Bloedorn v. Francisco Foods

• Citation: 276 F.3d 270
• Decision Date: 28 December 2001
• Docket Number: No. 00-1860,00-1860
• Parties: (7th Cir. 2001) PHILIP E. BLOEDORN, Regional Director of Region 30 of the National Labor Relations Board, for and on behalf of the NATIONAL LABOR RELATIONS BOARD, Plaintiff-Appellant, v. FRANCISCO FOODS, INC., d/b/a PIGGLY WIGGLY, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 270

276 F.3d 270 (7th Cir. 2001)

PHILIP E. BLOEDORN, Regional Director of Region 30 of the National Labor Relations Board, for and on behalf of the NATIONAL LABOR RELATIONS BOARD, Plaintiff-Appellant, v. FRANCISCO FOODS, INC., d/b/a PIGGLY WIGGLY, Defendant-Appellee.

No. 00-1860

In the United States Court of Appeals for the Seventh Circuit

ARGUED SEPTEMBER 21, 2000

DECIDED DECEMBER 28, 2001

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 99 C 1402--Rudolph T. Randa, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Ellen A. Farrell, NLRB, Inj. Lit. Bd., Richard J. Lussier (argued), NLRB, Washington, DC, for Appellant.

James R. Macy, Alyson K. Zierdt (argued), Davis & Kuelthau, Oshkosh, WI, for Appellant.

Before ROVNER, DIANE P. WOOD, and WILLIAMS, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Until 1999, the employees of the Piggly Wiggly grocery store in Ripon, Wisconsin, were represented by the United Food and Commercial Workers Union, Local No. 73A, AFL-CIO-CLC (the "Union"). When the owner of the store announced his intent to sell the franchise to Francisco Foods, Inc. ("FFI"), FFI invited store employees to submit applications to work for the new owner. Fewer than half of the employees that joined the FFI workforce had previously worked for the prior owner, however, so that when the store reopened under FFI's ownership, a majority of the store's employees were not Union members and consequently FFI was not obliged to recognize and bargain with the Union.

The Regional Director (the "Director") of the National Labor Relations Board (the "NLRB" or the "Board") filed an administrative complaint charging that FFI had deliberately refused to hire a number of people who had worked for the store's previous owner in order to avoid having to bargain with the Union, in violation of section 8(a)(1) and (3) of the National Labor Relations Act (the "Act"), 29 U.S.C. sec. 158(a)(1), (3). The Director also asserted that FFI's refusal to recognize and bargain with the Union, and its failure to adopt and enforce the terms of the collective bargaining agreement that the Union had entered into with FFI's predecessor, constituted unfair labor practices that were contrary to section 8(a)(1) and (5) of the Act, 29 U.S.C. sec. 158(a) (1), (5). While the complaint was pending before an administrative law judge, the Director filed this action seeking interim injunctive relief pursuant to section 10(j) of the Act, 29 U.S.C. sec. 160(j). Specifically, the Director asked the district court to enter an order requiring FFI to offer employment to the employees of the prior owner that FFI had refused to hire, to recognize and bargain with the Union, and to restore employee working conditions (including wages and hours) to their state prior to FFI's takeover of the store, until such time as the Director's complaint was finally resolved by the Board. The district court denied the Director's request, concluding that he was unlikely to prevail on the merits of the complaint and that he had not established the prospect of irreparable harm to the Union. R. 23.

The Director appeals the denial of his request for interim relief. Because we conclude that the Director has a "better than negligible" chance of prevailing on the merits of his complaint, that the unfair labor practices charged in the complaint do pose a threat of irreparable harm to the Union which outweighs the harm that interim relief poses to FFI, and that interim injunctive relief is in the public interest, we reverse the district court's judgment.

I.

We have derived the factual summary that follows from the record of the evidentiary hearing conducted before the Board's administrative law judge ("ALJ") on the Director's complaint. The Director submitted the record of that hearing to the district court in support of his petition for interim relief.

For more than twenty-five years prior to 1999, the Union represented all non-supervisory employees of the Piggly Wiggly store in Ripon. Ripon Supermarkets, Inc. ("RSI") owned the Piggly Wiggly franchise in the years immediately preceding the events underlying this action; Ron and Carol Bayer were the principals of RSI. The final collective bargaining agreement entered into by RSI and the Union covered the period beginning on February 1, 1996 and ending on January 31, 1999. General Counsel Exhibit ("GC Ex.") 2. However, in the final days of January 1999, RSI and the Union agreed to extend the term of this agreement until such time as they entered into a new contract. GC Ex. 3. The 1996 agreement contained no successor clause requiring anyone who purchased the store from RSI to recognize the Union.

Pam Francisco had worked at the Ripon Piggly Wiggly for twenty-five years and had served as the store manager for the last six and one-half years prior to 1999. When the Bayers decided to sell the store, Francisco and her husband Tom formed FFI for the purpose of buying the store. (Francisco is the president and secretary of FFI.) FFI and RSI entered into a purchase and sale agreement on March 10, 1999. GC Ex. 11. Because the final collective bargaining agreement between RSI and the Union contained no successor clause, FFI would not be required to recognize the Union if a majority of its employees were not already members of the bargaining unit--i.e., if they had not worked for RSI.¹

On March 12, 1999, Ron Bayer informed Grant Withers, the Union's business representative, that he was selling the Piggly Wiggly to Francisco. Bayer asked Withers to keep this information under his hat for a few days until Bayer had a chance to announce the sale to store employees. Three days later, on March 15, Withers telephoned Francisco to follow up on Bayer's disclosure. According to Withers' notes of the conversation, the following exchange took place:

Withers: Have you and Ron informed the employees yet?

Francisco: Yes, we did.

Withers: Well Pam, the reason I'm calling is I'd like to know if you would be available for a meeting tomorrow[.]

Francisco: No, I have two appointments already.

Withers: Well Pam, we need to know what your intentions are as far as recognizing the Union[.]

Francisco: At this time, I don't think we[']re going to.

Withers: Really? Are you sure?

Francisco: I may let my new employees decide what to do.

Withers: By your statement, "my new employees," am I to assume you won't be keeping the current employees?

Francisco: No, I'm not going to keep the bargaining unit.

Withers: Is this for sure or would you like a few days to think about it?

Francisco: No, at this point, I'm sure.

Withers: Well that's unfortunate. I'm sure Ron could tell you, and you probably recall, how much the turmoil cost Ron in business when he bought the store [--] sales that he never recovered. That is unfortunate[.] I'm sure you understand that we'll have to take whatever action we need to, to protect these jobs.

Francisco: Sigh.

Withers: Okay, Bye.

GC Ex. 4. In her own testimony, Francisco acknowledged telling Withers that "I was taking a new direction and there would be a lot of new faces," but she denied saying anything about whether she would retain RSI's employees, recognize the Union, or assume the collective bargaining agreement. Tr. 72; see also Tr. 633-35.

According to assistant store manager Michael Ritchay, Francisco likewise told him on March 15 that "she was going around to the people that she wanted to hire and . . . it wouldn't be a union . . . ." Tr. 432-33. Joann Schrader, manager of the bakery/deli section of the store, recalled Francisco remarking that same day, at a meeting of store managers and other employees, "that not everyone would be hired back." Tr. 340.

In a letter dated March 16, 1999, one day after and apparently in reference to Withers' conversation with Francisco, FFI's attorney, James Macy, wrote the following letter to Withers:

This letter is to notify you that we represent Francisco Foods, Inc., and are assisting them in regards to the transition and purchase of the Piggly Wiggly store in Ripon, Wisconsin. As noted by Ms. Francisco, they anticipate considerable changes in regards to the operation of this store upon the completion of this asset purchase. In that regard, the Company does not anticipate assuming the collective bargaining agreement.

While disappointed in your initial comments to the Company, we do anticipate a positive and professional transition. We respectfully request that if you have any further questions in regards to this transition, you direct them to our attention.

GC Ex. 5.

Also on March 16, Bayer and Francisco each posted notices at the store formally advising employees of the forthcoming sale. Bayer's notice read as follows:

This posting is to advise you that effective May 15, 1999, the entire assets of [the] Piggly Wiggly store operated by Ripon Supermarket Inc. at 111 E. Fond du Lac St., Ripon, Wisconsin 54971 will be sold to another company.

Soon you will receive a letter from the Company describing any severance benefits you may have available under the collectively bargained labor agreement.

I would like to take this opportunity to thank you all for your past efforts on behalf of the Company and, also wish each and every one the best for you in the future.

If you have any questions please be sure to ask. We would like this transition to be as smooth as possible.

GC Ex. 13. As Bayer's reference to severance benefits suggests, all RSI employees were to be terminated as of May 15. However, Francisco's notice invited the employees of RSI to apply for employment with FFI:

Tom and I are in the process of negotiating the purchase of Piggly Wiggly. We are both very excited about the prospect of owning the store.

We anticipate that there will be a number of restructuring and reorganization changes made here at the store.

Everyone...