706 F.2d 18 (1st Cir. 1983), 82-1635, Penntech Papers, Inc. v. N.L.R.B.

Docket Nº:82-1635.
Citation:706 F.2d 18
Party Name:PENNTECH PAPERS, INC., T.P. Property Corporation, and Kennebec River Pulp and Paper Company, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent. United Paperworkers International Union, et al., Intervenors.
Case Date:April 26, 1983
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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706 F.2d 18 (1st Cir. 1983)

PENNTECH PAPERS, INC., T.P. Property Corporation, and

Kennebec River Pulp and Paper Company, Petitioners,



United Paperworkers International Union, et al., Intervenors.

No. 82-1635.

United States Court of Appeals, First Circuit

April 26, 1983

Argued March 9, 1983.

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[Copyrighted Material Omitted]

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John W. Ohlweiler, New York City, with whom Terri M. Solomon, Gary I. Horowitz, Simpson Thacher & Bartlett, New York City, Sidney St. F. Thaxter, II, and Thaxter Lipez Stevens Broder & Micoleau, Portland, Maine, were on brief, for petitioners.

David S. Fishback, Atty., N.L.R.B., Washington, D.C., with whom William A. Lubbers, Gen. Counsel, John E. Higgins, Jr., Deputy Gen. Counsel, Robert E. Allen, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Andrew F. Tranovich, Atty., N.L.R.B., Washington, D.C., were on brief, for respondent.

Benjamin Wyle, New York City, for intervenors.

Before CAMPBELL and BOWNES, Circuit Judges, and MALETZ, [*] Senior Judge.

MALETZ, Senior Judge.

Penntech Papers, Inc. (Penntech) and its two subsidiary companies, T.P. Property Corporation (T.P.) and Kennebec River Pulp and Paper Company (Kennebec), petition this court to review and set aside an order of the National Labor Relations Board (the Board) which found that they had failed to bargain in good faith over the effects of a decision to close Kennebec. The Board cross-applies for enforcement of its order. Incident to the alleged failure to bargain is the Board's determination that Penntech, T.P. and Kennebec are a single employer within the meaning of section 2(2) of the National Labor Relations Act (the Act) 29 U.S.C. Sec. 152(2) (1976). In resolving this latter question the court must examine what effect United Paperworkers International Union v. Penntech Papers, Inc., 439 F.Supp. 610 (D.Me.1977), aff'd sub nom. United Paperworkers International Union v. T.P. Property Corp., 583 F.2d 33 (1st Cir.1978), has on the single employer determination.

For the reasons that follow, the petition for review is denied and enforcement of the Board's order is granted.



Penntech is a Delaware corporation having its corporate offices in New York City and operating a paper mill in Johnsonburg, Pennsylvania. From 1975 to 1977 Penntech had five directors, including John Leslie and Merrill J. "Jack" Dodge, who were also Penntech's president and vice president for marketing, respectively. The other officers of Penntech included William B. Ford, vice president for finance and secretary; Stephen D. Weinroth, vice president for corporate development; Steven D. Bittel, controller; and Georgie A. Penrose, treasurer.

In May 1975, T.P. was organized and incorporated by Penntech as a wholly-owned subsidiary for the purpose of acquiring certain real estate in Johnsonburg, an acquisition which was never consummated.

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T.P. performed no other corporate functions until March 1976 when it purchased the outstanding capital stock of Kennebec. The directors of T.P. were Leslie, Ford, and Weinroth. These three individuals also served as T.P.'s president, vice president, and vice president/secretary, respectively. Penntech's treasurer, Penrose, also served as T.P.'s treasurer. T.P. shared corporate headquarters with Penntech, but had no separate space at the headquarters, no furniture, and no employees of its own.

Kennebec is a Maine corporation which in 1959 acquired a paper mill in Madison, Maine as its only operating facility. Following years of declining profits, Kennebec discontinued its operations on December 20, 1975, laid off its employees, and closed its mill. Approximately three months later, on March 3, 1976, T.P. purchased all Kennebec's stock. As a condition precedent to the stock purchase, Penntech required Kennebec to negotiate certain changes in the collective bargaining agreement between Kennebec and the unions representing the mill employees. An amended collective bargaining agreement was signed by Kennebec and the unions on March 1, 1976.

With T.P.'s stock acquisition several of Penntech's officers and directors were appointed to serve concurrently as Kennebec officers and directors. Thus, Leslie and Ford were named as two of Kennebec's three new directors. (As of February 1977 Kennebec's board of directors consisted solely of Leslie and Ford.) Kennebec's new officers included Allen J. Nadeau, a Penntech vice president, as president; 1 Ford as vice president, secretary and treasurer; and Bittel as corporate controller. Weinroth was later added as a Kennebec vice president.

Kennebec resumed operations under its new ownership and management within a few weeks after T.P.'s stock purchase. Unfortunately, the Kennebec mill continued to be unprofitable, losing some $3,000,000 in 1976. Given this situation on November 19, 1976 Leslie called a meeting at the Kennebec mill attended by union representatives and Kennebec's department heads. At that meeting Leslie announced that unless production increased to specified levels the mill could not remain viable, adding that he would not allow Kennebec to pull Penntech down with it. With this announcement Leslie terminated the meeting. The union representatives were not given an opportunity to respond. Production did increase for a short time, but thereafter slipped into steady decline.

In January and February 1977, Kennebec lost approximately $750,000. By this time it had become obvious to at least one highly-placed company official, William B. Ford, Penntech's vice president for finance and a Kennebec director, that there would be large losses in March 1977 as well. In January and February Ford was further convinced that production would never reach the required level and communicated these views "to everyone in management in both companies." After an operations report in February 1977, Ford concluded that "a number of the steps we had taken were not being successful" and that Kennebec would not operate profitably in the future.

On March 29, 1977 the Kennebec mill was closed. Until that date the companies never notified the unions that the Kennebec mill would discontinue operations. On that day Kennebec's president, Bruce St. Ledger, having been directed by Leslie to close the mill, held a meeting with the union representatives at approximately 1:30 p.m. informing them for the first time that the mill would be shut down and that the employees should empty their lockers and remove their tools from the mill by 3:00 p.m. that same day. A letter was sent on March 30, 1977 formally advising the unions of the mill shutdown.

Five days later, on April 4, St. Ledger, who had consulted with Leslie and Penntech's attorneys on whether to label the layoff "indefinite" or "permanent," informed the union representatives that the layoff would be "indefinite." He advised them that there was a possibility that Kennebec

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would resume operations and that therefore the employees would not be entitled to severance pay. He was unable to provide definitive answers to the union representatives' questions concerning insurance and pension payments, and told the union representatives that if they wanted authoritative answers they should speak to Penntech's attorneys. He then gave them counsels' name and telephone number in New York City.

On April 11, 1977 the unions filed an unfair labor practice charge with the Board alleging that Kennebec had violated section 8(a)(5) and (1) of the Act, 29 U.S.C. Sec. 158(a)(5) and (1), by "terminating its operations without adequate notice or collective bargaining with the employees' representatives over the effect of the termination upon the employees." The unions also requested arbitration of a grievance relating to the employees' entitlement to vacations, pensions, and severance pay under the collective bargaining agreement. This request led to litigation by the unions seeking to compel Penntech and T.P. to arbitrate the alleged contract violations. On appeal from a dismissal of the unions' action this court held that since Penntech and T.P. were not signatories to the collective bargaining agreement, they could not be...

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