Friendly Ford

National Labor Relations Board - Administrative Judge Opinions

Feb 28, 2003

32-CA-019327 (N.L.R.B. Feb. 28, 2003)

JD(SF)-18–03
San Jose, California

UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
BRANCH OFFICE
SAN FRANCISCO, CALIFORNIA

SONIC AUTOMOTIVE, formerly d/b/a
CAPITOL FORD, currently d/b/a
FRIENDLY FORD

and

INTERNATIONAL ASSOCIATION OF MACHINISTS &
AEROSPACE WORKERS, DISTRICT LODGE 190,
LOCAL LODGE No. 1101, AFL-CIO
Case 32–CA–19327-1

Valerie Hardy-Mahoney, Oakland California, for the General
Counsel.
Robert G. Hulteng and Philip R. Paturzo, of Littler Mendelson,
San Francisco, California, for Respondent.
David A. Rosenfeld, of Van Bourg, Weinberg, Roger &
Rosenfeld, Oakland, California, for the Charging Party

DECISION

Statement of the Case
JAMES M. KENNEDY, Administrative Law Judge: This case was tried in San Jose,
California on September 18, 2002, 1 based upon a complaint issued March 22 by the Acting
Regional Director for Region 32. The underlying unfair labor practice charge was originally filed
by the International Association of Machinists & Aerospace Workers, District Lodge 190, Local
Lodge No. 1101, AFL-CIO, on January 7, subsequently amended on March 22. The complaint
alleges that Sonic Automotive formerly d/b/a Capitol Ford, currently d/b/a Friendly Ford (herein
called Respondent) violated §8(a)(1) and (5) by making various unilateral changes in working
conditions and simultaneously engaging in direct dealing with the employees rather than going
through the Union. It also asserts that Respondent committed two independent violations of
§8(a)(1) by threatening an employee because of his union activities. Respondent denies the
allegations.
1 All dates are 2002 unless stated otherwise.
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Issues
The independent §8(a)(1) allegations assert that Respondent, on two occasions, acting
through two different supervisors, threatened union steward Keith Scarboro with discharge as a
reprisal for his union activities. Respondent denies the incidents and argues that, in any event,
one of the individuals is not the supervisor as defined in §2(5) of the Act. With respect to the
§8(a)(5) allegations, the complaint asserts that Respondent breached the bargaining obligation
in four different respects: 1. modifying a productivity bonus program in October or November,
2001; 2. Changing its policies regarding paid holidays for both the Friday after Thanksgiving,
2001, 3. and Christmas Eve, 2001. 4. On January 9 changing the pay periods. Respondent
defends on several grounds, including de minimis, waiver, no change occurred, and, in the case
of the pay period change, that it was only an administrative change not affecting employee
working conditions.
The parties were given full opportunity to participate, to introduce relevant evidence, to
examine and cross-examine witnesses, to orally argue and to file briefs. The General Counsel,
the Charging Party and Respondent have all filed briefs which have been carefully considered.
Based upon the entire record of the case, as well as my observation of the witnesses and their
demeanor, I make the following:
Findings of Fact
I. Jurisdiction
According to the pleadings, Respondent is a California corporation 2 with an office in
place of business in San Jose, where it operates an automobile dealership where it sells and
services new and used motor vehicles. It admits that during the calendar year beginning May 8,
2001, in the course and conduct of its business it has derived gross revenues exceeding
$500,000 and during the same period it purchased and received goods originating outside
California valued in excess of $5000. Accordingly it admits that it is an employer engaged in
commerce within the meaning of §2(2), (6) and (7) of the Act. It further admits that the Union is
a labor organization within the meaning of §(5) of the Act.
II. The Alleged Unfair Labor Practices
a. The Setting
On May 8, 2001 Respondent took over the Ford dealership located on West Capitol
Expressway in San Jose known as Capitol Ford. 3 At the time of the takeover, Capitol Ford had
been a member of a multiemployer association and bound to a master collective bargaining
agreement with the Union which was not scheduled to expire until October 31. The General
Counsel and Respondent both agree that Respondent is a successor employer within the
meaning of the Supreme Court's decision in NLRB v. Burns Security Services, 406 U.S. 272
(1972). As such, it was obligated to recognize the Union, and it did so. At the same time, it was
not required to accept the Predecessor’s collective bargaining contract; instead, it was free to
set its own initial terms and conditions of employment for those employees in the bargaining
unit. It did that as well.
2 The dealership in question is part of a national chain of dealerships. Testimony shows it to
be one of approximately 180 dealerships owned by Sonic Automotive whose headquarters are
in Charlotte, North Carolina.
3 Respondent continued to do business under the Capitol Ford trade name for almost 6
months before converting to its current trade name, Friendly Ford.
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The bargaining unit, not in issue here, covers the automotive machinists, mechanics
bodyshop workers, painters, service writers and dispatchers but excludes auto sales personnel
and other appropriate exclusions. Respondent, upon its takeover, issued its own employee
handbook and immediately signed a recognition/interim agreement. 4 The parties, pursuant to
that recognition agreement, as of the date of the hearing, had not yet reached an agreement.
They had nevertheless engaged in extensive bargaining, including eight meetings during 2002
and five meetings in 2001. The complaint does not allege that Respondent has engaged in bad
faith bargaining during any of those negotiations.
As part of its initial terms and conditions, Respondent established a pay scale known as
the "Sonic package" (not in evidence). This system of recompense set levels under both hourly
and flat rate calculations. Both Respondent and the Union considered those levels as
minimums, and over-scale wages were allowed. In fact, business agent Glenn Gandolfo
testified that the Predecessor's collective bargaining contract expressly permitted over-scale
wages. He also testified that during a bargaining session in October 2001 the Union had
become aware that Respondent was paying wages over the initially established scales and the
Union did not object to the practice. It is reasonable, I think, to conclude that the Union's policy
is to encourage employers to pay workers beyond the minimums established, whether based on
a collective bargaining contract, initial fiat, experience or to reward demonstrated excellence. 5
Consistent with that policy, the Union does not appear to oppose bonuses or other types
of remuneration. Although occurring some 10 months after the incentive plan under scrutiny
here, Gandolfo wrote Respondent a letter on August 30 encouraging pay raises for the
bargaining unit based on "length of service, change of class, or proven ability." He went on to
say that the Union would not take action against the Company during negotiations because of
such a grant. He added that likewise, the Union did not oppose the grant of "bonuses, spiffs, or
other remuneration given by the manufacturer or the company."
Among other things, the handbook established eight paid holidays, one of which was a
day which could be scheduled by the department manager between December 24 and
January 2. The named holidays included Thanksgiving Day and Christmas Day. Neither the
day after Thanksgiving nor Christmas Eve was listed. Those omissions were a departure from
the predecessor's collective bargaining contract which had specifically granted the day after
Thanksgiving and Christmas Eve as paid days off.
During the period in question here, Respondent's General Manager was Gary Potter. 6
its service manager was Andrew McDonald; the maintenance and detail manager was Omar
Infante; and the used car reconditioning person was John Swarthout. Respondent
acknowledges the supervisory status of Potter, McDonald and Infante. It asserts that Swarthout
is not a supervisor within the meaning of § 2 (11) of the Act. Both Infante and Swarthout are
alleged to have said things which allegedly violated §8(a)(1) of the Act. The individual to whom
the remarks were supposedly directed was Keith Scarboro. Scarboro had been a longtime
4 The recognition agreement not only included an affirmative agreement to meet and
bargain in good faith, it committed Respondent to make contributions to the pension fund and
health plan.
5 Gandolfo’s testimony:
Q BY MR. HULTENG: And in dealings with this employer, have you in fact informed the
employer that the union does not oppose the granting of any above scale paid to employees?
A [WITNESS GANDOLFO] Yes.
6 At some point after the events recounted here, Potter became the regional director of used
cars for the nine Sonic dealerships in the North Bay. He is no longer resides in Northern
California, living now in Payson, Arizona, and commuting to California three times a week.
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employee with Capitol Ford, originally hired in 1989 and, except for a short hiatus in the early
1990s, had worked continuously at the facility until he quit in November 2001. For some period
of time prior to his departure he had been the union steward. He was succeeded as steward by
Rod Stamps. Both of those individuals testified in support of the General Counsel's case.
b. Scarboro 's Testimony
As noted, Keith Scarboro was the Union's longtime steward. He was also a member of
the Union's negotiating committee. Respondent had retained him when it took over the
dealership. He was a technician assigned to the used car reconditioning operation which was
run by John Swarthout. Scarboro said that sometime during October, he was in Swarthout's
office picking up a work order. He testified Swarthout arose from his desk, checked to make
certain no one was listening and closed the office door. Swarthout then told Scarboro "Hey, by
the way, watch your ass man, because they want to get you."
Similarly, at about the same time, Scarboro says he was near his work area walking
toward the parts department when he encountered detail manager Omar Infante. He says
Infante told him "You know, watch your ass man, they're out to get you, watch your ass." When
Scarboro asked Infante what he meant, Infante replied, "You know what they say: Cut off the
head and the body will fall." Scarboro says he asked Infante where he had heard that from.
Infante replied, “Potter.”
Neither of these statements has any particular context, although when pushed for more
information, Scarboro said Swarthout’s comment came after they had been talking about
contract negotiations. Even with that addition, specific context is wanting. Infante is Scarboro’s
longtime personal friend and co-worker. Swarthout had been put in charge of used car
reconditioning upon the May takeover, but he had previously worked at the dealership as a
parts man. Both were on very good terms with Scarboro.
Swarthout denied that such conversation had occurred. According to him, he has never
heard Potter or any manager say they were looking to get rid of Scarboro. Infante denied ever
having such a conversation with Scarboro, specifically saying that he never told Scarboro to
'watch his ass' or making a remark to the effect that if you cut off the head, the body will fall.
In assessing the relative credibility of these witnesses, one cannot ignore Scarboro's
intense dislike of Respondent. Respondent's counsel asked why he had voluntarily terminated
his employment and Scarboro replied, without much explanation, that he "wasn't going to work
for these people after what had been going on for seven, eight months." He explained that
'these people' referred to the Sonic management, apparently particularly those who were
negotiating the new collective bargaining contract. He agreed that he 'absolutely' disliked Sonic
and the people associated with it. His rancor, like his testimony, has little context. Whatever
the source of his negative attitude toward Respondent, it has not been articulated in the record.
Even so, his bitterness is striking. 7
Scarboro's approach to describing what occurred is in sharp contrast to the matter-of-
fact approach taken by both Swarthout and Infante. Furthermore, Potter credibly testified that
the phrase 'cut off the head and the body will fall' is not an expression that he uses. He denied
7 Neither Potter nor McDonald were members of Respondent’s negotiating team. According
to Mike Cervantes, Regional Fixed Operations Director for Sonic, their exclusion from collective
bargaining was by corporate design. It seems, therefore, that Scarboro’s resentment was
aimed at the negotiators, perhaps because of what he perceived as lack of progress.
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telling Infante any such thing and Infante agrees. Based on demeanor alone, is difficult to credit
Scarboro. Furthermore, given the lack of context and his testimony that these remarks came
out of the blue, the probability of such an occurrence is low. Furthermore, the General Counsel
needed to lead Scarboro to the specific conversations.
It seems to me that Scarboro's clear bias renders his testimony suspect. Coupled with
its other shortcomings, I am unable to credit him. Accordingly, I find the evidence to be
insufficient to support a §8(a)(1) violation. Moreover, even if one credits Scarboro's testimony, it
is difficult to assign a discriminatory meaning to the words. I find the phrases used ('watch your
ass' and 'if you cut off the head, the body will die', are very ambiguous in the circumstances.
Certainly they're not connected to union activity, except by innuendo. Other innuendos might
well be fashioned, too. To draw the conclusion which the General Counsel wishes is too much
of a reach, given Scarboro's inability to put the phrases in any sort of context. There is no
evidence that Scarboro had done anything to warrant Potter's attention and certainly no
evidence that either Infante or Swarthout harbored any union animus of their own. Therefore,
no context, and certainly no antiunion context, may be reasonably inferred. These statements
simply do not amount to interference, restraint or coercion as required by §8(a)(1). The
allegation should be dismissed. Accordingly, there is no reason to determine whether
Swarthout was a statutory supervisor through whom Respondent may be charged with an unfair
labor practice.
c. The October 2001 Productivity Bonus
The complaint alleges that in late October or early November 2001, Respondent
'modified' the productivity bonus program which had been established for October. In her brief,
counsel for the General Counsel seems to be modifying the complaint's theory. She argues,
without moving to amend, that Respondent unilaterally implemented the program in violation of
§8(a)(5), not just that it modified the program as alleged. Neither does she acknowledge any
theory change. The testimony, as taken, focused solely on the modification. 8
The record demonstrates that both before and after the bonus program under scrutiny
here, both the Predecessor 9 and Respondent had run similar incentive events. The employees
were familiar with the terminology and the practice from their experience with the Predecessor,
and Respondent had maintained a service advisor bonus program already in effect, albeit with
some slight modification. Technicians were also eligible for a $500 recruiting bonus in the event
they were able to recruit a new mechanic who lasted 90 days with the dealership. And,
although, not of significant value, in August 2001 it had taken the staff out for pizza and
beverages consistent with a promise to do so in the event the dealership reached a gross profit
level of $325,000 for that month. None of these bonuses or programs was negotiated with the
Union.
In October 2001, Potter announced the so-called "Big Dog Contest," an incentive
program aimed at the service technicians. He said that a $5000 'kitty' was being created which
could be divided among all the qualifying employees. Originally, to qualify, the technicians had
to be 90% productive during the month of October and the service department gross profit had
to reach 70%. The modification occurred when service director Andrew McDonald and Potter
8 An example is the question she propounded to the Union’s business representative:
BY MS. HARDY-MAHONEY: Did the union ever agree that a bonus program that was
implemented in October 2001 could be modified in any way?
A [WITNESS GANDOLFO] No. I never even knew.
9 The Predecessor's collective bargaining contract, article XII, specifically authorized it to
institute an incentive pay program.
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realized that even though a number of employees were close to reaching the program’s targets,
the 70% gross profit level would not be met, and that few ,if any, of the employees would reach
the 90% productivity rate. Furthermore, McDonald had heard that some of the employees were
supposedly thinking of sabotaging the program by unclear means. He reported what he had
heard to Potter. As a result of all that information, Potter decided to try to save the program. He
knew the staff was close to the 70% level and he knew that a number of the employees were
working very hard. He could see that he had nine employees who were over the 90% level and
that the productivity of four others had shown a marked increase even though they were not yet
at the 90% rate. Even though he knew he was diluting the number of 'winners', he wanted to
find a way to reward those who had made significant progress. He also knew, because the 70%
gross profit target had not been reached, if he followed the program’s announcement to the
letter, there would be no 'winners' at all. He decided to include every technician who had either
reached the 90% mark or who had shown marked improvement. After all, he reasoned, he was
trying to induce and reward better performance. As result, he selected thirteen employees who
met the modification to divide the $5000 pot equally. Each of those thirteen received a bonus of
$384.62. He did not tell the mechanics that the program had been modified to improve
everyone’s eligibility; he just announced the recipients.
d. The Two Paid Holidays
Article VII of the Predecessor's collective bargaining contract listed a number of
contractual paid holidays for the service department employees. These included the Friday
following Thanksgiving and the day before Christmas Day (Christmas Eve). These holidays had
been in the collective bargaining contract for many years. Indeed, since it was a multiemployer
association contract covering a number of South Bay dealerships, those holidays had become
part of the auto mechanics' culture. When Respondent acquired this dealership, its employee
handbook established for the service department employees eight paid holidays. Neither the
Friday after Thanksgiving nor Christmas Eve was included. It did allow for an additional holiday
to be scheduled by management between December 24 and January 2. It also allowed for a
floating holiday.
Although the dates are not specific, sometime in mid-November 2001, Respondent
posted the work schedule for the day after Thanksgiving. Consistent with its employee
handbook it had begun taking service appointments for that day. That posting cause an
immediate uproar within the technicians' ranks. Their dismay resulted in a meeting conducted
by service director McDonald. Both he and shop steward Rod Stamps agree that the entire staff
voiced intense opposition to working that day. The employees observed that the day after
Thanksgiving had been holiday for about 25 years. McDonald remembers hearing a strong
undercurrent from employees to the effect that they would not work that day. His recollection is
confirmed by Stamps’ testimony. Stamps agreed that he told McDonald that the employees
would not work on the Friday after Thanksgiving. McDonald informed Potter and after learning
that the only service departments on the Capitol Expressway to be open that Friday were at a
Nissan dealership owned by Sonic and a Toyota dealership. While the record does not reflect
the number of auto dealerships on that road, it is clear that it is an auto row with a large number
of similar businesses. Upon learning that, Potter decided that it was in the best interest of the
dealership to close the service department that day and to keep a happy work force he would
pay the service staff for 8 hours work that day. The Company did so.
A similar incident occurred for Christmas Eve. Stamps described a near identical
uprising. Again, the employees threatened not to work. This time Respondent exercised its
right under the employee handbook and announced that Christmas Eve was the additional
holiday which it had reserved under its rule. On December 7, 2001, Respondent issued a
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memo to its employees setting forth the service department work schedule for Christmas and
New Years. Respondent also paid the service department employees 8 hours pay for the
Christmas Eve holiday.
e. The Pay Period/Payday Change
When Respondent took over the operation from the Predecessor in May 2001 it
established a local payroll system. All of the data was collected locally and paychecks were
written at the dealership. At that time its pay period ran from Wednesday to Tuesday.
Paychecks were distributed that Friday. As noted above, Respondent is just one of over 180
dealerships nationally operated by Sonic Automotive, which is headquartered in Charlotte, North
Carolina. For administrative reasons, the national headquarters had determined to centralize its
payroll from Charlotte. It had established a web-based payroll system and in the first part of
2002, imposed it upon Respondent. 10
On January 9, Potter conducted an employee meeting and announced that the
dealership was changing the pay period. The new pay period was to begin on Sunday and end
on Saturday; paychecks were to be distributed the following Thursday. He explained that this
change would mean that on the first payday under the new system, Thursday, January 10, the
employees would receive a 3-day paycheck. It was to cover work performed on January 2, 3,
and 4, the Wednesday, Thursday and Friday of the previous week, but not January 7 and 8, the
Monday and Tuesday of the old cycle, days which had now been moved to the new pay cycle
beginning Sunday, January 6.
Steward Rod Stamps and most of the technicians protested and said they did not want
to change the pay period because it would result in their losing 2 days' pay [from that paycheck].
They became very upset and Potter decided that he needed to discuss the matter at a higher
level within the Company. Later that afternoon Potter and McDonald resumed the meeting.
Recognizing that short paychecks might result in some hardships, Potter said that for those
employees who were interested, the Company would allow them to "draw" against future wages
to make up for the shortage. They were to pay back the draw over the next four checks, by
having 4 hours wages deducted each of those weeks.
Over half of the employees accepted Potter's offer; the remainder did not. The others,
including Stamps, refused to accept the 3-day check. Those who accepted the offer received
two checks roughly equalling a full week's pay.
The two days pay, representing January 7 and 8, is now carried as part of the holdback.
Holdback is the amount of money held by an employer between the end of the pay period and
the day the paycheck is issued. Previously, this dealership's holdback was from Tuesday to
Friday, a holdback of 3 days. Under the new system the holdback is from Saturday to
Thursday, a holdback of 5 days. Nonetheless, the two unpaid days continue to roll forward.
According to Respondent, those days will be paid whenever an affected employee separates
from the Company.
10 That change required all dealerships, including Respondent, to collect the payroll data
and transmit the information electronically to an Atlanta payroll processor. Respondent now
sends that information to Atlanta every Monday. The Atlanta processor then creates the
paychecks and sends them out each Tuesday by an overnight express company, arriving in San
Jose on Wednesday. Since payday is Thursday, that system allows for a one-day cushion in
the event the express company’s delivery is delayed.
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III. Analysis and Conclusions
The independent §8(a)(1) threat allegations have been dismissed on their facts above. I
now proceed to the §8(a)(5) contentions. The first is the unilateral change allegations.
As noted in the introductory portion of the decision, Respondent has acknowledged its
successor status within the meaning of NLRB v. Burns Security Services, 406 U.S. 272 (1972).
To that end, it took advantage of the opportunity and set its initial terms and conditions of
employment; it also signed an interim agreement with the Union, recognizing the Union as the
§9(a) exclusive collective bargaining representative of the service department employees.
Since NLRB v. Katz, 369 U.S. 736 (1962) it has been an unlawful under §8(a)(5) for an
employer to circumvent its bargaining obligation with the §9(a) representative of its employees
by making unilateral changes in their wages, hours, and terms and conditions of employment.
The Supreme Court relatively recently reiterated that rule of law. In Litton Financial Printing Div.
v. NLRB, 501 U.S. 190 at 198 (1991), the Court quoted itself to say: "[A]n employer commits an
unfair labor practice if, without bargaining to impasse, it effects a unilateral change of an existing
term or condition of employment."
Initially, there is always the question of whether a change has actually occurred.
Therefore, one must first find a benchmark, the place from which the new status must be
measured. Second, the rule is not without its exceptions. For example, the rule does not apply
in cases of waiver [Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708 (1983)] or
insignificance [Rust Craft Broadcasting of New York, 225 NLRB 327 (1976)].
In successor situations such as this, the Board has held that the predecessor’s terms
and conditions of employment, particularly those established by collective bargaining, are to be
recognized as the starting point, i.e., the benchmark. In Holiday Inn of Victorville, 284 NLRB
916 (1987), the Board said:
Except for matters on which a successor employer sets its own initial terms, the terms
and conditions of employment of union-represented employees will normally be those
established by the predecessor's collective-bargaining agreement or by the predecessor
acting unilaterally to the extent that the union had waived bargaining. Practices thus
established are the existing practices. They are kept in place simply by virtue of Section
8(a)(5) of the Act rather than by force of contract, however, because a successor
employer is not bound to adopt a predecessor's collective-bargaining agreement. [citing
Burns].
Therefore, following Holiday Inn of Victorville, the benchmark from which we begin our analysis
is the terms and conditions established by the collective bargaining contract to which the
Predecessor was bound, albeit as modified by the initial terms and conditions announced by
Respondent when it took over the dealership. Therefore, the benchmark here is two-fold: 1. the
initial terms and conditions set by Respondent to the extent that they are actually new or that
they modified the Predecessor's terms; and 2. the Predecessor's terms and conditions which
Respondent did not seek to modify. Therefore, there is a mix of both old and new.
Insofar as the Productivity Bonus is concerned, there is no doubt that the Predecessor
utilized productivity bonus programs in much the same fashion as Respondent did here. This
was not a departure of any kind. The employees were familiar with such programs from their
experience with the Predecessor. It was an established term and condition which preceded
Respondent's takeover and was unaffected by the new employee handbook or the recognition
agreement; it was left over from the Predecessor.
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Therefore, when Respondent announced the 'Big Dog' incentive, it was not making any
sort of change; it was following a procedure established many years before by the Predecessor.
To the extent that the General Counsel is claiming (via a sub silentio complaint modification)
that the establishment of the program was a change, the contention is without merit. Similarly,
since Respondent had the right to set the incentive program's rules, it was likewise free to
modify those rules so long as it maintained its fundamental goal. When Potter realized that
none of the employees would qualify under the original announcement, he knew his goal of
better productivity would be defeated, for he would be perceived to have set the bar too high.
From an employee perception, if no technician could prevail and win the bonus, the goal would
be regarded as unachievable. Moreover, Respondent, their new employer, would make itself
out as parsimonious, if not dishonorable. Potter could not allow that to happen, for he
understood that employee morale was critical to a successful business enterprise. He knew
that if he denied the prize in its entirety, the employees would not only be disappointed, they
might well become disgruntled. As far as he was concerned, the $5000 kitty had already been
committed toward improved productivity/morale and it would only have a negative effect if it
were not spent as intended.
Knowing that he had the right to set the rules for winning, Potter believed, correctly in my
view, that he also had the right to make certain that the program succeeded. Therefore, he had
the power to cure any defect so long as the program maintained its primary purpose, improving
productivity. In the final analysis, this incentive program was nothing more than a management
tool to improve efficiency. It is accurate to say that the wage component, the winnings, was not
the driving purpose of the program. Improving productivity was the principal goal and that the
award money was simply an inducement to reach that end. Such a tool has long been
recognized by the Union as a legitimate instrument available to management to induce better
performance. 11 Accordingly, I find that Respondent did not make any unlawful unilateral
change. The system had been in place before Respondent acquired the facility and it simply
utilized it in the same fashion that the Predecessor had. This allegation will be dismissed.
With respect to the two holidays, the analysis is little different. Here Respondent did set
the initial terms and conditions as they related to paid holidays. The handbook issued
simultaneously with the acquisition specifically omitted the day after Thanksgiving and
Christmas Eve as paid holidays. Those days had been holidays under the Predecessor's
collective bargaining contract with the Union. Respondent's plan was to reduce the number of
paid holidays and the handbook reflected that policy. However, in the handbook Respondent
had specifically reserved to itself the right to declare a paid holiday during the end-of-the-year
Holiday Season.
At first blush there appears to be no doubt that Respondent changed its initial terms and
conditions insofar as the day after Thanksgiving is concerned. In response to both employee
complaints and employee threats to refuse to work that day, Potter decided to grant a paid
holiday for the day after Thanksgiving. The employees had come to expect that day as a paid
holiday and were not willing to accept Respondent's policy. There is no question that Potter
considered the employees' vehemence as a genuine threat to the viability of the workweek.
Most of the employees said that they would not work that day, and those that did not told
McDonald that they wanted to take a vacation day. Both McDonald and Potter realized that the
Friday service department appointments could not be met. This meant there was a dual
11 The only caveat might be that management could not use it in a discriminatory fashion.
Such a contention has not been made here, nor does the evidence suggest that the program
was abused in such a way. Indeed, such a claim would require the invocation of a different
section of the Act.
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problem. First, they knew there would be customer repercussions that Friday in the event
customers brought their automobiles in for service pursuant to an appointment which would then
be dishonored. Second, in the event the employees carried out their threat, there was very little
Respondent could do about it. It risked losing the entire staff if it disciplined them for not coming
to work that day. Indeed, discipline would have been counterproductive (and possibly unlawful
under §8(a)(1)). Again, seeking to make the best of a bad situation, Potter decided that it was
premature to impose Sonic's policy. The employees were simply not ready to accept it.
Therefore, he made the decision to honor the culture which had been established under the
Predecessor's collective bargaining contract.
Yet, despite the change’s apparent clarity, in a very real way, the decision can be viewed
as no change at all. After all, the established practice (as opposed to nascent policy) was to
grant the Friday after Thanksgiving as a paid holiday. Although the change had been
announced, Respondent had never actually implemented its desired plan of requiring work that
day. Indeed, insofar as the unionized portion of the auto repair service trade is concerned, the
paid day off was the industry norm. Meeting that standard was an acceptance of the status quo.
In another way, Respondent may well be viewed as having accepted a fait accompli
levied upon it by the employees. It had no real other choice. It certainly did not seek to grant
the paid holiday out of a sense of altruism or duty. It only responded to an employee-generated
threat to refuse to work that Friday. Given the fact that the employees, apparently led by their
shop steward, were seeking to maintain what they viewed as a long-established benefit, it can
hardly be said that this employer's response was either intended to or actually had the effect of
undermining the Union. Instead, the employees, led in a collective effort by their steward, were
able to maintain a standard established by the Union.
In fact, one may properly ask whether any different response would have been given by
the Union had Potter asked. Potter's question would have been, 'Is it okay to give the
employees to a paid holiday on the day after Thanksgiving?' The Union would either have said
that it was or it wasn't. If the Union had given its approval, the employees would have received
exactly what they did receive, a day off with pay. If the Union had said no, and asked to bargain
about it, the employees would have remained disgruntled, and the Union would have risked
their disfavor. The likelihood that the Union would have said no is virtually nil. Therefore, as a
practical matter the employees achieved exactly what the Union would have asked for, and they
did it with the leadership of their union steward. How such a result is contrary to the Union's
institutional interest escapes me.
For practical reasons I conclude that this matter simply does not rise to the level of an
unfair labor practice. A cease-and-desist order would not accomplish anything and an
affirmative remedial order would not accomplish much, either. I shall recommend that the
complaint be dismissed insofar as the day after Thanksgiving is concerned.
With respect to Christmas Eve, the result must be the same, albeit for a different reason.
Here, when Respondent established its initial terms and conditions through its handbook, it
reserved the right to grant a paid holiday between Christmas Eve and the end of the Holiday
Season. When faced with the same sort of employee dissatisfaction as a result of its posted
schedule, Respondent simply exercised the right it had reserved to itself to grant a paid holiday
during that period. No change of any kind ever occurred, for its conduct was an integral part of
its initially established terms and conditions. No complaint can be made concerning the addition
of this paid holiday. This matter, too, will be dismissed.
Insofar as the change in the pay periods is concerned, I am less impressed with
Respondent's explanation. There is no question that the frequency of wage payments is a
mandatory subject of bargaining. S & I Transp., Inc., 311 NLRB 1388, (1993) (presenting
employees and union with change from one-week pay period to two-week pay period an
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unlawful fait accompli and is a breach of the bargaining obligation under §8(a)(5).) Cf. South
Carolina Baptist Ministries, 310 NLRB 156, 188 (1993) (employer changed from one week to
two week pay periods during negotiations without bargaining to impasse.)
Here, as a result of an administrative convenience to itself, Respondent inflicted an
inconvenience upon its employees. Prior to the change, the employees had relied upon Friday
paychecks covering a full week's work. The employees had come to plan their personal
finances around receipt of that full check. On that Thursday, January 10, Respondent provided
them with only a 3-day check, causing consternation and complaint. The complaint was
legitimate and led Respondent to provide short-term loans to over half the staff to cover their
shortfall.
The pay period alteration was a significant event and constituted a material and
substantial change in the employees' terms and conditions of employment. Moreover, it
occurred in the normal course of things, not compelled by any unusual business circumstance.
Despite that, Respondent failed to notify the Union of its intent. It acted as if the Union was not
on the scene or did not represent the employees who would be affected by the change. Rather
obviously, had the Union been notified, the switch could have been accomplished more
smoothly. Indeed, the two days pay now hidden in the holdback may well have been paid out
without the necessity for the advances or the employees' having been shorted at all. The crude
matter in which Respondent carried out its changeover could have been avoided entirely.
Certainly the Union was not obligated to accept such a fait accompli. Furthermore, ignoring the
Union as it has, clearly has the tendency to undermine the Union's status in the eyes of the
employees. This is a classic unilateral change requiring a remedy under §8(a)(5). 12
In addition, the complaint asserts that each of the incidents set forth as unlawful
unilateral changes also constituted unlawful direct dealing. With respect to the allegations
concerning the productivity bonus programs and the paid holiday issues I am unable to concur
with the General Counsel's complaint. Simply notifying the employees that a unilateral change
will affect them does not constitute unlawful direct dealing. Johnson's Industrial Caterers, 197
NLRB 352 (1972). There, the Board adopted Trial Examiner Henry Jalette's decision where he
said, at 356:
The unilateral changes announced on July 9, which I have found violative of Section
8(a)(5) because they were instituted without notice to or consultation with the majority
representative, are also alleged . . . to be violative of Section 8(a)(5) on the ground that
when Respondent met with the employees on July 9 and announced the changes in
method of operations, and when thereafter it discussed with employees problems that
arose under the new system, it was engaged in direct dealing with the employees in
derogation of the status of the Union as majority representative. Of course, the unilateral
12 "An employer must inform the union of its proposed actions under circumstances which at
least afford a reasonable opportunity for counter arguments or proposals." NLRB v. Centra, 954
F. 2d 366, 372 (6th Cir. 1992). "If a policy is implemented too quickly after notice is given, or an
employer has no intention of changing its mind, the notice constitutes nothing more than
informing the union of a fait accompli." Id. Also, Roll & Hold Warehouse & Distribution Corp.,
325 NLRB 41 at 42, n. 4 (1997), enfd. 162 F. 3d 513 (7th Cir, 1998): "By announcing the [wage
increase] to the [Union] at the same time as all other employees, the respondent essentially
ignored the representative status of the employees' bargaining agent. Such failure to
acknowledge the [Union's] proper role in negotiating terms and conditions of employment
severely diminished, if not effectively foreclosed, any meaningful opportunity for the [Unions] to
exercise [their] authority in this matter."

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conduct derogated from the Union's status as majority representative and little is added
either to the remedy in this case or the body of law on the subject to find a violation on
the theory of direct dealing. In my judgment, the conduct of Respondent did not
constitute direct dealing with employees in the sense in which the term is normally used.
Respondent was not making offers to employees seeking acceptances, nor was it
seeking to induce employees to repudiate the Union. While the effect of its unilateral
change in working conditions was to undermine the Union, I cannot see how the
implementation and announcement of what was clearly a predetermined course of action
constituted direct dealing. Huttig Sash and Door Company, Incorporated, 154 NLRB
811, 817 (1965). Compare Dan Dee West Virginia Corp., 180 NLRB 534 at 539 (1970).
Assuming that the employees were actually victims of a unilateral change with respect to
the productivity bonus and holiday pay matters, Respondent simply announced the changes
and did not bargain with the employees of all. Making the same observation as Trial Examiner
Jalette did in Johnson's, I observe that Respondent simply followed a predetermined course in
implementing them. There can be no direct dealing violation in such a circumstance.
The same cannot be said for the change in pay period. Not only did it constitute an
unlawful unilateral change, Respondent dealt directly with those individuals who faced a
hardship, offering them a loan to cover the change in payday and lost two days wages. In
directly dealing with its employees in this fashion and without involving the Union in its
transactions concerning their pay matters, Respondent violated §8(a)(5) of the Act. The Union
was the §9(a) exclusive collective bargaining representative of the employees. Respondent had
the obligation to deal with it, not skip it or act as if it had no role in such matters. See Blue
Circle Cement Co., 319 NLRB 954 (1995). There, the Board not only found unlawful a unilateral
change in the starting time for a shift, in addition it found that the respondent had committed a
direct dealing violation under §8(a)(5) when discussing with union-represented employees their
preference concerning earlier start times on other shifts. Accordingly, Respondent’s offer of
loans to cover the pay shortfall was unlawful direct dealing.
Remedy
Having found that Respondent has engaged in certain unfair labor practices, I find that it
must be ordered to cease and desist and to take certain affirmative action designed to
effectuate the policies of the Act. The affirmative action will include an order to post a notice to
employees advising them of the remedial steps it will take. It shall also require Respondent to
pay the employees the 2 days wages it improperly placed into the holdback account when it
changed payroll periods in January 2002, together with interest on the amount improperly
withheld. Interest will be calculated under New Horizons for the Retarded, 283 NLRB 1173
(1987).
Based on the foregoing findings of fact and the entire record in this case, I hereby issue
the following
Conclusions of Law
1. Respondent is an employer engaged in commerce within the meaning of § 2(2), (6) and (7) of
the Act.
2. The Union is a labor organization within the meaning of § 2(5) of the Act.
3. The General Counsel has failed to prove by credible evidence that Respondent threated to
discharge its employee Keith Scarboro in violation of §8(a)(1) of the Act.
4. Respondent did not violate §8(a)(5) when it modified its productivity bonus program, when it
granted its employees a paid holiday on the day after Thanksgiving 2001 or when it granted
its employees a paid holiday for Christmas Eve 2001.
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5. Respondent violated §8(a)(5) and (1) of the Act when on January 9, 2002 it unilaterally
changed the payroll period, causing employees to receive short paychecks and rolling the
amount owed them into the pay holdback.
6. Respondent on January 9, 2002 violated §8(a)(5) and (1) by dealing directly with employees
in the collective-bargaining unit with respect to pay matters.
Based on the foregoing findings of fact and conclusions of law and the entire record, I
issue the following recommended: 13
ORDER
Respondent, Sonic Automotive, formerly d/b/a Capitol Ford, currently d/b/a Friendly
Ford, San Jose, California, its officers, agents, successors, and assigns, shall

1. Cease and desist from
a. Making unilateral changes in the payroll period or in other terms or conditions of
employment covering bargaining unit employees, without prior notice to or bargaining with the
Union as their exclusive collective bargaining representative.
b. Dealing directly with bargaining unit employees with respect to their rates of pay,
wages, hours, or other terms and conditions of employment.
c. In any like or related manner interfering with, restraining, or coercing employees in the
exercise of the rights guaranteed them by § 7 of the Act.
2. Take the following affirmative action necessary to effectuate the policies of the Act:
a. Within 14 days of the Board’s decision, pay to the employees in the bargaining unit,
together with interest, the 2 days wages placed in the payroll holdback account in January 2002,
together with interest as set forth in the Remedy section of this decision.
b. Within 14 days after service by the Region post at its business in San Jose,
California, copies of the attached notice marked “Appendix.” 14 Copies of the notice, on forms
provided by the Regional Director for Region 32 after being signed by Respondent's authorized
representative, shall be posted by Respondent immediately upon receipt and maintained for 60
consecutive days in conspicuous places including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by Respondent to ensure that the notices
are not altered, defaced, or covered by any other material. In the event that, during the
pendency of these proceedings, Respondent has gone out of business or closed the facility
involved in these proceedings, Respondent shall duplicate and mail, at its own expense, a copy
of the notice to all current employees and former employees employed by Respondent at any
time since January 9, 2002.
13 If no exceptions are filed as provided by § 102.46 of the Board’s Rules and Regulations,
the findings, conclusions, and recommended Order shall, as provided in § 102.48 of the Rules,
be adopted by the Board and all objections to them shall be deemed waived for all purposes.
14 If this Order is enforced by a Judgment of the 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.”
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c. Within 21 days after service by the Region, file with the Regional Director a sworn
certification of a responsible official on a form provided by the Region attesting to the steps
Respondent has taken to comply.

_____________________
James M. Kennedy
Administrative Law Judge

Dated: February 28, 2003

JD(SF)-18–03
San Jose, California

“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 Federal labor law and has ordered us to
post and obey this notice.

FEDERAL LAW GIVES YOU THE RIGHT TO
♦ Form, join or assist a union
♦ Choose representatives to bargain with us on your behalf
♦ Act together with other employees for your benefit and protection
♦ Choose not to engage in any of these protected activities.

WE WILL NOT make unilateral changes in the payroll period or in other terms or conditions of
employment in the bargaining unit of our employees represented by the International Association of
Machinists & Aerospace Workers, District Lodge 190, Local Lodge No. 1101, AFL-CIO, without prior
notice to or bargaining with that Union as your exclusive collective bargaining representative.
WE WILL NOT deal directly with our employees in that bargaining unit with respect to rates of
pay, wages, hours, or other terms and conditions of employment.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in
the exercise of the rights guaranteed them by federal law.
WE WILL pay the employees in the bargaining unit the 2 days wages which we placed in the
payroll holdback account in January 2002, together with interest.

SONIC AUTOMOTIVE, formerly d/b/a
CAPITOL FORD, currently d/b/a
FRIENDLY FORD
(Employer)

Dated By
(Representative) (Title)

The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor Relations
Act. It conducts secret-ballot elections to determine whether employees want union representation and it investigates and
remedies unfair labor practices by employers and unions. To find out more about your rights under the Act and how to file a
charge or election petition, you may speak confidentially to any agent with the Board’s Regional Office set forth below. You may
also obtain information from the Board’s website: www.nlrb.gov.
1301 Clay Street, Federal Building, Room 300N, Oakland, CA 94612-5211
(510) 637-3300, Hours: 8:30 a.m. to 5 p.m.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
THIS NOTICE MUST REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST
NOT BE ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING THIS
NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, (510) 637-3270.