MAKELA WELDING, INC., v. NLRB, 17348.

• Citation: 387 F.2d 40
• Decision Date: 15 December 1967
• Docket Number: No. 17348.,17348.
• Parties: MAKELA WELDING, INC., and Kemp Welding, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

387 F.2d 40 (1967)

MAKELA WELDING, INC., and Kemp Welding, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 17348.

United States Court of Appeals Sixth Circuit.

December 15, 1967.

COPYRIGHT MATERIAL OMITTED

Judith Bleich Kahn, Ann Arbor, Mich., for petitioners, Theodore Messner and Gerald Vairo, Messner & LaBine, Houghton, Mich., on brief, Judith Bleich Kahn, Ann Arbor, Mich., of counsel.

Nancy M. Sherman, N. L. R. B., Washington, D. C., for respondent, Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Nancy M. Sherman, Atty., N. L. R. B., Washington, D. C., of counsel.

Before PHILLIPS, PECK, and McCREE, Circuit Judges.

McCREE, Circuit Judge.

This case is before us on a petition to review and set aside an order of the National Labor Relations Board, reported at 159 N.L.R.B. No. 93, and on the Board's cross-petition for enforcement of its order.

Petitioner Makela Welding, Inc. (hereinafter Makela) operated a metal fabricating plant in Baraga, Michigan. Ninety per cent of the stock of Makela was owned by George Makela, Sr., his wife, and his son. On June 24, 1965, three Makela employees, Fallon, Kiiskila, and Lampinen, approached Kemppainen, who was general manager of Makela and also an officer and director, and a ten per cent stockholder, and requested a raise for Makela's 47 employees. Kemppainen stated that the company could not afford the raise. A similar request was made on two other occasions with the same response, and on July 8, all of Makela's employees commenced an economic strike.

On July 10, Kemppainen sent for Lampinen and stated that he was prepared to settle the strike by discharging 18 of the employees and giving the remaining employees a 5-cent hourly increase. Lampinen agreed to discuss this offer with the other employees, but later on July 10 Kemppainen, without receiving word from Lampinen, sent letters to 18 employees terminating their employment. Among the 18 were Fallon and Kiiskila, two of those who had been spokesmen in requesting a raise. George Makela, Jr., visiting at the home of a Makela employee, stated that "he was going to teach the troublemakers a lesson."

On July 12, Lampinen ascertained that the terms suggested by Kemppainen were unacceptable to the employees. On the evening of July 12, a meeting was held at which 28 Makela employees signed cards authorizing the International Union, United Automobile, Aircraft and Agricultural Implement Workers of America (UAW) to be their bargaining representative. Eleven more signed cards were sent by mail to the union representative within the next few days. On July 13, the union representative wrote two letters to Makela, requesting that Makela enter into negotiations with the union, and stating that all Makela employees were willing to return to work under the conditions which prevailed before the strike. These letters were not answered. On July 22, Makela's remaining employees were notified that "negotiations for the sale of the assets of the company" had been completed, and that their employment was terminated.

Kemppainen had discussed with the Makela family the possibility of purchasing the business in 1964, but no agreement was reached at that time. On July 17, 1965, Kemppainen and the Makelas agreed to terms for the sale of the business. These terms were approved by Makela on July 24, and by Kemp Welding, Inc. (hereinafter Kemp), a new corporation, on August 25. All the stock in the new corporation was owned by Kemppainen, his wife, and his daughter. The purchase price was $25,000, payable in weekly installments of $100, and Kemp was to take over Makela's accounts receivable as of July 1 and also to assume Makela's indebtedness to the Small Business Administration and to a local bank.

On July 27, Kemp commenced operations, fabricating items for Pettibone of Michigan, Inc., which had also been Makela's principal account. Kemp's work force at the outset consisted of 14 former Makela employees, and the majority of Kemp's personnel continued to be former Makela employees as the Kemp staff increased in size. Kemppainen served as general manager of Kemp, and Sarri, who had been the Makela foreman, assumed that position for Kemp. Kemp paid nearly all of the former Makela employees hourly wages of between 5 and 20 cents higher than those paid by Makela. Kiiskila, one of the men who had originally approached Kemppainen concerning a raise for Makela employees, was hired by Kemp on August 9. Fallon, another of the original spokesmen, was not hired. At the time of hiring, Kemppainen asked certain prospective Kemp employees about their feelings toward the union.

On September 16, the union requested that it be recognized by Kemp as bargaining agent for Kemp employees, then numbering about 25. Kemppainen informed the union that he disputed its majority claim, and refused a card check on the ground that cards signed by employees while working for Makela would not be binding on Kemp.

Based on the foregoing facts, the Board found that Makela had violated sections 8(a) (5) and 8(a) (1) of the National Labor Relations Act, 29 U.S.C. § 158(a) (1), (5), by refusing to bargain with the union, had violated sections 8 (a) (3) and 8(a) (1), 29 U.S.C. § 158(a) (1), (3), by refusing to reinstate the undischarged strikers and refusing to rehire the discharged strikers, and had violated section 8(a) (1) by discharging Fallon and Kiiskila and by threatening reprisals. The Board found that Kemp had violated sections 8(a) (5) and 8(a) (1) by refusing to bargain with the union and by raising wages without bargaining, had violated sections 8(a) (1) and 8(a) (3) by failing to hire Fallon and by delaying the hiring of Kiiskila, and had violated section 8(a) (1) by interrogating applicants with regard to union sympathies. In fashioning the remedy for these alleged unfair practices, the examiner recommended, and the Board ordered, that Makela make its employees whole for wages lost between July 16 (the day following the demand for reinstatement) and July 26 (the day before Kemp commenced operations), and that Kemp should assume this back pay obligation if Makela fails to do so.

On appeal, Makela contests the findings of violations based on refusal to bargain and on failure to reinstate or rehire its employees. Kemp contests the findings of violations based on refusal to bargain and on changing the wage rates, and also questions the propriety of the order requiring it to fulfill Makela's back pay obligation should Makela fail to comply.

I. Makela's Violations

Before the Board, Makela objected to the finding of unlawful refusal to bargain on the grounds that the corporation had entertained a good faith doubt as to the majority status of the union and that

Any effort made by Makela in response to any Union demand would have been purposeless since Makela had already committed itself to sell its assets and terminate its corporation existence and the employment status of its employees.

Here, Makela stresses the second ground. Makela's apparent abandonment of its claim of good faith doubt is understandable, for Kemppainen testified that he was aware that a majority of the employees had signed union authorization cards. Moreover, Kemppainen never informed the union of his alleged doubt, and in the absence of such communication, the claim of good faith doubt cannot be maintained. N.L.R.B. v. Crown Can Co., 138 F.2d 263 (8th Cir. 1943), cert. denied, 321 U.S. 769, 64 S.Ct. 527, 88 L.Ed. 1065 (1944).

Makela's second objection to the finding of an unlawful refusal to bargain raises important questions as to the effect of the decision of the Supreme Court in Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263, 85 S.Ct. 994, 13 L.Ed.2d 827 (1965). In Darlington, the Court held "that when an employer closes his entire business, even if the liquidation is motivated by vindictiveness toward the union, such action is not an unfair labor practice." 380 U.S. at 273, 274, 85 S.Ct. at 1001. Makela argues that in light of its decision to exercise the right guaranteed in Darlington, there would have been nothing to bargain about and its refusal to bargain was therefore not unlawful. The Board responds that, Darlington notwithstanding, an employer is under a duty to notify his employees' representative of impending discharges resulting from a planned sale of the plant so that there might be bargaining over such issues as severance pay. The cases cited by the Board are of little help in resolving this dispute, since they either involved no sale¹ or involved a transfer in which the transferee was the alter ego of the transferor in the sense that essentially the same business operations were involved and control remained in the same individuals.² Here, the sale was for valuable consideration and to a corporation with stock ownership substantially different from that of the transferor. (These facts are the apparent basis for the Board's conclusion that the sale was bona fide.) It might also be observed that all but one of the cases relied upon by the Board antedate Darlington.

We find it unnecessary to resolve this dispute at the present time because there is substantial evidence in the record to support the finding of an 8(a) (5) violation by Makela independent of any obligation to bargain concerning the effects of the sale. While the trial examiner's decision does mention "the requirement to bargain with the Union over the effect of the sale on the employees," it does not appear that he based his findings or his order on the existence of such a requirement. Kemppainen testified that the Makelas did not decide to sell their business until after the union had sought recognition. Hence, whether or not it was necessary to bargain concerning the effects of the sale, there was a refusal to bargain by Makela between the time it received the union's request and the time it decided to...