Big Bear Supermarkets No. 3

National Labor Relations Board - Board Decisions

Nov 1, 1978

239 N.L.R.B. 179 (N.L.R.B. 1978)

BIG BEAR SUPERMARKETS NO. 3
Big Bear Supermarkets #3 and Retail Clerks Union,
Local 1222, Retail Clerks International Association,
AFL-CIO and Amalgamated Meat Cutters Local
No. 229, Amalgamated Meat Cutters & Butcher
Workmen of North America, AFL-CIO. Cases 21-
CA-15605 and 21-CA-15703
November 1, 1978
DECISION AND ORDER
BY MEMBERS JENKINS. MURPHY, AND TRUESDALE
On February 24, 1978, Administrative Law Judge
Roger B. Holmes issued the attached Decision in this
proceeding. Thereafter, the General Counsel and
Charging Parties Retail Clerks Union, Local 1222.
Retail Clerks International Association, AFL-CIO,
and Amalgamated Meat Cutters Local No. 229, Am-
algamated Meat Cutters & Butcher Workmen of
North America, AFL-CIO, filed exceptions and sup-
porting briefs. Respondent and the Intervenor, Rich-
ard Holmes,' filed briefs in support of the Decision
of the Administrative Law Judge.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings, and
conclusions of the Administrative Law Judge only to
the extent consistent herewith.
Respondent, a corporation engaged in the opera-
tion of retail grocery markets in San Diego County,
California, owns and operates a chain of approxi-
mately 22 supermarkets, known as Big Bear markets,
in that area. The corporate entity, designated as Big
Bear Supermarkets #3, additionally owns and oper-
ates a number of other businesses. Big Bear Super-
markets #3 has, since at least 1957 and 1950,
respectively, been party to successive col-
lective-bargaining agreements with Retail Clerks
Union, Local 1222, Retail Clerks International Asso-
ciation, AFL-CIO, herein called Local 1222, and
Amalgamated Meat Cutters Local No. 229, Amalga-
mated Meat Cutters & Butcher Workmen of North
America, AFL-CIO, herein called Local 229, cover-
ing multistore bargaining units at its retail grocery
and meat markets in San Diego County.3 Prior to
Holmes, who was alleged In the complaint t ) be the alter ego of Respon-
dent. was permitted to intervene at the hearing
2 These include 6 other grocery stores and markets operated under the
trade names of Market Place and Cooks Markets. 9 Daisy's Restaurants.
and 15 Par Liquor Stores, as well as several shopping centers.
November 15, 1976, Respondent applied its con-
tracts with Local 1222 and Local 229 to bargaining
unit employees covered by these contracts at all Big
Bear markets in San Diego County.
Effective November 15, 1976, Respondent fran-
chised its Big Bear store 13, located in La Mesa, Cali-
fornia, to Richard Holmes, the Intervenor in this
proceeding. Richard Holmes, a former store manager
at another of Respondent's Big Bear markets, is the
son of Gerald Holmes, a corporate officer of Re-
spondent,4 who is a 5-percent shareholder of Big
Bear Supermarkets #3. Respondent had not previ-
ously, nor has it since, franchised any other of its
operations.
Under the terms of the franchise agreement execu-
ted by the parties on November 8, 1976, Richard
Holmes has exclusive control over the labor relations
of the La Mesa store. In preparation for taking over
the store's operation, Holmes recruited and hired a
new complement of employees for that store, paying
them wages and benefits less than those required un-
der Respondent's union contracts. The 12 Big Bear
employees working in the La Mesa store were trans-
ferred by Respondent to other of its Big Bear mar-
kets before Holmes commenced operation of the
store as franchisee. Only one former employee of
store 13, a part-time janitor who was not included in
the bargaining unit under either of Respondent's
union contracts, was retained by Holmes at the fran-
chised store.
The parties have stipulated that Respondent's em-
ployees at the La Mesa store were transferred to
other Big Bear stores without being given the oppor-
tunity to seek continued employment at the fran-
chised store, as we note is required by Respondent's
contract with Local 1222.' The parties have further
stipulated that Respondent neither notified nor bar-
gained with the Unions representing these employees
regarding the employees' transfer either before or af-
ter the transfers occurred. The parties additionally
stipulated that Richard Holmes has refused to recog-
!Respondent's contracts with Local 1222, the most recent of which is
effective from July 28, 1975. to July 30, 1978. set forth the specific job
classifications constituting the unit appropriate for collective bargaining.
Respondent's contracts with Local 229, the most recent of which is effective
from November 8. 1976. to November 4. 1979. likewise set forth the job
classifications included in the appropriate bargaining unit
'Gerald Holmes is Respondent's general manager and secretary-treasur-
er. as well as a member of the corporation's board of directors.
Art XIX(D) of Respondent's contract with Local 1222 states as follows:
D. ,ALE O TiNSFEII
I In the event of a sale or transfer of a store or stores, an employee
shall be allowed a seven (7) das period from the date of announcement
to the employees of the sale or transfer during which time he may
determine whether he wishes to stay with the seller or whether he
wishes to make application for employment with the new owner or
transferee In the event the employee chooses to remain with the seller.
such choice shall not be construed as any guarantee of employment
over and beyond the terms if this Agreement
179
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
nize either Local 1222 or Local 229 as the bargaining
representative of the employees at the franchised
store, and has also refused to apply the terms of Re-
spondent's contracts with these Unions to the em-
ployees at the La Mesa store. He has declined as well
to supply Local 1222 with the names and addresses
of the store's current employees in the job classifica-
tions included in its bargaining unit when such infor-
mation was requested by that Union. As a result of
the employee transfers and of franchisee Holmes'
subsequent refusal to recognize and bargain with
these Unions as representatives of the employees at
store 13, or to abide by the terms of Respondent's
collective-bargaining agreements with Local 1222
and Local 229, both Unions filed the instant unfair
labor practice charges.
The Regional Director for Region 21 consolidated
the two cases and, on June 9, 1977, issued an
amended complaint alleging that the La Mesa store
is an alter ego of Big Bear Supermarkets #3. The
gravamen of the General Counsel's contention is that
Respondent's purported franchising of store 13 to
Richard Holmes was, in actuality, a sham trans-
action motivated by Respondent's desire to trans-
form a losing operation into a profitable one by
avoiding its obligation to pay contractually agreed to
union wages and benefits. Specifically, the General
Counsel alleges that Big Bear retained and exercises
such extensive control over the franchised operation
as to render it in effect a subordinate entity and dis-
guised continuance of Big Bear Supermarkets #3.
Thus, the complaint alleges that Respondent violated
Section 8(a)(l), (3), and (5) of the Act by refusing to
bargain with Local 1222 and Local 229 as representa-
tives of the employees at the La Mesa store; by refus-
ing to honor its collective-bargaining agreements
with these Unions with regard to those same employ-
ees; by withdrawing recognition from the Unions as
collective-bargaining representatives of the employ-
ees in the separate units at the La Mesa store; by
unilaterally transferring the previous employees of
the La Mesa store to other stores of Respondent
within the multistore bargaining units, and without
bargaining with the Unions over such transfers, be-
cause of their union representation; and by refusing
to furnish Local 1222 with the names and addresses
of current employees of the La Mesa store in job
classifications included in its bargaining unit when
such information was requested by that Union.
The Administrative Law Judge, rejecting the Gen-
eral Counsel's alter ego contention, dismissed the
complaint in its entirety. Analyzing the instant case
in terms of whether the two enterprises have substan-
tially identical ownership and control and common
business purpose, management, operations, equip-
ment, customers, and supervision, the Administrative
Law Judge concluded that these factors did not pre-
ponderate in favor of finding Richard Holmes to be
the alter ego of Big Bear Supermarkets #3.6 Nor, he
concluded, did the evidence establish the selection of
Holmes as franchisee to be a subterfuge by which
Respondent would continue to operate the store. In
addition, the Administrative Law Judge found that
neither the transfer of all union-represented employ-
ees at the La Mesa store to other stores in Respon-
dent's chain nor Respondent's failure to notify and
bargain with the Unions representing those employ-
ees regarding their transfer and change in status of
the store violated the Act. For the reasons set forth
below, we disagree with certain of these conclusions,
and therefore find that Respondent committed cer-
tain of the unfair labor practices alleged.
The Alter Ego Issue
The La Mesa store, as indicated in the Administra-
tive Law Judge's Decision more fully describing the
facts in this proceeding, is located in a shopping cen-
ter which Respondent owns. This particular shop-
ping center has been subject to three separate free-
way construction condemnation proceedings by the
State of California, shrinking its size from a total of
some 13 acres in 1950 to less than 2 acres in 1976.
The most recent condemnation and road construc-
tion, occurring in 1975-76, resulted in an approxi-
mate 25-percent sales drop for store 13 and the elimi-
nation of a substantial portion of the store's parking
area. Profit and loss statements show that the store
declined from a fiscal 1974 profit of $1,580 to a fiscal
1975 loss of $52,507 and a fiscal 1976 loss of $55,320.
It was these financial losses, along with economic
difficulties at some of its other operations, which Re-
spondent asserts precipitated its decision to franchise
the La Mesa store. Further influencing that decision,
Respondent maintains, was its desire to retain its
overall market share of the grocery business in San
Diego County, and the need to keep the Big Bear
name in its shopping center as a customer-drawing
factor for the benefit of its tenants in other stores and
shops in the center. Thus, Respondent claims, the
franchising of the store was a bona fide arm's-length
business transaction motivated by a desire to mini-
mize its financial losses while achieving these related
business objectives.
Selected by Respondent as franchisee was Richard
Holmes, an employee of Big Bear Supermarkets #3
These factors have previously been identified as being generally indica-
tive of alter ego status. Crawford Door Sales Comnpany, Inc. and Cordes Door
Compan., Inc., 226 NLRB 1144 (1976); Marquis Printing Corporarion and
Mutual Lithograph Coompans, 213 NLRB 394 (1974).
180
BIG BEAR SUPERMARKETS NO. 3
since 1969. The son of Gerald Holmes, a major offi-
cer and a shareholder of Respondent,7 Richard
Holmes was until November 1976 manager of a high
volume Big Bear market in El Cajon. His ability to
continue in that capacity was, unfortunately, limited
by the fact that he is a victim of multiple sclerosis.
The effects of this disease had necessitated his taking
a leave of absence of about 4 months in 1975, and
Holmes testified that the disease was affecting his
ability to perform as a Big Bear manager in 1976.
Rated by the Veterans Administration as 30 percent
disabled, Holmes testified that multiple sclerosis is
generally a progressive disease, depending upon the
person and the kind of pressure he is under. Holmes
has been aided in the operation of the franchised
store by his wife and mother, who have worked at the
store without pay.
The franchise agreement executed by the two par-
ties was, according to Respondent's attorney who
prepared the document, patterned after a 1966 copy
of a Southland Corporation franchise agreement for
a 7-Eleven store which the Board had found to create
an independent contractor relationship between a
franchisor and its franchisee. s While identifying sev-
eral areas in which modifications to that document
were made, including rent, advertising, termination,
and inventory, Respondent avers that it basically
merely incorporated the provisions of Southland's
agreement in drafting Big Bear's franchise and leas-
ing agreements.9 (Major provisions of the Big Bear
agreement are set forth verbatim in the attached De-
cision of the Administrative Law Judge.)
As a review of this agreement reveals, Big Bear
retains under the contract terms a substantial num-
ber of controls over the operation of the La Mesa
store. Thus the agreement provides, for example, that
7Approximately 80 percent of the stock of Big Bear Supermarkets #3 is
owned by its president, John Mabee, with Gerald Holmes owning about 5
percent, and the remaining 15 percent being held primanly by supervisors of
Respondent.
5 The Southland Corporation, d/b/a Speeder 7-Eleven, 170 NLRB 1332
(1968).
' While we do not find it necessary to our decision herein to engage in an
extensive comparison and analysis of the Big Bear and Southland Corpora-
tion agreements, we note significant vanations between the two. Southland
franchisees, for example, are required to pay a cash initial franchise fee at
contract execution, as well as provide cash operational capital as an initial
investment. They are also charged interest on open account items advanced
by Southland, if they desire to finance their operation through Southland
rather than from some other source. Big Bear, as discussed infra, has mark-
edly different provisions regarding these items. (Any thorough and accurate
comparison of Big Bear's contract with the Southland agreement, asserted
by Respondent to have been its model, is precluded, however, by the fact
that Respondent introduced into evidence only a copy of a Southland agree-
ment dated July 1977, and the 1966 version claimed as the prototype for Big
Bear's franchising contract was not made available as record evidence.) In
any event, given the overall facts of this case, we do not find the situation of
the Southland Corporation, which is an acknowledged entity in the fran-
chising industry, to be analogous to that of Big Bear, which is not in the
business of franchising and, indeed, aside from the La Mesa store has made
no attempt to franchise its business units.
(1) the La Mesa store is to be operated as part of
Respondent's system of Big Bear stores; (2) Holmes
is specifically obligated to carry such product lines as
are customarily carried in the Big Bear system, and
in such quantities as are reasonably necessary, in the
sole judgment of Big Bear, to meet customer de-
mands: (3) Holmes must obtain permission from Big
Bear before changing any product line customarily
carried in the Big Bear system; (4) Big Bear has the
authority to contract for such advertising as it deems
sufficient in its sole judgment and, while Holmes may
purchase such additional advertising as he may de-
sire, that advertising must be approved in writing by
Big Bear and may not, in the sole judgment of Big
Bear, be inconsistent with its advertising purposes;
(5) Holmes must stock and sell advertised goods at
the advertised prices and honor discount coupons
contained in Big Bear advertisements; (6) Holmes is
obligated to purchase and distribute trading stamps
for so long as Big Bear gives them; and (7) Big Bear
reserves the right to provide Holmes with supervision
and technical assistance, and in any event with no less
supervision than is provided to other markets in the Big
Bear system. Holmes is moreover precluded from as-
signing, encumbering, mortgaging, pledging, or hy-
pothecating his interest in the leasehold estate or
equipment (although Big Bear's right to take the
same actions with regard to the store's equipment
and fixtures is retained), and from selling, transfer-
ring, or assigning his interest in the contract as well.
A termination clause provides that Holmes may lose
his franchise if he fails to request and receive any
approvals required by the agreement, among several
listed conditions justifying termination. Thus, the
franchised store continues to operate essentially as
any other Big Bear market, with Big Bear actively
exercising its contractual prerogatives.
Also of import, particularly since Respondent as-
serts that the franchising resulted from valid eco-
nomic considerations, are the financial provisions
underpinning the franchising agreement. For a
downpayment of $2,000 and the execution of an
unsecured promissory note in the amount of
$114,400.81, Holmes took over a $116,400.81 inven-
tory of goods and became the putative owner of this
ongoing business operation having an annual sales
volume well in excess of $1 million.'s According to
article 19 of the agreement, outlining the operation of
the owner's open account, Big Bear pays for all ex-
penditures required to be made in the operation of
the business, and debits these to Holmes' open ac-
°0 The value of "goodwill" accruing to the new owner in his assumption
of the business is not financially recognized in this document. In marked
contrast, the purchase prices of two stores recently sold by Respondent
included amounts of S40.000 and S100.000, respectively, over and above the
value of inventory transfered
181
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
count. There is no requirement for the payment of
interest on this account; therefore, Big Bear in actu-
ality advances interest-free all moneys required for
the store's operation-including so-called owner's in-
vestment costs of permits, transfer fees, business li-
censes, and "set-up" fees." Big Bear then collects
and deposits Holmes' daily sales receipts, credits this
income to Holmes' open account, and, by virtue of
the accounting services which it also provides, de-
termines the quarterly and, finally, yearly net operat-
ing income for apportionment between it and
Holmes. As consideration for the lease, franchise, li-
cense agreement, utilities, and services to be per-
formed by Big Bear, the agreement requires that Big
Bear be paid a "Big Bear Charge" consisting of 40
percent of Holmes' net operating income.' 2
Interspersed throughout the agreement are provi-
sions whereby Big Bear commits itself to pay various
items to be borne by Holmes under the contract's
terms, debiting these payments to Holmes' noninter-
est-bearing open account. Thus, Big Bear obligates
itself to pay all bills, invoices, or other obligations
Holmes is required to pay under the maintenance
and repair provisions for the leased premises and
equipment; the rent itself for the building and fix-
tures is debited to the open account (since Big Bear
owns the leased building and fixtures, it is in effect
advancing the economic costs of these items by de-
biting Holmes' account); Big Bear agrees to advance
Holmes sufficient sums to obtain all permits and li-
censes required by law for the store's operation; Big
Bear agrees initially to arrange for fire and casualty
insurance, debiting its cost to the open account; Big
Bear is required, in addition to paying real property
taxes under the agreement, to make the actual tax
payments for Holmes' personal property taxes on the
inventory and equipment, as well as the business'
sales taxes, again debiting the open account; Holmes'
pro rata share of the advertising and supervision Big
Bear provides is to be debited to the account; Big
Bear is obligated to pay and debit to his open ac-
count Holmes' state unemployment insurance, social
security, payroll insurance, workmen's compensation
insurance, and any other similar expenses relative to
Holmes' employment relationship. As is apparent
I Art. 18 of the agreement, which is not among those provisions included
in the Administrative Law Judge's Decision, states as follows:
ii ownear 10srfatr
OWNER shall pay for all permits, transfer fees. business licenses. or
any other "set-up" fees that may be necessary to take over the store and
operate it. In addition. OWNER agrees to pay to BIG BEAR the cost
of opening inventory as is provided in paragraph 17 above. These
amounts shall constitute the OWNER'S investment. These costs shall
be debited to OWNER'S Open Account as provided above.
2 Net operating income is defined as "gross gain less operating expen-
sC.
from all of the above, it is Big Bear and not Holmes
providing the capital to operate the La Mesa store.
Holmes would moreover appear under the
agreement's terms to have no choice of obtaining his
financing from any other source, a fact which we
note without comment other than the observation
that he would not appear likely to desire other fi-
nancing, with Big Bear financing the store's opera-
tion interest free. It is, of course, relevant to a consid-
eration of the alleged bona fide nature of the
franchising transaction.
Holmes' unsecured $114,400.81 promissory note in
payment for the store's initial inventory is payable
$500 or more monthly, including interest at the rate
of 5 percent per annum, until the note has been paid
in full. At the end of each quarterly accounting,
Holmes is required to make a principal payment on
this note in an amount equal to 50 percent of his net
profit until the cost of the initial inventory has been
paid in full. There is no time limit as to when this
principal amount must be fully paid. The Adminis-
trative Law Judge found it significant that Holmes
had applied his total net profits, rather than only the
half required by the contract, to the repayment of the
principal on this note, as indicative that Holmes is
truly a franchisee and the agreement is not a sham. A
review of the record, however, indicates that the Ad-
ministrative Law Judge was factually in error in this
regard. Whereas Holmes did apply his total quarterly
profits to payment of the principal on January 13
and April 20, 1977, on July 31, 1977, he paid on the
note's principal only the half of his net profits man-
dated by the contract. Thus, whatever weight the Ad-
ministrative Law Judge accorded this fact in reach-
ing his conclusion would appear misplaced.
Another significant financial aspect of the trans-
action is reflected in article 21 of the agreement, re-
lating to Holmes' "Draw on Anticipated Profits."
This provision requires Big Bear to pay Holmes $425
each week, irrespective of whether or not the busi-
ness is showing a profit. Moreover, the amount may
be changed only upon the written request of Holmes
and with Big Bear's approval, and may not be re-
duced either quarterly or at the close of the fiscal
year for lack of a profit. This amount, roughly com-
parable to the $18,500 to $23,000 annual salaries re-
ceived by managers of Respondent's Big Bear mar-
kets, is also to be debited to Holmes' interest-free
open account. Although the agreement refers to this
payment as a "Draw on Anticipated Profits," the
payment is totally unrestricted under the contract
terms by any necessity of ever having any profits to
draw on. 3 It would appear, rather, to operate as an
I The 1977 Southland agreement, in comparison, likewise provides for an
owner's draw on anticipated profits, but reduces that draw if the draw plus
182
BIG BEAR SUPERMARKETS NO. 3
open-ended salary guarantee with Big Bear again ad-
vancing these funds interest free.
Big Bear, as stated, avers that it entered into the
franchising agreement in order to cut its financial
losses at the La Mesa store.'4 The agreement does
not, however, as described above, function to relieve
Big Bear of an unprofitable operation. Richard
Holmes paid Big Bear only $2,000 and his unsecured
promissory note, the principal of which is essentially
to be amortized from the store's future profits, if any,
for the Big Bear franchise. As a result of this trans-
action, Big Bear gained only $2,000 and a promise
from Richard Holmes to pay for the other
$114,400.81 worth of inventory provided him at some
time in the future when the store makes money. Al-
though the agreement requires Holmes to share in
any losses of the store, if his open account reflects a
balance due upon the termination of the agreement,
the record contains no evidence that Holmes owns
assets accessible for such purpose. It does indicate,
however, that he has pledged no other assets as se-
curity. Meanwhile, under the agreement Big Bear is
committed to continue its general financing of the
store's operation, by virtue of various provisions re-
quiring it to pay all the bills, and by the fact that
Holmes pays no interest on these moneys advanced.
Thus, any true entrepreneurial risks would appear to
be borne in the first instance by Big Bear, rather than
by Holmes.
Furthermore, franchising could not solve the ma-
jor reason adduced by Respondent for the store's
poor financial record. Big Bear President John Ma-
bee testified that the store's volume had been "head-
ed on a straight line up, and all of a sudden with the
taking of the parking lot it leveled off and flat-
tened-dropped and has sort of maintained a level
line since that particular time," referring to the 1974
state condemnation and 1976-76 freeway construc-
tion at the store's locale which resulted in about a
25-percent drop in its sales volume. Franchising
could hardly remedy a lack of parking space. Nor
does the record contain any evidence that Holmes
overcame this problem.
What was accomplished through the purported
franchising, however, was a drastic reduction in the
store's operating costs through avoidance of the ap-
plication of Respondent's union contracts to the
franchised store's employees. Thus, an examination
of profit and loss statements for the store shows, for
the4payroll for the store exceeds a stated percentage of net sales.
While Respondent's other asserted reasons for the franchising of the
store. i.e., the desire to maintain its overall market share of the grocery
business in San Diego County and to keep Big Bear in the shopping center
as a customer-drawing factor, may explain why Respondent did not want to
sell the store, they would appear to bear no logical relationship to how
franchising could resolve this store's financial difficulties.
example, that whereas salaries and wages cost Big
Bear $174,204, and employee benefits an additional
$24,537, for the period from August 1, 1975, to July
31, 1976, Holmes has operated the franchised store
from November 15, 1976, to July 31, 1977, at a salary
and wage cost of $81,687, with employee benefits
costing only $1,988. While these figures do not, of
course, represent equivalent time periods, they are
indicative of drastically reduced costs in this area,
with approximately the same number of employees
working at the store during both time periods.' Op-
erating the store in essentially the same manner as it
had previously functioned under Big Bear, Holmes
has succeeded through these operating cost reduc-
tions in transforming the store from a losing opera-
tion to one which earned a net operating income in
excess of $30,000 for the first 8-1/2 months of its
fiscal year, as reflected in the instant record.
We agree with the General Counsel that the fore-
going shows that Respondent's real purpose behind
the entire arrangement was to retain for itself control
of the La Mesa operation while, through the appear-
ance of a bona fide franchise agreement, achieving a
reduction in labor costs through the avoidance of the
economic obligations imposed by its collective-bar-
gaining agreements with Local 1222 and Local 229.
Further evidence that Big Bear's real objective was
simply to oust the Unions from its La Mesa store is,
as the General Counsel argues, found in the manner
in which it rid that store of those employees who had
been represented by the Unions. Thus, those employ-
ees were given no option to continue at La Mesa but
were, without any consideration apparently being
given to their choice in the matter, transferred to
other Big Bear stores. This was done with respect to
employees represented by Local 1222 despite that
Union's contract with Big Bear requiring, as noted
above, that in the event of a store's transfer or sale an
employee be given 7 days to choose between ap-
plying for a job with the new owner or moving to
another of Respondent's stores.' 6 Such preemptory
transferring out ostensibly would obviate the possi-
bility that Holmes would be a successor employer
obliged, despite even a bona fide franchising, to rec-
ognize and bargain with the Unions.
Therefore, in view of all the foregoing, including,
inter alia, the selection of Richard Holmes, a close
relative of high management, as the purported fran-
chisee; the controls retained and exercised by Big
Bear over the store's operation; and the economic
realities of the arrangement reflected in the franchise
' The parties have stipulated that prior to November 15, 1976. there were
12 employees at the store, and that the number of employees of Holmes at
the store after that date was 13. At the time of the hearing, Holmes testified,
the store had 16 employees.
t6 See fn 5. supra.
183
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
agreement whereby Holmes initially invested only
$2,000 cash and Big Bear financed the store's opera-
tion without charging interest to Holmes, we con-
clude, contrary to the Administrative Law Judge,
that the arrangement between Big Bear and Holmes
was not a bona fide franchising transaction, but rath-
er that Holmes' position was essentially that of a
manager of,'7 and that he was in fact Respondent's
alter ego with respect to, the La Mesa store.' Accord-
ingly, we find that Richard Holmes and Respondent
constitute a single employer within the meaning of
Section 2(2) of the Act, and that employees of the La
Mesa store are employees of Respondent and part of
the bargaining units covered by Respondent's collec-
tive-bargaining agreements with Local 1222 and Lo-
cal 229.
Therefore, by withdrawing recognition from and
refusing to recognize Local 1222 and Local 229 as
the collective-bargaining representatives of the em-
ployees in the separate units at the La Mesa store on
and after November 15, 1976, and by refusing at
such times to apply the terms of the collective-bar-
gaining agreements to such employees, thereby uni-
laterally changing the terms and the conditions of
employment specified in the applicable collective-
bargaining agreements, Respondent violated Section
8(aX5) and (1) of the Act. Respondent additionally
violated Section 8(a)(5) and (1) of the Act by refusing
to furnish information to Local 1222 when that
Union requested names and addresses of its bargain-
ing unit employees at the La Mesa store from Re-
spondent's alter ego, Richard Holmes. Finally, by
transferring employees at the La Mesa store to other
stores because of their representation by Local 1222
and Local 229, Respondent violated Section 8(a)(3)
and (1) of the Act as well.'
CONCLUSIONS OF LAW
1. Respondent Big Bear Supermarkets #3 and its
alter ego, Richard Holmes, constitute a single em-
17 As noted above, Holmes' "guaranteed" minimum income under the
"franchising" arrangement was substantially the same as that earned by
managers of Respondent's other stores.
Is The record indicates that control over labor relations with the new La
Mesa store employees existed essentially in Richard Holmes. While we have
regarded the control which one party exercises over the labor relations poli-
cy of another to be an important factor in deciding whether a franchisee is
an independent contractor or a single or joint employer with its franchisor,
our application of that criterion has been premised upon the existence of a
bona fide, arm's-length franchising relationship between the contracting
parties. See The Southland Corporation, d/b/a Speedee 7-Eleven, supra. Here,
based upon a consideration of all the factors present in this case, we cannot,
as concluded above, find that Richard Holmes and Big Bear entered into
such a bona fide, arm's-length franchising relationship.
19 Inasmuch as we have found that Big Bear Supermarkets #3 and Rich-
ard Holmes are a single employer, and Respondent's union contracts pro-
vide for employee transfers between stores within the multistore bargaining
units without prior consultation with the Unions, we do not find the trans-
fers violated Sec. 8(aX5) of the Act.
ployer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
2. Richard Holmes is the alter ego of Big Bear Su-
permarkets #3 in the operation of Respondent's Big
Bear store 13, located in La Mesa, California.
3. Retail Clerks Union, Local 1222, Retail Clerks
International Association, AFL-CIO, and Amalga-
mated Meat Cutters Local No. 229, Amalgamated
Meat Cutters & Butcher Workmen of North Amer-
ica, AFL-CIO, are labor organizations within the
meaning of Section 2(5) of the Act.
4. All employees of Respondent Big Bear Super-
markets #3 and its alter ego, Richard Holmes, in a
unit of all hourly employees working in the job clas-
sifications enumerated in its collective-bargaining
agreement with Retail Clerks Union, Local 1222, Re-
tail Clerks International Association, AFL-CIO, ef-
fective from July 28, 1975, to July 30, 1978, at its
retail grocery and meat markets in San Diego Coun-
ty, including the La Mesa store, constitute a unit ap-
propriate for the purposes of collective bargaining
within the meaning of Section 9(b) of the Act.20
5. Retail Clerks Union, Local 1222, Retail Clerks
International Association, AFL-CIO, is now, and at
all times material herein has been, the exclusive bar-
gaining representative of all the employees of Re-
spondent Big Bear Supermarkets #3 and its alter ego,
Richard Holmes, in the aforesaid unit for the pur-
poses of collective bargaining within the meaning of
Section 9(a) of the Act.
6. All employees of Respondent Big Bear Super-
markers #3 and its alter ego, Richard Holmes, in a
unit of all hourly employees working in the job clas-
sifications enumerated in its collective-bargaining
agreement with Amalgamated Meat Cutters Local
229, Amalgamated Meat Cutters & Butcher Work-
men of North America, AFL-CIO, effective from
November 8, 1976, to November 4, 1979, at its retail
grocery and meat markets in San Diego County, in-
cluding the La Mesa store, constitute a unit appropri-
ate for the purposes of collective bargaining within
the meaning of Section 9(b) of the Act.2 '
7. Amalgamated Meat Cutters Local 229, Amal-
gamated Meat Cutters & Butcher Workmen of North
America, AFL-CIO, is now, and at all times material
herein has been, the exclusive bargaining representa-
tive of all the employees of Respondent Big Bear Su-
permarkets #3 and its alter ego, Richard Holmes, in
the aforesaid unit for the purposes of collective bar-
gaining within the meaning of Section 9(a) of the
Act.
20 We have adopted herein the description of the appropriate unit for
collective bargaining as described in the amended complaint and stipulated
to by the parties in this proceeding.
21 See In. 20, supra.
184
BIG BEAR SUPERMARKETS NO. 3
8. By refusing since on or about November 15,
1976, to bargain collectively with the Unions as the
exclusive bargaining representatives of the employees
in the aforesaid separate units, by withdrawing rec-
ognition from and refusing to recognize Local 1222
and Local 229 as the exclusive bargaining representa-
tives of the employees in the separate units at the La
Mesa store, by refusing to apply the collective-bar-
gaining agreements with these Unions to such unit
employees, thereby unilaterally changing the terms
and conditions of employment established by its col-
lective-bargaining agreements, and refusing to fur-
nish Local 1222 with the names and addresses of bar-
gaining unit employees at the La Mesa store when
such information was requested by that Union, Re-
spondent has engaged in unfair labor practices with-
in the meaning of Section 8(a)(5) and (1) of the Act.
9. By transferring employees of the La Mesa store
to other stores within said multistore units because of
their union representation at the La Mesa store, Re-
spondent has engaged in unfair labor practices with-
in the meaning of Section 8(a)(3) and (1) of the Act.
10. The aforesaid unfair labor practices affect
commerce within the meaning of Section 2(6) and (7)
of the Act.
THE REMEDY
Having found that Respondent has engaged in,
and is engaging in, unfair labor practices in violation
of Section 8(a)(l), (3), and (5) of the Act, we shall
order Respondent to cease and desist therefrom and
to take certain affirmative action designed to effectu-
ate the policies of the Act.
As we have found that Respondent unlawfully
withdrew recognition from and refused to recognize
and bargain with Local 1222 and Local 229 as the
exclusive representatives of the La Mesa store em-
ployees in their respective bargaining units, we shall
order Respondent to recognize and bargain with the
Unions as the representatives of Respondent's em-
ployees in those units at the La Mesa store. Having
also found that Respondent unlawfully refused to
apply the collective-bargaining agreements with
these Unions to the unit employees at the La Mesa
store, thereby unilaterally changing the terms and
conditions of employment specified in its collective-
bargaining agreements, we shall also order Respon-
dent to restore the status quo ante by applying the
terms and conditions of the current collective-bar-
gaining agreements with these Unions to the La
Mesa store employees, retroactive to November 15,
1976, and to make the La Mesa store employees
whole for any losses suffered as a result of Respon-
dent's failure to apply the collective-bargaining
agreements to them, with interest to be computed in
the manner prescribed in Florida Steel Corporation,
231 NLRB 651 (1977).22
We shall also order Respondent to supply Local
1222 with the names and addresses of its La Mesa
store bargaining unit employees, as requested by that
Union, as well. Furthermore, as we have found that
Respondent discriminatorily transferred La Mesa
store employees to other stores within the multistore
bargaining units because of their union representa-
tion, we shall order Respondent to offer the employ-
ees who were transferred out of the La Mesa store
immediate reinstatement to their former jobs or, if
those no longer exist, to substantially equivalent po-
sitions, displacing if necessary any employees as-
signed to these positions since November 15, 1976,
without prejudice to their seniority or other rights
and privileges, and to make whole the transferred
employees or any other unit employees 23 for any
losses they may have suffered as a result of the un-
lawful transfers. All such losses are to be reimbursed
in the manner set forth in F. W. Woolworth Compa-
ny, 90 NLRB 289 (1950), with interest thereon to be
computed as prescribed in Florida Steel Corporation,
supra.
Finally, inasmuch as Respondent's unlawful con-
duct was for the purpose of avoiding and evading its
collective-bargaining obligations, we regard such
conduct as antithetical to the entire collective-bar-
gaining process and, thus, to a primary policy of the
Act. Accordingly, we shall order that Respondent
cease and desist from infringing in any other manner
upon the rights guaranteed to its employees by Sec-
tion 7 of the Act.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board hereby orders that the Respondent, Big
Bear Supermarkets #3 and its alter ego, Richard
See. generally, Iris Plumbing & Hearing Co., 138 Nl RB 716 (1962).
Local 1222 has asserted that the transfer of the La Mesa store emplo)-
ees to other stores within the multistore bargaining unit resulted in lasyoffs
and reductions in hours of unit employees at these other stores The Admin
istrative Law Judge, while noting this general assertion. found Insufficient
record evidence to support such a finding. Inasmuch as we haie found
Respondent's transfer of union-represented employees from the 1.a Mesa
store to be unlawful, ans unit employees at other Big Bear stores iof Respon-
dent within the bargaining units represented by either Local 1222 or lIocal
229 who in fact suffered losses as a result of Respondent's unlawful conduct
are entitled to be made whole for such losses. Whether or not such losses
occurred. or their extent, is a matter which can properly be resolved at the
compliance stage of this proceeding. We shall. however. include in our Or-
der herein a proilsion requiring that the Notice to Emplosees be posted at
all Big Bear stores of Respondent in the bargaining units. in order that any
unit employees who may hase suffered losses as a result of Respondent's
unlawful emploee transfers may therebs be apprised of their right to be
made whole
185
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Holmes, La Mesa, California, its officers, agents, suc-
cessors, and assigns, shall:
1. Cease and desist from:
(a) Refusing to bargain collectively with Retail
Clerks Union, Local 1222, Retail Clerks Internation-
al Union, AFL-CIO, and Amalgamated Meat Cut-
ters Local 229, Amalgamated Meat Cutters & Butch-
er Workmen of North America, AFL-CIO, herein
referred to as Local 1222 and Local 229, respectively,
as the exclusive bargaining representatives of the em-
ployees in the units set forth in their respective col-
lective-bargaining agreements with Respondent, in-
cluding the unit employees at the La Mesa store, by
withdrawing recognition from and refusing to recog-
nize those Unions as the exclusive bargaining repre-
sentatives of the employees in the separate units at
the La Mesa store.
(b) Unilaterally changing the terms and condi-
tions of employment established by its collective-bar-
gaining agreements with the aforesaid Unions by re-
fusing to apply the terms of collective-bargaining
agreements with those Unions to its employees in the
separate units at the La Mesa store.
(c) Refusing to furnish to Local 1222 the names
and addresses of employees included in its bargain-
ing unit at the La Mesa store as requested by that
Union.
(d) Transferring employees of the La Mesa store
to other stores within the multistore units because
they are represented by the Unions.
(e) In any other manner interfering with, restrain-
ing, or coercing its employees in the exercise of their
rights guaranteed by Section 7 of the Act.
2. Take the following affirmative action which is
necessary to effectuate the policies of the Act:
(a) Recognize and bargain collectively with Local
1222 as the exclusive representative of the employees
of Respondent at the La Mesa store in a unit of all
hourly employees working in the job classifications
enumerated in its collective-bargaining agreement
with that Union, effective from July 28, 1975, to July
30, 1978, at its retail grocery and meat markets in
San Diego County, and apply the collective-bargain-
ing agreement with the Union to the unit employees
at the La Mesa store, retroactive to November 15,
1976.
(b) Recognize and bargain collectively with Local
229 as the exclusive representative of the employees
of Respondent at the La Mesa store in a unit of all
hourly employees working in the job classifications
enumerated in its collective-bargaining agreement
with that Union, effective from November 8, 1976, to
November 4, 1979, at its retail grocery and meat
markets in San Diego County, and apply the collec-
tive-bargaining agreement with the Union to the unit
employees at the La Mesa store, retroactive to No-
vember 15, 1976.
(c) Make the employees at the La Mesa store in
the aforesaid units whole for any losses they may
have suffered since November 15, 1976, as a result of
Respondent's failure to apply the collective-bargain-
ing agreements to them, in the manner set forth in
the section of this Decision entitled "The Remedy."
(d) Supply Local 1222 with the names and ad-
dresses of employees included in its bargaining unit
at the La Mesa store, as requested by it.
(e) Offer employees of the La Mesa store who
were transferred to other stores of Respondent with-
in the multistore bargaining units immediate rein-
statement to their former positions or, if those posi-
tions no longer exist, to substantially equivalent
positions, displacing if necessary any employees as-
signed to those positions since November 15, 1976,
without prejudice to their seniority or other rights
and privileges, and make whole the transferred em-
ployees or any other unit employees for any losses
they may have suffered as a result of Respondent's
unlawful transfers in the manner set forth in the sec-
tion of this Decision entitled "The Remedy."
(f) Preserve and, upon request, make available to
the Board or its agents, for examination or copying,
all payroll records, social security payment records,
timecards, personnel records and reports, and all
other records necessary to analyze the amount of
backpay due under the terms of this Order.
(g) Post at all its Big Bear Supermarkets in San
Diego County, California, copies of the attached no-
tice marked "Appendix." 24 Copies of said notice, on
forms provided by the Regional Director for Region
21, after being duly signed by Respondent's author-
ized representative, shall be posted by Respondent
immediately upon receipt thereof, and be maintained
by it for 60 consecutive days thereafter, in conspicu-
ous places, including all places where notices to em-
ployees are customarily posted. Reasonable steps
shall be taken by Respondent to insure that said no-
tices are not altered, defaced, or covered by any
other material.
(h) Notify the Regional Director for Region 21, in
writing, within 20 days from the date of this Order,
what steps the Respondent has taken to comply here-
with.
IT IS FURTHER ORDERED that the amended com-
plaint herein be, and it hereby is, dismissed insofar as
it alleges unfair labor practices not found herein.
:4 In the event that this Order is enforced by a judgment of a United
States Court of Appeals. the words in the notice reading "Posted by Order
of the National Labor Relations Board" shall read "Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.'
186
BIG BEAR SUPERMARKETS NO. 3
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 having found,
after a hearing at which all parties were given an
opportunity to present evidence and argument, that
we violated the National Labor Relations Act, we
notify you that:
WE WILL NOT refuse to bargain collectively
with Retail Clerks Union, Local 1222, Retail
Clerks International Association, AFL-CIO,
and Amalgamated Meat Cutters Local No. 229,
Amalgamated Meat Cutters & Butcher Work-
men of North America, AFL-CIO, as the exclu-
sive bargaining representatives of our employees
in the units set forth in our collective-bargaining
agreements with these Unions, including the
unit employees at the La Mesa store.
WE WILL NO ' unilaterally change wages, work-
ing conditions, or terms of employment estab-
lished by our collective-bargaining agreements
with these Unions by refusing to apply the terms
of our collective-bargaining agreements to our
employees in the separate units at the La Mesa
store.
WE WILL NOT refuse to furnish Local 1222 with
the names and addresses of employees included
in its bargaining unit at the La Mesa store.
WE WILL NOT transfer employees of the La
Mesa store to other Big Bear markets because of
their union representation.
WE WILL NOT in any other manner interfere
with, restrain, or coerce our employees in the
exercise of their rights guaranteed in Section 7
of the Act.
WE WILL recognize and bargain collectively
with Retail Clerks Union, Local 1222, Retail
Clerks International Association, AFL-CIO, as
the exclusive representative of the employees at
the La Mesa store in a unit of all hourly employ-
ees working in the job classifications enumerat-
ed in our collective-bargaining agreement with
that Union, effective from July 28, 1975, to July
30, 1978, at our retail grocery and meat markets
in San Diego County, and will apply the collec-
tive-bargaining agreement with the Union to the
unit employees at the La Mesa store, retroactive
to November 15, 1976.
WE WILL recognize and bargain collectively
with Amalgamated Meat Cutters Local No. 229,
Amalgamated Meat Cutters & Butcher Work-
men of North America, AFL-CIO, as the exclu-
sive representative of the employees at the La
Mesa store in a unit of all hourly employees
working in the job classifications enumerated in
our collective-bargaining agreement with that
Union, effective from November 8, 1976, to No-
vember 4, 1979, at our retail grocery and meat
markets in San Diego County, and will apply the
collective-bargaining agreement with the Union
to the unit employees at the La Mesa store, ret-
roactive to November 15, 1976.
WE WILL make the employees at the La Mesa
store in the aforesaid units whole for any losses
they may have suffered since November 15,
1976, as a result of our not applying the collec-
tive-bargaining agreements to them, with inter-
est.
WE WILL supply Local 1222 with the names
and addresses of employees included in its bar-
gaining unit at the La Mesa store, as requested
by it.
WE WILL offer employees of the La Mesa store
whom we transferred to other Big Bear markets
because of their union representation immediate
reinstatement to their former positions or, if
those positions no longer exist, to substantially
equivalent positions, displacing if necessary any
employees assigned to those positions since No-
vember 15, 1976, without prejudice to their se-
niority or other rights and privileges.
WE WILL make whole the employees we trans-
ferred from the La Mesa store, and any other
bargaining unit employees at the stores they
were transferred to who may have been laid off
or had their hours of work reduced, for any loss-
es they may have suffered as a result of our
transferring the union-represented employees
from the La Mesa store, with interest.
BIG BEAR SUPERMARKETS #3
DECISION
STATEMENT OF THE CASE
ROGER B. HOLMES. Administrative Law Judge: The unfair
labor practice charge in Case 21-CA-15605 was filed on
April 4, 1977, by Retail Clerks Union, Local 1222, Retail
Clerks International Association, AFL-CIO, herein called
the Charging Party Retail Clerks. The Regional Director
for Region 21 of the National Labor Relations Board,
herein called the Board, acting on behalf of the General
Counsel of the Board, issued on May 25, 1977, a complaint
187
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and notice of hearing in Case 21-CA-15605 against Big
Bear Supermarkets #3, herein called the Respondent.
Thereafter the Respondent and Richard Holmes, who
was contended to be operating the La Mesa, California,
store as the alter ego of the Respondent, each filed separate
answers to the complaint.
The unfair labor practice charge in Case 21-CA-15703
was filed on May 9, 1977, by Amalgamated Meat Cutters
Local No. 229, Amalgamated Meat Cutters & Butcher
Workmen of North America, AFL-CIO, herein called the
Charging Party Meat Cutters.
The Regional Director for Region 21 of the Board, on
behalf of the General Counsel, issued on June 9, 1977, an
order consolidating cases, consolidated amended com-
plaint, and amended notice of hearing in Cases 21-CA-
15605 and 21-CA-15703. The General Counsel's consoli-
dated complaint alleges that the Respondent has engaged
in unfair labor practices within the meaning of Section
8(aX)(1), (3), and (5) of the National Labor Relations Act, as
amended, herein called the Act. The Respondent and
Richard Holmes once again filed separate answers in
which each one denied the commission of the alleged un-
fair labor practices, and each one raised certain affirmative
defenses.
The hearing was held before me on September 8, 1977,
at San Diego, California. The consolidated complaint al-
leges only Big Bear Supermarkets #3 as the Respon-
dent-which pleading is consistent with the contention ad-
vanced by the General Counsel and both Charging Parties
that Richard Holmes is, in fact, the alter ego of Big Bear
Supermarkets #3 in his operation of the La Mesa store. It
is not contended, for example, that Richard Holmes is the
successor employer to Big Bear Supermarkets #3 at the La
Mesa store. Instead, the legal theory, on which the consoli-
dated complaint is predicated, is straightforward and clear
that this case is being tried on an alter ego theory.
At the hearing, Richard Holmes was permitted to inter-
vene and to participate fully in these proceedings. As indi-
cated in the answers previously filed by Richard Holmes
and the Respondent, it is their contention that Richard
Holmes is not the alter ego of Big Bear Supermarkets #3.
As stated at the outset of the hearing, and reiterated here
for those persons who were not present at the hearing, I am
not related to the Intervenor, Richard Holmes. It is a mere
coincidence of having the same last name.
Counsel for the General Counsel, the attorney for the
Charging Party Retail Clerks, the attorney for the Charg-
ing Party Meat Cutters, the attorney for the Respondent,
and the attorney for the Intervenor each filed very persua-
sive briefs by the due date of November 14, 1977. Those
briefs have been read and considered.
On December 6, 1977, counsel for the General Counsel
filed with me a motion to strike portions of Respondent's
brief. The portions sought to be stricken include Appendix
3 attached to the brief and certain parts of the argument in
the brief which pertain to that multipaged document. Ap-
pendix 3 purports to be certain marketing information
compiled by the advertising department of the San Diego
Union and The Evening Tribune newspapers. Counsel for
the General Counsel correctly points out that the docu-
ment was not introduced in evidence at the hearing.
On December 13, 1977, the attorney for the Respondent
filed a response to motion to strike portions of Respon-
dent's brief in which it was urged, inter alia, that the mate-
rials contained in Appendix 3 were matters which were
subject to judicial notice pursuant to Rule 201(b) of the
Federal Rules of Evidence, and further that judicial notice
may be taken at any stage of the proceeding in accordance
with Rule 201(f) of the Federal Rules of Evidence.
I have reviewed Rule 201 and the legislative history per-
taining to that particular rule. (See the compilation pre-
pared at the request of the Federal Judicial Center, Federal
Rules of Evidence for United States Courts and Magistrates,
Approved January 2, 1975, Effective July 2, 1975, with Notes
by the Federal Judicial Center, Pertinent Advisory Committee
Notes and Relevant Legislative History, West Publishing Co.
(1975).)
I am not persuaded that the marketing survey results
meet the standards set forth in section (b) of Rule 201
"either (1) generally known within the territorial jurisdic-
tion of the trial court or (2) capable of accurate and ready
determination by resort to sources whose accuracy cannot
reasonably be questioned." As to the first criterion, it
seems to me that the marketing information would not be a
matter "generally known" in the greater San Diego area,
but instead, that it would be a matter of special knowledge
to advertisers in the grocery business and to the publishers
of the two daily newspapers which prepared the survey. As
to the second criterion, it has not been shown that the
accuracy of the information can be readily determined by
resort to sources whose accuracy cannot be reasonably
questioned.
I note that the Board has taken judicial notice of certain
regulations of the city of Chicago, but declined to take
judicial notice of certain other matters requested by the
charging party in Yellow Cab Company, 229 NLRB 1329,
fn. 2, (1977), where the Board stated:
The Charging Party has requested the Board to take
judicial notice of (I) certain new city of Chicago regu-
lations affecting the taxicab industry which were pro-
mulgated after the close of the hearing in this case, (2)
certain facts which are on record with the office of the
Chicago Commissioner of Sales, Weights and Mea-
sures, and (3) a bulletin issued by Respondent Check-
er and a newspaper advertisement which announce a
program of free hospitalization insurance to be fur-
nished by Checker to its lessee drivers. We hereby take
judicial notice of the newly promulgated city of Chica-
go regulations, as these are properly within the prov-
ince of judicial notice. We decline, however, to take
judicial notice of the other requested items, as these
are not matters which can properly be judicially no-
ticed.
After considering the foregoing, I have decided that
counsel for the General Counsel is entitled to have her
motion to strike granted in these circumstances. Accord-
ingly, the motion to strike by the General Counsel is
hereby granted.
Upon the entire record in this proceeding and based
upon my observation of the demeanor of the witnesses, I
make the following:
188
BIG BEAR SUPERMARKETS NO. 3
FINDINGS OF FACT
I. JURISDICTION
The Respondent has been at all times material herein a
corporation engaged in the operation of retail grocery mar-
kets in San Diego County, California. At least until on or
about November 15, 1976, the Respondent owned, operat-
ed, and managed a retail grocery and meat market at 8745
Broadway in La Mesa, California.
In the normal course and conduct of its business opera-
tions, the Respondent has annually derived gross revenue
in excess of S500,000, and the Respondent has annually
purchased and received goods, materials, and supplies val-
ued in excess of $50,000 directly from suppliers located
outside the State of California.
Upon the foregoing facts admitted in the pleadings and
upon the entire record in this proceeding, I find that the
Respondent has been at all times material herein an em-
ployer engaged in commerce within the meaning of Section
2(6) and (7) of the Act.
I. THE LABOR ORGANIZATIONS INVOLVED
It was admitted in the pleadings that both Charging Par-
ty Retail Clerks and Charging Party Meat Cutters have
been at all times material herein labor organizations within
the meaning of Section 2(5) of the Act. Accordingly, I find
those facts to be so.
II. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Issues
The principal issue raised by the pleadings is whether
Richard Holmes, the Intervenor, is the alter ego of Big Bear
Supermarkets #3, the Respondent, in the operation of the
La Mesa store.
If a preponderance of the evidence establishes that fact,
then the issues are whether the Respondent violated Sec-
tion 8(aXl), (3), and (5) of the Act: (1) by refusing since on
or about November 15, 1976, to bargain with Charging
Party Retail Clerks and Charging Party Meat Cutters as
the collective-bargaining representatives of separate units
of Respondent's employees at the La Mesa store; (2) by
refusing to honor and abide by the terms of the collective-
bargaining agreements between the Respondent and those
two Unions with respect to the units of employees at the La
Mesa store; (3) by withdrawing recognition from those two
Unions as the collective-bargaining representatives of the
employees in the separate units at the La Mesa store; (4)
by unilaterally transferring the employees at the La Mesa
store to other stores of the Respondent within the multi-
store bargaining units; and (5) by refusing since December
1976 to furnish to Charging Party Retail Clerks certain
information requested by that Union; to wit the names and
addresses of employees at the La Mesa store who were
working in the bargaining unit represented by the Charging
Party Retail Clerks.
B. The Witnesses
In alphabetical order, the following persons appeared as
witnesses at the hearing in this proceeding:
Samuel F. Daly is a business agent for the Charging Par-
ty Retail Clerks.
Gerald C. Holmes has been secretary-treasurer of the Re-
spondent for the past 20 years. He is one of the members of
the board of directors of the Respondent, and he holds
approximately 5 percent of the shares of stock in the Re-
spondent. No other member of his family owns stock in the
Respondent.
Richard Holmes is the Intervenor in these proceedings
and the person alleged to be operating the La Mesa store as
the alter ego of the Respondent. At the time of the trial, he
was 31 years old. He worked for the Respondent during the
years 1969 through 1976. He was employed as a clerk, an
assistant manager, and as a manager for the last 4 or 5
years of his employment. First, he was the manager of Re-
spondent's store Number 6, and then he became manager
of the Respondent's El Cajon store for 2 years. His father is
Gerald Holmes.
Marc Lemieux is a business agent of the Charging Party
Retail Clerks.
John C. Mabee is president of the Respondent. He owns
approximately 80 percent of the shares of stock in the cor-
poration, and he is one of the members of the board of
directors. Except for the years 1948-49, he has been in the
grocery business since 1944.
Chris Platten has been administrative assistant to the
president of the Charging Party Retail Clerks since Janu-
ary 1977. Previously, Platten had served as a business agent
of that Union since November 1, 1975. Prior to that time,
he worked as an employee of the Respondent from Sep-
tember 1972 to November 1975. During that period of
time, Platten primarily worked at the Respondent's San
Carlos store, but he also worked at the Respondent's El
Cajon, Claremont, and Adams Avenue stores. In addition,
he worked at the Respondent's Jonathan's store in La Jol-
la, California.
Albert Stegman had been a business agent for the Charg-
ing Party Meat Cutters for almost 3 years at the time of the
hearing.
Raymond T Theep is the attorney for the Respondent.
He testified with regard to his preparation of the agreement
between the Respondent and the Intervenor.
Tom Vandeveld has been president of the Charging Party
Retail Clerks since November 1975.
The findings of fact in this section have been based upon
the testimony of each one of the witnesses.
C. Credibility Resolutions
A significant number of the material facts in this pro-
ceeding are not in dispute.
The attorneys for the parties are to be commended for
taking the time and exerting the extra effort to arrive at
numerous stipulations of fact concerning many different
189
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
matters which were not seriously contested. Many of the
findings of fact to be made herein will be based upon such
stipulations by the parties, and also many findings will rest
upon the substantial amount of documentary evidence
which was introduced at the hearing.
Although stipulations and documentary evidence pro-
vide the basis for making numerous findings of fact, I will
also rely extensively upon the testimony given by Mabee
and by Richard Holmes throughout the decision. Whether
they were on direct examination or cross-examination, it
seemed to me that they were responding to the questions
truthfully and without regard to whether their answers sup-
ported or detracted from their legal positions. In particular,
Mabee demonstrated that he was a very knowledgeable
witness concerning many matters, and that he was a res-
ponsive witness who was not evasive in his answers, nor
one who attempted to conceal the facts. Richard Holmes
gave the impression of being a sincere witness who was
honestly relating the facts.
As in most trials, there were some conflicts among the
witnesses in relating past events. In section H herein, I will
rely upon the testimony of Mabee and Gerald Holmes con-
cerning the question of whether there were layoffs and re-
ductions in hours as a result of the transfer of the employ-
ees from the La Mesa store. Their testimony on this point
is consistent, and in view of Mabee's knowledge of his
business, I find his testimony more persuasive than the
general assertion that layoffs and reductions took place.
In section I herein, I will primarily rely upon the detailed
testimony of Richard Holmes on this subject, along with
the testimony of Mabee and a stipulation of the parties.
However, to the extent that their testimony is not inconsis-
tent with the foregoing, I shall also rely upon the testimony
given by Stegman, Vandeveld, Platten, Daly, and Lemieux.
In section J herein, I will also rely upon the testimony of
Richard Holmes. Although I did not have the opportunity
to observe Fougeron testify, his stipulated version is not
substantially different on any material matter, and, as indi-
cated above, I find Richard Holmes to be a credible wit-
ness. In these circumstances, I will base the findings of fact
on the testimony of Richard Holmes.
In section K herein, the versions given by Richard
Holmes and Gerald Holmes are consistent. Of course, Ger-
ald Holmes was not present at the entire conversation, but
to the extent that he was present, his version supports the
version given by Richard Holmes.
With regard to each section, the source or basis for the
findings of fact in that particular section will be stated at
the end of each section.
D. The Collective-Bargaining History
The parties entered into the following stipulations on
this subject matter:
(a) Since at least 1957, and continuing to date, Re-
spondent has been party to successive collective-bar-
gaining agreements, the most recent of which is effec-
tive from July 28, 1975, to July 30, 1978, with Retail
Clerks Local 1222 as the exclusive representative for
purposes of collective bargaining of Respondent's em-
ployees in a unit of all hourly employees working in
the job classifications enumerated in the aforestated
current collective-bargaining agreement at its retail
grocery and meat markets in San Diego County,
which unit constitutes a unit appropriate for the pur-
poses of collective bargaining within the meaning of
Section 9(b) of the Act.
(b) Prior to November 15, 1976, this unit described
in paragraph (a) above included employees of Re-
spondent's store No. 13 located in La Mesa, Califor-
nia.
(c) Since at least 1957, and at all times material
herein, Local 1222 has been the representative for the
purposes of collective bargaining of a majority of the
employees in the unit described in paragraph (a)
above, and, by virtue of Section 9(a) of the Act, has
been, and is now, the exclusive representative of all
employees in said unit for the purposes of collective
bargaining with respect to rates of pay, wages, hours
of employment, and other terms and conditions of em-
ployment.
(d) Since at least 1950, and continuing to date, Re-
spondent has been party to successive collective-bar-
gaining agreements, the most recent of which is effec-
tive from November 8, 1976, to November 4, 1979,
with Amalgamated Meat Cutters Local 229 as the ex-
clusive representative for purposes of collective bar-
gaining of Respondent's employees in a unit of all
hourly employees working in the job classifications
enumerated in the aforestated current collective-bar-
gaining agreement at its retail grocery and meat mar-
kets in San Diego, County, which unit constitutes a
unit appropriate for the purposes of collective bar-
gaining within the meaning of Section 9(b) of the Act.
(e) Prior to November 15, 1976, the unit described
in paragraph (d) above included employees of Re-
spondent's store No. 13 located in La Mesa, Califor-
nia.
(f) Since at least 1950, and at all times material
herein, Local 229 has been the representative for the
purposes of collective bargaining of a majority of the
employees in the unit described in paragraph (d)
above, and, by virtue of Section 9(a) of the Act, has
been, and is now, the exclusive representative of all
employees in said unit for the purposes of collective
bargaining with respect to rates of pay, wages, hours
of employment, and other terms and conditions of em-
ployment.
The parties further stipulated that:
On August 27, 1976, Mr. Max Osslo, Secretary-
Business Manager for Amalgamated Meat Cutters Lo-
cal No. 229, ("Local 229," herein) notified Employer,
in writing, that the Union desired to terminate the
Collective Bargaining Agreement between the Em-
ployer and Local 229 as of its expiration date (Novem-
ber 7, 1976).
That, on or about, March 11, 1977, Employer en-
tered into a successor Collective Bargaining Agree-
ment with Local 229, which provided for, among other
190
BIG BEAR SUPERMARKETS NO. 3
things, retroactivity of all wage and fringe benefit in-
creases to November 8, 1976.
The documents which comprise the collective-bargaining
agreements in effect at all times material herein between
the Charging Party Retail Clerks and the Respondent were
introduced into evidence as General Counsel's Exhibit 7.
The documents which comprise the collective-bargaining
agreements in effect at all times material herein between
the Charging Party Meat Cutters and the Respondent were
introduced into evidence as General Counsel's Exhibit 8.
The subject of transfers of employees by the Respondent
is set forth in article III, section H 2(a), (b), and (c) and
section I of General Counsel's Exhibit 7. The subject also is
covered in article XVI, section D, of General Counsel's
Exhibit 8. While the agreements between each Charging
Party and the Respondent create certain rights for the
transferred employee and place some limitations on the
Respondent, the agreed-upon provisions pertaining to such
transfers do not require that the Respondent give advance
notice to the Unions. For example, article III, section 1, of
General Counsel's Exhibit 7 provides:
I. OPERATIONAL TRANSFER.
1. It is recognized that to meet the necessities of the
business and to advance the Employer's equal em-
ployment opportunity program, transfer of employees,
either within the geographical jurisdiction of a Union
party to this Agreement or from the jurisdiction of one
such Local Union to another such Local Union may
be required. In such cases where such transfer is ef-
fected by the Employer, the transferred employee will
carry to such employee's new assignment all seniority,
as defined above, acquired in the employ of the Com-
pany. This transfer rule shall have application to both
the available and self-restricted seniority lists. Trans-
fers referred to in this Paragraph shall not require an
employee to travel one way more than twenty-five (25)
miles between the employee's residence and the new
location. Reasonable tolerance of these limits shall be
allowed for temporary transfers such as vacation relief
and store openings.
2. These transfer provisions shall not be applied in
an arbitrary, capricious, or discriminatory manner or
for disciplinary purposes, and shall not be utilized as a
device for creating hardship to the employee in order
to force or provoke resignation.
Article XVI, section D, in General Counsel's Exhibit 8
provides:
D. An employee covered by this Agreement shall
have the right to refuse a transfer to another location
if the distance to travel one (I) way is more than thirty
(30) miles between his place of residence and the new
location. A refusal of a transfer by an employee cov-
ered by this Agreement under any of these circum-
stances shall not constitute a reason for discrimina-
tion, layoff or discharge, except in the case of layoffs
due to lack of work.
The findings of fact set forth in this section have been
based upon stipulations by the parties and documentary
evidence.
E. The Decision To Enter Into a Franchise Agreement for
Operation of the La Mesa Store
At the time of the hearing, the Respondent operated 21
or 22 Big Bear grocery supermarkets; 2 Jonathan's grocery
stores in La Jolla and Rancho Santa Fe, California; 5
Cook's Markets in the Imperial Valley; I Marketplace; 9
Daisy Restaurants, and 15 Par Liquor Stores. Additionally,
John Mabee's business interests included the operation of
about 14 shopping centers with a couple of hundred ten-
ants, and a construction business.
There were between 1,200 and 1,300 persons employed
by the Respondent at the time of the hearing.
Approximately 80 percent of the shares of stock in the
corporation were owned by Mabee. Gerald Holmes held
about 5 percent of the shares of stock. About 15 percent of
the shares were held by supervisors of the Respondent and
one to three outside stockholders. Mabee, Ms. Mabee, and
Gerald Holmes were identified as being members of the
board of directors.
Several factors entered into the decision to franchise the
operation of the La Mesa store. Among these factors were
the financial problems encountered by the Respondent at
the La Mesa store in the 2 fiscal years preceding the deci-
sion to franchise the store; the fact that the Respondent
had closed some other stores and was reluctant to give up
more of its market share; and the fact that Mabee himself
owned the shopping center in which the La Mesa store was
located.
The size of the La Mesa store was significantly smaller
than the average size of other supermarkets operated by
the Respondent. Mabee said the La Mesa store had 14,800
square feet of space, whereas the average size of a new
supermarket would range from 27,000 square feet to 50,000
square feet of space.
The State of California took a considerable amount of
the parking area available to customers at the shopping
center in condemnation proceedings for a freeway. When
Mabee originally purchased the land in 1950, there were 13
acres, but now there are less than 2 acres in the shopping
center. One of the condemnations was in 1962 and another
one was filed in 1974, with construction being completed in
1975-76.
The impact of the loss of parking space and the continu-
ing problem of not having good access into the center were
reasons which Mabee cited as being factors in the loss of
25 percent of the sales volume at the La Mesa store. The
most recent condemnation resulted in the closing of two
other businesses at the center: a Fotomat and Der Wiener-
schnitzel.
Profit-and-loss statements for the La Mesa store re-
vealed the following: August 1, 1973, to July 31,
1974-$1,580 profit; August i, 1974, to July 31,
1975-$52,507 loss; August 1, 1975, to July 31,
1976-$55,320 loss.
Since there were 12 to 13 other tenants in the shopping
center, Mabee believed that the loss of the Big Bear name
would adversely affect the other tenants. In his opinion,
the other tenants of the shopping center were relying upon
the Big Bear store to draw customers into the center. Since
Mabee owned the shopping center, this was another reason
191
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
for deciding to franchise the operation and retain the Big
Bear name in his center.
Mabee further explained that he was reluctant to relin-
quish any more of the Respondent's market share since the
Respondent had no other grocery store in that particular
area. He stated that the Respondent had approximately I I
percent to 13 percent of the share of the grocery market in
San Diego County.
Two other unprofitable stores had been sold previously
by the Respondent in 1975. Unlike the La Mesa store, both
stores were on leased premises, rather than in shopping
centers owned by Mabee. One store was located at Menlo
and El Cajon Boulevard, and the other was located in Del
Mar. The Del Mar store was only about 11,000 square feet
in size, and the Respondent built a new store about a mile
and a half away. The old store was remodeled as a
Jonathan's store but was not successful. It was sold about 4
to 6 months later.
In addition, two Marketplace stores of the Respondent
were closed and then two other Marketplaces were sold.
Mabee described them as small units of only 5,000 to 8,000
square feet. The Marketplace stores were nonunion.
The findings of fact in this section are based upon the
testimony given by Mabee and upon documentary evi-
dence.
F. The Events and Discussion Pertaimng to the Franchise
Agreement
Because of their knowledge of the business, Mabee felt
that the managers at the Respondent's stores would be the
most qualified persons to handle the franchise of the La
Mesa store. Mabee said that the annual salary of a store
manager of the Respondent varied from $18,500 to
$23,000. He expressed the opinion at the trial that an "out-
sider" would need an exceptional amount of training for
that task, and that such a person would be an "unknown
quantity."
In giving consideration to the store managers employed
by the Respondent, Mabee narrowed the choice down to
two possibilities for the franchise operation. One was Rich-
ard Holmes, who was the son of Gerald Holmes and a
manager of a high volume store of the Respondent, and the
other was the store manager at the La Mesa store. Al-
though the La Mesa store manager had about 15 years of
experience with another independent grocer, he had only
been employed by the Respondent for about I year at that
point in time. Knowing that Richard Holmes was then the
manager of a high volume store and knowing that he had
multiple sclerosis, Mabee decided to make the offer to
Richard Holmes.
Mabee said that the whole transaction was discussed in
advance with the board of directors of the Respondent and
with the supervisors who also owned shares of stock in the
corporation. That was done prior to his meetings and dis-
cussions with Richard Holmes.
In October 1976 Mabee met with Richard Holmes and
Gerald Holmes to discuss the idea of Respondent's fran-
chising the La Mesa store. There were subsequently three
or four additional meetings just between Mabee and Rich-
ard Holmes.
As noted earlier, Richard Holmes had been the manager
of Respondent's El Cajon store for about 2 years. Richard
Holmes described the El Cajon store as being approximate-
ly 20,000 square feet in size and having an annual volume
of business of about $5 million to $6 million.
In August 1975, Richard Holmes had been advised that
he had multiple sclerosis. The symptoms became more sev-
ere and began affecting his job performance as manager of
the Respondent's El Cajon store, and ultimately resulted in
his having to take a leave of absence from work. The Veter-
ans Administration has rated his disability as being 30 per-
cent.
During discussions between Mabee and Richard
Holmes, it was agreed that the profits would be divided on
a 60-40 basis, with Richard Holmes receiving the 60 per-
cent. Mabee was certain that he did not discuss with Rich-
ard Holmes that he would not be bound by the Unions'
contracts; however, after Richard Holmes made the deci-
sion to operate on a nonunion basis, he so informed Ma-
bee. At that point, Mabee started making plans for the
transfer of the employees.
After reviewing the profit and loss statement for the La
Mesa store, and prior to his signing the franchise agree-
ment with the Respondent, Richard Holmes said that he
may have mentioned to Mabee that Richard Holmes had
made the decision to operate the store on a nonunion basis.
Richard Holmes stated at the trial that he knew that the La
Mesa store had been a losing operation at the time he ac-
cepted the franchise.
About the first of November 1976, Theep was asked by
Mabee to prepare a draft of an agreement between the
Respondent and the Intervenor. Theep recalled that at that
point in time Mabee gave him a list of items which had
been agreed upon between Mabee and Richard Holmes.
He stated that Mabee gave him no instructions regarding
labor relations matters.
Utilizing a 1966 copy of a Southland Corporation fran-
chise agreement for a 7-Eleven store, Theep prepared a
draft of an agreement. He said that he tailored the lan-
guage from that copy, and he made what he viewed to be
"major changes" concerning the provisions relating to: (I)
rent; (2) advertising; (3) termination of the agreement; and
(4) inventory. Theep said that he prepared three drafts of
the agreement before it was signed on November 8, 1976.
The parties stipulated that a physical inventory of the La
Mesa store was taken on November 14, 1976. On Novem-
ber 15, 1976, the escrow closed and Richard Holmes began
operating the La Mesa store under business licenses in his
name. Other than its normal hours of closure, the La Mesa
store was not closed as a result of this transaction.
The beginning inventory at the La Mesa store as of No-
vember 15, 1976, was valued at $116,400.81.
The reasons for the agreement on the $2,000 initial cash
payment by Richard Holmes to the Respondent were sum-
marized by Mabee as follows: (I) Mabee had known Rich-
ard Holmes and his background for 20 years; (2) Mabee
knew that Richard Holmes was a financially responsible
person and a stable individual with assets; and (3) Mabee
believed that "it would work itself out in a fairly rapid
fashion for the dollar amounts involved."
Richard Holmes said that he was his own sole support,
192
BIG BEAR SUPERMARKETS NO. 3
and he estimated his personal net worth as being in excess
of $100,000. He pointed out at the trial that if the La Mesa
store did not make a profit, he would have to bear the loss.
On the other hand, if the La Mesa store showed a profit,
then Richard Holmes would receive his share of the profits.
He pointed out that he would pay income tax on his part of
the profits.
He contrasted his present situation with that of a store
manager in one of the Respondent's stores. If the store
made a profit, the store manager would probably receive a
bonus. However, there was no bonus for the store manager
if the store did not make a profit. If the store's operation
resulted in a loss, however, the store manager did not per-
sonally bear any portion of the store's operating loss.
The original amount of the promissory note between the
Respondent and Richard Holmes was $116,400.81. As not-
ed above, his initial cash payment was $2,000. In addition
to the payments for interest, Richard Holmes has made
payments on the principal since that time in excess of
$18,000. He stated at the trial that he had decided to apply
his total net profits to payments on the principal amount,
so that he could make the payments sooner than was re-
quired. His record of payments was introduced as
Intervenor's Exhibit I, which provides in pertinent part:
date of amount
pea nt due
11-20-76
12-15-76
1-13-77
1-15-77
2-15-77
3-15-77
4-15-77
4-20-77
5-15-77
6-15-77
7-15-77
7-31-77
$2,000.00
500.00
500.00
7,031.00
500.00
500.00
500.00
6,876.00
500.00
500.00
500.00
2,128.50
credited on
int. prin.
$476.67
476.57
447.18
446.96
446.74
417.87
417.52
417.18
$2,000.00
23.33
23.43
7,031.00
52.82
53.04
53.26
6,876.00
82.13
82.48
82.82
2,128.50
bal. of prin.
unpaid
$116,400.81
114,400.81
114,377.48
114,354.05
107,323.05
107,270.23
107,217.14
107,163.93
100,287.93
100,205.80
100,123.32
100,040.50
97,912.00
Thus, the balance due by Richard Holmes as of July 31,
1977, was $97,912.00.
The findings of fact in this section are based upon the
testimony of Mabee, Theep, and Richard Holmes, as well
as upon documentary evidence and a stipulation of the
parties.
G. The Franchise Agreement
The agreement between the Respondent and Richard
Holmes is set forth in General Counsel's Exhibit 3. The
agreement itself is 12 pages long and is typed double space
on legal size paper. There is a 13th page for signatures. In
addition, there are several attachments to the agreement.
Rather than set forth herein the entire agreement, I have
selected certain items from the agreement to be reproduced
here with just the headings of the remaining items. Of
course, the entire agreement has been read and considered.
By setting forth certain portions of the agreement, I do not
mean that I have ignored the remainder. The entire docu-
ment is in evidence and anyone desiring to consult the
other parts may simply examine General Counsel's Exhibit
3.
The preamble to the agreement provides:
THIS AGREEMENT is made and entered into this
-- day of November, 1976 by and between RICH-
ARD A. HOLMES. a married man hereinafter referred to as
OWNER and DIG SEAR SUPER MARKET NO. 3, a California
corporation, 5075 Federal Boulevard, San Diego, Cali-
fornia 92102, hereinafter referred to as siG sEAR.
BIG BEAR owns equipment and leases real property
and improvements commonly known as Store No. 13
at 8745 Broadway, La Mesa, California 92041, suit-
able for use as a general retail grocery and related
sundries business.
OWNER desires to lease said real property and the
improvements thereon, described in Exhibit A ini-
tialed by the parties and attached hereto, and the
equipment installed therein, described in Exhibit B,
initialed by the parties and attached hereto; and to
secure a franchise agreement to use the tradename,
trademark, labels and copyrights applicable to the slG
BEAR name and the services of lIG BEAR in connection
with the operation of said business.
Thereafter, the first six subject headings are: (I) Descrip-
tion and Term; (2) Master Lease; (3) Use; (4) Assignment;
and (5) Maintenance and Repair.
Portions of the agreement continue as follows:
6. RENT FOR BUILDING AND FIXTURES.
a. It is hereby agreed that slG sEAR shall be entitled
to receive the sum of one and one-half percent (I
1/2%) of OWNERS monthly Net Sales or the sum of
Two Thousand Two Hundred Dollars ($2,200.00)
whichever is greater, as monthly rent for the premises
leased hereunder.
b. It is hereby agreed that slG SEAR shall be entitled
to receive the sum of 0.15% of OWNERS Monthly Net
Sales or the sum of Two Hundred Twenty Dollars
($220.00) whichever is greater as monthly rent for the
equipment leased hereunder.
c. It is further agreed that slG sEAR shall be entitled
to debit OWNER'S Open Account for said rentals.
7. FRANCHISE AND LICENSE. so G EAR hereby
grants to OWNER the right and license to use, at the
above described location, the lIG BEAR system and the
tradename, trademark, labels and copyright applica-
ble to said system.
8. TERM. The term of this Agreement shall coin-
cide with the term of the real property and equipment
leases hereinabove provided and the termination of
one shall simultaneously terminate the other.
9. PERMITS AND LICENSES. OWNER covenants
and agrees to comply with valid ordinances, regula-
tions and laws of any municipal and governmental au-
thority applicable to OWNERS use of the demised prem-
ises at OWNER'S expense. OWNER shall obtain when
required a Business License, Sales Tax Permit, State
Employment Number, Health Permit, State and Fed-
eral Beer and Wine Licenses, if available, and any and
all other licenses or permits required by governmental
authorities. All matters concerning licenses relating to
193
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
alcoholic beverages shall be processed through the De-
partment of Alcoholic Beverage Control. BIC BEAR
agrees to advance to OWNER sufficient sums to obtain
said permits, which sums shall be debited to OWNER'S
Open Account.
10. INVENTORY. OWNER'S discretion is not limited
in purchasing products for inventory. BIG BEAR will
supply OWNER with "house label" products and whole-
saling services at customary wholesale rates. OWNER
does agree to stock and to sell advertising goods at the
advertised prices and to honor discount coupons con-
tained in BIG BEAR advertisements.
However, OWNER does acknowledge and agree that
BIG BEAR has developed a unique and valuable system
for the operation of supermarkets in San Diego Coun-
ty, California and OWNER specifically obligates himself
to carry such product lines as are customarily carried
in the BIG BEAR system, and in such quantities as are
reasonably necessary, in the sole judgment of BIG BEAR
to meet customer demands for such products. Further-
more, OWNER agrees that OWNER will obtain permission
from BIG BEAR before OWNER changes any product line
customarily carried in the BIG BEAR system.
II. INSURANCE. BIG BEAR agrees initially to ar-
range for the following insurance:
a. Such insurance as is required by the Master
Lease. If liability insurance is not required under the
Master Lease, BIG BEAR shall procure liability insur-
ance in limits of not less than $S100,000.00 for death or
injury to one person, $300,000.00 for death or injury to
more than one person and $25,000.00 for property
damage.
b. Fire and comprehensive coverage insurance (in-
cluding fire, hail, windstorm, hurricane, tornado, van-
dalism, malicious destruction and theft) on the equip-
ment leased hereunder.
c. Fire and comprehensive coverage insurance (as
above) on OWNER'S inventory of stock in trade.
OWNER'S Open Account will be debited for the cost
of any such insurance obtained.
If, in the opinion of BIG BEAR, the improvements on
the demised premises are rendered substantially unfit
for occupancy by any casualty, BIG BEAR shall have the
option to terminate this agreement or to rebuild the
demised premises, which option shall be exercised by
notice in writing within 10 days of the happening of
the casualty. Should BIG BEAR notify OWNER that it has
elected to rebuild the improvements on the demised
premises, this agreement shall entirely abate from the
date such notice is given as provided in paragraph 24,
and shall remain in abeyance until the day OWNER shall
open for business to the public. If, in the opinion of
BIG BEAR. the improvements on the demised premises
are rendered only partially unfit by any casualty, BIG
BEAR shall promptly and diligently restore said im-
provements and this agreement shall not abate.
12. TAXES. OWNER shall pay, or cause to be paid
pursuant to the Master Lease, all real property taxes
due on the demised premises and improvements.
OWNER shall pay all personal property taxes on their
inventory and OWNER shall pay all applicable personal
property taxes on the equipment leased herein.
OWNER shall also pay all sales taxes applicable to
sales made from the demised premises.
BIG BEAR shall make the actual payments required of
OWNER under this paragraph and shall debit OWNER'S
Open Account for the cost thereof.
OWNER shall also make his own provisions for both
State and Federal Income Taxes. BiG BEAR will provide
technical assistance to OWNER in this matter.
13. ADVERTISING. BIG BEAR shall, at its expense,
contract for such advertising in connection with the
BIG BEAR system as is deemed sufficient in its sole judg-
ment. Nothing herein shall prevent OWNER from pur-
chasing such suitable advertising as he may desire, at
his expense, provided, however, such advertising as
may be purchased by OWNER must be approved in writ-
ing by BIG BEAR and shall not, in the sole judgment of
BIG BEAR be inconsistent with or conflict with the pur-
poses of advertising planned by BIG BEAR. Free mer-
chandise, products and sums of money received from
suppliers from advertising or promotional purchased
for which OWNER is not charged, and advertising allow-
ances received from suppliers shall be included in the
general advertising budget of BIG BEAR.
OWNER shall pay his store's pro-rata share of such
advertising costs incurred by debiting OWNER'S Open
Account based on the ratio that OWNER's Gross Gain
bears to the Gross Gain of all stores in the BIG BEAR
system.
14. OWNER'S OPERATION. It is the intention of
the parties hereto that OWNER shall be an independent
contractor and exercise control over the manner and
means of the operation of his business. OWNER and his
agents and employees shall under no circumstances be
considered or construed to be agents or representa-
tives of BIG BEAR and OWNER shall have no right or au-
thority and shall not attempt to negotiate or enter into
contracts or commitments of any nature in the name
of or on behalf of BIG BEAR, to bind or obligate BIG BEAR
in any respect whatsoever, to make any agreements or
incur any debts or liabilities of any kind on behalf of
BIG BEAR, to negotiate a change in the benefits of the
insurance program or insurance coverage provided
herein, to contract for or accept merchandise or ser-
vices on behalf of BIG BEAR, or to alter any arrange-
ments of BIG BEAR relating to the master lease, equip-
ment leases, and maintenance and supplier
agreements.
OWNER shall have the sole right to employ and dis-
charge such employees at his store as in his judgment
may be necessary and such employees shall be em-
ployees and agent of OWNER and not of BIG BEAR. OWNER
agrees to exercise full and complete control over and
have full responsibility for any and all labor relations,
including the hiring, firing, disciplining, compensation
and work schedules of his employees.
OWNER shall pay the cost of any applicable state un-
employment insurance, Social Security, payroll insur-
ance, workmen's compensation insurance covering his
employees, and any other similar expenses relative to
OWNER'S relationship as an employer to his employees.
194
BIG BEAR SUPERMARKETS NO. 3
Said costs will be actually paid by BIc BEAR and debit-
ed to OWNER'S Open Account.
OWNER agrees to give his full time to the operation of
the above described store under the BIG BEAR system,
to record in the Cash Register at time of purchase all
retail sales of merchandise including merchandise tak-
en for personal use.
15. TERMINATION. OWNER may lose his franchise
if he does not perform all terms and conditions of the
Franchise Agreement and/or upon the occurrence of
any of the following events:
a. Agreement of the parties.
b. OWNER fails to secure and keep currently effective
such licenses and permits as are required herein.
c. The filing of a voluntary or involuntary petition
in backruptcy against OWNER is eminent, in the opinion
of BIG BEAR; OWNER makes an assignment for the bene-
fit of creditors; or, a receiver or trustee is appointed
for all or substantially all of the assets of OWNER.
d. The leased premises, in the opinion of BIG BEAR.
are destroyed or rendered unfit for the operation of a
convenience food store by fire, flood, windstorm or
other casualty, or eminent domain.
e. Failure by OWNER to request and receive any ap-
provals required under this agreement to be obtained
by OWNER.
Thereafter follows the portion of the agreement under
the heading "Accounting and Inventory." The next three
subject headings are: (16) Definitions; (17) Opening Inven-
tory; and (18) Owner's Investment.
Portions of the agreement continue as follows:
19. OWNER'S OPEN ACCOUNT. BIG BEAR shall
establish separate books of account for all of the
transactions contemplated by this agreement. Said
books of account shall be collectively referred to as
OWNERS Open Account. OWNER agrees to deposit all
sales receipts daily with BIG BEAR. and said receipts
shall be credited to OWNER'S Open Account. BIG BEAR
will pay for all expenditures required to be made in
the operation of the business, and said expenditures
shall be debited against this account. The unpaid bal-
ance of OWNER'S investment shall be debited against
this account which shall be entitled OWNER'S OPEN AC-
COUNT. Such OWNER'S OPEN ACCOUNT shall also be debit-
ed with all disbursements made by BiG BEAR on behalf
of OWNER in accordance with this agreement and shall
be credited with all gross receipts deposited with BIG
BEAR by OWNER in accordance with this agreement.
20. ACCOUNTING SERVICE.
21. OWNER'S DRAW ON ANTICIPATED
PROFITS. On a weekly basis, BIG BEAR shall remit to
OWNER and shall debit OWNER'S Open Account with the
sum of $425.00 for remittance to be made on the first
Wednesday of the first complete week of operation
and to end on the last Wednesday of operation, which
amount may be changed on written request from OWN-
ER and approval of BiG BEAR. The amount so charged
against OWNER'S Open Account may not be reduced at
the close of the fiscal year, or any quarterly account-
ing period, by reason of the failure of OWNER to show a
profit in the operation of the business. However,
OWNER'S Open Account shall be debited with said re-
mittances until the total thereof has been amortized.
22. BIG BEAR CHARGE. For and in consider-
ation of the above described Lease, Franchise, license
agreement, utilities and the services to be performed
by BIG BEAR. OWNER agrees to pay BIG BEAR at the end of
each quarterly accounting period, and BIG BEAR shall
debit OWNER'S Open Account with a "BIG BEAR CHARGE"
which shall be an amount of money equal to 40% of
OWNER'S Net Operating Income.
It is mutually agreed that in consideration of BIG
BEAR'S having provided OWNER with an opening inven-
tory, that OWNER agrees to pay BIG BEAR at the end of
each quarterly accounting period, and BIG BEAR shall
debit OWNER'S Open Account with a Principal Payment
which shall be an amount of money equal to 509'0 of
OWNER'S Net Profit until said initial inventory has been
paid in full.
It is hereby mutually agreed that contemporaneous-
ly with the close of BIG BEAR'S fiscal year, there shall be
an annual accounting whereby the profit and loss
statement for OWNER'S store will be annualized with all
of the other stores in the BIG BEAR system, and varia-
tions in the quarterly statements will be debited or
credited to OWNER'S Open Account as appropriate.
When the net operating income for the store has been
determined on an annual basis, then BIG BEAR shall pay
to OWNER 60oc of the net operating income, less
amounts taken, as provided above, for reduction of
the Promissory Note for initial inventory, and less
amounts reasonably necessary to continue operation
of the store, and BIG BEAR shall debit OWNER'S Open
Account the amount of the BIG BEAR CHARGE as provid-
ed above.
Exhibit C, attached hereto and by this reference in-
corporated herein, provides the method of allocation
and determination of all expenses incurred by OWNER.
The subject headings for the next four portions are: (23)
Final Accounting; (24) Assignment; (25) Notices; (26) Ef-
fective Date; (27) Execution - Complete Agreement; and
(28) Trading Stamps.
The agreement continues:
29 SUPERVISION. BIG BEAR shall provide such su-
pervision and technical assistance to OWNER in the op-
eration of the business as may be reasonably necessary
to establish the business, and in any event no less su-
pervision than is provided to other markets in the BIG
BEAR system.
There are various attachments to the agreement. One
such attachment is designated as Exhibit A and contains a
copy of the lease between Mabee and the Respondent. It is
11 pages long and is typed single space on legal size paper.
Another attachment is designated as Exhibit B and con-
tains a list of the equipment. Exhibit C is on a profit and
loss statement form with specific provisions typed in for
each applicable item. For example, "Sales-Deposited Di-
195
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
rectly in Open Account." Also attached is an escrow settle-
ment statement; a proof of publication of a Fictitious Busi-
ness Name Statement, and an installment note.
Other types of franchise agreements pertaining to seven
other companies were introduced into evidence by the Re-
spondent as Respondent's Exhibit 4. The other companies
are: The Southland Corporation for a 7-Eleven Store; Con-
venient Food Mart, Inc.; Alpen Pantry, Inc.; Judy's
Foods, Inc.; Chicken Delight Division of El Centro Foods,
Inc; Pop Shoppes of America, Inc.; and Marie Callender
Pie Shops, Inc.
The findings of fact set forth in this section are based
upon documentary evidence.
H. The Hiring of New Employees and the Transfer of
Respondent's Employees to Other Stores
About 250 applicants for employment at the La Mesa
store were interviewed by Richard Holmes. He placed an
advertisement in The Evening Tribune for applicants, and
he conducted the interviews in a vacant building in San
Carlos. The building was not one of Respondent's facil-
ities. Richard Holmes made the decision as to which em-
ployees would be hired. He did not offer jobs to any em-
ployees who were working for the Respondent at the La
Mesa store with the exception of the part-time janitor.
Richard Holmes said that he was the one who made that
decision. At the time of the hearing, there were 16 employ-
ees at the La Mesa store.
The parties also stipulated to the following facts:
The number of employees of Big Bear Super Market
No. 3 at the La Mesa Store prior to November 15,
1976, was 12.
The number of employees of Richard A. Holmes at
the La Mesa store after November 15, 1976, was 13.
With the exception of the part-time janitor, none of
the employees who were hired by Richard A. Holmes
after November 15, 1976, were the same employees as
were employed by Big Bear Super Market No. 3 prior
to November 15, 1976, at the La Mesa store.
In addition to the foregoing, the parties stipulated that:
Those persons employed by the Respondent prior to
November 15, 1976, at Big Bear Store No. 13 located
at 8745 Broadway, La Mesa, California, were transfer-
red to other Big Bear stores without being given the
option of seeking continued employment at the La
Mesa store after November 15, 1977.
The parties further joined in the following stipulations:
(a) The Respondent did not give notice to Amalga-
mated Meat Cutters Local No. 229, Amalgamated
Meat Cutters & Butcher Workmen of North America,
AFL-CIO (herein called Local No. 229) that it was
'intemplating transferring employees represented by
Local No. 229 at Big Bear Store #13 in La Mesa to
other Big Bear Stores, and the Respondent did not
notify Local No. 229 that these same employees had
been transferred.
(b) The Respondent did not notify Retail Clerks
Union, Local 1222, Retail Clerks International Associ-
ation, AFL-CIO (herein called Local 1222) that it was
contemplating transferring employees represented by
Local 1222 at Big Bear Store #13 in La Mesa to other
Big Bear Stores and the Respondent did not notify
Local 1222 that these same employees had been trans-
ferred.
According to Tom Vandeveld, president of the Charging
Party Retail Clerks, he never received any notice from the
Respondent, Gerald Holmes, or Richard Holmes that the
La Mesa store had been sold or transferred, or that the
employees previously at the La Mesa store had been trans-
ferred to other stores. Instead, he said that he learned of
these facts from the Union's business agents.
The parties also stipulated that the Respondent did not
give notice directly to the Charging Party Meat Cutters,
prior to the events which took place in November 1976, of
the Respondent's intent to alter the status of the La Mesa
store in any way.
Although Vandeveld stated that there were layoffs about
November 15, 1976, in the other stores of the Respondent
to which the La Mesa employees were transferred, Gerald
Holmes recalled having conversations with Mabee prior to
November 15, 1976, in which Mabee told him that there
were to be no layoffs of employees or reductions in hours.
Gerald Holmes acknowledged at the trial that he did not
have personal knowledge whether or not this had occurred.
Mabee, however, said that he was not aware that employ-
ees had been laid off or had their hours reduced.
The findings of fact in this section have been based upon
the testimony of Richard Holmes, Vandeveld, Gerald
Holmes, and Mabee, as well as stipulations by the parties.
As to whether or not there were layoffs and reductions in
hours around November 15, 1976, I find the evidence is
insufficient to support such a finding. There is the general
assertion that there were, but no specifics or details were
supplied. Gerald Holmes recalled Mabee's instructions
against having layoffs and reductions, and Mabee himself
indicated that he was not aware of any. In other matters at
the trial, Mabee was very knowledgeable about so many
facets of the Respondent's business and related matters
that it seems very unlikely that such layoffs and reductions,
which were contrary to his instructions, would have es-
caped his attention.
I. The Operation of the La Mesa Store Under Richard
Holmes
With regard to labor relations and personnel matters at
the La Mesa store, Richard Holmes makes the decisions
concerning hiring employees, firing employees, setting
wage scales to be paid the employees, scheduling the hours
of work of the employees, and determining the working
conditions for the employees.
The employees are paid lower wage rates than those em-
ployees who were working at the La Mesa store prior to
November 15, 1976. While the Respondent's main office
does the scheduling of the produce employees and the
meat department employees in the Respondent's stores,
Richard Holmes does that scheduling at the La Mesa store.
In addition, he sets his own hours of work. Both his wife
196
BIG BEAR SUPERMARKETS NO. 3
and his mother work at the La Mesa store without pay.
The Respondent has a rule against employing both a
husband and a wife. According to Mabee's recollection,
the rule had been broken only on one occassion. That was
when a man and a woman, who were already employed in
one of the Respondent's stores, got married. The Respon-
dent requested that one of them leave its employ, but they
declined to do so and took the matter to the Retail Clerks.
After negotiations with the Retail Clerks, the Respondent
backed down from its position that one of them must quit.
and instead placed the husband and wife in different
stores.
During the first 3 weeks of operation under Richard
Holmes, supervisors from the Respondent came in and
helped in the produce and meat departments with technical
knowledge. Since that time, supervisors from the Respon-
dent come into the store less than once a week. Richard
Holmes estimated that within a typical 2-week period all
four such supervisors would be in his store. They are the
grocery supervisor, the meat supervisor, the produce super-
visor, and the deli supervisor. He said that they spoke with
the produce man and the head meatcutter. However, Rich-
ard Holmes testified that if a supervisor observed that a
clerk in the store was doing something wrong, he would not
tell that clerk that he was doing it incorrectly.
Mabee stated that he had been to the La Mesa store only
twice since Richard Holmes took over operation of that
store.
Richard Holmes said that he had the discretion as to
whether to open the La Mesa store on holidays. He pointed
out that a manager for the Respondent would not have
such discretion. He acknowledged at the trial that he had
not done so, but if he decided not to open on a holiday, it
would be specified in the Respondent's advertisement.
Advertisements in local newspapers for the La Mesa
store have not been placed by Richard Holmes, but he said
that he had canied promotions in the store as "manager's
specials' for a period of 30 days or so.
Restrictions are not placed on Richard Holmes with re-
gard to his selection of suppliers. Additionally, he said that
he could order anything he wanted to order, and that he
had made specialty orders. He explained that as a manager
in one of the Respondent's stores he could not have or-
dered from certain suppliers without the approval of the
headquarters office. For reasons of economy and conven-
ience to himself, Richard :holiaes orders his produce from
the Respondent's warehouse, although most of the time he
prices the produce at his store higher than the Respon-
dent's pricing guide. He also orders the meat for the La
Mesa store through the Respondent's central office.
Richard Holmes holds a license to sell beer and wine,
and he purchases his beer and wine directly from Gallo
and Italian Swiss Colony. The bills from those companies
are sent to the La Mesa store and then forwarded to the
Respondent's accounting department which Richard
Holmes utilizes.
All of the licenses necessary to carry on the business are
held in Richard Holmes' name. With regard to fire and
liability insurance, Richard Holmes pays premiums in his
name to the Respondent and is covered under the Respon-
dent's insurance package.
Meetings for the store managers of the Respondent are
held approximately once a month. Since November 1976,
Richard Holmes has attended only one or two such meet-
ings. He said, "If it is not relevant to me, I don't go."
The determination as to whether charitable contribu-
tions will be made by the La Mesa store rests with Richard
Holmes. When he was a store manager for the Respondent,
he said, such decisions were made at the Respondent's cen-
tral office.
Customers who use food stamps for purchases at the La
Mesa store receive their change in scrip which is provided
by the Respondent's main office.
There are approximately 20,000 various products carried
by the La Mesa store. Between November 1976 and the
time of the hearing in September 1977, Richard Holmes
estimated that he had made about 200 or 300 additions and
deletions of products at the store. He deleted the Candy
Kids line of products, which he acknowledged had also
been eliminated from some of the Respondent's stores by
Gerald Holmes. He also deleted the La Rosa and Cream-
ettes line of spaghetti and lasagna which had been carried
at the store. He pointed out that a store manager for the
Respondent would have had to obtain approval before dis-
continuing that line of products, which he said was still
carried in the Respondent's stores. He also deleted a line of
shoes at the store, and he changed ice companies. He
added a Sparkletts water vending machine on his own voli-
tion. As a store manager for the Respondent, he said that
he could not have done so without prior approval. Richard
Holmes pointed out that he receives the proceeds from the
Sparkletts water sales.
Richard Holmes added an extensive health foods line at
the La Mesa store, and he added a fancy food section-
primarily Japanese foods-to the store. He acknowledged
at the hearing that he knew that three other stores of the
Respondent had fancy food sections, and he knew of two
such stores with health foods. However, he pointed out that
when he was the manager of Respondent's Store Number
12 he did not use his discretion to add a health food line,
but instead he asked permission of his grocery supervisor
who, after some talking, agreed to adding a small section.
In addition to the foregoing, Richard Holmes added cer-
tain Knudsen products to the store which had not previ-
ously been carried. He obtained shelving and revamped
just about every shelf in the entire store. He also moved a
flower display and he moved the card racks to another
location within the store.
He acknowledged that he had the same number of cash
registers as before, and that the store was essentially the
same inside as previously, with the added shelves and rear-
rangements described above.
Richard Holmes receives a copy of the Respondent's
standard pricing manual for grocery items only. When he
was a manager for the Respondent he followed the pricing
manual, but now he does not always follow it.
With regard to this subject, the parties entered into the
following stipulation:
The La Mesa store is the only franchise outlet of Big
Bear. Richard Holmes operates the La Mesa store
Monday through Saturday 9 A.M.-9 P.M. and Sun-
197
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
day 10 A.M.-7 P.M. which are the same hours of op-
eration that the store maintained prior to November
15, 1976.
These hours of operation are the hours of operation
followed by all Big Bear meat retail grocery chains in
San Diego County.
Pursuant to the Franchise Agreement, Richard
Holmes honors all advertised specials of Big Bear.
Richard Holmes exercises his option to purchase
Big Bear "house brand" products.
After the agreement was signed and before Richard
Holmes took over operation of the store, he advertised
for employees in the newspaper, rented an office com-
pletely separate and apart from Big Bear Markets for
the purpose of interviewing employee applicants. He
interviewed approximately 250 applicants and he
hired 12 employees. He sets wages, hours and condi-
tions of employment for each of his employees. He
hires and fires his employees. His wages and fringe
benefits are less than those provided in the respective
collective bargaining agreements.
Richard A. Holmes has elected to use the Big Bear
Accounting System as provided in the franchise agree-
ment, including deposit of receipts and payment of
obligations by Big Bear Super Market No. 3, except
that Richard Holmes maintains his own business pay-
roll account from which he personally pays all of his
employees.
Richard Holmes submits weekly time cards desig-
nating wages and hours to the Big Bear accounting
department which computerizes the time cards and
provides a print-out with all deductions taken out. Big
Bear then issues a check for the amount of the wages
reflected in the computer print-out, which amount is
debited to Richard Holmes open account.
Business Agent Stegman of the Charging Party Meat
Cutters was familiar with the meat departments in the ma-
jor chain supermarkets in the San Diego area. Most of the
independent supermarkets in San Diego County purchased
their meats locally, as did the Respondent. However, cer-
tain markets, such as Safeway, Alpha Beta, and Food
Basket, purchased their meats from their own facilities.
The tools used by employees in the various retail meat
markets in the San Diego area are basically the same. Each
of the meat markets has a display for meats, a holding
cooler, and cutting tables. The products handled are gener-
ally the same, and the cuts of meat are similar.
President Vandeveld of the Charging Party Retail Clerks
said that he had visited the La Mesa store recently prior to
the hearing. He observed that the signs, shelf tags, and
grocery bags were the same as used in the Respondent's
stores. He also noticed that green stamps were given to
customers as was done in the Respondent's stores.
During cross-examination by the attorney for the Re-
spondent, Vandeveld gave the following testimony con-
cerning stores within the jurisdiction of the Charging Party
Retail Clerks:
Q. Okay. Now, you say you have seven chains un-
der your jurisdiction. Can you tell me what those
chains are, please?
A. Vons, Safeway, Alpha Beta, Food Basket, Fed-
Mart, Gemco, Big Bear.
Q. Okay. That is seven. Okay. Do you get into vari-
ous stores of various chains on a regular basis?
A. Yes.
Q. So when you go into Vons-would you say you
go into a Vons store once a week?
A. Not that often probably.
Q. Once every two weeks?
A. More like once a month.
Q. Okay. Safeway?
A. Safeway more frequently.
Q. Alpha Beta?
A. Once or twice a month.
Q. Food Basket?
A. Once or twice a month.
Q. And Big Bear?
A. Big Bear probably once a week. I have a Big
Bear right where I live and I shop there.
Q. Okay. When you go into various Vons stores, do
they sell meat?
A. Yes.
Q. They sell produce?
A. Yes.
Q. Do they sell general grocery items?
A. Yes.
Q. Do they sell non-foods?
A. Yes.
Q. Do they have their check stands in the front of
the store?
A. Right.
Q. Do they have their doors in the front of the
store?
A. Yes.
Q. Or maybe near the front, perhaps would be a
better question. Do they have aisles?
A. Yes.
Q. With gondolas?
A. Yes.
Q. And shelving and that sort of thing? Do they
have deli cases?
A. Yes.
Q. Do they generally cluster their deli cases in the
vicinity of their meat counter?
A. Yes.
Q. When you go into Safeway, do they have all the
things that Vons have?
A. Well, you know, the food stuffs and so forth.
Maybe they have different brands, but general mer-
chandise is the same.
Q. Okay. How about Alpha Beta?
A. Same.
Q. And Food Basket?
A. Right.
Q. And Big Bear?
A. Same.
Q. Okay. Do they all carry-with the exception of
house brands, do they all carry pretty much the same
products?
A. Yes.
Q. They all carry flour and eggs and milk and
198
BIG BEAR SUPERMARKETS NO. 3
meats and-
A. Yes.
Q. They all carry pretty much the same cuts of
meat?
A. Yes.
Q. Okay. In terms of grocery lines-canned peas,
frozen foods and things like that, do they all carry
pretty much the same products?
A. Yes.
Q. Would it be fair to say then that supermarkets as
an industry operate pretty much the same; they have
the same equipment, freezers, gondolas and so on?
A. Yes.
Q. They have pretty much the same product line?
A. Yes.
Q. And the only real differences would be in per-
haps house brands?
A. Yes.
Q. Would it be fair to say that the FedMart and the
Gemco operations are somewhat different than the
other chains in the country?
A. Yes. Different from the supermarket, yes.
Administrative Assistant Platten of the Charging Party
Retail Clerks recalled a conversation with the store manag-
er of the Respondent's San Carlos store which took place
in 1973 or early 1974. Platten had inquired of the store
manager regarding the manager's authority to move stock
in the store from aisle to aisle, or from gondola to gondola.
The store manager told Platten that he did not have wide-
spread power of that nature without approval from a su-
pervisor of that store, but that he had some discretion in
placing items which he felt would be more profitable for
the area in which the store was located. He contrasted his
authority with what he perceived to be the straight sche-
matic policy in the Alpha Beta stores in California. He
indicated to Platten that items in any Alpha Beta store
would be on the same shelf and on the same aisle.
Platten gave other examples of situations where a store
manager of the Respondent had exercised his own judg-
ment in the store. He recalled one occasion where the per-
son who later became the store manager of the San Carlos
store made the decision as to where to set up a Halloween
candy display. He also related that the store manager at
the El Cajon store had a discussion with one of the frozen
food distributors as to whether to purchase a "manager's
special" to put in the end freezer display. Platten also said
that the store managers had the discretion to go beyond the
Respondent's policy in cashing checks. He stated that at
the San Carlos store there was some revamping of sections
about every 2 or 3 months while he was employed there.
He recalled the revamping of the baby foods and diaper
section at the store.
According to Platten, the store managers instructed the
clerks to substitute another product when advertised items
ran out of stock. He also said that store managers placed
damaged packages and dented canned goods into a "bar-
gain corner."
With regard to the pricing of products, Platten said that
if the price list was lost, if the office was closed late at
night, and if another store did not have the price listed in
the Respondent's price book, then in those circumstances
the store manager would assign a price to the item. He said
that this happened especially with regard to Japanese food.
Platten said that he had observed Sparkletts water cool-
ers at two of the Respondent's stores. In addition, he said
that the manager of the San Carlos store had changed ice
distributors on two or three occasions.
In 1975, Platten had a conversation with the store man-
ager of one of the Respondent's Jonathan's stores. The
store manager told Platten that he felt that he had more
discretion at the Jonathan's store, and made the point to
Platten that he had input on deciding that certain items
would go into the Jonathan's advertisement.
Business Agent Daly of the Charging Party Retail Clerks
said that he visited the La Mesa store on a weekly basis
from about May 1976 to November 15, 1976. Since that
time, he has visited the store on two or three occasions-
the last time being about 2 days prior to the hearing in this
proceeding when he was in the store for 15 or 20 minutes.
In Daly's view, there were no major changes in the phys-
ical layout of the store. He said, for example, that the meat
department, dairy department, and produce department
were located in the same areas as before, He noticed that
the signs outside the store were the same and that there
were Big Bear signs inside the store. He purchased some
items in the store and observed that Big Bear grocery bags
were used.
Business Agent Lemieux of the Charging Party Retail
Clerks said that he had been in the La Mesa store in De-
cember 1976. In his opinion, "everything was the same,"
and "there was no change at all." He said that he observed
that the employees were also wearing the same color
aprons as he had seen before.
Charging Party Retail Clerks' Exhibit I is a 2-page ad-
vertisement which appears in The Evening Tribune news-
paper on September 7, 1977. The ad lists numerous items
and the prices of those items at Big Bear supermarkets.
Among the 22 store locations listed in the advertisement is
"La Mesa, Highway 94, at Campo." The Respondent's Ex-
hibit 2, which is also a newspaper advertisement, indicates
that the special sale on the brand of beer advertised was
not applicable to the La Mesa store. It was explained by
Mabee that the Respondent's beer and wine warehouse
does not supply those products to the La Mesa store. As
noted earlier, Richard Holmes has his own beer and wine
license and makes those purchases directly from suppliers
to comply with the State of California law.
The findings of fact in this section rest primarily upon
the testimony given by Richard Holmes and Mabee and
stipulation of the parties. However, to the extent that their
testimony is not inconsistent with the foregoing, I have also
based findings of fact upon the testimony of Stegman,
Vandeveld, Platten, Daly, and Lemieux as noted above. In
addition, the findings of fact rest upon the documentary
evidence referred to in the foregoing paragraph.
J. The Conversation Between Augustus Fougeron and
Richard Holmes
Richard Holmes had a brief conversation with Augustus
Fougeron in late November 1976 at the La Mesa store.
199
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Fougeron is an International representative of the Charg-
ing Party Meat Cutters.
After Fougeron had introduced himself, Richard
Holmes told him that he was the new owner. Fougeron
inquired if Richard Holmes was going to continue to bar-
gain with the collective-bargaining unit. Richard Holmes
replied that he "planned on running an open shop."
Augustus Fougeron did not appear at the hearing to tes-
tify. However, the parties stipulated as to what his testi-
mony would be if Fougeron had been called to testify, but
with the caveat "without admitting the truth thereof." The
parties stipulated as follows:
The undersigned parties stipulate that (without ad-
mitting the truth thereof) if called to testify Gus Foug-
eron, International Representative of the Amalgamat-
ed Meat Cutters & Butcher Workmen of North
America, AFL-CIO, herein called the meat cutters
spoke with Richard A. Holmes at Big Bear No. 13, in
La Mesa, California. Fougeron asked what had hap-
pened to the meat cutters represented by the Meat
Cutters who had been working at that store. R.
Holmes stated that he was the new owner of Big Bear
Store # 13 and that Big Bear Supermarkets, respon-
dent, had transferred all the employees in question to
other Big Bear Stores. Fougeron then asked if R.
Holmes was contemplating becoming a union store
and Holmes replied that he was absolutely not going
to become Union, and that he was going to remain
non-union.
The two versions of the foregoing conversation are not
in substantial dispute on any material matter in this pro-
ceeding. However, I found Richard Holmes to be a credi-
ble witness on other matters, and I will accept his version
of this conversation, and base the findings of fact on his
testimony.
K. The Conversation Involving Marc Lemieux at the La
Mesa Store
Marc Lemieux, a business agent for the Charging Party
Retail Clerks, had a conversation with Richard Holmes at
the La Mesa store. Lemieux approached Richard Holmes
in the back room where he was working and asked to talk
with him. The two then went to the office. Lemieux pre-
sented a contract to Richard Holmes which indicated to
him that, as a successor, he would have to continue bar-
gaining with the Charging Party Retail Clerks.
Richard Holmes told Lemieux that the contract had not
been signed by him, but by the Respondent. Richard
Holmes said that he would have to talk with his lawyer,
although at the trial Richard Holmes stated that he did not
have a lawyer at that time. He recalled telling Lemieux to
see the Respondent's lawyer, but he did not recall whether
or not he mentioned attorney Theep's name. At the hear-
ing, Richard Holmes said that he did not recall ever using
attorney Theep as his lawyer.
About that time, Gerald Holmes came in and greeted
Lemieux. Then, a person who worked in a nearby restau-
rant came in to inquire about purchasing some flour at a
discount. The man first spoke with Gerald Holmes and
then with Richard Holmes, who declined to make the sale
at a discount. Gerald Holmes left about the same time.
Richard Holmes said that Gerald Holmes did not partici-
pate in any part of the conversation about union represen-
tation.
Gerald Holmes recalled that in December 1976 he had
gone by the La Mesa store in order to take his wife to
lunch. While he was there, he went toward the back room
to see whether Richard Holmes would be able to go to
lunch with them. On his way, he ran into Lemieux. The two
men exchanged greetings, and at that point a person from
an Italian restaurant came in looking for flour. Because
Richard Holmes was busy, Gerald Holmes said, he spoke
with the man from the restaurant.
Gerald Holmes denied that he stated, "Richard, you
shouldn't sign this, it has all been taken care of by the
lawyers," and he further denied mentioning Attorney
Theep's name to Business Agent Lemieux.
Lemieux's version is that he took three contracts in De-
cember 1976 to Richard Holmes at the La Mesa store. He
gave the contracts to Richard Holmes in his office to be
signed. Richard Holmes told him that he did not know if
he should sign them, whereupon Gerald Holmes told Lem-
ieux that it had all been taken care of between the lawyers.
At that point, according to Lemieux, they were inter-
rupted by a person who was seeking to purchase a large
quantity of sugar. Lemieux said that Richard Holmes
checked a copy of the Big Bear price and order book. Lem-
ieux recognized it as being like those he had seen in other
Big Bear supermarkets. After the unidentified person de-
parted, Gerald Holmes advised Richard Holmes that he
should not sign the contracts. Lemieux said that he then
asked Gerald Holmes who was the lawyer and that Gerald
Holmes replied Mr. Theep, the lawyer for Big Bear.
After considering the foregoing versions of this event, I
have decided to base the findings of fact in this section
upon the testimony given by Richard Holmes and Gerald
Holmes for the reasons previously stated.
L. The Request for Information by the Charging Party
Retail Clerks
The parties entered into a stipulation with regard to the
following facts:
In or about late December 1976 or early January
1977, a representative of Retail Clerks Union, Local
1222, (herein Local 1222) telephoned Richard Holmes
at his office at the Big Bear store in La Mesa and
requested that Richard Holmes supply Local 1222
with the names and addresses of the current employ-
ees of the La Mesa store. Richard Holmes replied that
he believed he had no obligation to supply such infor-
mation to Local 1222 and that he believed that the
supplying of such information would be an infringe-
ment of his employees rights and that he would not
supply that information.
The findings of fact in this section are based upon the
foregoing stipulation.
200
BIG BEAR SUPERMARKETS NO. 3
M. Conclusions
In Crawford Door Sales Company, Inc., 226 NLRB 1144
(1976), the Board commented on certain factors where the
Board generally has found alter ego status:
The Administrative Law Judge also found that Re-
spondent Cordes was not Respondent Crawford's alter
ego because in his view identical corporate ownership
is the sine qua non of alter ego status. We disagree.
Clearly each case must turn on its own facts, but gen-
erally we have found alter ego status where the two
enterprises have "substantially identical" manage-
ment, business purpose, operation, equipment, cus-
tomers, and supervision, as well as ownership. See, e.
g., Marquis Printing Corporation, 213 NLRB 394
(1974)....
In sum, it is apparent that both Respondents at all
times material were wholly owned by members of the
Cordes family and never lost their character as a
closed corporation. In these circumstances, we find
that ownership and control in both enterprises is sub-
stantially identical. In view of the foregoing, and the
other factors which reveal common business purpose,
management, operations, equipment, customers, and
supervision, we find that Respondent Cordes is the
alter ego of Respondent Crawford.
Among the several factors commented upon by the
Board in the Crawford Door decision is the matter of "su-
pervision." I discuss that subject first because it seems to
me that the facts in this case are very clear as to that mat-
ter. In the franchise agreement, section 14 spells out specif-
ically the authority which is to be exercised by Richard
Holmes concerning his employees in his operation of the
La Mesa store:
OWNER shall have the sole right to employ and dis-
charge such employees at his store as in his judgment
may be necessary and such employees shall be em-
ployees and agent of OWNER and not of BIG BEAR. OWNER
agrees to exercise full and complete control over and
have full responsibility for any and all labor relations,
including the hiring, firing, disciplining, compensation
and work schedules of his employees.
Significantly, the testimony of Richard Holmes shows
that he has exercised his authority with regard to supervi-
sion and personnel matters. He did the initial interviewing
of applicants for employment and made the decision as to
who would be hired. He sets the wage scales for the em-
ployees at the La Mesa store, and those wage rates are
different from those previously in effect under the Respon-
dent's operation of the store. He schedules the hours of
work of the employees, and he determines their working
conditions.
Section 29 of the franchise agreement provides: "BIG
BEAR shall provide such supervision and technical assis-
tance to OWNER in the operation of the business as may be
reasonably necessary to establish the business, and in any
event no less supervision than is provided to other markets
in the BIG BEAR system." As the testimony shows, those
visits to the stores by various supervisors from the Respon-
dent are more in the nature of "technical assistance" rather
than day-to-day supervision of employees who work at the
La Mesa store.
In The Southland Corporation, d/b/a Speedee 7-Eleven,
170 NLRB 1332 (1968), the Board concluded that the fran-
chisee in that case was an independent contractor, and,
additionally, that the franchisor and franchisee were not
joint employers. In weighing the facts as to the first issue of
independent contractor status, the Board stated:
Under the franchise agreement, exclusive control
over labor relations is vested in the franchisee. Article
14 of the franchise agreement states in relevant part:
"Owners (franchisees] agree to exercise full and com-
plete control over and have full responsibility for any
and all labor relations, including the hiring, firing, dis-
ciplining, compensation and work schedules of their
employees."
Although Southland makes out the wage checks to
employees, this is merely a convenience for the fran-
chisees, who furnish Southland's computer with all rel-
evant wage information, whereupon Southland rou-
tinely makes out the checks in the appropriate
amounts. The franchisee's account is debited accord-
ingly.
There is no evidence that Southland has ever exer-
cised any control over any of the terms of employment
of the store employees.
Moreover, in addressing the second issue of whether the
franchisor and franchisee were joint employers in The
Southland Corporation, the Board stated at 1334:
We have long held that the critical factor in de-
termining whether a joint employer relationship exists
is the control which one party exercises over the labor
relations policy of the other. It is immaterial whether
this control be actually exercised so long as it may
potentially be exercised by virtue of the agreement un-
der which the parties operate. In the instant case
Southland neither exercises actual, nor possesses po-
tential, control over the store's labor relations under
the franchise agreement. It is undisputed that George
alone and exclusively hires, fires, and in every other
respect sets iie terms and conditions of employment
of the store's employees. There is no evidence that the
clear language of article 14 of the franchise agreement
granting complete control over store labor relations to
the franchisee has ever been disregarded by the parties
or that Southland has ever sought to interpret the
agreement in such a way as to vest in itself the right to
influence George's labor relations policies.
Considering the facts with regard to labor relations, per-
sonnel matters, and supervision of employees, I conclude
that those facts favor the finding that Richard Holmes is
not the alter ego of the Respondent in his operation of the
La Mesa store. Furthermore, the conversations which he
had with Fougeron, Lemieux, and a representative of the
Charging Party Retail Clerks who requested the names and
addresses of his employees, are consistent with Richard
Holmes' position of not being the alter ego of the Respon-
dent.
201
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Turning now to a consideration of the factor of the
"business purpose," it is clear that the La Mesa store was a
grocery supermarket both before and after November 15,
1976. Thus, in a strict sense, the purpose of the business
remained the same; i.e., to sell groceries and other products
at retail to customers.
In addition, looking at the factors of "equipment" and
"customers," it seems reasonable to conclude that these
remained substantially as they had been prior to Novem-
ber 15, 1976. The lease for the premises, which is attached
to the franchise agreement as Exhibit A, and the descrip-
tion of the equipment, which is attached to the franchise
agreement as Exhibit B, are indicative that the basic
"equipment" for doing business at the La Mesa store loca-
tion remained substantially the same. The factor involving
the "customers" is more difficult to ascertain in a retail
enterprise. A manufacturer or a wholesaler, for example,
would be expected to have a list of his customers. A retail
grocery supermarket, on the other hand, would not be ex-
pected to have such a definitive list. In these circumstanc-
es, a basis for inferring that most customers continued to
shop at the La Mesa store after November 15, 1976, as they
had previously, is that the store continued in the same loca-
tion without any interruption of business, and the store
continued to use the Big Bear name and to be listed among
the stores in the Big Bear advertisements. Furthermore, the
fact that Richard Holmes was able to turn around the busi-
ness from a loss situation to a profitable situation within a
few months' time is some indication that former customers
continued to shop at the store, although it could also mean
that new customers were attracted to shop there.
In examining the factor of "ownership," the basic ques-
tion is whether the franchise agreement between the Re-
spondent and Richard Holmes is a bona fide transaction or
a sham. It is helpful to consider the matters which led to
the Respondent's decision to franchise the operation of the
La Mesa store. These have been set forth in section E
herein, but, in summary, they concern the fact that the La
Mesa store had suffered losses under the Respondent's op-
eration in the 2 fiscal years preceding the decision to enter
into a franchise; the desire on the part of the Respondent
not to give up any more of its market share in the greater
San Diego area; and the fact that Mabee owned the shop-
ping center in which the La Mesa store was located and
was concerned about the effect of losing the Big Bear name
in drawing customers to the center.
The testimony of Mabee was convincing and persuasive
that these were the true reasons which led him to make the
decision to franchise the operation of the La Mesa store. In
a similar manner, Mabee's testimony was convincing with
regard to his reasons for deciding to make the first offer to
Richard Holmes. At the time Richard Holmes was the
manager of one of the high volume stores of the Respon-
dent, yet Mabee knew of the fact that Richard Holmes'
multiple sclerosis had an effect on his continued perfor-
mance as manager of that store. Not to be overlooked is
the fact that Richard Holmes was the son of Gerald
Holmes, who had been the secretary-treasurer of the Re-
spondent for 20 years. Given these circumstances, it seems
logical that Mabee would have decided to make the offer
to franchise to Richard Holmes, but, more importantly, I
conclude that the evidence does not establish that the se-
lection of Richard Holmes as a franchisee was a subterfuge
by which the Respondent would continue to operate the
store.
I have given consideration to the fact that the initial cash
payment required of Richard Holmes was only $2,000.
However, Mabee's testimony concerning this fully explains
Mabee's rationale for that figure. He said that he had
known Richard Holmes and his background for 20 years,
and he knew him to be a financially responsible person and
stable individual. Moreover, Mabee anticipated repayment
of the promissory note fairly rapidly. The facts bear out
Mabee's anticipation as Richard Holmes had repaid over
$18,000 on the note as of July 31, 1977, in addition to the
interest payments.
Section 21 of the franchise agreement, entitled "Owner's
Draw on Anticipated Profits," and section 22 of that agree-
ment, entitled "Big Bear Charge," set forth the terms by
which Richard Holmes may draw on his share of the
profits and the provisions for 40 percent of the net operat-
ing income to go to the Respondent. It is significant that
Richard Holmes has applied his total net profits to the
repayment of the principal on his promissory note to the
Respondent. His repayment of that amount is an indica-
tion that he is truly a franchisee and that the franchise
agreement is not a sham.
While a store manager of the Respondent receives a bo-
nus if his store makes a profit, he does not personally share
in the losses if the store sustains a loss. However, under the
terms of the franchise agreement, Richard Holmes shares
in the profits, if any are made, and also must bear the
losses, if that results. The point is that his sharing in the
profits or the losses is an indication that he is an owner,
rather than an employee.
Perhaps of less importance, but still a matter to ponder,
is why Richard Holmes' wife and mother would commence
working at the La Mesa store without any pay for their
services unless Richard Holmes did, in fact, own his busi-
ness. If the Respondent still owned and operated the La
Mesa store, it would seem to be improbable that Richard
Holmes' wife and mother would be working without pay.
On the other hand, their assistance to him without renu-
meration is logical if he owns his business.
Considering the matters discussed above concerning the
"ownership" factor, I conclude that factor favors a finding
that Richard Holmes is not the alter ego of the Respon-
dent.
Next, I weigh the factors of "management" and "opera-
tions." Section 14 of the franchise agreement states the in-
tentions of the parties to that agreement: "It is the inten-
tion of the parties hereto that OWNER shall be an
independent contractor and exercise control over the man-
ner and means of the operations of his business." The testi-
mony of Richard Holmes is persuasive that he has carried
out that intent of the parties, but, of course, within the
terms of the agreement. Section 10, entitled "Inventory,"
does obligate Richard Holmes to stock items which are
customarily carried in Big Bear stores and to stock such
items in quantities which, in the sole judgment of the Re-
spondent, are reasonably necessary to meet customer de-
mands. In addition, Richard Holmes must stock and sell
202
BIG BEAR SUPERMARKETS NO. 3
advertised goods at the prices advertised by the Respon-
dent and honor the Respondent's discount coupons. Sec-
tion 13 of the franchise agreement gives the Respondent
effective control over the advertising decisions.
Notwithstanding these obligations to stock the items cus-
tomarily carried in Big Bear stores, Richard Holmes has
not been precluded from adding or expanding product
lines. For example, an extensive health foods line was
added, and so was a fancy foods section, primarily Japa-
nese foods. Moreover, he has made some 200 to 300 addi-
tions or deletions of products handled by the La Mesa
store.
Thus, while the franchise agreement obligates him to
carry the basic Big Bear store products, it has not prevent-
ed his exercising his judgment in adding, expanding, or
changing other products. After considering the foregoing
and the other facts set forth in Section I herein, entitled
"The Operation of the La Mesa Store Under Richard
Holmes," I conclude that the factors of "management" and
"operations" favor the finding that Richard Holmes is not
the alter ego of the Respondent.
Finally, after considering the entire record and particu-
larly the foregoing conclusions regarding the factors of su-
pervision, ownership, management, and operations, I con-
clude that a preponderance of the evidence does not
establish that Richard Holmes is the alter ego of the Re-
spondent in his operation of the La Mesa store, and that a
preponderance of the evidence does not establish that the
Respondent has violated Section 8(a)(1), (3), and (5) of the
Act. Cf. Frank Naccarato, a sole proprietor, d/b/a Naccara-
to Construction Company, el al., 233 NLRB 1394 (1977);
Edward E. Schultz d/b/a Schultz Painting & Decorating Co.,
202 NLRB II11 (1973); Sakrete of Northern California, Inc.,
140 NLRB 765 (1963); and Charles T. Reynolds Sr. doing
business as Charles T. Reynolds Box Company, 139 NLRB
519 (1962).
I have given consideration to whether the Respondent's
lack of direct notice to the Charging Party Retail Clerks
and the Charging Party Meat Cutters regarding the trans-
fer of employees from the La Mesa store to other stores of
the Respondent violated Section 8(a)(l), (3), and (5) of the
Act. The agreed-upon provisions between the Respondent
and the two Unions have been set forth in section D herein
entitled "The Collective-Bargaining History." As noted
there, the provisions of the agreements do not specifically
require that the Respondent give advance notice to the
Unions, and in the circumstances here, where the Respon-
dent ceased to operate the La Mesa store, I find that the
lack of such notice did not violate the Act as alleged.
Upon the basis of the foregoing findings of fact and
upon the entire record in this proceeding, I make the fol-
lowing:
CONCLUSIONS OF LAW
I. The Respondent is an employer engaged in commerce
within the meaning of Section 2(6) and (7) of the Act.
2. The Charging Party Retail Clerks and the Charging
Party Meat Cutters are labor organizations within the
meaning of Section 2(5) of the Act.
3. The Respondent has not engaged in the unfair labor
practices alleged in the consolidated amended complaint in
this proceeding.
[Recommended Order for dismissal omitted from publi-
cation.]
203