In re Brada Miller Freight Systems, Inc.
| Decision Date | 31 December 1981 |
| Docket Number | 81-C-0433-S.,Civ. A. No. 81-C-0432-S |
| Citation | 16 BR 1002 |
| Parties | In re BRADA MILLER FREIGHT SYSTEMS, INC., Debtor. NATIONAL LABOR RELATIONS BOARD, Appellant, v. BRADA MILLER FREIGHT SYSTEM, INC., Appellee. In re BRADA MILLER FREIGHT SYSTEM, INC., Debtor. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA; International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Steel and Special Commodity Haulers Local No. 124; International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America Local Union No. 543; National Labor Relations Board Region 25; and Region 7; Ralph Proctor; and Richard G. McCracken, Appellants, v. BRADA MILLER FREIGHT SYSTEMS, INC., Appellees. |
| Court | U.S. District Court — Northern District of Alabama |
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Perry Winkler, Gen. Counsel for Special Litigation N.L.R.B., Washington, D.C., George M. Dick, Indianapolis, Ind., Gerry M. Miller, Goldbert, Previant, Uelmen, Gratz, Miller, Levy & Brueggeman, Milwaukee, Wis., Richard G. McCraken, Fillenwarth & Fillenwarth, Indianapolis, Ind., Wilbur G. Silberman, Robert Loeb, Silberman, Silberman & Loeb, Birmingham, Ala., Aileen A. Armstrong, N.L.R.B., Washington, D.C., for plaintiffs.
John Richard Carrigan, Balch, Bingham, Baker, Hawthorne, Williams & Ward, Jerry W. Schoel, Denaburg, Schoel, Meyerson & Ogle, Birmingham, Ala., for defendants.
This bankruptcy appeal raises several unsettled and troublesome issues generated by the sometimes conflicting national policies embodied in this country's labor laws and the Bankruptcy Reform Act of 1978. Specifically, this Court must determine whether a Bankruptcy Court is empowered to (1) determine the existence vel non of unfair labor practices; (2) enjoin union and employee activity otherwise protected by the Norris-LaGuardia Act; and (3) stay NLRB proceedings, in the exercise of its discretion, and if so, the applicable legal standards governing the issuance of such discretionary stays. In addition, the appeal raises the question of whether the Bankruptcy Court for the Northern District of Alabama clearly erred in approving the rejection of the collective bargaining agreements between Brada Miller Freight Systems, Inc. and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America and certain of its affiliated local unions. For reasons set forth in this opinion, the Court's response to the first two inquiries is in the negative; the last two questions are answered affirmatively.
Brada Miller Freight Systems, Inc. ("the Company"), a wholly owned subsidiary of Brada Miller, Inc., is a special commodity carrier which is regulated by the Interstate Commerce Commission. The principal materials transported are iron and steel. The Company is owned by Dean Cutsinger who acquired it from Art Belford in January, 1979. Mr. Cutsinger moved Brada Miller's general office from Kokomo, Indiana to Birmingham, Alabama. Accordingly, the general administrative functions (accounting, billing, payroll, central dispatch) are handled from the Birmingham office. Even though the general office is located in Birmingham, Brada Miller's principal operations are in the Midwestern states — a circumstance not uncommon in the industry.
When Cutsinger acquired the Company, it was operating an average of 550 motorized units on a daily basis, out of some 29 terminals in the Midwest. It generated $44,000,000 of gross revenues in 1978; and daily gross revenues reached $180,000.
The Company is a signatory to the "National Master Freight Agreement and Central States Area Iron and Steel and Special Commodity Rider" and the "National Master Freight Agreement and Central States Area Local Cartage Supplemental Agreement".1 These collective bargaining agreements, negotiated between the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("Teamsters") and employer associations of which the Company is a member, are effective for the period April 1, 1979 to March 31, 1982. The Company has recognized the Teamsters since 1955.
The Company has two types of employees — owner operators and city or terminal drivers. The owner operator owns the equipment and drives it himself. He is allowed three percent of the gross revenues. The city or terminal driver picks up and delivers loads in six of the Company's twenty-nine terminal areas. Under the collective bargaining agreement these drivers are paid a $10.53 per hour base wage plus $.95 for cost of living, totalling $11.48 per hour.
In addition to their wages, the Company's employees are provided several fringe benefits. The Health and Welfare fund costs the Company $36.50 a week per employee. If an employee works during the week, he is entitled to that sum regardless of the number of hours that he worked. The Pension Fund costs $46.00 a week per employee. Employees are entitled to ten holidays at an eight-hour day hourly rate. Employees are also allowed a maximum of three days funeral leave and five days sick leave all paid as eight-hour days. The city drivers are entitled to between one and five weeks vacation per year paid as forty-five-hour weeks.
Aside from its monetary contributions to provide these fringe benefits, the Company incurs further costs as a result of the collective bargaining agreement. It subscribes to Motor Carriers Labor Advisory Counsel (MCLAC), an association which represents them at union hearings and negotiations. The MCLAC service costs the Company $14,500 for one year of representation. Harold Mathena, vice-president of operations and labor at the Company attends three to four grievance hearings outside of Birmingham each month for an annual cost of approximately $14,000.
The Company must maintain additional office personnel to handle the paperwork of complying with the collective bargaining agreement. This paperwork includes maintenance of a checkoff for individual local unions, filing Health and Welfare and Pension reports, and paying drivers on a two check system. One check is issued for wages, another for equipment rental.
Evidence before the Bankruptcy Court indicated that the Company must generate $32,000 per day to meet its obligations under the collective bargaining agreements.
Shortly after Cutsinger purchased the Company in January, 1979, a strike ensued which was not over until mid-May. From that time, there has been a gradual decline in the business of the Company. The month of July is particularly devastating financially because of plant closings for vacation, inventories and other reasons. These slow downs caused a substantial decrease in the Company's business.
Because the Company's market is the automobile industry, it was additionally damaged by declines in that industry. The slow-down in the automotive industry means less work for Brada Miller and, in turn, fewer loads for its employees to haul.
The Company showed a net operating loss of $188,000 for 1979; and by July, 1980, it had reduced the number of its daily operating motorized units by one-half. As of the end of August, 1980, the number of operating motorized units had been reduced by an additional one-half—from 225 to approximately 125.
To meet its daily operating expenses, and the requirements of the collective bargaining agreements, in 1980 the Company should have generated $102,000 daily in gross revenues.2 In July-August, 1980, the daily gross revenues averaged one-third of this "break even" point. The Company's chief financial officer testified that by mid-October, 1980, the gross revenues of the Company could reasonably be expected to be approximately $70,000 daily.
In the summer of 1980, the Company considered and implemented various measures which would decrease costs and thereby increase gross revenues. Nonessential office and terminal personnel were laid off. Operating expenses were decreased or eliminated in the areas of insurance, overhead, selection of carriers and computer operations. It also resigned from MCLAC and contacted its creditors to ascertain whether they would accept less than 100% of the amounts due.
On August 1, 1980, the Company informed its terminal managers that it was planning to initiate bankruptcy reorganization proceedings, and that an effect of these proceedings would be to cancel the collective bargaining agreements. The terminal managers were specifically instructed to execute interim leases or independent contracts with the truckdrivers. Several such contracts were executed with various members of the Teamster locals; and in some instances, where Teamster members refused to sign the independent contracts, they were not assigned any work by the Company.
The Company along with the parent organization, filed reorganization petitions under Chapter 11 of Title 11 U.S.C. § 1101 et seq. in the Bankruptcy Court for the Northern District of Alabama on August 1, 1980. By application filed simultaneously with the petitions, the Company requested that the Bankruptcy Court approve its rejection of the collective bargaining agreements with the Teamsters. On August 5, 1980, the Bankruptcy Court entered an ex parte order authorizing the Company to reject the collective bargaining agreements ("union contracts"). Ten days later, on application of certain affected Teamster local unions, the Bankruptcy Court set aside its order approving the rejection of the union contracts and set a hearing for August 28, 1980.
Hearings on the Company's requested rejection of the union contracts were held on August 28, 29 and September 4, 5, 1980 in the Bankruptcy Court in Birmingham.
In the meanwhile, various Teamster locals had filed charges against the Company with the National Labor Relations Board's ("the Board") regional offices in Indianapolis and Detroit, contending that certain conduct by the Company related to its rejection of the union...
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