Operating, Engineers, Loc 701

National Labor Relations Board - Board Decisions

Nov 24, 1975

221 N.L.R.B. 751 (N.L.R.B. 1975)

OPERATING ENGINEERS, LOC. 701
International Union of Operating , Engineers, Local
No. 701, AFL-CIO and Cascade Employers
Association, Inc. for and on behalf of its employer-
member Tru-Mix Construction Co., Inc. Case 36-
CE-10
November 24, 1975
DECISION AND ORDER
BY CHAIRMAN MURPHY AND MEMBERS
FANNING AND JENKINS
Upon a charge filed on November 5, 1974, Cascade
Employers Association, Inc. (hereinafter called
Cascade), for and on behalf of its employer-member
Tru-Mix Construction Co. (hereinafter called Tru-
Mix), the Regional Director for Region 19 issued a
complaint and notice of hearing on January 29, 1975,
alleging that the International Union of Operating
Engineers, Local,No. 701, AFL-CIO (hereinafter
called Respondent), has engaged in, and is engaging
in, conduct that constitutes an unfair labor practice
affecting commerce within the meaning of Section
8(e) and Section 2(6) and (7) of the National Labor
Relations Act, 'as amended. The complaint alleges, in
effect, that Respondent has entered into an agree-
ment violative of Section-8(e)1 by requiring Tru-Mix
to sell its capital assets only'to purchasers willing to
adopt all the terms of a collective-bargaining
agreement, thus, in effect, agreeing to cease and
refrain from handling, using, selling, transporting, or
otherwise dealing in the products of other employers,
and agreeing to " cease doing business with other
persons. Copies of the charge and complaint and
notice of hearing were duly served on Respondent.
Thereafter, Respondent filed a timely answer to the
complaint admitting in part and denying in part the
allegations of the complaint and denying the com-
mission of an unfair labor practice, while advancing
as an affirmative defense the contention that, the
object and purpose of the contract language at issue
was to preserve work traditionally performed by the
union employees:
On February 21, 1975, the General Counsel filed
with the Board a motion for summary judgment and
memorandum in support, thereof submitting that, in
view of Respondent's answer, there were no issues of
fact or law requiring a hearing and, therefore, the
Board should grant , the motion andissue the
i Sec. 8(e) reads in pertinent part:
It shall be an unfair labor practice for any labor organization and
any employer to enter into any contract or agreement, express or
implied, whereby such employer ceases or refrains or agrees to cease or
refrain from handling, using, selling, , transporting or otherwise dealing
in any of the products of any other employer, or to cease doing
business with any other person, and any contract or agreement entered
221 NLRB No. 124
751
appropriate order. On February 2$, 1975, the Board
ordered that the proceeding be transferred to and
continued before it and issued a notice to show cause
why the General Counsel's motion should not be
granted. Thereafter, Respondent filed a brief in
opposition to the motion and Cascade filed a brief in
support of the motion.
Pursuant to the provisions "of Section 3(b) of the
National Labor Relations Act, as- amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
Upon the entire" record in this proceeding, the
Board makes the following:
Ruling on the Motion for Summary Judgment
Tru-Mix owns _a sand and gravel' business and also
operates as a paving contractor. It employs 10-14 of
Respondent's members and during peak periods it
obtains as .many as 16 additional employees through
Respondent's hiring hall for onsite construction. On
December 12, 1974, Tru-Mix, after an attempt to
delete certain provisions, executed under protest a
contract with Respondent identical to one previously
executed by the three other members of the Cascade
Employers Association. The contract expires on May
31, 1979, and includes the following provisions:
Purposes of this Agreement
-Section 2 . -This Agreement shall cover all pre-
established, and/or permanently and/or new
permanently located plants owned and /or operat-
ed by the Employers signatory , and shall be
binding upon them and their heirs, executors,
administrators , successors, purchasers and as-
signs, through the duration of this Agreement and
the successive agreements unless terminated in
accord with the provisions of this Agreement.
Article VI
Agreement Binding Upon Parties
(b) This Agreement shall be- binding upon the
heirs, executors, administrators, successors, pur-
chasers and assigns of the parties hereto.
The General Counsel argues, inter alia, that the
pleadings establish that the disputed provisions of
the contract implicitly place a burden upon Tru-Mix
into heretofore or hereafter containing such an agreement , shall be to
such extent unenforceable and void: Provider, That nothing in this
subsection (e) shall apply to an agreement between a labor organization
and an employer in the construction industry relating to the
contracting or subcontracting of work to be done at the site of the
construction , alteration, painting, or repair of a building, structure, or
other work .
752 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to sell its capital assets only to a purchaser willing to
'adopt all the terms of the contract, thus, in effect,
agreeing` to cease "doing business" within the
meaning of Section .8(e) with purchasers unwilling, to
adopt the collective-bargaining agreement. He relies,
in part, upon ' the Board's decision in Commerce
Tankers.2 where the Board held that the sale of
capital assets in' the' maritime industry was "doing
business" cognizable under Section 8(e).
While agreeing with the General Counsel, Cascade
further argues that the disputed clauses put Tru-Mix
"in the untenable position of incurring liability under
Section 301 of the Labor Management Relations
Act" unless the transferees assume the entire con-
tract, including Respondent's ' collective-bargaining
agreement . Cascade further contends that the restric-
tion upon `the seller's'fight to sell its business without
regard to an existing labor agreement runs counter to
the policy of maximizing the economic freedom of
purchasers and the free transfer of capital as set forth
in N.L.R_B. v. Burns International Security Services,
Inc., 406 U.S. 272 (1972).
In opposition, the Respondent, urges, inter alia, that
the legislative history of Section 8(b)(4) and of
Section 8(e) reflects no evidence of an intention to
apply,these provisions to the sale of all, or.substan-
tially all, of an employer's capital assets. Legislative
history shows a concern to protect neutral employers
and their employees and, therefore, Section 8(e) is
not applicable unless there are two separate business-
es, each with its own work force.
After due consideration of the General Counsel's
motion, the briefs 'of the parties, the applicable
statutory provisions, and the legislative history, the
Board has concluded that the motion should be
denied.
A reading of the legislative history clearly indicates
that Section 8(e), like Section 8(b)(4), was to:
protect genuinely neutral employers and their
employees, not themselves involved in a labor
dispute, against, economic coercion designed to
give a labor union victory in a dispute with some
other employer: [S. Rep. No. 187, 86 Cong., 1st
sess ., I Leg. 'Hist. of the Labor-Management
Reporting and Disclosure Act of 1959].
The specific union tactic Section 8(e) proscribed
was the inclusion of provisions in a collective-
bargaining 'agreement that would require the neutral
employer to stop or refrain from handling, transport-
ing, using, selling, or otherwise dealing with another
2 National Maritime Union, AFL-CIO; Commerce Tankers Corporation
(Vantage Steamship Corporation), 196 NLRB 1100 (1972), enfd. 486 F.2d 907
(C.A 2, 1973), cert. , demed 416 U .S. 970 (1974)
3 Johnson Ready Mix Co., 142 NLRB 437 (1963).
4 Grainger Brothers Co., 146 NLRB 609 (1964).
employer's product or to, cease doing business with
that employer. In this fashion a union would exert
pressure by interrupting the business relationship the
neutral,, has or would have with the employer
considered to be unfair by the union.
The transfer or sale of a business enterprise has for
many years been the subject of consideration while
this Board has attempted to determine the degree to
which a succeeding party must-undertake a predeces-
sor's obligations in the conduct of its labor relations
policy. In this particular context, the sale or `transfer
of an enterprise has been viewed not as a business
transaction but as a substitution of one entity for the
other while the conduct of business continues
without interruption.
In The Northwest Glove Co., Inc., et al., 74 NLRB
1697, 1700 (1947), the Board adopted the rationale of
the Court of Appeals, for the Sixth , Circuit in
N.L.R.B. v. Arthur L. Colten and,Abe,J. Colman, co-
partners d/b/a Kiddie Kover Manufacturing Company,
105 F.2d 179 (1939):
It is the employing industry that is sought'to be
regulated and brought within, the corrective and
remedial provisions of the Act in,the interest of
industrial peace. The term "co-partners" may not
then be regarded as more' than a term of
description, or as denoting a, legal entity which
alone is subject to the command of the order. It
needs no demonstration that the strife which is
sought to be averted is no , less an object of
legislative solicitude when contract, death, , or
operation of law brings about change of owner-
ship in the employing industry.
From this perspective we have viewed the business
enterprise as not only surviving and continuing after
the mere change of its owner, but as being the same
employing industry. Considerations of this matter
have underscored our decisions in questions as to
whether a certification of a bargaining representative
survives the substitution of a new owner,3 whether a
predecessor's contract is a bar to a representation
proceeding,4 or whether a succeeding party is liable
for the predecessor's unfair labor practices 5-
Contrary to the General Counsel, we do not view
Commerce Tankers, supra, as precedent for the
conclusion that the instant contractual clauses are
unlawful under Section 8(e). In Commerce Tankers
the Board held that the sale of vessels in the maritime
industry was a fairly common occurrence and did
5 Perim Vinyl Corporation, Dade Plastics Co and United States Pipe and
Foundry Company, 164 NLRB 968 (1967). See also Golden State Bottling Co.,
Inc, formerly Pepsi-Cola Bottling Co. of Sacramento, et al. v. N.L. R B., 414
U.S. 168 (1973).
OPERATING ENGINEERS, LOC. 701
not "represent a novel situation but occurs in the
normal course of doing business." 6 That concept
would seem inapplicable to a situation, as here,
where an entire business entity may be transferred
from one person to another. This would not involve a
contractually required refusal to deal in "hot goods,"
"unfair materials," or "blacklisted" products, or an
agreement to withhold services from an "unfair"
employer, the primary concern of Congress in
legislating this section of the Act.7
Whatever inhibitions the alleged unlawful clauses
may create with respect to the current owners'
contractual commitment to sell Tru-Mix only to a
buyer willing to accept the existing labor agreement,8
it is clear that the Company itself would continue to
produce and sell sand and gravel and that its normal
business relations with customers and suppliers
would not necessarily be affected.
Accordingly, we shall deny the motion for summa-
ry judgment and dismiss the complaint herein.9
CONCLUSIONS OF LAW
1. Tru-Mix Construction Company, Inc., the
Employer, is engaged in commerce within the
meaning of the Act and it will effectuate the purposes
of the Act to assert jurisdiction herein.
2. The conduct of Respondent alleged to consti-
tute an unfair labor practice within the meaning of
Section 8(e) of the National Labor Relations Act, as
amended, has not been sustained by the pleadings.
6 Supra at 1101. See also 486 F .2d 907 , 911, where the court noted that it
may at least be "doubted" whether such a sale comes within the meaning of
Sec 8(e) and it "assumed without deciding for the future " that the sale of a
vessel in the maritime industry was "doing business" principally because the
Board had made such a finding and the Union did not challenge it before
the court.
7 I, II Leg. Hist. 475, 778-779, 838, 1007, 1161-63 (1959)
6 While we agree with Cascade that the Supreme Court in Burns, supra,
demonstrated its interest in affording certain freedoms to purchasers, it was
not directed to the application of Sec. 8(e) and shows no basis for
concluding that the Court intended to implicitly broaden the narrowly
defined statutory prohibitions of that section.
9 In view of our conclusions herein , we find it unnecessary to reach the
question of whether the disputed clauses protect the "work preservation"
ORDER
753
It is hereby ordered that the General Counsel's
motion for summary judgment be, and it hereby is,
denied.
IT IS FURTHER ORDERED that the complaint be, and
it hereby is, dismissed.
CHAIRMAN MURPHY, concurring:
I agree with my colleagues that the motion for
summary judgment should be denied and the
complaint herein should be dismissed. But I do not
agree with their rationale. Rather, I have considered
the contract clause itself very carefully and I
conclude that it does not violate Section 8(e) by its
terms.
As I read the contested clause, it seeks to apply
automatically to a purchaser of the business, but it
places no inhibitions upon the actions of the
contracting employer in his selection or dealing with
such a purchaser and requires no commitment or
affirmative conduct on the part of the contracting
employer. Hence, assuming , without deciding, that
such a sale of a business would be "doing business"
within the meaning of the Act, an issue which I need
not and do not reach in this case , I find that the
clause does not even impliedly seek to compel the
employer to cease dealing with any potential pur-
chaser.10 Since the' clause is unambiguous, it is to be
interpreted to require no more than what is allowed
by law.11
Under these circumstances, no possible basis is
alleged upon which a violation may be found of
Section 8(e) of the Act. Accordingly, I concur in the
result.
interests of Respondent.
i° Cf. National Maritime Union of America, AFL-CIO; Commerce
Tankers Corporation (Vantage Steamship Corporation), 196 NLRB 1100
(1972), enfd 486 F.2d 907 (C A. 2, 1973), in which the contract clause
(quoted in full at 1103) provided specifically that "The Company obligates
itself to obtain for the benefit of the Union a written undertaking with the
Umon to be executed by the business entity to which the vessel has been
sold or transferred that for the full term of the Agreement all of its terms
and provisions shall apply to said vessel . "
11 General Teamsters, Chauffeurs, Warehousemen and Helpers, Local 982,
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and
He pers of America (J K Barker Trucking Co, et at), 181 NLRB 515 at 517
(1970), enfd. 450 F.2d 1322 (C A.D.C, 1971)