Parkview Drugs, Inc.

National Labor Relations Board - Board DecisionsAug 20, 1962

138 N.L.R.B. 194 (N.L.R.B. 1962)

194 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Parkview Drugs, Inc. and Retail Clerks International Associa- tion, AFL-CIO, Local No. 782. Case No. 17-CA-1877. August 20, 1962 DECISION AND ORDER On March 27, 1962, Trial Examiner Frederick U. Reel issued his Intermediate Report in the above-entitled proceeding, finding that Respondent had not engaged in the unfair labor practices alleged in the complaint and recommending that the complaint herein be dis- missed, as set forth in the attached Intermediate Report. Thereafter, the General Counsel and the Union filed exceptions, each with a sup- porting brief. The Respondent filed a brief in reply to that of the General Counsel and the Union. Pursuant to the provisions of Section 3(b) of the Act, the Board has delegated its powers in connection with this case to a three-member panel [Members Rodgers, Fanning, and Brown]. The Board has reviewed the rulings made by the Trial Examiner at the hearing and finds that no prejudicial error was committed . The rulings are hereby affirmed. The Board has considered the Inter- mediate Report, the exceptions and briefs,' and the entire record in this case, and hereby adopts the Trial Examiner's findings, conclu- sions, and recommendations insofar as consistent with the following modifications : 2 We agree with the Trial Examiner's conclusion that the Respond- ent's leased departments do not constitute an accretion to the pre- existing unit of retail stores. In reaching this conclusion, we rely particularly on the following facts: 1. The nature of the collective-bargaining agreement which by its terns specifically applies to the Respondent's retail operations, whereas the Government Employees Mart (GEM), in which the leased departments in question are located, is a discount type operation. 2. The substantial degree of control vested in the lessor (GEM) under the lease agreement, in that GEM sets the minimum wage scale for the leased department employees; approves all hirings in the de- partments; has the power, which it has in fact exercised, to compel the discharge of such employees and, in fact, controls the labor policy affecting employees in the leased departments. Accordingly, we find that the Respondent's refusal to recognize and bargain with the Union for leased department employees as part 'The Union's motion for oral argument is denied because in our opinion, the record, exceptions, and briefs adequately set forth the positions of the parties 2 Member Fanning finds it unnecessary to pass upon the Trial Examiner's dictum with respect to the Respondent's obligation to recognize the Charging Party as representative of employees of a new drugstore In all other respects he adopts the Trial Examiner's findings, conclusions, and recommendations without modification. 138 NLRB No. 25. PARKVIEW DRUGS, INC. 195 of the preexisting unit did not constitute a violation of Section 8(a) (5) and (1) of the Act and we shall, therefore, dismiss the complaint. [The Board dismissed the complaint.] INTERMEDIATE REPORT AND RECOMMENDED ORDER Pursuant to a charge filed October 25, 1961 , and an amended charge filed Novem- ber 13, 1961, by Retail Clerks International Association , AFL-CIO, Local No. 782 (herein called the Union ), General Counsel on December 22, 1961, issued a com- plaint against Parkview Drugs, Inc. (herein called the Respondent or the Company), alleging violations of Section 8(a)(5) and ( 1) of the National Labor Relations Act, as amended . Issue having been joined by the filing of an answer , the matter was heard before Trial Examiner Frederick U. Reel in Kansas City , Missouri, on February 20 and 21, 1962. Briefs were thereafter received from General Counsel and Respondent , and have been carefully considered . Upon consideration thereof and of the entire record ,' I make the following: FINDINGS OF FACT 1. THE BUSINESS OF THE RESPONDENT ; THE LABOR ORGANIZATION INVOLVED The pleadings establish and I find that Respondent is a Delaware corporation with its principal place of business in Kansas City, Missouri, where 'it operates a chain of retail drugstores. The pleadings further establish and I find that Respondent in 1961 sold at retail goods and products valued in excess of $500,000, of which goods and products valued in excess of $10,000 were received by Respondent directly from outside the State of Missouri, and that Respondent is an employer engaged in com- merce within the meaning of Section 2(6) and (7) of the Act. The pleadings further establish and I find that the Union is a labor organization within the meaning of Section 2(5) of the Act. II. THE ALLEGED UNFAIR LABOR PRACTICE The issue in this case arises out of the fact that the Company , acting through three subsidiary corporations, operates three departments located within a Kansas City discount department store known as Government Employees Mart (herein called GEM). The General Counsel contends, and the Respondent denies, that these depart- ments constitute an "accretion " to the preexisting bargaining unit, consisting of the employees in the Company's 17 retail stores for which the Union is the statutory bargaining representative. A. The relationship between the Company and the Union For many years the Company has recognized the Union as the bargaining repre- sentative of the employees in the Company 's retail stores, and the parties have enjoyed harmonious contractual relations . When a new store is opened , the existing collective -bargaining agreement by its terms is immediately applicable to employees in the new store. The difficulties culminating in the instant proceeding arose after the Company, acting through three wholly owned subsidiary corporations known as Second Sales Company, Third Sales Company, and Fourth Sales Company, started to operate three retail departments (drugs, groceries, and books and stationery) in the GEM store. Respondent employs approximately 170 retail clerks and phar- macists in its retail stores; the drug, book and stationery, and grocery departments at GEM employ approximately 30, 6, and 16 employees, respectively. The Union contended that the employees in the three departments were employees of Respond- ent, and hence were covered by the Union's agreement with Respondent under which the Union was recognized as the representative of "all registered pharmacists and retail clerks employed by [ Respondent ] . in all retail stores . . . in the Greater Kansas City Trade Area." The Union sought to have the union-security provisions of its contract applied to the employees in the departments in question . The Company i Together with his brief counsel for Respondent filed a motion to correct certain errors In the typewritten transcript This motion Is hereby granted and the transcript will be corrected as requested in the motion. 662353-63-vol 138-14 196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD refused to recognize the Union as bargaining representative of these employees, tak- ing the position that the employees in question were not employees of the Company, and further pointing out that if it recognized the Union as bargaining representative of these employees, GEM might exercise its option to cancel the licenses it had given to Second, Third, and Fourth Sales Companies to operate departments in the GEM store. In the course of negotiations for a new contract to be effective February 28, 1962, the Union had proposed adding to the recognition clause, quoted above, language providing explicitly that the contract would be applicable to employees of subsidiary corporations (e.g., Second, Third, and Fourth Sales Companies), and further pro- viding that the union-security clause of the contract would be applicable to all employees in leased departments such as are here involved, including employees of the lessor (e.g., GEM) unless the Union had a contract with the lessor which would control as to the lessor's employees. The Company contends that by proposing this change the Union is conceding that the previous recognition clause did not reach this case, but General Counsel and the Union apparently view the proposed new clause as merely making explicit in the contract that which was previously implicit or operative as a matter of law. If the Company were correct in its view that the employees in question were the employees of Second, Third, and Fourth Sales Companies rather than of the Com- pany, its refusal to recognize the Union as their representative would be sustained on this ground alone. But the record discloses not only that the several Sales Com- panies are wholly owned subsidiaries of Respondent, but that their officers and those of Respondent are identical, that the officers have no duties to perform in their capacities as officers of the Sales Companies, that the Sales Companies utilize the main office of the Company as their main office, and that many clerical and bookkeeping functions of the Company and the Sales Companies are handled by the same em- ployees. Under these circumstances, it is clear that for purposes of the Act Re- spondent is an employer of the employees in the leased departments. See, e.g., N.L.R.B. v. A. E. Nettleton Co., et al., 241 F. 2d 130, 131 (C.A. 2), and cases cited; N.L.R.B. v. Federal Engineering Company, Inc., 153 F. 2d 233, 234 (C.A. 6), and cases cited; N.L.R.B. V. Christian A. Lund, d/b/a C. A Lund Company and Northland Ski Manufacturing Company, 103 F. 2d 815, 818-819 (C.A. 8). In short, if one of the subsidiary corporations opened an ordinary retail drugstore in Kansas City, Respondent would have been obligated to recognize the Union as bar- gaining representative of the store's employees. The other ground Respondent advanced to the Union as an excuse for not recognizing it as the representative of the leased department employees-fear that GEM would cancel the leases-is palpably no defense if as a matter of law Re- spondent is required to extend recognition. The grounds advanced by Respondent in its dealings with the Union, therefore, do not sustain Respondent's ultimate position. The mere fact that Respondent put forth fallacious reasons for not recognizing the Union does not establish the violation, however, for it is incumbent on General Counsel to establish that the Union was lawfully entitled to demand recognition. In other words, if the leased departments do not amount to an "accretion" to the existing unit, Respondent was under no legal duty to recognize the Union as the representative of the employees therein, and the refusal to recognize, whatever its motivation, was not unlawful? We turn to a consideration of the factors which determine whether the employees in these departments should be considered an accretion to the unit of retail stores. B. Comparison of the GEM departments with Respondent's retail stores The three GEM departments handle merchandise substantially similar to that 'handled by the Respondent's retail stores. The exceptions appear to be that the GEM book and stationery department handles hardcovered books as well as paper- backs, whereas only the latter are sold in the other stores, and even those do not come from the same supplier who supplies paperbacks to the GEM department Some of the stores, but not all, handle groceries similar to those handled at GEM. The departments in GEM are basically of the self-service type, with a special cashier to ring up sales, whereas in the stores the sales clerks make sales and operate the cash registers themselves. The volume of business at the GEM drug department is ap- parently greater than that in any of the stores, -for at GEM the pharmacists spend full time making up prescriptions, and do not wait on customers. Also, the stockers at GEM only stock merchandise, whereas in the stores they may also sell. 2 There is no claim that the Union represented any of the leased department employees if such departments are not an accretion to the preexisting unit PARKVIEW DRUGS, INC. 197 Although the items of merchandise handled at the stores are of a similar character to those handled at GEM, the sources of supply are quite different. Respondent operates its own warehouse and largely supplies its retail stores through that ware- house The GEM departments on the other hand, although receiving some supplies from that warehouse, receive by far the greater part of their merchandise direct from the manufacturer or from wholesalers. The quantities handled at the GEM departments are sufficiently large to make it more economical to deal directly with the supplier rather than to utilize Respondent's warehouse. The determination whether to buy groceries from an independent source or to use Respondent's ware- house is made by the manager of the GEM grocery department who gets a list of prices from Respondent and buys only those items which are cheaper there than elsewhere 3 There is some transfer of goods between the retail stores and the GEM departments; the GEM grocery department may receive "small items" such as "ten cartons of tomatoes" from the other stores "two or three times a week." The GEM management does not direct the department managers as to what merchandise to buy or where to buy it, except to require that nationally advertised brands be carried rather than lesser-known brands, and to require that certain products under GEM's brandname be carried. The GEM management will also check the prices charged in the various departments, and if it finds any price too high in terms of prevailing retail and discount prices elsewhere in the area, will require that the price be lowered. Respondent's officials regularly visit the GEM departments, but in the event their orders are contrary to those issued by GEM management, the latter are controlling. Insurance covering the leased departments ,is handled at Respondent's office in the same manner as insurance covering the retail stores. Payroll records, withholding tax statements, and similar clerical matters affecting the employees in the leased departments are handled at Respondent's central office. Applications for employ- ment at the retail stores are made on Respondent's forms; applications for the GEM departments were formerly made on such forms but are now made on GEM forms. Employees in the GEM departments are required to wear badges similar to those worn in other departments in the GEM store; indeed, the ordinary customer at GEM would be unaware that the grocery, drug, and book and stationery depart- ments in that store were operated by a licensee rather than by the GEM manage- ment Unlike the retail stores in Respondent's chain which are open to the general public, access to the GEM departments is limited to Government employees (Fed- eral, State, or local), members of the Armed Forces, including the active reserve, and persons connected with companies doing 40 percent of their business with the Government The license agreement with GEM has with each licensee (nominally Second, Third, and Fourth Sales Companies, but for our purposes with Respondent) recites that the licensee will "comply with the labor policies established by GEM" or (in a later form) that the licensee will "comply with such labor policies as GEM shall espouse from time to time." In actual practice, all hirings in the departments must be approved by the GEM management, and on at least one occasion such approval was withheld. GEM also retains (and on one occasion exercised) the power to compel the discharge of employees in the departments. GEM sets the minimum wage for the departments, but payment above that wage is within the discretion of the department manager. GEM fixes the hours the departments will be open, requires that each employee be allowed an hour for lunch, and directs that employees shall work a 40-hour, 5-day week Aside from those limitations the schedule of particular employees is set up by the department manager. Sick leave and vacation policy are set by GEM, and not by the department manager or by Respondent. GEM is closed on six legal holidays; some of Respondent's stores are open on those days. Of the over 150 employees hired for the leased depart- ments since the first one opened in the fall of 1958, only 1, an assistant manager, has been a transfer from one of Respondent's stores .4 No employees in the leased departments have transferred to any of Respondent's stores. C. Concluding findings No case has been cited to me, and I have found none, involving the question whether a leased department should be considered an accretion to a previous unit consisting of a group of stores operated by the lessee. In several cases the Board has indicated that employees in such leased departments will usually be excluded 3The department managers were employed at Respondent 's stores before going to the GEM departments 'Assistant store managers are expressly excluded from the bargaining unit under the Union's contract with Respondent in effect at the time of the hearing. 198 DECISIONS OF NATIONAL LABOR RELATIONS BOARD from bargaining units comprised of other employees in the department store. See, e.g., Duane's Miami Corporation, 119 NLRB 1331, 1335; The Sperry and Hutchinson Company, 117 NLRB 1762, 1764, footnote 5. But assur.Iing arguendo that the employees in the leased departments here would not be included in a unit compris- ing the GEM store, it by no means follows that they are included in the preexisting unit of Respondent's retail stores as an accretion thereto. At least three possibilities exist: they may be an automatic accretion; they may be included in that unit only after a self-determination election; and they may be excluded therefrom and required to comprise a unit of their own. For purposes of this proceeding, I need answer only the first question: do these departments constitute an accretion to the pre- existing unit by operation of law and without regard to the wishes of the employees therein? Stated otherwise, the question is whether these departments should be considered as simply a new retail store or stores in Respondent's chain (in which case they would be an accretion to the unit; see Jewel Food Stores, a Department of Jewel Tea Co., Inc., 111 NLRB 1368), or whether they should be considered as sufficiently different in character to lead to the conclusion that the "accretion" principle is inapplicable. A consideration of the Board cases finding or rejecting "accretions" leaves me with- little doubt that the departments here do not constitute an accretion to the pre-- existing unit of retail stores. In reaching that result, while I rely on the entire- congeries of facts, I am particularly impressed by the nearly complete lack of trans- fer between the stores and the GEM departments, the differences in duties between the store employees and those in the GEM departments, the extent to which GEM controls the labor conditions in the leased departments (minimum wage, sick leave, and vacation policy), and the administrative difference which Respondent observes between the stores and the GEM departments, particularly in the sources of supply. See particularly Essex Wire Corporation, 130 NLRB 450, 453; Longs Stores, Inc., a California Corporation, 129 NLRB 1495, 1496-1497; Krambo Food Stores, Inc., 119 NLRB 369, 373; Pay Less Drug Stores, 127 NLRB 160; Hot Shoppes, Inc., 130 NLRB 138; See also Pacific States Steel Co., 134 NLRB 1325; Buy Low Super- market, Inc., 131 NLRB 23; Houck Transport Company, 130 NLRB 270; Armstrong Cork Company, (Lancaster Floor Plant), 106 NLRB 1147; Scrivner Stevens Com- pany, 104 NLRB 506; Price National Corporation, 102 NLRB 1393; Ware Labora- tories, Inc., 98 NLRB 1141; American Can Company, 98 NLRB 1190; Thatcher Glass Manufacturing Company, 97 NLRB 238. Compare Robert Hall Clothes, Inc., 118 NLRB 1096; Borg-Warner Corporation, 113 NLRB 152; Birdsboro Armor- cast, Inc., 101 NLRB 22. It follows that Respondent did not violate the Act by refusing to recognize the Union as bargaining representative of the employees in the leased departments and by refusing to apply the collective-bargaining agreement to those employees. CONCLUSIONS OF LAW 1. Respondent is an employer engaged in commerce within the meaning of Section 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. Respondent has not engaged in the unfair labor practices alleged in the complaint. RECOMMENDED ORDER Upon the basis of the foregoing findings of fact and conclusions of law, and upon the entire record in this case, it is recommended that the complaint herein be dismissed. Sam Winer Motors, Inc. and International Association of Ma- chinists, Lodge 762 , AFL-CIO. Case No. 8-CA-2673. August 20, 1962 DECISION AND ORDER On June 20, 1962, Trial Examiner James A. Shaw issued his Inter- mediate Report in the above-entitled proceeding, finding that the Respondent had engaged in and was engaging in certain unfair labor- 138 NLRB No. 29.