Canteen Co.

National Labor Relations Board - Board Decisions

Jun 30, 1995

317 N.L.R.B. 1052 (N.L.R.B. 1995)

1052
317 NLRB No. 153
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an admin-
istrative law judge’s credibility resolutions unless the clear prepon-
derance of all the relevant evidence convinces us that they are incor-
rect. Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188
F.2d 362 (3d Cir. 1951). We have carefully examined the record and
find no basis for reversing the judge’s findings.
The Respondent also suggests that remarks made by the judge at
the hearing exhibited bias and that the judge’s bias affected his rul-
ings and decision. After a careful examination of the entire record,
we are satisfied that this allegation is without merit.
The General Counsel requests correction of two factual errors in
the judge’s decision. We make the following corrections: (1) con-
trary to the judge’s finding in fn. 9, p. 6, a copy of the letter ex-
pressing Gallo’s assent to proposed language regarding work per-
formed by supervisors was received into evidence as G.C. Exh. 4;
and (2) on L. 23, p. 8, the judge refers to the General Counsel’s
reliance on the testimony of ‘‘Piquette and Anderson,’’ but as the
judge discusses in the next two paragraphs, he should have referred
to ‘‘Piquette and Cook.’’ These minor errors do not affect our deci-
sion in this case, and the errors are corrected.
2 We adopt the judge’s successorship analysis and find it unneces-
sary to rely on the voluntary recognition theory set forth in fn. 36
of the judge’s decision.
3 We find merit in the General Counsel’s exception to the adminis-
trative law judge’s failure to provide in the remedy and in the notice
to employees that the Respondent restore the conditions that existed
under the Service America contract, that the Respondent maintain
these conditions pending good-faith bargaining, and that the Re-
spondent make the affected employees whole for the losses they in-
curred as a result of the Respondent’s unilateral changes to their
wages or other benefits implemented on July 1, 1992. We shall mod-
ify the Order and the notice to employees accordingly. 4 All dates are in 1992, unless stated otherwise.
Canteen Company and Hotel Employees and Res-
taurant Employees Local No. 122, AFL–CIO.
Case 30–CA–11826
June 30, 1995
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS STEPHENS,
BROWNING, COHEN, AND TRUESDALE
On December 7, 1993, Administrative Law Judge
Joel A. Harmatz issued the attached decision. The Re-
spondent filed exceptions and a supporting brief and
the General Counsel filed a brief in response to the
Respondent’s exceptions and filed cross-exceptions
with a supporting brief.
The National Labor Relations Board has considered
the decision and record in light of the exceptions and
briefs and has decided to affirm the judge’s rulings,
findings,1 and conclusions2 and to adopt the rec-
ommended Order as modified.3
The primary issue in this case is whether the Re-
spondent violated Section 8(a)(5) and (1) of the Act by
unilaterally setting initial wage rates that were different
from those paid by the predecessor under its collective-
bargaining agreement with the Union. We agree with
the judge that the Respondent was precluded from uni-
laterally changing the wage rates without first consult-
ing with the Union pursuant to the ‘‘perfectly clear’’
caveat of NLRB v. Burns Security Services, 406 U.S.
272, 294–295 (1972). That proposition was stated by
the Supreme Court as follows:
Although a successor employer is ordinarily
free to set initial terms on which it will hire the
employees of a predecessor, there will be in-
stances in which it is perfectly clear that the new
employer plans to retain all of the employees in
the unit and in which it will be appropriate to
have him initially consult with the employees’
bargaining representative before he fixes terms. In
other situations, however, it may not be clear until
the successor employer has hired his full com-
plement of employees that he has a duty to bar-
gain with a union, since it will not be evident
until then that the bargaining representative rep-
resents a majority of the employees in the unit as
required by § 9(a) of the Act, 29 U.S.C. § 159(a).
As discussed by the judge, the Board in Spruce Up
Corp., 209 NLRB 194, 195 (1974), held that the Burns
‘‘perfectly clear’’ caveat should
be restricted to circumstances in which the new
employer has either actively or, by tacit inference,
misled employees into believing they would all be
retained without change in their wages, hours, or
conditions of employment, or at least to cir-
cumstances where the new employer . . . has
failed to clearly announce its intent to establish a
new set of conditions prior to inviting former em-
ployees to accept employment. [Footnote omit-
ted.]
In this case, the Respondent, prior to assuming con-
trol of operations on July 1, 1992,4 personally con-
tacted the predecessor employees to say that the Re-
spondent wanted them to apply for employment with
the Respondent. Additionally, the Respondent had sev-
eral discussions with the Union in June. These discus-
sions initially concerned the Respondent’s desire to es-
tablish a working manager position. The parties also
discussed which sample contract they would use when
negotiating a new collective-bargaining agreement. On
June 22, the Respondent informed the Union that it
wanted the predecessor employees to serve a proba-
tionary period with the Respondent. The Union agreed
to this request. Also on June 22, the parties agreed to
meet on June 30 to negotiate a collective-bargaining
agreement. The Respondent did not mention in these
discussions the possibility of any other changes in its
initial terms and conditions of employment.
We agree with the judge that the Respondent vio-
lated Section 8(a)(5) of the Act when, on or after June
23, the Respondent told three of the four predecessor
employees that they could continue working in the
1053CANTEEN CO.
5 We disagree with our dissenting colleagues’ contention that the
Respondent did not have a plan on June 22 to retain the predecessor
employees. It is not disputed that the Respondent intended from the
outset to hire all of the predecessor employees; that in early to mid-
June the Respondent personally urged each predecessor employee to
fill out an application and schedule an interview; and that the Re-
spondent took no action to attract or consider outside applicants until
a few days before its scheduled opening, after it learned that the
predecessor employees would not accept employment based on the
unilaterally imposed wage rates. In addition, by its contacts to the
employees to urge them to apply, and by its discussions with the
Union, including the agreement it reached with the Union that the
predecessor employees would serve a probationary period, the Re-
spondent had made it ‘‘perfectly clear’’ by June 22 to both the
Union and the employees, that it intended to hire all the predecessor
employees.
food services operation, but at significantly reduced
wages. Specifically, we find that by June 22, when the
Respondent expressed to the Union its desire to have
the predecessor employees serve a probationary period,
the Respondent had effectively and clearly commu-
nicated to the Union its plan to retain the predecessor
employees.5 Therefore, as it was ‘‘perfectly clear’’ on
June 22 that the Respondent planned to retain the pred-
ecessor employees, the Respondent was not entitled to
unilaterally implement new wage rates thereafter.
Our colleagues in dissent contend that the ‘‘perfectly
clear’’ caveat in Burns, as interpreted in Spruce Up,
should apply only when the new employer has failed
to announce initial employment terms prior to, or si-
multaneously with, the extension of unconditional of-
fers of hire to the predecessor employees. None of the
cases cited in the dissent, including Burns and Spruce
Up, expressly limit the caveat to such a late point in
the transition from one employer to another. To the
contrary, the judge correctly cited Roman Catholic Di-
ocese of Brooklyn, 222 NLRB 1052 (1976), enf. de-
nied in relevant part sub nom. Nazareth Regional High
School v. NLRB, 549 F.2d 873 (2d Cir. 1977), as a
controlling example of the imposition of an obligation
to bargain about initial terms of employment prior to
the new employer’s extension of formal offers of em-
ployment to the predecessor’s employees.
The respondent in Roman Catholic made an un-
equivocal statement to the union in March 1974 of an
intent to hire all of the predecessor’s lay teachers for
the academic year beginning in September. It did not
mention any changes in terms and conditions of em-
ployment. Subsequently, however, it transmitted em-
ployment contracts to the predecessor teachers which
disclaimed any intention of being bound by the prede-
cessor’s terms. It then hired the predecessor teachers
on the basis of unilaterally imposed terms. The Board
found that the March 1974 statement made ‘‘perfectly
clear’’ the respondent’s intent to hire all of the prede-
cessor’s employees and bound it to bargain about ini-
tial terms.
The dissent’s reliance on the Second Circuit’s denial
of enforcement in Roman Catholic is unavailing. The
court’s opinion was based on a view of Burns which
is more restrictive than Spruce Up and its progeny.
According to the Second Circuit, a new employer re-
mains free to fix initial terms unless it expressly prom-
ises continued employment to each of the prede-
cessor’s employees on the basis of the existing terms.
In the Second Circuit’s view, silence about wages and
benefits throughout the hiring process, even after the
act of hiring, would not bind the employer to initial
bargaining. On the other hand, if the respondent in
Roman Catholic had expressly declared to the prede-
cessor employees in March 1974 that they would be
retained on the basis of existing terms, the Second Cir-
cuit would presumably have agreed with the Board
that the subsequent offer to hire those employees on
different terms was unlawful.
This view of the Burns ‘‘perfectly clear’’ caveat is
too restrictive when viewed in light of the reasoning
which the Board enunciated in Spruce Up. In that case,
the respondent made it clear in its initial meeting with
the union that initial pay rates would be different from
those of the predecessor. Thus, the Board held that the
new employer was not a ‘‘perfectly clear’’ successor
because it had stated from the outset that it would be
hiring the predecessor employees pursuant to the new
terms. Spruce Up, supra at 195.
The court’s reasoning in Roman Catholic, on the
other hand, turns this rule on its head, and would re-
quire the new employer to make unequivocal offers of
hire to the existing employees on the basis of the pred-
ecessor’s terms and conditions of employment before
concluding it was a ‘‘perfectly clear’’ successor. This
requirement is inconsistent with the express language
of the ‘‘perfectly clear’’ caveat in Burns. Moreover, it
does not take into account the very real possibility that
existing employees could be misled into believing
‘‘they would all be retained without change in their
terms and conditions of employment.’’ Id. To deal
with this possibility, the Board in Spruce Up held that
an employer who was silent about its intent with re-
gard to the existing terms and conditions of employ-
ment would be found to be a ‘‘perfectly clear’’ succes-
sor if it stated or clearly indicated it would be hiring
the predecessor’s employees.
The Roman Catholic opinion did not refer to Spruce
Up, but the Board’s holding in the later case is entirely
consistent with Spruce Up’s interpretation of the ‘‘per-
fectly clear’’ caveat. Any doubt about the consistency
between the two cases should have been laid to rest in
Fremont Ford, 289 NLRB 1290, 1296–1297 (1988). In
that case, the Board again imposed an initial bargain-
ing obligation under the ‘‘perfectly clear’’ exception
on a respondent employer which manifested the intent
1054 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
6 In a subsequent case, the Board held that a new employer cannot
make a lawful Spruce Up announcement if it engages in discrimina-
tory hiring practices. U.S. Marine Corp., 293 NLRB 669, 672–673
(1989), enfd. en banc 944 F.2d 1305 (7th Cir. 1991), cert. denied
503 U.S. 936 (1992). Although the respondent in Fremont Ford was
also found to have engaged in discriminatory hiring, the Board’s in-
terpretation of Spruce Up in that case, as it relates to the timing of
the announcement of new terms, is controlling.
7 We note that Member Stephens, who dissents here, participated
on the panel which decided Fremont Ford.
to retain the predecessor’s employees prior to the be-
ginning of the hiring process.
There, the respondent new employer informed the
union on May 6, 1982, that only 3 or 4 of the 22 pred-
ecessor employees might not be retained. The respond-
ent did not, however, announce significant changes in
initial terms and conditions of employment until it
conducted hiring interviews the following May 17. The
Board found that the respondent’s statement to the
union made it a ‘‘perfectly clear’’ successor, and that
the respondent had not made a lawful Spruce Up an-
nouncement because ‘‘[i]t was not until after the hiring
process had begun that the [r]espondent first informed
the Fremont employees that there would be signifi-
cantly different employment conditions.’’ 289 NLRB
at 1297. In addition, although the respondent in Fre-
mont Ford, like the Respondent here, first informed
the predecessor’s employees about significantly dif-
ferent employment conditions during hiring interviews,
the Board expressly referred to Spruce Up in holding
that the respondent had ‘‘failed to clearly announce its
intent to establish a new set of conditions prior to in-
viting former employees to accept employment.’’ Id.6
We fail to see how our dissenting colleagues can
apply a more restrictive reading of Spruce Up without
overruling Roman Catholic and Fremont Ford.7 We
would adhere to that precedent and to its proper appli-
cation in this case.
Accordingly, because the Respondent did not an-
nounce the new wage rates until June 23, after it had
effectively announced its intent to retain the prede-
cessor employees, we agree with the judge that the Re-
spondent violated the Act by unilaterally changing the
terms and conditions of employment. Thus, we also
agree with the judge that the Respondent violated Sec-
tion 8(a)(3) and (1) of the Act by constructively deny-
ing employment to the predecessor employees (i.e.,
making them choose between employment on its un-
lawfully unilateral terms and declining the employment
offer), and that it violated Section 8(a)(5) of the Act
by refusing to recognize and bargain with the Union.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, Canteen Company, Mil-
waukee, Wisconsin, its officers, agents, successors, and
assigns, shall take the action set forth in the Order as
modified.
1. Substitute the following for subparagraph 2(a).
‘‘(a) On request of the Union, rescind the above uni-
lateral changes until such time as the Respondent ne-
gotiates in good faith with the Union to agreement or
to impasse.’’
2. Insert the following subparagraph 2(b) and reletter
the subsequent subparagraphs.
‘‘(b) Offer Susan Anderson, Kelly Piquette, and
Irene Cook immediate employment in their former po-
sitions, or if nonexistent, to substantially equivalent
jobs, and make them whole for losses sustained by rea-
son of the discrimination against them and by reason
of the Respondent’s unilateral changes in the unit em-
ployees’ wages or other benefits commencing July 1,
1992, in the manner set forth in Ogle Protection Serv-
ices, 183 NLRB 682 (1970), enfd. 444 F.2d 502 (6th
Cir. 1971), with interest as computed in New Horizons
for the Retarded, 283 NLRB 1173 (1987).’’
3. Substitute the attached notice for that of the ad-
ministrative law judge.
CHAIRMAN GOULD, concurring.
I join Members Browning and Truesdale in finding
that the Respondent violated Section 8(a)(5) and (1) of
the Act by unilaterally setting initial terms and condi-
tions of unit employees’ jobs without affording the
Union a chance to bargain. As stated in their opinion,
the finding of a violation is warranted under the stand-
ard set forth in Spruce Up Corp., 209 NLRB 194
(1974), enfd. on other grounds 529 F.2d 516 (4th Cir.
1975). I write separately, however, to express my opin-
ion that the Spruce Up standard represents an unduly
restrictive reading of the Supreme Court’s definition of
circumstances in which a successor employer must bar-
gain about initial terms and conditions of employment.
In NLRB v. Burns Security Services, 406 U.S. 272
(1972), the Supreme Court held that ‘‘[a]lthough a suc-
cessor employer is ordinarily free to set initial terms
on which it will hire the employees of a predecessor,
there will be instances in which it is perfectly clear
that the new employer plans to retain all of the em-
ployees in the unit and in which it will be appropriate
to have him initially consult with the employees’ bar-
gaining representative before he fixes terms.’’ 406 U.S.
at 294–295. In Spruce Up, a Board majority interpreted
this language and, after factoring in the perceived de-
sire and willingness of employees to work under dif-
ferent conditions, held that ‘‘[w]hen an employer who
has not yet commenced operations announces new
terms prior to or simultaneously with his invitation to
the previous work force to accept employment under
those terms, we do not think it can fairly be said that
the new employer ‘plans to retain all of the employees
in the unit,’ as that phrase was intended by the Su-
preme Court.’’ 209 NLRB at 195. The Board majority
1055CANTEEN CO.
1 209 NLRB at 206.
2 See W.B. Gould, Agenda for Reform (MIT Press 1993), 173–
174; John Wiley & Sons v. Livingston, 376 U.S. 548 (1964); Howard
Johnson Co. v. Detroit Local Joint Executive Board, 417 U.S. 249
(1974); Burns, 406 U.S. at 285–288.
then stated that the perfectly clear ‘‘caveat in Burns
. . . should be restricted to circumstances in which the
new employer has either actively or, by tacit inference,
misled employees into believing they would all be re-
tained without change in their wages, hours, or condi-
tions of employment, or at least to circumstances
where the new employer . . . has failed to clearly an-
nounce its intent to establish a new set of conditions
prior to inviting former employees to accept employ-
ment.’’ Id. (Footnote omitted.)
I question the validity of Spruce Up and believe that
it grafts on an additional requirement for finding a
‘‘perfectly clear’’ successor which is neither warranted
nor intended by the Supreme Court in Burns. The Su-
preme Court stated that the test was only whether ‘‘the
new employer plans to retain all of the employees in
the unit’’ for the new employer to be a ‘‘perfectly
clear’’ successor. Burns, 406 U.S. at 294–295. Con-
trary to the majority’s opinion in Spruce Up, 209
NLRB at 195, the Supreme Court in no way even sug-
gested, much less stated, that the ‘‘desire’’ of the em-
ployees or their ‘‘willingness’’ to accept the new em-
ployer’s offer was to be considered in determining
whether the employer planned to retain all of the em-
ployees in the unit. I agree with the dissents of Mem-
bers Fanning and Penello on this point. See Spruce Up,
209 NLRB at 205–206 (Member Fanning dissenting)
and 207–208 (Member Penello dissenting).
Indeed, as the Court noted in Fall River Dyeing
Corp. v. NLRB, 482 U.S. 27, 41 (1987):
[I]n Burns we acknowledged the interest of the
successor in its freedom to structure its business
and the interest of the employees in continued
representation by the union.
The fact is that in many, if not most, business re-
arrangements, the successor employer perceives a need
for change or greater flexibility in the employment re-
lationship. This is the essential dynamic involved in
the instant case as well as countless others. To elimi-
nate instances where employers express an intent to
provide changed employment conditions from the obli-
gation to negotiate under the ‘‘perfectly clear’’ stand-
ard announced in Burns would both render the holding
on this point meaningless and also disregard the care-
ful balance between competing interests articulated by
the Court in both Burns and Fall River Dyeing.
This point is made graphically when one takes into
account the employer’s right to institute unilaterally its
own position at the time that the new operation is es-
tablished. Under Burns, the employees and unions are
protected by the right to negotiate subsequent to the
employer’s communication of an intent to retain the in-
cumbent work force. The language of Burns makes
this point clear. The employer’s obligation is not to ad-
here to terms which it views as unsuitable. This was
the proposition rejected by the Court in Burns.
All that is required by Burns is negotiation prior to
the commencement of the operation. As Member Fan-
ning correctly noted in his Spruce Up dissent,1 this is
the only circumstance in which negotiations could be
possibly contemplated under the ‘‘perfectly clear’’ test
in Burns. For where the employer announces its intent
to adhere to the predecessor’s collective-bargaining
agreement there is little or nothing about which to bar-
gain.
It is said that a rule such as the one that I have pro-
pounded—the approach initially articulated by Mem-
bers Fanning and Penello—creates a disincentive to
hire the old work force. See, e.g., Spruce Up, 209
NLRB at 195. Aside from the fact that there are dis-
incentives to hire aplenty already contained in Federal
labor law,2 I rather doubt the proposition that the obli-
gation to bargain alongside of the ability to institute
unilaterally the employer’s own position when its oper-
ation commences will induce employers appreciably to
be less forthcoming with employment offers.
Again, my judgment is that Spruce Up represents a
misreading of Burns. The characterization of Burns
that the Court subsequently provided in Fall River
Dyeing represents the better view of the issue at hand.
Thus, in the present case, the dispositive fact establish-
ing the Respondent’s status as a ‘‘perfectly clear’’ suc-
cessor is undisputed: the Respondent intended to at-
tempt to hire its initial work force from the employees
currently working at the predecessor’s facility. The Re-
spondent was therefore obligated to bargain with the
Union before it ‘‘fix[ed] terms’’ (Burns, 406 U.S. at
295) and violated Section 8(a)(5) and (1) by unilater-
ally making changes in existing terms and conditions
of employment prior to commencing operations on
July 1, 1992.
MEMBER STEPHENS and MEMBER COHEN, dissenting.
We would reverse the judge’s findings that the Re-
spondent violated Section 8(a)(1), (3), and (5) of the
Act and would dismiss the complaint in its entirety. As
discussed below, we would find that the Respondent
was free to set initial employment terms, that the Re-
spondent was not a Burns successor because it lawfully
did not employ any of the predecessor’s employees,
and that the Respondent was, thus, not obligated to
recognize and bargain with the Union.
A determination of the Respondent’s bargaining ob-
ligations, if any, begins with a discussion of the Su-
preme Court’s decision in NLRB v. Burns Security
Services, 406 U.S. 272 (1972). In Burns, the Supreme
1056 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The case currently at issue is distinguishable from Roman Catho-
lic Diocese because in that case the respondent made a direct an-
nouncement of an intent to retain the predecessor’s employees. The
majority in this case has to infer the Respondent’s announcement of
an intent to retain the employees from the Respondent’s actions.
Court held that, although a successor employer may be
obligated to bargain with the union that represented the
predecessor’s employees, the successor is ordinarily
not bound by the substantive terms of the collective-
bargaining agreement between the union and the pred-
ecessor and is, instead, free to set initial terms and
conditions of employment. One of the concerns ex-
pressed by the Court in reaching these holdings was
that a new employer may be reluctant to take over a
moribund business unless the employer can make
changes in the structure of the business, in the labor
force, and in the terms and conditions of employment.
406 U.S. at 287–288. As to its second holding—that
a new employer may set its own initial terms and con-
ditions of employment—the Court noted that it ‘‘is dif-
ficult to understand how [the new employer] could be
said to have changed unilaterally any pre-existing term
or condition of employment without bargaining when
it had no previous relationship whatsoever to the bar-
gaining unit and, prior to . . . [the hire date], no out-
standing terms and conditions of employment from
which a change could be inferred.’’ 406 U.S. at 294
(emphasis in the original). The Court, however, went
on to state that:
Although a successor employer is ordinarily
free to set initial terms on which it will hire the
employees of a predecessor, there will be in-
stances in which it is perfectly clear that the new
employer plans to retain all of the employees in
the unit and in which it will be appropriate to
have him initially consult with the employees’
bargaining representative before he fixes terms.
[406 U.S. at 294–295.]
This exception has become known as the ‘‘perfectly
clear’’ caveat.
The Board, in Spruce Up Corp., 209 NLRB 194,
195 (1974), enfd. on other grounds 529 F.2d 516 (4th
Cir. 1975), interpreted the ‘‘perfectly clear’’ caveat of
Burns, holding as follows (emphasis added):
When an employer who has not yet commenced
operations announces new terms prior to or si-
multaneously with his invitation to the previous
work force to accept employment under those
terms, we do not think it can be fairly said that
the new employer ‘‘plans to retain all of the em-
ployees in the unit,’’ as that phrase was intended
by the Supreme Court. . . . We believe the ca-
veat in Burns, therefore, should be restricted to
circumstances in which the new employer has ei-
ther actively, or, by tacit inference, misled em-
ployees into believing they would all be retained
without change in their wages, hours, or condi-
tions of employment, or at least to circumstances
where the new employer . . . has failed to clearly
announce its intent to establish a new set of con-
ditions prior to inviting former employees to ac-
cept employment.
The Board restricted application of the ‘‘perfectly
clear’’ caveat because (1) the Board did not want to
discourage new employers from commenting favorably
on the employment prospects of the predecessor em-
ployees; (2) the Board recognized that when a new
employer announces new terms prior to extending an
offer to hire the predecessor employees, there is a real
possibility that the employees may not accept employ-
ment with the new employer; and (3) absent the an-
nouncement of new terms, the Board was concerned
that employees would be misled into believing that
they would be retained without change in their em-
ployment conditions. Id.
The judge, in this case, focused on the issue of
whether the employees were misled into believing they
would be retained without changes in their working
conditions. We believe this misconstrues Spruce Up by
failing to consider its link to Burns. In our view, the
Board in Spruce Up was interested in protecting em-
ployees from being misled into accepting employment
with the belief that they would be retained under the
predecessor’s terms and conditions. This view is sup-
ported not only by the language and rationale of
Spruce Up and the rationale of Burns, but also by the
fact that the very language relied on by the judge in-
cludes a footnote citing Howard Johnson Co., 198
NLRB 763 (1972), and Good Foods Mfg. & Process-
ing, 200 NLRB 623 (1972). In both those cases, the
employees were misled into accepting employment
with the new employer with the belief that they were
being retained without a change in the terms and con-
ditions of employment, only to have the successor em-
ployer unilaterally change the terms and conditions
after having already hired almost all of the prede-
cessor’s employees. The Board found violations in
each case.
This case confronts the Board with a choice of
whether to follow an interpretation of the Spruce Up
doctrine that was embraced (apparently by implication)
in Roman Catholic Diocese of Brooklyn, 222 NLRB
1052 (1976), or to accept the Second Circuit’s contrary
interpretation when it reviewed Roman Catholic Dio-
cese on appeal. Nazareth Regional High School v.
NLRB, 549 F.2d 873, 881–882 (2d Cir. 1977). Unlike
our colleagues, we opt for the Second Circuit’s analy-
sis, which in our view is a more faithful application
of Spruce Up and the policies of Burns and which, in
our view, requires a dismissal of the complaint here.1
As we also show below, the Board’s analysis in
1057CANTEEN CO.
2 Contrary to the implication of our colleagues, we do not believe
that the Second Circuit has limited the ‘‘perfectly clear’’ exception
to situations where the new employer promises employment under
the predecessor’s terms. The exception would also apply to situations
where the new employer promises employment and is silent as to
whether the predecessor’s terms will continue. In both instances, the
employees can reasonably believe that these terms will not change.
3 See also United Maintenance & Mfg. Co., 214 NLRB 529, 535–
536 (1974) (no violation of the Act where there was no indication
that the new employer intended to change the terms and conditions,
Continued
Roman Catholic Diocese was something of an aberra-
tion when compared with other Board decisions issued
both before and after it.
In Roman Catholic Diocese, the respondent told the
union on March 25 that ‘‘we intend to rehire all of the
people back. They will be retained next year.’’ A
month later, the respondent disavowed any promise to
rehire the predecessor’s teachers. The respondent com-
menced operations in September with a faculty consist-
ing almost entirely of the predecessor’s teachers (49 of
55). The teachers were rehired at different terms and
conditions of employment than those that existed under
the predecessor. The Board found (without citing or
discussing Spruce Up) that the respondent became ob-
ligated on March 25 to consult with the union before
imposing initial terms because that was the point at
which the respondent expressed its intent to rehire all
of the predecessor’s teachers.
The Second Circuit denied enforcement of this por-
tion of the Board’s decision because, in the court’s
view
[t]he important consideration in determining
whether it is perfectly clear that a successor in-
tends to retain all of the employees is whether
they have all been promised re-employment on
the existing terms. . . . A successor-employer’s
right to set initial terms of employment may not
be rendered nugatory solely on the basis of an ex-
pression of intention to rehire its predecessor’s
employees—particularly when the successor’s
other actions are completely inconsistent with
such a statement.
549 F.2d 873 at 881–882. We agree with this reason-
ing, and believe that the perfectly clear exception
should be limited to situations in which the employees
have been tendered unconditional offers of hire, with
no indication that the predecessor’s terms will be
changed. The ‘‘perfectly clear’’ exception will not
apply if the employer indicates a change ‘‘prior to or
simultaneously with its offer to employ the prede-
cessor’s work force.’’ Id. at 881, quoting Brotherhood
of Railway Clerks v. REA Express, 523 F.2d 164, 171
(2d Cir. 1975), cert. denied 423 U.S. 1017 (1975).2
A survey of Board cases that apply Spruce Up also
supports the view that the Board has intended to limit
the ‘‘perfectly clear’’ caveat to instances in which the
new employer fails to announce new terms prior to, or
simultaneous with, extending unconditional offers of
hire to the predecessor’s employees. In Jerry’s Finer
Foods, 210 NLRB 52 (1974), the Board held that a
new employer who, 2 weeks prior to taking over oper-
ations, announced his desire to hire the predecessor’s
employees, but at lower wages, did not violate the Act
because it did no more than give preference to experi-
enced employees contingent on their acceptance of the
terms offered by the new employer. 210 NLRB at 53.
The Board similarly found that the new employer in
Henry M. Hald High School Assn., 213 NLRB 415
(1974), did not violate the Act by announcing changes
simultaneously with its employment offers after assur-
ing the teachers months earlier that they could apply
for jobs but informing them that the new terms and
conditions had not yet been set. Finally, in Boeing Co.,
214 NLRB 541 (1974), affd. sub nom. Machinists v.
NLRB, 595 F.2d 664 (D.C. Cir. 1978), the Board found
no violation where, even though it could be said that
the respondent intended to hire all or substantially all
of the predecessor’s employees (and that this intent
was made known to the union and the predecessor’s
employees), the ‘‘[r]espondent’s ‘intentions’ were from
the outset tied to the lower wages and benefits of [a
different contract].’’ In that case, the fact that the re-
spondent’s hiring intentions were based on lower
wages and benefits was communicated clearly and
early to the union. Id. at 552. Thus, the Board found
that there was a possibility that the predecessor em-
ployees would not accept employment and it could not
be said that the respondent planned to retain all of the
employees in the unit, as that phrase was intended by
the Supreme Court.
The facts in Arden’s, 211 NLRB 501 (1974), pre-
sented a more difficult case for the Board because nei-
ther the union nor the employees received notice of the
new employer’s intent to offer the predecessor’s em-
ployees employment, nor did they receive notice of the
new wages and terms, until the very day that the new
employer took over operation of the store. The Board
found that there could be no argument that the employ-
ees were misled into believing that they would be re-
tained without changes in their employment conditions
because, although there was no advance notice of the
new terms, there also was no advance commitment as
to the employees’ employment. Id. Admitting that it
was drawing a fine line, the Board held that the new
employer was entitled to set its initial terms and condi-
tions. In reaching this decision, the Board took into
consideration the facts that the new employer ex-
pressed its willingness to bargain with the union, there
was no evidence of union animus, and no attempt by
the employer to rid itself of the union. 211 NLRB at
502.3
1058 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
but it was clear that the predecessor employees would not have ac-
cepted employment even under the original terms and conditions, as
shown by the fact that the employees were on strike for over 4
months prior to the new employer taking over); and Holiday Inn of
Victorville, 284 NLRB 916 fn. 2 (1987) (no violation of the Act
when the new employer ‘‘did not mislead employees into believing
that their retention would be without change in their wages, hours
or conditions of employment, but expressly put them on notice that
their future employment would be under new conditions, giving
them the option of refusing employment if that arrangement was not
to their satisfaction’’).
4 245 NLRB 78 (1979), enfd. in pertinent part 640 F.2d 1094 (9th
Cir. 1981).
5 Member Cohen does not agree that the ‘‘perfectly clear’’ prin-
ciple would apply where, but for 8(a)(3) discrimination, some of the
predecessor’s employees would have been hired.
On the other hand, the Board has found a new em-
ployer to have violated the Act by announcing new
terms and conditions after hiring the predecessor’s em-
ployees, without bargaining with their union. For ex-
ample, in Blitz Maintenance, 297 NLRB 1005 (1990),
the new employer took over operations on June 15; on
the same day, the new employer gave the prede-
cessor’s employees job applications to fill out and told
them that wages would remain the same and as few
changes as possible would be made, although he did
indicate a possibility that he would change scheduling.
Within a couple of weeks, however, the new employer
unilaterally implemented changes affecting wages and
benefits and other terms and conditions of employ-
ment. The Board adopted the judge’s finding that the
employer violated the Act because he did not specify
to prospective employees the initial terms and condi-
tions. The Board found, however, that the employer
was not required to rescind changes made to the em-
ployees’ schedules because those changes were an-
nounced at the time that the employees were hired.
297 NLRB at fn. 2. See also Starco Farmers Market,
237 NLRB 373 (1978) (Board found violation where
the new employer changed benefits after expressing its
intent of keeping all of the predecessor’s employees
without indicating that the offers of employment were
conditional on acceptance of new terms and condi-
tions); and Spitzer Akron, Inc., 219 NLRB 20 (1975)
(Board found a violation where the new employer stat-
ed before taking over operations that ‘‘I want every
man to stay on the job, and we will carry on as
usual,’’ but on taking over the operation, he actually
changed a number of the terms and conditions of em-
ployment).
Contrary to the majority’s assertion, our interpreta-
tion of Spruce Up, and its application in this case, is
entirely consistent with the Board’s decision in Fre-
mont Ford, 289 NLRB 1290 (1988). In that case, the
respondent conducted a misinformation campaign de-
signed to mislead employees about their retention
under the predecessor’s terms and conditions of em-
ployment. For example, prior to making employment
offers: the respondent’s owner indicated to the union
representative that he had doubts about retaining only
a few of the predecessor’s employees (thereby indicat-
ing that he intended to hire most of the employees);
a supervisor directly informed two employees that they
would be retained and assured another employee that
nothing was going to change when the respondent took
over operations, including having union representation;
and the respondent instructed supervisors to conceal or
make misleading statements to employees who in-
quired about new working conditions or terms of em-
ployment. Thus, in those circumstances, the Board
found that the respondent’s actions fell within the
‘‘perfectly clear’’ caveat to Burns, as interpreted in
Spruce Up, because the respondent actively misled em-
ployees into believing that they would be retained
without change in their conditions of employment and
the ‘‘[r]espondent failed to clearly announce its intent
to establish a new set of conditions prior to inviting
former employees to accept employment.’’ 289 NLRB
at 1297 (emphasis added).
Fremont Ford is also distinguishable from the
present case because of the presence of 8(a)(3) viola-
tions. The Board found that the respondent in Fremont
Ford violated Section 8(a)(3) and (5) under a Love’s
Barbeque Restaurant No. 624 analysis because the re-
spondent did not hire some of the predecessor employ-
ees based on unlawful considerations: the interviews
were tainted because the respondent conditioned the
hiring of the predecessor employees on a willingness
to abandon union representation and to cross the
union’s picket lines.5 The Board found that, but for the
respondent’s unlawful conduct, it would have hired the
predecessor employees and the union’s status as the
exclusive bargaining representative would have sur-
vived the successor’s takeover of the business. 289
NLRB at 1295. Unlike the respondent in Fremont
Ford, the judge specifically found in this case that
there is no evidence that the Respondent harbored
union animus nor is there evidence that the Respondent
made an attempt to get rid of the Union. Further, there
is no evidence in this case that the Respondent ran a
‘‘misinformation campaign.’’ In our view, the Board’s
findings in Fremont Ford support our position rather
than that of the majority.
Thus, a survey of Board cases and our reading of
the decisions in Spruce Up and Burns, lead us to con-
clude that the Board should reaffirm Spruce Up and
clarify that a new employer need only consult with the
predecessor employees’ bargaining representative prior
to setting initial terms and conditions if (a) the new
employer plans to retain a sufficient number of prede-
cessor employees to make it evident that the bargain-
ing representative’s majority status will continue and
(b) the new employer fails to announce to the prede-
1059CANTEEN CO.
6 Member Cohen does not agree with part (a) of this test. In his
view, it is inconsistent with the Supreme Court’s language: ‘‘plans
to retain all’’ (emphasis supplied). However, inasmuch as he agrees
with part (b) of the test, he joins Member Stephens in finding that
the Respondent was free to set initial terms and conditions of em-
ployment.
7 Our view on this point is not changed by the judge’s finding that
after Anderson, Piquette, and Cook rejected the job offers, the Re-
spondent ‘‘[I]n a panicked reaction . . . [was] compelled to seek
personnel from a variety of sources.’’ The judge infers that the Re-
spondent’s ‘‘panicked reaction’’ is evidence of the Respondent’s in-
tent to hire all of the predecessor employees. We do not believe that
the Respondent’s unannounced intent is a factor that logically bears
on whether it was ‘‘perfectly clear’’ that the Respondent intended to
retain the predecessor employees without change in their terms and
conditions of employment.
cessor employees, prior to, or simultaneously with, ex-
tending an unconditional offer to hire, that its initial
terms will be different from the predecessor’s terms.6
In this case, the Respondent never announced that it
would hire the Service America employees, but did an-
nounce its intent to establish new terms and conditions
of employment before it invited Anderson, Piquette,
and Cook to accept employment. In fact, the Respond-
ent posted the job vacancies at the site instructing pro-
spective employees that they were required to fill out
applications in order to be considered for employment.
The employees were also required to participate in
interviews with the Respondent before they were of-
fered jobs. It was during the individual interviews that
the Respondent announced its wage rates and then
made job offers to Anderson, Piquette, and Cook.
We disagree with the majority that the ‘‘plan to re-
tain all’’ came into existence on June 22. The evidence
shows that, on June 22, the Respondent had not yet de-
cided whom to hire. Indeed, the interviewing of appli-
cants was not scheduled to begin until the next day.
As discussed above, the Respondent had decided on
June 22 only to consider the hiring of the employees
of the predecessor. In these circumstances, it was not
‘‘perfectly clear’’ that Respondent had decided, on
June 22, to hire the employees of the predecessor. If
anything, it is ‘‘perfectly clear’’ that no hiring decision
had been made as of June 22.
Further, assuming arguendo that the Respondent had
decided, by June 22, to offer employment at the inter-
view to be held on the next day, that offer would be
at the new terms and conditions of employment. As set
forth above, the new employer is privileged to set forth
new terms at the time of the offer.
In our view, the circumstances of this case are simi-
lar to Spruce Up, because the Respondent must have
realistically anticipated the possibility that the prede-
cessor’s employees would not desire to be employed
under the new wages and, thus, it can not be said that
it was ‘‘perfectly clear’’ to the Respondent that he
would retain all of the employees.7 Finally, as the
Board did in the close case of Arden’s, supra, we
would take into consideration that the judge in this
case specifically found no evidence of union animus,
that the Respondent indicated its willingness to bargain
with the Union, and that there is no evidence that the
Respondent made an attempt to rid itself of the Union.
Our position is not altered by the facts relied on by
the judge to find that the Respondent misled the em-
ployees. In his view, the employees were misled be-
cause: (1) the Respondent initiated discussions with the
Union regarding a ‘‘working manager’’; (2) the Re-
spondent kept the wage rates ‘‘secret,’’ even when two
of the employees inquired about wages; and (3) the
Respondent admits that it assumed that it would be re-
taining the Service America employees. The fact that
the Respondent contacted the Union regarding the cre-
ation of a ‘‘working manager’’ and the fact that the
Respondent refused to discuss wage rates until the
time of the interviews shows that it was anything but
‘‘perfectly clear’’ that the Respondent planned to re-
tain the predecessor’s employees without any change
in their wages, hours, and conditions of employment.
In our view, the following facts make it even less clear
that the Respondent planned to retain the predecessor’s
employees: the Respondent posted the job vacancies
and required job applications and interviews; the Re-
spondent indicated to the Union that any employees
hired would be subject to a probationary period; and
the Respondent expressed a preference for working
from another Canteen collective-bargaining agreement
rather than the Service America (the predecessor’s)
agreement, if and when it began negotiations with the
Union.
We are concerned that the majority’s decision today
will result in a rule whereby a new employer will be-
come obligated to retain the predecessor’s employees
under their former terms and conditions of employ-
ment merely by indicating that it is considering hiring
the predecessor’s employees. This is exactly one of the
scenarios that the Board was concerned about when it
decided in Spruce Up to limit the ‘‘perfectly clear’’ ca-
veat to certain circumstances. For instance, new em-
ployers may be discouraged from talking to the prede-
cessor employees’ bargaining representative or perhaps
from even reviewing the predecessor’s collective-bar-
gaining agreement, until after the new employer has
announced all of its changes in terms and conditions
of employment and has hired its work force; otherwise
the new employer may be found to have misled the
predecessor employees into believing that they would
be retained at their former terms and conditions. We
are also concerned that the majority’s decision is tanta-
mount to announcing a requirement that a new em-
ployer must announce the changes it intends to make
to terms and conditions of employment all at once,
even if the new employer has not yet extended job of-
fers to the predecessor employees.
1060 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 Errors in the transcript have been noted and corrected.
2 On November 9, 1993, I issued an Order to show cause as to
why the record should not be reopened for receipt of G.C. Exhs.
11(a) through (g) on a posthearing basis. By letter dated November
16, 1993, the Respondent advised that it had no objection thereto,
For all of these reasons, we would reverse the
judge’s decision and find that the Respondent did not
violate Section 8(a)(5) of the Act by unilaterally
changing the wage rates. Because we would find that
the Respondent was free to set initial terms and condi-
tions of employment, we would also reverse the
judge’s finding that the Respondent constructively de-
nied employment to Anderson, Piquette, and Cook,
thereby violating Section 8(a)(3). Finally, because we
would find that the Respondent lawfully failed to em-
ploy a majority of the Service America unit employ-
ees, we would also reverse the judge’s finding that the
Respondent violated the Act by refusing to recognize
and bargain with the Union. The Respondent did not
hire any of the Service America employees. Thus the
Service America employees were not a majority of the
Respondent’s work force, and the Respondent is not a
Burns successor and is not obligated to recognize or
bargain with the Union, which does not represent any
of the Respondent’s current employees at the Medical
College.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec-
tion
To choose not to engage in any of these pro-
tected concerted activities.
WE WILL NOT refuse to bargain in good faith by
withdrawing recognition or otherwise refusing to rec-
ognize and bargain with Hotel Employees and Res-
taurant Employees Local No. 122, AFL–CIO as the ex-
clusive representative of employees in the following
appropriate unit:
All commissary food processing employees em-
ployed by the Employer at the Medical College of
Wisconsin, excluding guards, professional em-
ployees and supervisors as defined in the Act.
WE WILL NOT refuse to bargain in good faith by
unilaterally setting initial terms of employment for the
employees described above, without consulting the
Union.
WE WILL NOT discourage membership in a labor or-
ganization by constructively denying employment to,
or in any other manner discriminating with respect to
our employees’ wages, hours, or other terms and con-
ditions of employment.
WE WILL NOT in any like or related manner interfere
with, coerce, or restrain employees in the exercise of
their rights guaranteed by Section 7 of the Act.
WE WILL, on request of the Union, rescind the uni-
lateral changes in our unit employees’ wages or other
benefits that were implemented on July 1, 1992, and
WE WILL make affected employees whole for losses
they incurred by virtue of our unilateral changes to
their wages or other benefits.
WE WILL offer Susan Anderson, Kelly Piquette, and
Irene Cook immediate employment in their former po-
sitions or, if nonexistent, to substantially equivalent
jobs, and make them whole for losses sustained by rea-
son of the discrimination against them, with interest.
WE WILL, on request, bargain collectively and in
good faith concerning wages, hours, and other terms
and conditions of employment with the Union as the
exclusive representative of employees in the above-de-
scribed unit, and embody any understanding reached in
a signed agreement.
CANTEEN COMPANY
Benjamin Mandelman, Esq., for the General Counsel.
Steven H. Adelman, Esq. (Lord, Bissel & Brook), of Chicago,
Illinois, for the Respondent.
DECISION
STATEMENT OF THE CASE
JOEL A. HARMATZ, Administrative Law Judge. This case
was tried in Milwaukee, Wisconsin, on June 28 and 29,
1993, on an original unfair labor practice charge filed on
July 22, 1992, and a complaint issued on November 29,
1992, alleging that the Respondent violated Section 8(a)(1),
(3), and (5) of the Act by first bargaining, then withdrawing
recognition from the Union as exclusive bargaining rep-
resentative of a unit of employees in its newly acquired busi-
ness, while constructively denying employment to Susan An-
derson, Kelly Piquette, Irene Cook, and Sandra Wilson, the
previously represented employees, by offering predictably
unacceptable terms, thereby causing them to reject job offers.
In its duly filed answer, the Respondent denied that any un-
fair labor practices were committed. Following the close of
the hearing, briefs were filed on behalf of the General Coun-
sel, the Charging Party, and the Respondent.
On the entire record,1 including my opportunity directly to
observe the witnesses and their demeanor, and after consider-
ing the posthearing briefs,2 I make the following
1061CANTEEN CO.
and, accordingly, the record is hereby reopened for the limited pur-
pose of granting the General Counsel’s request that G.C. Exhs.
11(a)–(g) be, and they hereby are, received in evidence.
3 Unless otherwise indicated all dates refer to 1992.
4 See, e.g., Snow & Sons, 134 NLRB 709, (1961), enfd. 308 F.2d
687 (9th Cir. 1962).
FINDINGS OF FACT
I. JURISDICTION
The Respondent, a corporation, from facilities in Milwau-
kee, Wisconsin, operates as a contractor of food catering
services. In the course thereof, the Respondent, during the
12-month period prior to issuance of the complaint, pur-
chased and received at the facilities goods valued in excess
of $50,000 directly from points outside the State of Wiscon-
sin. The complaint alleges, the answer admits, and I find,
that the Respondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
The complaint alleges, the answer admits, and I find that
Hotel Employees and Restaurant Employees Local No. 122,
AFL–CIO (the Union) is a labor organization within the
meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Factual Overview
Prior to the events in issue here, Service America, a com-
petitor of the Respondent, held the food service contract at
the Medical College of Wisconsin. It had four employees at
that location, namely, Susan Anderson, Kelly Piquette, Irene
Cook, and Sandra Wilson. They were represented by the
Union in a more comprehensive bargaining unit that also in-
cluded some 150 other workers employed at a number of
other locations where Service America provides food serv-
ices. Recognition in that multilocation unit was memorialized
in a collective-bargaining agreement between the Union and
Service America having a term of October 1, 1990, through
September 30, 1993.
In 1992,3 the Medical College of Wisconsin reopened bid-
ding on its food service operation. In late May or early June
1992, the Respondent—a food service contractor that oper-
ates in 15 States and has more than 300 collective-bargaining
agreements—was informed that it was the successful bidder.
Under the terms of the takeover, Service America would be
replaced by the Respondent on July 1. Anderson, Piquette,
and Cook applied and were offered jobs by the Respondent,
but at significantly lower rates of pay. Because of the cut
each rejected their job offer. On June 30, the Union was in-
formed that because it did not represent any of the Respond-
ent’s employees it would not be recognized at the Medical
College.
B. Positions of the Parties
The ultimate question in this case is whether the Respond-
ent, having successfully bid the food service operation, was
obligated to continue the bargaining relationship either by
virtue of its own voluntary action or as a statutory successor.
Remedially, perhaps even more significant is a prefatory alle-
gation that the Respondent violated Section 8(a)(3) and (1)
of the Act by offering former employees at the site predict-
ably unacceptable rates of pay, causing them to reject the
employment offers, thus, constituting a constructive and pro-
scribed refusal to hire. In addition, the General Counsel con-
tends that these rates were set at a time when the Respond-
ent, under NLRB v. Burns Security Services, 406 U.S. 272
(1972), and related cases, could not do so legitimately, with-
out consulting the Union.
By way of defense, the Respondent defends against the
8(a)(3) and (1) allegations with the observation that the
former employees were offered jobs at legitimately estab-
lished, competitive wages. It claims that the new wage levels
were substantially above those paid elsewhere to ‘‘new’’ em-
ployees hired into the Respondent’s locations, and that it had
every reason to assume that the job offers would be accept-
ed. It contends that it legitimately acted alone in fixing the
initial terms under aegis of Burns, and, further, that the new
wage rates were not shown to have been grounded on
antiunion motivation. As for the 8(a)(5) recognition issue, the
Respondent asserts that it did not actually employ any of the
former employees, and that while it did engage in prelimi-
nary discussions with the Union concerning an issue of im-
portance to it, this was not tantamount to recognition or bar-
gaining, and it at no time intended to grant recognition, nor
did it have any obligation to do so. Finally, the Respondent
argues that any successorship finding would rest on a mate-
rial change in the scope of the unit, because the Service
America employees were in a multilocation unit while, under
the instant complaint, bargaining could be compelled only at
a single location.
C. Preliminary Exchanges Between the Parties
There is no question that the Respondent, well prior to its
July 1 startup, initiated contact with the Union, and, as shall
be seen, actually negotiated a discrete term of employment.
These exchanges are a major ‘‘building block’’ for the
8(a)(5) theory specified in the complaint, in which it is as-
serted that the Respondent actually agreed to recognize the
Union, and violated Section 8(a)(5) when on June 30 it ad-
mittedly refused to negotiate.4 Even if not tantamount to rec-
ognition, the General Counsel contends, in the alternative,
that these discussions, coupled with the Respondent’s inten-
tion to retain the Service America employees, precluded the
Respondent from lawfully setting new wage rates without
first consulting with the Union. See Burns, above, 406 U.S.
at 294, 295.
In this connection, the facts show that in early 1992, prior
to preparing its bid, and ostensibly to assist in the competi-
tive process, the Respondent requested that the Union for-
ward a copy of its collective-bargaining agreement that cov-
ered Service America’s employees at the Wisconsin College
of Medicine. (G.C. Exh. 2.) The Union obliged.
Thereafter, the Respondent was named as the successful
bidder. In late May, Robert Kovacs, the Respondent’s direc-
tor of labor relations and its chief regional spokesperson for
contract negotiation in Wisconsin and 15 other States, was
informed of the acquisition by Dennis Hillgartner, the Re-
spondent’s district manager for food services, whose author-
ity includes its Milwaukee sites. About a week later,
Hillgartner again telephoned Kovacs advising that under the
1062 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Hillgartner testified that food service arrangements at the College
called for ‘‘executive style catering’’ for ‘‘special events.’’ He added
that the Medical College had expressed dissatisfaction with Service
America’s performance in this area. It was felt that a qualified indi-
vidual (Terry Mouller) was available within the Respondent’s orga-
nization that could effectively perform that responsibility. She was
a management trainee, however, who had already been promised a
position as ‘‘assistant manager.’’ He informed Kovacs of this need,
declaring that it was ‘‘imperative’’ that the working manager posi-
tion be secured to deliver on the promises in the proposal. He added
that ‘‘if we’re going to in fact recognize the union, I needed . . .
the understanding that we will have a flexible working assistant
manager.’’
6 Kovacs testified that he is not involved in day-to-day labor activ-
ity at a particular site, but that he will ‘‘negotiate a contract over
whatever period of time, and then . . . leave, rarely to go back for
another three years.’’ It is therefore fair to assume that, at a mini-
mum, his involvement at the Medical College was in anticipation of
collective bargaining.
7 During a series of leading questions, propounded by the Re-
spondent’s counsel, Kovacs denied that other Canteen contracts were
mentioned during these deliberations. Although counsel might have
been entitled to adduce evidence in this fashion, it was an option
that failed to produce reliable testimony. I believed that more com-
prehensive negotiations were a high-level priority for Gallo and it is
entirely likely that he raised that issue. His account was consistent
with the fact that at the June 30 meeting, as Kovacs himself testified,
Gallo presented a comparative study of terms contained in the Re-
spondent’s Miller Brewing and the Union’s Service America labor
agreements. (R. Exhs. 1 and 2.) Gallo was believed over any denial
by Kovacs that this step was taken by the former pursuant to their
earlier discussion.
8 G.C. Exh. 4.
9 The letter was not offered in evidence.
10 Gallo’s affidavit places this exchange as having taken place
around the end of June. In light of Kovacs’ admission, any discrep-
ancy in this regard is viewed as immaterial.
11 Gallo also testified, without contradiction, that he discussed with
Kovacs a request by the latter that, once employed, the incumbent
employees be required to serve ‘‘a relatively short probationary pe-
Union’s collective agreement with Service America there
was no provision for a ‘‘working manager.’’ Hillgartner de-
clared that, while this position would entail performance of
bargaining unit work, it was essential to the Respondent’s
performance at the Medical College.5
On June 8, he again met with Kovacs, expressing concern
as to how this requirement would impact on any ‘‘labor con-
tract.’’ It was agreed that samples be collected of favorable
contract language and then transmitted by Hillgartner to the
Union.
According to Kovacs, he met with Hillgartner on June 8,
showing him language in another labor contract with a dif-
ferent union that authorized a supervisor to perform unit
work. Kovacs then telephoned Vince Gallo, the business
manager of Local 122. Kovacs offered the following account
of their conversation:
I basically just explained to him that we were award-
ed the contract at the Medical College and that we were
interested in working out an arrangement wherein we
could have language concerning a working manager.
Gallo, according to Kovacs, replied that he did not think this
would present a problem unless someone would get hurt by
it, but requested something in writing. Kovacs stated, ‘‘I’ll
send it to you.’’6
Gallo differs slightly with Kovacs in this regard, testifying
that he expressed disenchantment with the idea of yielding
a position normally held by members, but that he agreed to
review language in other contracts extending this privilege.
Gallo also testified that their discussion had ramifications far
broader than the working manager issue. He claims that he
suggested to Kovacs that as a guide to overall negotiations,
he wanted to ‘‘work off of the Service America contract,’’
but that Kovacs resisted, indicating that the Respondent pre-
ferred that one its own comparable contracts be used as a
basis for negotiation. Gallo was led to understand that
Kovacs had the Miller Brewing agreement in mind.7
Gallo testified that Hillgartner, on or about June 11, hand
delivered to his office written contract language that would
accommodate the Respondent’s needs on the working man-
ager issue. The source was a collective-bargaining agreement
between the Respondent and a sister local of the Union.
(G.C. Exh. 3.) In addition to Hillgartner’s contact, by letter
of June 15, 1992, Kovacs informed Gallo as follows:
As you are aware, Canteen will be opening a new
account, Medical College of Milwaukee on July 1,
1992.
It is imperative to our successful operation of this fa-
cility that it be staffed by a working manager. To that
end, I would propose that we either add language to
any collective bargaining agreement or sign a letter of
understanding that clearly spells out this position.
Therefore, I would propose the following language
that is contained in other H.E.R.E. contracts:
Bargaining Unit Work
[It is] agreed that supervisory employees shall be al-
lowed to perform work normally done by bargaining
unit employees as long as they do not displace said em-
ployees.
If you agree, please sign one copy of the two en-
closed originals and return same to my office.8
Having failed to receive a signed copy from the Union, on
or about June 22, Kovacs testified that he initiated another
conversation with Gallo, because ‘‘we were within a couple
of weeks of opening the account and we wanted to make
sure that we were in agreement on it.’’ Although Kovacs tes-
tified that Gallo ultimately agreed to this language, he could
not recall whether Gallo indicated that he would do so during
this phone conversation. It appears that Gallo subsequently
signified his assent by mail.9
Gallo also testified that it was his recollection that, during
this second conversation, he arranged with Kovacs to meet
in conjunction with impending negotiations covering the Re-
spondent’s employees at Miller Brewing. Kovacs suggested
that they exchange proposals in that regard on June 30, using
the morning for that purpose, and then in the afternoon, that
they proceed to negotiate an agreement for the Medical Col-
lege. Kovacs agreed that an arrangement had been made
whereby at noon on June 30, ‘‘we would discuss the Service
America contract.’’10 Specifically, it does not appear that the
Respondent’s prior agreement to meet for that purpose was
subject to any express conditions or limitations.11
1063CANTEEN CO.
riod.’’ Kovacs was told that the Union would have no problem with
such a requirement.
12 Srok admits that he discussed the Service America employees
with Mouller, who previously worked with them at the Medical Col-
lege, and who advised that ‘‘everyone worked well.’’ In fact, the Re-
spondent concedes that Srok took no steps to solicit other applicants
until after he was informed, in late June, that Piquette, Anderson,
and Cook had rejected job offers.
13 G.C. Exh. 5.
14 Irene Cook, the fourth Service America employee, testified that
she too participated in a conversation with Fitzgerald. The record
does not clearly establish just who initiated this contact.
15 Anderson could not recall if her application had been filed at
the time. I find that her application dated June 15 actually was filed
subsequently. G.C. Exh. 8.
16 Fitzgerald testified that he was approached, after the posting, by
two Service America employees whom he did not identify. He
claims that they inquired as to how ‘‘they could go about filling out
this applications.’’ This testimony does not squarely contradict the
General Counsel’s witnesses, and even were I to construe it as pre-
senting inconsistent testimony, the more precise testimony offered by
the latter would be credited.
17 Miller Brewing is one of the Respondent’s three organized oper-
ations in the Milwaukee region.
18 Piquette’s prehearing affidavit was not quite so direct. There she
indicates that when she asked about the Union, he simply replied
that if the employees had a problem, they could seek assistance of
union representatives at Miller Brewing.
19 Fitzgerald claims that when asked if the operation would be
union, he indicated ‘‘that it was up to the employees to make that
decision.’’ He acknowledges that he identified Miller Brewing and
Briggs & Stratton, as the Respondent’s union operations, but denies
that he made any suggestion that Piquette go to either facility. Fitz-
gerald admits that, previously, he had been informed by superiors
Continued
D. The Offers of Employment to
Service America Employees
1. The Respondent’s intentions with respect to the
Service America employees
During and before this interaction with the Union, accord-
ing to a consistent segment of the Respondent’s evidence, it
held the intention, albeit unannounced, to retain the Service
America employees at the Medical College. It is also as-
serted on behalf of the Respondent that it was expected that
they would accept its offers of employment. Thus,
Hillgartner testified that the Respondent, as a matter of prac-
tice, on displacing another contractor, would post the vacan-
cies at the site, and, as he put it: ‘‘. . . we obviously give
the first choice of jobs to current employees that are there.’’
Matthew Fitzgerald, a ‘‘manager of food services,’’ who re-
ported to Hillgartner, agreed that the Respondent ‘‘antici-
pated hiring those people.’’ Similarly, Kovacs testified that
he assumed that the Union would be recognized at the Medi-
cal College because, as he explained, it was the Respondent’s
practice to ‘‘offer the existing employees positions, and in
most cases the employees seem to accept those jobs and
come on board.’’
As events unfolded, hiring responsibility was delegated to
Steven Srok, the Respondent’s onsite manager at the Medical
College. In the presence of the assistant manager, Terry
Mouller, he conducted the formal interviews. Srok testified
that his superiors had instructed him to accord a preference
to those already employed at that location. He added that this
was in accord with his own desire to retain the Service
America employees because he ‘‘wanted their experience.’’12
As shall be seen, the Respondent’s intention to retain the
Service America employees was backed by an expectation so
strong that it neglected to take serious steps to recruit from
other sources until it was informed that they had rejected job
offers.
2. The invitations to apply
Consistent with the foregoing, on or about June 11, Mat-
thew Fitzgerald posted the following announcement in the
Medical College cafeteria:
Canteen Corporation is accepting application’s [sic]
for all positions at the Medical College of Wisconsin
facility. Blank applications can be obtained at our office
located at 4500 West Wisconsin. Office hours are 7:30
a.m. to 4:30 p.m. You cannot be considered for a posi-
tion if you do not fill out an application.
Any questions concerning employment should be di-
rected to myself at (414) 774–1111.
Thank you.13
Kelly Piquette, Susan Anderson, and Sandra Wilson testi-
fied that before they elected to respond, they were solicited
personally by the Respondent’s officials.14 In this respect,
Anderson testified that Fitzgerald contacted her in early June,
requesting a meeting, prompting her to go to his office in
which she participated in a brief discussion of the Respond-
ent’s objectives at the Medical College.15 Piquette testified
that she was telephoned at work by Terry Mouller, the des-
ignated assistant manager at the Medical College. Mouller
urged Piquette to schedule an interview and to complete an
application. In addition, Sandra Wilson, also a Service Amer-
ica employee, testified that shortly after the posting, Fitzger-
ald told her that ‘‘he would like me to contact him and set
up an interview because he was interested in talking to me
about staying on as an employee.’’ Wilson, who never filed
an application, testified that towards the end of June, after
the others actually had their employment interviews, she
again was told by Fitzgerald that he was still interested in
interviewing her.16
3. Fitzgerald’s alleged antiunion remarks
The General Counsel asserts that Fitzgerald, during these
preliminary discussions, made comments concerning the
Union that not only disclosed an antiunion intent, but, though
unalleged, constituted independent 8(a)(1) violations. In this
respect the General Counsel relies on the testimony of
Piquette and Anderson. Each testified that in their meetings
with Fitzgerald, he adverted to unionization in negative
terms.
Piquette testified that when she met with Fitzgerald, she
asked if there would be a union. Fitzgerald replied, ‘‘No,’’
advising that she could seek work at Miller Brewing17 if
‘‘you feel the need . . . to . . . have a union representative
. . . if you feel you can’t come to us personally.’’18 Beyond
that, Piquette asserts that when she inquired about rates of
pay, Fitzgerald stated that he was not interested in discussing
wages or benefits at that juncture.19
1064 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
that they anticipated that the job would be union, however, he denies
having mentioned this to the applicants.
20 It made no sense that Fitzgerald would have suggested that ei-
ther seek work elsewhere in the Respondent’s operation. Considering
the Respondent’s approach to manning the job it is inconceivable
that Fitzgerald would have made any statements calculated to steer
Service America applicants away from the Medical College.
21 This is based on the credited testimony of Srok, who presum-
ably would have the best information about the particular time
frame. Accordingly, it is concluded that the interviews were held on
and after June 23.
22 Srok acknowledged the suitability of all three, when he de-
scribed his efforts during the interviews to persuade them to accept
employment with the Respondent as follows:
I tried to explain extensively how we care about our people. I
explained that I treat people fairly and when someone does a
good job I let them know it. I tried to explain the benefits of
working for our company. I wanted them to work for me.
23 On June 22, perhaps, after the interview, Piquette completed her
employment application, which indicated that she had started at
Service America at $5.97, and almost 4 years later, was then earning
$6.79 per hour. G.C. Exh. 6.
24 Cook filed her application on June 16. G.C. Exh. 9. It disclosed
a starting rate of $6.11 at Service America, which had increased to
$6.79 by June 1992.
25 Anderson filed her application on June 15. G.C. Exh. 8. It re-
flected that her Service America starting rate in July 1988 was
$6.97, and that almost 4 years later she was earning $7.49.
26 It is of interest that Srok testified that during both the Piquette
and Anderson interviews he approached the wage issue as follows:
. . . I tried to stress knowing that they had higher salaries, that
we at Canteen treat our employees with respect, that we like to
foster a team attitude, that . . . we’re trying to be the best food
service company in the world. I tried to instill that we give cred-
it where credit is due and we consider our employees our big-
gest asset.
27 Later, Hillgartner informed Srok that the rate offered, though ap-
parently contemplated since March, was actually in error, and should
have been $5.72. Hillgartner testified that he took this step after dis-
covering that the ‘‘utility’’ rate set forth in Service America’s collec-
tive-bargaining agreement at the time was $5.72 per hour. Srok sub-
sequently informed the three applicants that the rate would be in-
creased by 2 cents. If Hillgartner is to be believed, this was not the
only discrepancy between his wage projections set forth in R. Exh.
3, and the Service America labor contract. In that document, the rate
of $6.50 was set forth forth for the cook. This classification was to
receive the starting rate of $7.29 hourly under Service America’s
agreement with the Union. This enforces my doubt that there was
any correlation between the Service America contract and the rates
contained in R. Exh. 3. To make matters worse, I did not believe
Hillgartner’s intimation that the Company did not intend to hire An-
derson as a ‘‘cook.’’ Obviously, the $5.72 rate would be difficult to
explain were there an intention to retain Anderson in that capacity.
Yet, would Anderson be expected to do anything else? Also unac-
ceptable is Hillgartner’s explanation that the Respondent preferred
utilization of a cook who would be ‘‘experienced’’ with the Re-
spondent’s ‘‘recipes and procedures.’’ In contrast, Fitzgerald testified
that the individual designated for this position, Bonnie Lebiecki, was
an unknown quantity. She had worked under him in a ‘‘smaller’’ op-
eration in the past. According to Fitzgerald, he did not feel that she
‘‘had the level of experience to step right into that and needed to
prove herself to me.’’ When transferred Lebiecki was making only
$5.50 per hour, and according to Fitzgerald, at the Medical College,
she was given $5.70 as a probationary rate until she could dem-
onstrate her ability to handle the job. R. Exh. 9. It is considered
more likely that Lebiecki’s transfer was an emergency measure in
reaction to Respondent’s notification that Anderson would not be
available to serve as the ‘‘cook.’’
As indicated, Irene Cook also met with Fitzgerald. She
testified then when she inquired about rates of pay, Fitzger-
ald would only state that they would exceed ‘‘minimum
wages.’’ Cook testified that when she inquired if the job
would be union, Fitzgerald replied, ‘‘absolutely not,’’ and
added that the Respondent did not want to keep all the girls
because ‘‘they want a change.’’ After she indicated that she
wanted to remain union, Fitzgerald allegedly commented that
Cook might be interested in seeking work at one the Re-
spondent’s sites that were union.
I believed Piquette and Cook only insofar as they testified
that when inquiries were made about wage rates, Fitzgerald
declined to offer precise guidance. Although Fitzgerald was
an unimpressive witness, in this instance, Piquette and Cook
were even less believable. The antiunion remarks they at-
tribute him simply did not ring true.20 It is my distinct im-
pression that the Respondent at the time was on a course
pointing to recognition of the Union and retention of the
Service America employees. The Respondent’s commitment
to this eventuality was so strong that its recruitment efforts
did not include any significant exploration of alternative
sources for manning the job. Mid-June would have been a
totally inopportune time and context for a subordinate to
strike out against the Union. Considering the probabilities
evident from the entire record, together with my strong sus-
picions, garnered initially during the testimony of Piquette
and Cook, it is concluded that the Respondent is entitled to
benefit of the doubt on this issue. I reject the assertions that
Fitzgerald exhibited union animus during these preliminary
conversations.
4. The interviews, job offers, and reduced hourly rates
‘‘[D]uring the last full week of June,’’ presumably com-
mencing on June 23,21 all Service America employees that
applied were interviewed and offered jobs. The Respondent
during those interviews for the first time disclosed publicly
that it would not adhere to each and every existing condition
of employment.
At the time, the Service America bargaining unit employ-
ees were compensated at the hourly rates set forth below:
Kelly Piquette $6.79
Susan Anderson 7.49
Irene Cook 6.79
Sandra Wilson 7.49
As of June 23, only Piquette, Anderson, and Cook had
filed applications. Srok, during their separate interviews, of-
fered each a job,22 but stated that they merely would earn
$5.70 per hour, a reduction of 16 percent in the cases of
Piquette23 and Cook,24 and 24 percent in the case of Ander-
son.25 At the time of the interviews, Srok was fully aware
of of the drastic reductions in earnings that the employees
would sustain26 if they accepted employment with the Re-
spondent.27 All three applicants expressed strong disenchant-
ment with the wage offering, but were noncommittal on ac-
ceptance, advising that they would think it over.
The experience of Sandra Wilson, Service America’s ca-
tering coordinator at the Medical College, presents a special
case. She testified that she had two brief conversations with
Fitzgerald. The first was about the time that the Respondent
1065CANTEEN CO.
28 Hillgartner testified that on Monday, June 29, Kovacs told him
that ‘‘the ruling Mr. Taegel gave me was the fact that there was no
union representation left at the Medical College . . . it was against
the law . . . to in fact recognize and bargain with Local 122.’’
29 R. Exhs. 1 and 2.
30 According to Hillgartner, when the Union raised the Medical
College issue, Kovacs replied,‘‘Sorry, but we have nothing to talk
about, there are no employees left that are members of local 12 and
I have been told it is against the law for me to recognize and bargain
with you.’’
31 G.C. Exh. 7. Vince Gallo testified that, on learning that very
day that the employees had declined employment offers, he re-
quested that this letter be prepared and that new authorizations be
executed. Anderson confirmed that all employees signed union au-
thorization cards at that time.
posted the June 11 notification inviting the incumbent em-
ployees to file job applications. According to Wilson, at the
time, Fitzgerald advised that he wanted her to arrange an
interview because ‘‘he was interested in talking to me about
staying on as an employee.’’ Wilson indicated that she would
contact him. She did not do so, however. Later, toward the
end of June, after the others had been interviewed, she again
had a chance meeting with Fitzgerald at the College. He reit-
erated his interest in interviewing her. Wilson advised that
she would think about it. She never applied, explaining that
based on the wage offers described to her by coworkers, she
could not afford to work for the Respondent.
Ultimately, a few days prior to the July 1 starting date,
Piquette, Anderson, and Cook informed the Respondent that
they would reject the job offers. Hillgartner asserts that he
first learned that the Service America employees had rejected
employment on either Thursday, June 25, or Friday, June 26.
In a ‘‘panicked’’ reaction, this compelled the Respondent to
seek out personnel from a variety of sources, including news-
paper advertisements, and utilization of temporary agencies
and a ‘‘job service.’’ See G.C. Exhs. 11(a), (b), and (c).
It is the Respondent’s testimony that this development led
it to recast its position with respect to the Union. According
to Kovacs, on or about June 27, Hillgartner reported that the
Service America employees had rejected the job offers, and
hence the new operation would be manned by persons hired
‘‘off the street.’’ Because uncertain about what this meant in
terms of union recognition, Kovacs contacted Harold Taegel,
the Respondent’s corporate vice president and director of
labor/employee relations. Taegel advised that recognition of
the Union in these circumstances would be illegal, and he in-
structed Kovacs to refuse to negotiate.28
E. The Events of June 30
On June 30, the day before the Respondent was to begin
operations at the Medical College, Kovacs, and Hillgartner
appeared at union headquarters to meet with Gallo, and his
brothers, Mike and Sam, pursuant to their earlier agreement
made sometime in mid-June. Prior thereto, there had been
neither direct, nor indirect disclosure to the Union either that
new wage rates had been fixed for the Medical College job,
or that any nonnegotiated change in existing terms was in-
tended.
As agreed, the first order of business on June 30 involved
an exchange of proposals on the soon to expire contract at
Miller Brewing, to be followed by discussion of possible ex-
tension of that agreement. Previously, it also had been agreed
that, at noon, the parties would ‘‘discuss what we were going
to do at the Medical College . . . to get the place open July
1st.’’ Consistent therewith, Gallo opened the Medical Col-
lege discussions by presenting Kovacs an outline that high-
lighted differences between the Miller Brewing and Service
America bargaining agreements in the area of holidays, vaca-
tion, money, etc.29 At that point, Kovacs admittedly stated:
I have been advised by my boss that I will not rec-
ognize 122 since we feel that they legally do not rep-
resent the employees at the Medical College.30
Gallo admittedly lost his temper and walked out. Having re-
ceived no prior information that the Service America em-
ployees had ‘‘quit,’’ or under what circumstances, he tele-
phoned at the Medical College. In the process, he learned for
the first time of the wage cuts. Thus, when he inquired about
why the job offers were rejected, while complaining that he
was with Respondent’s officials for the purpose of negotiat-
ing a contract that very afternoon, he was informed by the
employees that they had no choice in light of the substantial
cuts in pay. Gallo, after learning that they would work for
the Respondent if current conditions were maintained, re-
quested that they prepare a letter to that effect. He then re-
turned to the still-present company representatives, yelling at
Kovacs, without sparing profanities, that:
[T]he company stabbed me in the back, that we had an
agreement that we were going to negotiate a contract,
and they orchestrated the discharge of those employees
by offering them reduced wages and no benefits.
The company representatives then left, stating there was
nothing further to discuss.
Later that day, Vince Gallo sent Mike Gallo to the Medi-
cal College. In the latter’s presence, a letter was prepared
and signed by all four of the Service America employees,
stating:
We, the undersigned, would agree to continue our em-
ployment at the Medical College of Wisconsin at our
present rate of pay according to union scale, and would
like to continue our union affiliation.31
The letter was given returned to Vince Gallo, who for-
warded it the Respondent. There was no response. The
Union filed the instant unfair labor practice charge on July
21.
F. Concluding Analysis
Under the successorship doctrine, an employer is impelled
to accept the collective-bargaining relationship of another
employer if (1) a majority of its employees had been em-
ployed by the predecessor, and if (2) similarities between the
two operations manifest a ‘‘substantial continuity’’ between
those enterprises. Citisteel USA, 312 NLRB 815 (1993);
NLRB v. Burns Security Services, above, 406 U.S. at 280–
281. Satisfaction of this latter requirement is amply dem-
onstrated in this case by the Respondent’s replacement of a
food service contractor under conditions obligating itself to
provide those services in the same capacity, with neither hia-
1066 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
32 The Burns successorship doctrine delimits circumstances when
an unwitting employer might be compelled to confer initial recogni-
tion. Other precedent comes into play when recognition is conferred
voluntarily, and later the employer seeks to repudiate the relation-
ship. See, e.g., Snow & Sons, 134 NLRB 709 (1961), enfd. 308 F.2d
687 (9th Cir. 1962), agreement made by the employer to voluntarily
recognize; Terrell Machine Co., 173 NLRB 1480 (1969), enfd. 427
F.2d 1088 (4th Cir. 1970), presumption of continuing majority; Har-
ley-Davidson Transportation Co., 273 NLRB 1531 (1985), rebuttal
of presumption. If substantiated, voluntary recognition, alone, would
preclude the unilateral setting of wage rates; it also would invalidate
the June 30 withdrawal of recognition.
33 209 NLRB at 195.
tus, nor significant change, while continuing to serve the
identical market. In short, apart from personnel issues, the
‘‘substantial continuity’’ between the two enterprises re-
mained undisturbed. Thus, the majority question is deter-
minative. In this regard, the evidence shows that the Re-
spondent, at the Medical College, did not employ a single
Service America employee in a nonmanagerial capacity. Ac-
cordingly, the Respondent argues strenuously that since none
of its employees at the Medical College were ever rep-
resented by the Union, the 8(a)(5) allegations in the com-
plaint must be dismissed.
The General Counsel counters with precedent establishing
that the failure to retain a majority of the predecessor’s em-
ployees, if based on illegal discrimination, will not alone ex-
cuse a successor’s duty to bargain. See, e.g., Fremont Ford,
289 NLRB 1290 (1988); Fall River Dyeing & Finishing v.
NLRB, 482 U.S. 27 (1987). This contention springs from the
fact that three of the four Service America employees applied
for bargaining unit jobs with the Respondent, and, after inter-
view, each was offered employment. Later, these offers were
declined solely because contingent on acceptance of dras-
tically reduced rates of pay. Against this background, the
General Counsel argues that the wage offers were ‘‘predict-
ably unacceptable’’ and involved a change in existing terms
of employment at a time when the Respondent, as a matter
of law, could not so without consulting the Union. Accord-
ingly, by virtue of the allegedly unlawful revision on wage
rates, it is contended that the Respondent constructively de-
nied employment to the Service America employees in viola-
tion of Section 8(a)(3) and (1) of the Act.
The General Counsel observes, and I agree that, under
successorship criteria, the pivotal issue is whether the Re-
spondent acted lawfully when Service America applicants
were offered jobs at less than existing wage levels. If so, and
if specific evidence of discriminatory motivation were lack-
ing, the General Counsel would have no cause to complain.
Under those conditions, rejection of the job offers would
have been an exercise of personal preference beyond statu-
tory remedy, and the failure of the Respondent to retain a
majority would foreclose a finding that the Respondent suc-
ceeded to Service America’s bargaining obligation.
Regarding this inquiry, the Respondent is favored initially
by the Supreme Court’s declaration in Burns, above, that ‘‘a
successor is ordinarily free to set initial terms on which it
will hire the employees of a predecessor.’’ 406 U.S. at 294,
295. However, this principle is not without limits. For the
Court went on to state:
[T]here will be instances in which it is perfectly clear
that the new employer plans to retain all of the employ-
ees in the unit and in which it will be appropriate to
have him initially consult with the employees’ bargain-
ing representative before he fixes terms. In other situa-
tions in may not be clear until the successor employer
has hired his full complement of employees that he has
a duty to bargain with a union, since it will not be evi-
dent until then that the bargaining represents a majority
of the employees in the unit as required by [Section]
9(a) of the Act.
The General Counsel argues that the exception controls
when, as here, the ‘‘successor’’ not only intended at all times
to hire the ‘‘employees of a predecessor,’’ but also volun-
tarily sought and participated in negotiations to obtain relief
from a contractual working condition that it wished to
change. Obviously, these deliberations furnish an atypical
quality to this case. It permits the General Counsel to contest
the Respondent’s prerogatives regarding initial terms on the
basis of distinct legal theories. The first transcends traditional
successorship principles. In this latter connection, the Gen-
eral Counsel argues that the Respondent’s willful participa-
tion in negotiations with the Union was tantamount to a vol-
untary grant of recognition, and hence precluded the subse-
quent unilateral June 23 announcement of new wage rates.32
Alternatively, the General Counsel relies on Burns, but
contends that the Respondent’s conduct was the analogue of
a situation ‘‘in which it is perfectly clear that the new em-
ployer plans to retain all of the employees in the unit and
in which it will be appropriate to have him initially consult
with the employees’ bargaining representative before he fixes
terms.’’ 406 U.S. at 294–295. Legal writers would subse-
quently refer to this standard variously as the Burns ‘‘ca-
veat’’ or the ‘‘perfectly clear’’ doctrine.
In the years since the 1972 decision in Burns, the Board
and circuit courts have not always been in harmony regard-
ing the scope and meaning of the ‘‘perfectly clear’’ excep-
tion. There is evidence that the Board has declined to inter-
pret that standard literally. In 1974, the Board determined
that the right to unilaterally fix initial terms was not vitiated
merely by an employer’s declared intent to hire a prede-
cessor’s employees. Thus, in Spruce Up Corp., 209 NLRB
194 (1974), it was held that the new operator was free to do
so when he had ‘‘made it clear from the outset that he in-
tended to set his own initial terms, and that whether or not
he would in fact retain the incumbent[s] . . . would depend
upon their willingness to accept those terms.’’ Accordingly,
the 8(a)(5) and (1) allegation based on the employer’s subse-
quent unilateral establishment of new commission rates was
dismissed on reasoning that:
When an employer who has not yet commenced oper-
ations announces new terms prior to or simultaneously
with his invitation to the previous work force to accept
employment under those terms, we do not think it can
be fairly said that that the new employer ‘‘plans to re-
tain all of the employees in the unit,’’ as that phrase
was intended by the Supreme Court.33
At the same time, the Board made clear the possibility that
a duty to consult might arise before it can be determined
with precision that the successor actually has hired a major-
1067CANTEEN CO.
34 Ibid.
35 Vince Gallo testified that unit employees at the Medical College
contacted the Union in late May or early June, after learning that
the Respondent had been awarded the food service operation at the
Medical College. He testified that he assured them that they would
be working under a union contract when the Respondent takes over,
noting that he already had a letter from the Respondent, a reference
to G.C. Exh. 4. In fact, he probably had not received, but was ex-
pecting that document at the time. This discrepancy did not dissuade
me from belief of his testimony, however, that employees contacted
him and made the inquiries in question, provoking the assurances he
described.
36 That result is also warranted by the evidence demonstrating that
the Respondent effectively recognized the Union by initiating nego-
tiation, making proposals, and enticing the Union to relinquish its
contractual right to insist that unit work be performed by represented
employees. See Bellingham Frozen Foods, 237 NLRB 1450, 1465
(1978). Contrary to the Respondent, in light of the presumption of
continuing majority, no illegality would inure in consequence of
such a voluntary act. See, e.g., Fall River Dyeing Corp. v. NLRB,
above, 482 U.S. at 27.
37 Cf. Blitz Maintenance, 297 NLRB 1005 (1990).
38 Concern would be expressed later in Fall River, above, that suc-
cessors, during the ‘‘transition between employers’’ might use their
inherent economic power to further ends inimical to the statutory
Continued
ity. Thus, Spruce Up conceded that the unilateral setting of
initial rates would be illegal when:
[T]he new employer has either actively or, by tacit in-
ference, misled employees into believing that they
would all be retained without change in their wages,
hours, or conditions of employment, or at least to cir-
cumstances where the new employer, unlike the
[r]espondent here, has failed to clearly announce its in-
tent to establish a new set of conditions prior to inviting
former employees to accept employment.34
The General Counsel argues that this is just such a case.
The Respondent takes issue with that view of the facts, argu-
ing, by way of posthearing brief, as follows:
Here, Canteen never announced that it planned to retain
all of the Service America employees and that they
would be employed pursuant to the terms and condi-
tions called for by the collective bargaining agreement
between Service America and the Union. To the con-
trary, Canteen’s conduct shows a consistent and unwav-
ering intent to hire only those employees who applied
and who would accept the terms and conditions of em-
ployment being unilaterally set by Canteen for its Med-
ical College employees.
Consistent with these observations, it is true that the Re-
spondent, at least prior to the interviews during the last full
week of June, had never ‘‘announced’’ that it would hire the
Service America employees. Yet, all times, to the point of
dependency, it held to an unflagging plan and desire to do
so. Moreover, if Hillgartner is to be believed, the new wage
policy had been forged months before the formal interviews,
yet held in secrecy until then, even in the face of a specific
inquiries by Piquette and Cook. Thus, unlike the employer in
Spruce Up, above, here, the Respondent withheld, and there-
by ‘‘failed to clearly announce its intent to establish a new
set of conditions prior to inviting the former employees to
accept employment.’’ 194 NLRB at 195.
In fact, the Respondent’s prior conduct offered not a clue
to either the disappointed applicants or their bargaining rep-
resentative that Service America employees would be re-
cruited at anything less than existing terms. Instead, it cre-
ated the opposite impression. During this entire period, it
openly manifested an intention to commence operations
under conditions that avoided collision with demands of the
subsisting labor contract. This was the admitted purpose be-
hind its initiation of talks with the Union concerning a
‘‘working foreman,’’ a classification that it feared could not
be countenanced under the Union’s Service America con-
tract. In that instance, it sought change through negotiation.
Yet neither this record, nor any sense of reason, offers expla-
nation as to just why the Respondent would have solicited
union involvement in resolving a relatively mundane matter,
contemporaneous with a longstanding plan to ‘‘throw caution
to the wind’’ in the critical area of wages. Its failure to com-
municate both ends of this erratic formula left a single under-
standing, namely, that the Respondent’s avowed respect for
contractual guarantees in the area of unit work would be mir-
rored in other areas, particularly one with obvious explosive
potential. Intended or not, the deception effectively denied
the employees the protective services of their representative.
Whatever the ultimate goal, the natural and foreseeable con-
sequences of the Respondent’s overall pattern of conduct left
the Union every reason to assume that, until alternative terms
were established through negotiations, then scheduled for
June 30, the Respondent would maintain all employment
conditions other than the concession it had sought and suc-
cessfully exacted in the case of the ‘‘assistant manager.’’35
Whether the Respondent, in these circumstances, be es-
topped on the basis of its misleading behavior from asserting
a right to set new terms unilaterally, or it be deemed to have
made it ‘‘perfectly clear’’ that no such changes would be
made, the facts impel the conclusion that the Respondent
violated Section 8(a)(5) and (1) of the Act, by during em-
ployment interviews commencing on June 23, announcing
unilaterally that job offers were contingent on acceptance of
an hourly rate less than the job applicants previously en-
joyed.36
My conclusion in that regard is not altered by the fact that
the new terms were announced prior to actual employment
of a majority of the Service America employees.37 Under,
the governing principles, employers are not free, in any abso-
lute sense, to effect unilateral changes at all times prior to
actual employment of a majority. Any such policy would be
simply applied and thus would eliminate future controversy
in an area where predictability would have special utility.
The Supreme Court opted for a more complex formulation,
however, by suggesting in Burns that the so-called ‘‘caveat’’
might outlaw the unilateral fixing of initial terms even before
‘‘the successor employer has hired his full complement of
employees.’’ 406 U.S. at 295. The overall formula an-
nounced by the Court reflects a sensitivity to the possibility
that the ‘‘perfectly clear’’ standard, once manifested, might
be deemed to be so frail that, later, it might be vitiated sim-
ply because the successor employer has had a change in sen-
timent and elected to minimize job acceptance by announc-
ing significant if not drastic cuts in benefits.38 This construc-
1068 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
policy encouraging ‘‘industrial peace.’’ Thus, at 482 U.S. at 40, the
Court stated:
[W]ith the wide variety of corporate transformations possible,
an employer could use a successor enterprise as a way of getting
rid of a labor contract and of exploiting the employees’ hesitant
attitude towards the union to eliminate its continuing presence.
39 See, e.g., Control Services, 303 NLRB 481, 485 (1991), enfd.
975 F.2d 1551 (3d Cir. 1992); RCR Sportswear, 312 NLRB 513
(1993). The Respondent defends against the 8(a)(3) allegations by
arguing that the record does not contain specific evidence of
antiunion motivation. In this regard, the General Counsel depicts the
drastic cut in wages appended to the job offers as ‘‘predictably unac-
ceptable’’ and part of a deceptive, deliberate scheme to avoid collec-
tive bargaining. At best, the evidence raises a suspicion that this
might have been the case. I conclude that no such inference is war-
ranted. This is despite my disbelief of the Respondent’s testimony
as to the origin of the pay cuts. I also reject the contention that it
is, or ever has been, the practice of this major corporation to recruit
experienced personnel, whose services are desired, at drastically re-
duced earnings. At the same time, while it is my own view that the
hourly rates proffered by the Respondent are appropriately character-
ized as ‘‘predictably unacceptable,’’ I am convinced that the Re-
spondent believed otherwise. I am persuaded that the Respondent
placed itself in a position of vulnerability with respect to manning
the job. I do not believe that it would have taken this approach un-
less it were confident that the Service America applicants would ac-
cept employment on its terms. In any event, since the Respondent,
under Burns and its progeny, was not free to set terms without con-
sulting with the Union, Board precedent does not require specific
evidence of an antiunion intent to substantiate an 8(a)(3) violation.
40 The complaint identifies Sandra Wilson as among those victim-
ized by discrimination. Wilson filed no application, as specifically
required by the June 11 posting. She did not comply with this re-
quirement even though urged to do so by Fitzgerald almost 2 weeks
before any indication that the Respondent would dishonor existing
terms. Wilson offered no explanation for her failure, during this pe-
riod, to act with diligence. Her inaction raised question about wheth-
er she held a genuine interest in seeking work at a time when their
was no reason to do anything other than pursue this employment op-
portunity. In failing to meet the application requirement on a timely
basis, she created an ambiguity, if not suspicion, as to the legitimacy
of her placement within the discriminatory class. In the end, Wilson
testified that she refused to apply because she could not afford to
work at the wages levels that the Respondent reportedly was offer-
ing. I am aware of the formidable support the General Counsel re-
ceives from the ‘‘futility’’ concept in a case such as this. I am also
aware of the burden imposed on the wrongdoer when an unlawful
pattern of conduct is punctuated by ambiguity. ‘‘Futility’’ is often
employed as a self-serving tool, however, which is difficult to refute
even when invoked inappropriately. In my opinion, more was re-
quired of Wilson before she could excuse her delay in pursuing em-
ployment under conditions that effectively denied the Respondent the
opportunity to interview her and to possibly identify some other non-
discriminatory condition that either the Employer or even Wilson
would deem unacceptable. Simply put, she is not entitled to the ben-
efit of every doubt, particularly when, as here, she has failed to allay
suspicion by affording some explanation for her failure to apply be-
tween June 11 and June 23. Her involvement and signing of G.C.
Exh. 7 on June 30, signifying that she would have accepted employ-
ment at existing levels of pay was a gesture of ‘‘solidarity’’ that did
not overcome her unpersuasive testimony that she did not file an ap-
plication solely because of what she learned on or after June 23. In
the circumstances, I am unwilling to find that Wilson was genuinely
interested in employment even at her existing rate, or to assume that
she would not have been rejected on lawful grounds if interviewed.
Accordingly, the 8(a)(3) allegation in her case has not been substan-
tiated and shall be dismissed.
41 The Respondent contends that the Board could not require it to
bargain in a unit limited to those employees at the Medical College.
Its position is grounded in the fact that the incumbent employees at
the Medical College were represented by the Union in a single unit
that also included about 150 workers employed by Service America
at other locations. Under this argument, the Respondent could have
splintered off any one of the locations within that unit while escap-
ing any bargaining obligation irrespective of other underlying facts.
Successorship determinations, however, do not require that the scope
of the former and acquired bargaining units be coextensive. Under
settled Board authority, the test is whether the successor unit is ap-
propriate. See, e.g., Au Chu Co., 259 NLRB 177, 182 (1981); School
Bus Services, 312 NLRB 1 fn. 1 (1993). That is the case here.
tion accords with established Board policy. Thus, in CME,
Inc., 225 NLRB 514 (1976); and Roman Catholic Diocese of
Brooklyn, 222 NLRB 1052 (1976), enf. denied in relevant
part sub nom. Nazarath Regional High School v. NLRB, 549
F.2d 873 (2d Cir. 1977), the Board found that successor em-
ployers violated Section 8(a)(5) by setting initial terms be-
fore employees were actually hired.
From the foregoing it follows that the Respondent violated
Section 8(a)(3) and (1) of the Act by unilaterally imposing
an unacceptable condition of employment, which understand-
ably was rejected by Piquette, Anderson, and Cook. Estab-
lished precedent warrants a finding that these circumstances
alone establish that the applicants were constructively denied
employment for reasons proscribed by Section 8(a)(3) and
(1) of the Act. Thus, the 8(a)(3) allegations are controlled by
the principle that ‘‘employees who quit rather than work
under conditions established in derogation of the statutory
right to bargain . . . [are] . . . constructively discharged in
violation of Section 8(a)(3) and (1) of the Act.’’39 Accord-
ingly, on this basis, it is concluded that the Respondent vio-
lated Section 8(a)(3) and (1) of the Act by denying employ-
ment, on a constructive basis to Piquette, Anderson, and
Cook.40
It follows that the Respondent, but for the unlawful dis-
crimination, would have retained a majority of the Service
America employees. Accordingly, the Respondent also vio-
lated Section 8(a)(5) and (1) on and after June 30 by refusing
to recognize and bargain with the exclusive representative of
the food service employees at that location, who themselves
constitute a separate appropriate collective-bargaining unit.41
CONCLUSIONS OF LAW
1. The Respondent, Canteen Company, is an employer en-
gaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act.
2. The Union is a labor organization within the meaning
of Section 2(5) of the Act.
3. The following employees constitute a unit appropriate
for collective bargaining within the meaning of Section 9(b)
of the Act:
All food service employees employed by the Respond-
ent at the Medical College of Wisconsin, excluding
guards, professional employees and supervisors as de-
fined in the Act.
4. The Respondent violated Section 8(a)(5) and (1) of the
Act by since on or about June 23, 1992, unilaterally an-
nouncing new wage rates for the above employees without
consulting the Union.
1069CANTEEN CO.
42 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the above findings, conclusions, and
recommended Order shall, as provided in Sec. l02.48 of the Rules,
be adopted by the Board and all objections to them shall be deemed
waived for all purposes.
43 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
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.’’
5. The Respondent, as a successor to Service America at
the Medical College of Wisconsin, violated Section 8(a)(3)
and (1) of the Act by since on or about July 1, 1992, con-
structively denying employment to Susan Anderson, Kelly
Piquette, and Irene Cook.
6. The Respondent, as a successor to Service America at
the Medical College of Wisconsin, violated Section 8(a)(5)
and (1) of the Act by since on or about June 30, 1992, refus-
ing to recognize and bargain with the Union as the exclusive
representative of employees in the above-described collec-
tive-bargaining unit.
7. The Respondent, at least since June 8, 1992, having vol-
untarily recognized the Union as exclusive representative of
employees in the afore-described unit, violated Section
8(a)(5) and (1) of the Act by, on June 30, 1992, withdrawing
recognition and refusing to bargain with the Union.
8. The above unfair labor practice are unfair labor prac-
tices having an effect on commerce within the meaning of
Section 2(6) and (7) of the Act.
THE REMEDY
Having found that the Respondent has engaged in certain
unfair labor practices, it shall be recommended that it be or-
dered to cease and desist therefrom, and to take certain af-
firmative action deemed necessary to effectuate the policies
of the Act.
The Respondent, having constructively denied employment
to Susan Anderson, Kelly Piquette, and Irene Cook, shall be
ordered to hire them to their former positions, and make
them whole for loss of wages and benefits by reason of the
discrimination against them. Backpay shall be computed on
a quarterly basis in accord with F. W. Woolworth, 90 NLRB
289 (1950), with interest as authorized in New Horizons for
the Retarded, 283 NLRB 1173 (1987).
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended42
ORDER
The Respondent, Canteen Company, Milwaukee, Wiscon-
sin, its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain in good faith with the Union con-
cerning the rates of pay, wages, hours, and working condi-
tions of employees in the following appropriate unit:
All commissary food processing employees employed
by the Respondent at the Medical College of Wiscon-
sin, excluding guards, professional employees and su-
pervisors as defined in the Act.
(b) Refusing to bargain in good faith by announcing new
terms of employment in the above unit without consulting
the Union.
(c) Refusing to bargain in good faith by withdrawing rec-
ognition or otherwise refusing to recognize and bargain with
the Union as the exclusive representative of employees in the
above-described unit.
(d) Discouraging membership in a labor organization by
constructively denying employment, or in any other manner
discriminating against employees with respect to wages,
hours, or other terms and conditions of employment.
(e) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Offer Susan Anderson, Kelly Piquette, and Irene Cook
immediate and full reinstatement to their former jobs or, if
those jobs no longer exist, to substantially equivalent posi-
tions, without prejudice to their seniority or any other rights
or privileges previously enjoyed, and make them whole for
any loss of earnings and other benefits suffered as a result
of the discrimination against them, in the manner set forth
in the remedy section of the decision.
(b) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of backpay due under the terms of this Order.
(c) On request, bargain collectively and in good faith con-
cerning wages, hours, and other terms and conditions of em-
ployment with the Union as the exclusive representative of
employees in the above-described unit, and embody any un-
derstanding reached in a signed agreement.
(d) Post at its operation at the Medical College of Wiscon-
sin in Milwaukee, Wisconsin, copies of the attached notice
marked ‘‘Appendix.’’43 Copies of the notice, on forms pro-
vided by the Regional Director for Region 30, after being
signed by the Respondent’s authorized representative, shall
be posted by the Respondent immediately upon receipt and
maintained for 60 consecutive days in conspicuous places in-
cluding all places where notices to employees are customar-
ily posted. Reasonable steps shall be taken by the Respond-
ent to ensure that the notice is not altered, defaced, or cov-
ered by any other material.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.