Los Angeles Marine Hardware Co., Div. of Mission Marine Associates, Inc. v. N.L.R.B.

• Decision Date: 02 May 1979
• Docket Number: No. 78-1907,78-1907
• Citation: 602 F.2d 1302
• Parties: 102 L.R.R.M. (BNA) 2498, 87 Lab.Cas. P 11,628 CA 79-3323 LOS ANGELES MARINE HARDWARE CO., a Division of Mission Marine Associates, Inc., and California Marine Hardware Co., a Division of Mission Marine Associates, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1302

602 F.2d 1302

102 L.R.R.M. (BNA) 2498, 87 Lab.Cas. P 11,628

CA 79-3323 LOS ANGELES MARINE HARDWARE CO., a Division of

Mission Marine Associates, Inc., and California

Marine Hardware Co., a Division of

Mission Marine Associates, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 78-1907.

United States Court of Appeals,

Ninth Circuit.

May 2, 1979.

Anthony T. Oliver, Jr. (argued), Parker, Milliken, Clark & O'Hara, Los Angeles, Cal., for petitioners.

Elliott Moore, Michael Nicholson (argued), N. L. R. B., Washington, D. C., for respondent.

On Petition to Review a Decision and Order of the National Labor Relations Board.

Before WRIGHT and WALLACE, Circuit Judges, and TEMPLAR, Senior District Judge. ^*

EUGENE A. WRIGHT, Circuit Judge:

Los Angeles Marine Hardware Co. (LA Marine) and California Marine Hardware Co. (Cal Marine), both ¹ divisions of Mission Marine Associates (Mission) petition for review of a National Labor Relations Board (Board) order adopting the decision of the Administrative Law Judge (ALJ).

The order states, in part, that: (a) Mission, LA Marine and Cal Marine are employers and, collectively, constitute a single employing enterprise within the meaning of § 2(2) of the National Labor Relations Act (29 U.S.C. § 151, Et seq.); (b) they violated §§ 8(a)(1) and (5) and § 8(d) of the Act by repudiating the terms and conditions of a collective bargaining agreement (CBA or agreement) with the union; ² and (c) they violated §§ 8(a)(1) and (3) by the resultant discharge and refusal to reinstate 23 employees. 235 N.L.R.B. No. 88 (1978).

We grant the Board's cross-appeal for enforcement.

FACTS

Mission, a holding company, owned LA Marine, a separate corporation. In November 1976, Mission reorganized the corporations it held and made them operating divisions. One of those divisions, the Hardware Distribution Group, includes LA Marine and Cal Marine. It is headed by General Manager Richard Zajic, a vice-president of Mission.

Cal Marine was an inactive shell prior to March 1977. LA Marine's activities centered in two market areas, recreational sales and commercial fishing. Recreational sales represented more than 80% Of LA Marine's total sales by early 1977.

The bargaining relationship between LA Marine and the union dated back at least to 1956. LA Marine was the only Mission subsidiary to sign the collective bargaining agreement at issue.

Despite efficiency measures, LA Marine faced a sizable potential operating loss. In part, this was due to the high union wages it was paying. During the 1975 collective bargaining negotiations, Zajic, Mission's Hardware Group General Manager, attempted unsuccessfully to obtain economic relief from the union in the recreational sales area.

Zajic and Jack D. Cox, the union's Secretary-Treasurer, met several times during January and February, 1977. They discussed LA Marine's intention to relocate its Zajic announced Mission's decision to move LA Marine's recreational sales operation to San Dimas and San Fernando on March 1, 1977. Although union workers were terminated, Mission announced its intention to contribute to the union trust fund and take applications for employment at its new locations. The union replied that the relocation, motivated by an attempt to avoid the CBA, would constitute an unfair labor practice.

San Pedro recreational sales operations. Zajic proposed a new contract for the relocation, but the union declined to discuss the matter further in light of the existing agreement.

On the same day, Mission activated Cal Marine, the inactive corporate shell, to conduct the relocated recreational sales operations of LA Marine. Cal Marine employees have the same job classifications and performed the same type of work as did the LA Marine employees in recreational sales prior to the relocation. The wages and benefits at the new warehouses, however, are approximately $3 per hour less than those agreed upon in the CBA between LA Marine and the union.

LA Marine ceased its operations in San Pedro and transferred its equipment and supplies to Cal Marine's San Dimas and San Fernando locations in April 1977. The new locations are 50 to 60 miles from San Pedro.

DISCUSSION

Our review of the Board's findings is limited. If they are supported by substantial evidence on the record as a whole and if the Board applied the law correctly, the order will be enforced. 29 U.S.C. § 160(e) (1976). See, e. g., NLRB v. Heath Tec Division, 566 F.2d 1367, 1369 (9th Cir. 1978).

Single Employer :

The Board's findings of unfair labor practices turn initially upon their determination that LA Marine and Cal Marine constitute a single employing enterprise under § 2(2) of the Act. See, NLRB v. Triumph Curing Center, 571 F.2d 462, 467 (9th Cir. 1978). The determination is essentially factual and must stand unless clearly erroneous. NLRB v. Sweet Lumber Company, 515 F.2d 785, 793 (10th Cir.), Cert. denied, 423 U.S. 986, 96 S.Ct. 393, 46 L.Ed.2d 302 (1975).

The four criteria for determining the existence of an integrated enterprise are: (1) interrelation of operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership or financial control. Radio Union v. Broadcast Service, 380 U.S. 255, 256, 85 S.Ct. 876, 13 L.Ed.2d 789 (1965). The first three factors carry the most weight and particularly significant is the common control of labor. Triumph Curing Center, 571 F.2d at 468.

Here, each of the Radio Union criteria is satisfied. The operations of the two companies are interrelated. A central office handles the payroll and preparation of all financial statements for both and Cal Marine continues to do business with LA Marine's old customers.

There is common management. Mission made the decision to transfer LA Marine's recreational sales operations to Cal Marine and Mission sets the annual profit targets for both. Zajic, a vice-president of Mission, is the head of the Hardware Distribution Group which includes both LA Marine and Cal Marine. Finally, the authority of the division managers with respect to personnel matters is the same as before the relocation.

Most importantly, Mission exercises common control over the labor relations policies of both divisions. Zajic was solely responsible for the pre- and post-relocation negotiations with the Union. Finally, Mission is the common owner of LA Marine and Cal Marine.

There is substantial evidence on the record as a whole to support the conclusion that Cal Marine is merely continuing LA Marine's recreational sales operation under a different name. As a result, LA Marine and Cal Marine are a single employing enterprise under § 2(2) of the Act. ³Unfair Labor Practices :

Mission relocated LA Marine's recreational sales operation because of its dissatisfaction with labor costs imposed by the CBA. Its motivation was strictly economic and was not based upon unlawful considerations. The inquiry, however, does not stop here.

The employers were bound to a collective bargaining agreement which was not scheduled to expire until 1979. The agreement covered the union's recreational sales employees. This is different from most relocation cases in that the relocation here took place during the effective period of the agreement. The Board's findings are predicated upon this mid-term repudiation.

After negotiations failed, the employers moved the San Pedro bargaining unit work to San Dimas and San Fernando without the union's consent. In conjunction with the relocation, it instituted less favorable wages at the new locations and abandoned the then existing CBA as to the recreational sales operation. This was done despite the fact that Mission, LA Marine and Cal Marine are a single employing enterprise.

The Board found, in part, that LA Marine and Cal Marine violated §§ 8(d), 8(a) (3) and (5) of the Act by: (1) discharging and refusing to reinstate LA Marine employees; (2) closing the San Pedro facility and relocating the recreational sales operation in an attempt to withdraw work from the bargaining unit; (3) refusing to apply the terms and conditions of the CBA to the new Cal Marine employees; (4) withdrawing recognition of the union as the collective bargaining representative of those employees, and (5) modifying unlawfully the CBA, in mid-term, without the consent of the union. Its findings were correct.

The employers argue that they neither repudiated nor modified the CBA in mid-term because the agreement applies to the San Pedro area only. This is their primary defense to the unfair labor violations. They rely upon language in the CBA preamble which states:

THIS MASTER AGREEMENT is made and entered into by and between CHAUFFEURS, SALES DRIVERS, WAREHOUSEMEN AND HELPERS UNION LOCAL 572, IBT, hereinafter referred to as the "Union," and C. J. HENDRY COMPANY, MARINE HARDWARE COMPANY AND SEASIDE SUPPLY STORES, INC., On behalf of their operations located at San Pedro, California and vicinity, . . . . (emphasis added).

The employers contend that this is a clear waiver by the union and limits the geographical application of the agreement. ⁴ See Oddie v. Ross Gear and Tool Co., 305 F.2d 143 (6th Cir.), Cert. denied, 371 U.S. 941, 83 S.Ct. 318, 9 L.Ed.2d 275 (1962); Timken Roller Bearing Co. v. NLRB, 325 F.2d 746, 750-51 (6th Cir. 1963), Cert. denied, 376 U.S. 971, 84 S.Ct. 1135, 12 L.Ed.2d 85 (1964). They argue that if their construction of the preamble is correct, they did not commit any unfair labor practices.

The language cited is not a geographical limitation, but merely the parties' descriptive recitation of the physical location of the facilities at the time of the negotiations. The language appears only in the preamble of the agreement, and not in the recognition clause. The agreement's effectiveness is not limited expressly to the San Pedro area, nor is there evidence that the parties intended such a limitation.

An employer cannot alter mandatory contractual terms...