OK Toilet & Towel Supply, Inc.

National Labor Relations Board - Board Decisions

Aug 21, 2003

339 N.L.R.B. 1100 (N.L.R.B. 2003)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1100
OK Toilet and Towel Supply, Inc., t/a OK Towel and
Uniform, and OK Toilet and Towel Supply, Inc.,
Debtor in Possession and Amalgamated Service
and Allied Industries Joint Board, Union of Nee-
dletrades, Industrial and Textile Employees
(UNITE!). Cases 22–CA–25380, 22–CA–25410,
and 22–CA–25466
August 21, 2003
DECISION AND ORDER
BY MEMBERS LIEBMAN, SCHAUMBER, AND ACOSTA
The General Counsel seeks a default judgment1 in this
case on the ground that the Respondent has failed to file
an answer to the amended complaint. Upon charges filed
by the Union on September 18 and October 3, 2002, and
an amended charge filed by the Union on November 5,
2002, the General Counsel issued a complaint on No-
vember 27, 2002, and an amended complaint on Decem-
ber 30, 2002, against OK Toilet and Supply, Inc., the
Respondent.
The complaint issued on November 27, 2002, alleges
that the Respondent has violated Section 8(a)(1) and (5)
of the Act by dealing directly with employees and failing
to abide by the collective-bargaining agreement by mak-
ing unilateral changes in wages and benefits. The Re-
spondent filed an answer on December 6, 2002, admit-
ting in part and denying in part certain allegations of the
complaint and raising certain affirmative defenses.
The amended complaint issued on December 30, 2002,
repeats the earlier allegations, and also alleges that the
Respondent violated Section 8(a)(1) and (3) by terminat-
ing 18 employees engaged in an unfair labor practice
strike. On January 7, 2003, the Respondent requested an
extension of time until February 7, 2003, to file an an-
swer to the amended complaint. Although properly
served copies of the amended complaint, the Respondent
failed to file a timely answer to the amended complaint.
On March 17, 2003, the General Counsel filed a Mo-
tion for Summary Judgment with the Board. On March
18, 2003, the Board issued an order transferring the pro-
ceeding to the Board and a Notice to Show Cause why
the motion should not be granted. On March 27, 2003,
the Respondent filed a timely response to the Notice to
Show Cause and an answer to the amended complaint.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.

1 The General Counsel’s motion requests summary judgment on the
ground that the Respondent has failed to file an answer to the amended
complaint. Accordingly, we construe the General Counsel’s motion as
a Motion for Default Judgment.
Ruling on Motion for Default Judgment
Section 102.20 of the Board’s Rules and Regulations
provides that the allegations in the complaint shall be
deemed admitted if an answer is not filed within 14 days
from service of the complaint, unless good cause is
shown. In addition, the amended complaint affirmatively
states that unless an answer is filed within 14 days of
service, all the allegations in the complaint will be con-
sidered admitted. Further, the undisputed allegations in
the General Counsel’s motion disclose that the Region
warned the Respondent that if it failed to file an answer,
a Motion for Default Judgment would be filed. On Janu-
ary 7, 2003, the Respondent requested an extension of
the time to file an answer until February 7, 2003. The
Region informed the Respondent by telephone on that
date that no answer had been received.
In its response to the Notice to Show Cause, the Re-
spondent claims that it failed to file an answer because its
counsel was informed by counsel for the General Coun-
sel, before it filed its answer to the complaint, that the
matter had been postponed indefinitely. The Respondent
also contends that its counsel thought the case was being
held in abeyance because the Respondent had ceased
operations and was being liquidated in bankruptcy pro-
ceedings. Neither of these arguments constitutes good
cause for failing to file a timely answer to the amended
complaint.
First, even assuming, for the sake of argument, that
remarks by counsel for the General Counsel led the Re-
spondent to believe initially that the case had been post-
poned indefinitely, the Respondent could not reasonably
have been operating under that assumption after it re-
ceived the amended complaint. The amended complaint
specifically stated that an answer must be filed within 14
days from the date of service. The Respondent’s request
for an extension a week later shows that it was not oper-
ating under the belief that the matter was being held in
abeyance at that point. Consequently, there is no merit in
the Respondent’s claim that it failed to file an answer to
the amended complaint by February 7, 2003, because it
mistakenly assumed that the matter had been indefinitely
postponed, because that mistaken impression had been
corrected at least a month earlier.
Second, the Respondent is not excused from filing a
timely answer because it had ceased operations and filed
for liquidation in bankruptcy. The Board has rejected
claims that “economic necessity,” “dire financial straits”
and the institution of bankruptcy proceedings constitute
good cause. See, e.g., Dong-A Daily North America,
Inc., 332 NLRB 15 (2000) (rejecting the respondent’s
argument that the closing of its office and company tur-
moil constitute good cause for the failure to file a timely
339 NLRB No. 142
OK TOILET & TOWEL SUPPLY, INC. 1101
answer); Rite Style Fashions, 280 NLRB 1134, 1134
(1986) (rejecting the respondent’s attempt to invoke its
bankruptcy petition as a defense to its failure to file an
answer).2
Because good cause has not been shown for the failure
to file a timely answer to the amended complaint, we
grant the General Counsel’s Motion for Default Judg-
ment, but only in part.
Because the Respondent failed to file a timely answer
to the amended complaint, the General Counsel seeks
default judgment on all of the allegations contained in
the amended complaint, including the 8(a)(1) and (5)
allegations of the complaint. However, the Respondent
filed a complete and timely answer to the complaint, ad-
mitting the allegations of paragraphs 1(a) and (b), 2
through 11, 13, and 14 and denying the allegations of
paragraphs 15, 16, and 17. The Respondent also admit-
ted that it cut wages, as alleged in paragraph 12(a), and
ceased making pension and welfare fund contributions,
as alleged in paragraph 12(b), but denied that those
changes modified the contract as alleged. It also denied
imposing on employees a requirement that they make
mandatory health insurance contributions, as alleged in
paragraph 12(a). As affirmative defenses, the Respon-
dent asserted that it made the admitted unilateral changes
to keep from having to close its doors as a result of se-
vere financial conditions and because the Union failed to
bargain in good faith.
Because the Respondent denied or explained signifi-
cant portions of the 8(a)(5) allegations in the complaint,
we shall not grant the General Counsel’s motion for de-
fault judgment as it pertains to those allegations, even
though the Respondent failed to file a timely answer to
the amended complaint, which reiterated those allega-
tions. See TPS/Total Property Services, 306 NLRB 633
(1992); Caribe Cleaning Services, 304 NLRB 932
(1991). Instead, we shall sever and remand that portion
of the proceeding to the Region for further appropriate
action. Miami Rivet of Puerto Rico, 307 NLRB 1390,
1391 (1992).
However, we shall grant default judgment on, and
deem admitted, the unanswered 8(a)(3) allegations of
paragraphs 1(c) and 16 through 20 of the amended com-
plaint, to which the Respondent failed to file a timely
answer.
On the entire record, the Board makes the following

2 Member Schaumber parts company with his colleages in their ap-
proval of the Board’s rejection of “economic necessity,” “dire financial
circumstances,” and the institution of bankruptcy proceedings as
grounds for good cause. He is of the view that the Board applies its
procedural rules in too harsh a manner. See NLRB v. Washington Star
Co., 732 F.2d 974 (D.C. Cir. 1984).
FINDINGS OF FACT
I. JURISDICTION
At all material times, the Respondent, a corporation,
with an office and place of business in Elizabeth, New
Jersey, has provided commercial laundry services. Since
about November 14, 2001, the Respondent has been a
debtor in possession with full authority to continue its
operations and to exercise all powers necessary to admin-
ister its business. During the preceding 12 months, the
Respondent performed services in excess of $50,000
outside the State of New Jersey. We find that the Re-
spondent is an employer engaged in commerce within the
meaning of Section 2(2), (6), and (7) of the Act and that
Amalgamated Service and Allied Industries Joint Board,
Union of Needletrades, Industrial and Textile Employees
(UNITE!), the Union, is a labor organization within the
meaning of Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
At all material times, the following individuals held
the positions set forth opposite their respective names
and have been supervisors of the Respondent within the
meaning of Section 2(11) of the Act and agents of the
Respondent within the meaning of Section 2(13) of the
Act.

Edward J. Oels President
Jackson Bernadin Plant Manager
Anthony J. Mongelli Vice President/Chief
Financial Officer
Carrol Del Polito Vice President

The following employees of the Respondent constitute
a unit appropriate for the purposes of collective bargain-
ing within the meaning of Section 9(b) of the Act:

All production and maintenance employees in-
cluding drivers employed by the Respondent at its
Elizabeth, New Jersey facility, but excluding office
clerical employees, sales persons, professional em-
ployees, guards, and supervisors as defined in the
Act.

For at least 20 years, the Union has been the desig-
nated exclusive collective-bargaining representative of
the unit under Section 9(a) and has been recognized as
such by the Respondent. This recognition has been em-
bodied in successive collective-bargaining agreements,
the most recent of which was to be effective from No-
vember 27, 1999, to November 27, 2002, and thereafter
from year-to-year, unless either party served the other
with 60 days notice of its desire to terminate or modify
the agreement.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1102
About October 3, 2002, the Respondent implemented a
wage cut for unit employees. About October 30, 2002,
the Respondent ceased making contributions to the Un-
ion’s pension and welfare funds on behalf of the unit
employees. The Respondent implemented these changes
without the Union’s consent. The terms and conditions
of employment affected by these acts are mandatory sub-
jects of collective bargaining.
On or about October 24, 2002, certain employees of
the Respondent represented by the Union and employed
at the Respondent’s facility engaged in a strike. The
strike was caused by the conduct that was alleged in the
complaint to violate Section 8(a)(5). About October 25,
2002, the Respondent discharged Annia Blaise, Richard
Curtis, Elimode Dauphin, Kettelyne Dauphin, Jose Diaz,
Richard Dimodica, Micheune Dormilus, Mary Dorsain-
vil, Frank Stack Jr., George Feliciano, Maria Jean, Jean-
ise Merilan, Leroy Nevius, Edward O’Kane, Allette Phil-
ippe, Orlando Rivera, Rosemary Roman, and Rafaela
Santos. The Respondent discharged these employees
because they engaged in the strike described above;
formed, joined and assisted the Union; and engaged in
protected concerted activities; and to discourage employ-
ees from engaging in such activities.
CONCLUSION OF LAW
By discharging the above individuals, the Respondent
has been discriminating in regard to the hire or tenure or
conditions of employment of its employees, thereby dis-
couraging membership in the Union, and has engaged in
unfair labor practices affecting commerce within the
meaning of Section 8(a)(1) and (3) and Section 2(6) and
(7) of the Act.
REMEDY
Having found that the Respondent has engaged in cer-
tain unfair labor practices, we shall order it to cease and
desist and to take certain affirmative action designed to
effectuate the policies of the Act. Specifically, having
found that the Respondent unlawfully discharged the
employees named above, we shall order it to remove
from its files any reference to the unlawful discharges
and to notify the discriminatees in writing that this has
been done and that the unlawful discharges will not be
used against them in any way.
We shall not impose further affirmative remedies at
this time. We have found that the Respondent violated
Section 8(a)(3) when it fired the above-named employees
for engaging in a strike and other protected concerted
activities. The appropriate remedy for this violation de-
pends in part on the nature of the strike. If it was an un-
fair labor practice strike, the discharged strikers are enti-
tled to immediate reinstatement and full backpay, even if
they were permanently replaced. Mastro Plastics Corp.,
v. NLRB, 350 U.S. 270, 278 (1956). If the strike was an
economic strike, on the other hand, any strikers who may
have been permanently replaced before they were fired
would be entitled to reinstatement only when their re-
placements depart, and to backpay only if their replace-
ments have already departed. Laidlaw Corp., 171 NLRB
1366 (1968), enfd. 414 F.2d 99 (7th Cir. 1969), cert. de-
nied 397 U.S. 920 (1970); Auburn Foundry, 274 NLRB
1317 fn. 2 (1985), enfd. 791 F.2d 619 (7th Cir. 1986).
The amended complaint alleges that the strike was an
unfair labor practice strike, caused by the Respondent’s
conduct that allegedly violated Section 8(a)(5). The Re-
spondent denied that its conduct violated Section 8(a)(5),
and we are remanding those issues for a hearing. The
administrative law judge will determine whether the Re-
spondent violated Section 8(a)(5) and, thus, whether the
strike was an unfair labor practice strike. He or she will
also determine, if necessary, whether any of the dis-
criminatees were permanently replaced before they were
discharged. The judge will then be able to determine
whether they are entitled to reinstatement and backpay,
and issue an appropriate order.3
ORDER
The National Labor Relations Board orders that the
Respondent, OK Toilet and Towel Supply, Inc., t/a OK
Towel and Uniform, and OK Toilet and Towel Supply,
Inc., Debtor in Possession, Elizabeth, New Jersey, its
officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Discharging employees because they engage in a
strike; form, join, or assist the Union; or engage in pro-
tected concerted activities, and to discourage employees
from engaging in such activities.
(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Within 14 days from the date of this Order, remove
from its files any reference to the unlawful discharges of
Annia Blaise, Richard Curtis, Elimode Dauphin, Kette-
lyne Dauphin, Jose Diaz, Richard Dimodica, Micheune

3 As discussed above, the Respondent is involved in bankruptcy pro-
ceedings. The General Counsel does not argue that the requested rem-
edy should be limited by the bankruptcy proceedings. We shall enter
our usual remedies and leave to compliance the effect of those proceed-
ings on our remedial order. Desert Valley Electric, 301 NLRB 1197,
1199 fn. 4 (1991). The Respondent may raise in compliance the issue
of the appropriateness of those remedies. Budget Heating & Cooling,
332 NLRB No. 132, slip op. at 4 fn. 4 (1992) (not reported in Board
volumes).
OK TOILET & TOWEL SUPPLY, INC. 1103
Dormilus, Mary Dorsainvil, Frank Stack Jr., George Fe-
liciano, Maria Jean, Jeanise Merilan, Leroy Nevius, Ed-
ward O’Kane, Allette Philippe, Orlando Rivera, Rose-
mary Roman, and Rafaela Santos, and within 3 days
thereafter notify the employees in writing that this has
been done and that the discharges will not be used
against them in any way.
(b) Within 14 days after service by the Region, post at
its Elizabeth, New Jersey facility copies of the attached
notice marked “Appendix.”4 Copies of the notice, on
forms provided by the Regional Director for Region 22,
after being signed by the Respondent’s authorized repre-
sentative, shall be posted by the Respondent and main-
tained for 60 consecutive days in conspicuous places
including all places where notices to employees are cus-
tomarily posted. Reasonable steps shall be taken by the
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, the Re-
spondent has gone out of business or closed the facility
involved in these proceedings, the Respondent shall du-
plicate and mail, at its own expense, a copy of the notice
to all current employees and former employees employed
by the Respondent at any time since October 25, 2002.
(c) Within 21 days after service by the Region, file
with the Regional Director a sworn certification of a re-
sponsible official on a form provided by the Region at-
testing to the steps that the Respondent has taken to
comply.
IT IS FURTHER ORDERED that the General Counsel’s
Motion for Default Judgment is denied with respect to
the 8(a)(5) allegations in paragraphs 12(a) and (b), 15,
16, and 17 of the complaint, and in the equivalent para-
graphs in the amended complaint (except for those that
have been admitted), and that this proceeding is re-
manded to the Regional Director for Region 22 for the
purpose of arranging a hearing before an administrative
law judge concerning the allegations in those paragraphs.
The judge shall prepare and serve on the parties a deci-
sion containing findings of fact, conclusions of law, and

4 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 Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
a recommended Order. Following service of the judge’s
decision on the parties, the provisions of Section 102.46
of the Board’s Rules shall be applicable.
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 vio-
lated Federal labor law and has ordered us to post and obey
this notice.

FEDERAL LAW GIVES YOU THE RIGHT TO

Form, join, or assist any union
Choose representatives to bargain with us on
your behalf
Act together with other employees for your bene-
fit and protection
Choose not to engage in any of these protected
activities.

WE WILL NOT discharge employees because they en-
gage in a strike; form, join, or assist the Union; or engage
in other protected concerted activities, and to discourage
them from engaging in such activities.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
guaranteed you by Section 7 of the Act.
WE WILL, within 14 days from the date of the Board’s
Order, remove from our files any references to the
unlawful discharges of Annia Blaise, Richard Curtis,
Elimode Dauphin, Kettelyne Dauphin, Jose Diaz, Rich-
ard Dimodica, Micheune Dormilus, Mary Dorsainvil,
Frank Stack Jr., George Feliciano, Maria Jean, Jeanise
Merilan, Leroy Nevius, Edward O’Kane, Allette Phil-
ippe, Orlando Rivera, Rosemary Roman, and Rafaela
Santos, and WE WILL, within 3 days thereafter, notify the
discriminatees in writing that this has been done and that
we will not use the discharges against them in any way.

OK TOILET AND TOWEL SUPPLY, INC., T/A OK
TOWEL AND UNIFORM, AND OK TOILET AND
TOWEL SUPPLY, INC., DEBTOR IN POSSESSION