LOCAL 57, INTERNATIONAL LADIES'GARMENT WKRS.'U. v. NLRB

• Decision Date: 11 January 1967
• Docket Number: No. 19478,19624.,19478
• Parties: LOCAL 57, INTERNATIONAL LADIES' GARMENT WORKERS' UNION, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Garwin Corporation, S'Agaro, Inc., Joseph Winkelman and Milton Mirsky, Intervenors. GARWIN CORPORATION et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

374 F.2d 295 (1967)

LOCAL 57, INTERNATIONAL LADIES' GARMENT WORKERS' UNION, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Garwin Corporation, S'Agaro, Inc., Joseph Winkelman and Milton Mirsky, Intervenors.

GARWIN CORPORATION et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

Nos. 19478, 19624.

United States Court of Appeals District of Columbia Circuit.

Argued February 11, 1966.

Decided January 11, 1967.

Certiorari Denied June 5, 1967.

COPYRIGHT MATERIAL OMITTED

Mr. Max Zimny, New York City, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Mr. Morris P. Glushien, New York City, was on the brief, for petitioner in No. 19478.

Messrs. John A. McGuinn, Washington, D. C., and Joseph A. Perkins, Miami, Fla., with whom Mr. Guy Farmer, Washington, D. C., was on the brief, for petitioners in No. 19624 and intervenors in No. 19478.

Mr. Lawrence M. Joseph, Atty., N.L. R.B., of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Messrs. Arnold Ordman, Gen. Counsel, N.L.R.B., Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Solomon I. Hirsh, Atty., N.L. R.B., were on the brief, for respondent.

Before BASTIAN, Senior Circuit Judge, and BURGER and McGOWAN, Circuit Judges.

Certiorari Denied June 5, 1967. See 87 S.Ct. 2074, 2078.

BURGER, Circuit Judge:

Consolidated for review are a petition to set aside an order of the National Labor Relations Board, a petition to modify the order, and a cross-petition by the Board for enforcement of its order. The petitions involve what is known colloquially as a "runaway shop." The Board found that the employer closed its plant in New York City, discharged its employees, and moved operations to Miami, Florida, for the purpose of depriving the New York employees of rights guaranteed under Section 7 of the National Labor Relations Act and to avoid dealing with the Union in violation of § 8(a) (5), (3) and (1) of the Act.¹ An additional violation of § 8 (a) (5) and (1) was found in the failure to consult with the Union concerning the decision to move to Miami.

The Employer, Garwin Corporation, claims in its review petition that the Board's findings are not supported by substantial evidence and that the Board's remedy is improper. The Union contends the Board's remedy is inadequate. The Board seeks enforcement.

Until 1963 Garwin manufactured women's swimwear in its New York plant. Its key personnel in that year were: Joseph Winkelman, president and sole stockholder; Milton Mirsky, in charge of products control; and Vera Maniaci, designer and production manager.

In July 1963, S'Agaro of Florida was incorporated with Mirsky as president. Winkelman, although not an officer of S'Agaro, was found by the Trial Examiner to have participated fully in its operation and to have directed its efforts; Maniaci was designer and production manager. S'Agaro was capitalized with money drawn from Garwin, carried on substantially identical operations, including production of many of the same lines, and operated with some of the office and factory equipment moved from the New York plant to Florida.

On the basis of these and other factors, the Trial Examiner concluded, and the Board agreed, that the Florida corporation, S'Agaro, was the alter ego of Garwin. Garwin argues, however, that it was completely liquidated and that there were more differences in the operation of S'Agaro and Garwin than similarities. That there was a formal termination of Garwin, however, hardly settles the matter of whether its business operations were continued in the form of S'Agaro. With respect to this, the Trial Examiner's finding that S'Agaro was the alter ego of Garwin is abundantly supported by substantial record evidence.

While it is now clear that an employer may terminate his business for any reason,² it is equally well settled that he may not transfer its situs to deprive his employees of rights protected by Section 7.³ Given that S'Agaro was a continuation of Garwin, the next question for the Examiner was the motive for the move. The Examiner found the company had closed its New York plant and moved operations to Florida because of its opposition to the employees' exercise of their rights under the Act and because of an animosity toward the Union, thus violating Sections 8(a) (1), (3), and (5)

The Examiner based his finding of discriminatory motivation on direct evidence of antiunion bias and hostility, on concealment from the union of plans for the move, and on the inadequacy of the economic explanations offered by the Company. The Board adopted the Examiner's findings.

As to the first basis, the record discloses that despite constant friction between the Union and the company, including apparently illegal Union demands, the company did not invoke the contract's arbitration provisions. Winkelman was explicit in his testimony before the Trial Examiner about his feelings toward the Union. He told of warning his associate Mirsky that

they come at you like a strong arm boy, there is no sense to this, no reasoning behind the union, and anything that you did with the union is wrong because they are nothing but strong arm boys, * * * and if it\'s possible down here Florida to stay out of their clutches * * * as long as possible. * * *

He further testified what he had told a Union accountant:

I told him that I lost my lease, that I was darned well fed up with the union terrorism and activities and that had been going on and that I no longer intended to go along with it any more because I had lost my main source of revenue from Modern Jr\'s only because of them, that they were deleterious in their efforts.

There was also testimony that Maniaci told an employee in December 1963, after the move had been effected, that "the main reason was that Mr. Winkelman wanted to get out of the union."

The Company does not point to any countervailing evidence ignored by the Trial Examiner but argues that it was perfectly reasonable for Winkelman to feel this way in light of the "coercive and threatening tactics engaged in by agents of the Union." But the cause of Winkelman's attitude toward the Union is irrelevant. The law does not permit an employer to flee the bargaining agent because of hostility to it; other procedures are available to him to rectify such grievances.

Evidence of concealment of plans for the move from the union is likewise clear. The decision to move had crystallized at least by May 1963 and in that month Winkelman wrote, "I am very interested in finding a factory * * * in Hialeah or any other part of the area. * * *" About this time a Union business agent heard rumors of the move but was told by Maniaci, who conducted labor affairs, that Garwin was looking for another location "in the area" (New York).⁴

Garwin's main contention on appeal is that the record demonstrates that it was spurred to move because of economic pressures and that even if there were also some antiunion animus, the "preponderant" motive was economic. Since the Trial Examiner found that there was only one reason for the move — antiunion sentiment — and rejected claims of economic necessity, this is not a case where we need to pass on what standard should be applied if the two motives are found to co-exist.

The record amply supports the Trial Examiner's finding that there was no genuine economic motivation independent of the hostility toward the union. Garwin enjoyed substantial operating profits in the last two years of operation in New York. In July 1963 Garwin lost one of its accounts, which it claimed was an important factor in its operations, but, while the company claimed this would result in financial loss, it presented no clear evidence of the relative importance of this line. Garwin relied on the testimony of Winkelman that this was his "only money making account," but the Trial Examiner rejected this since he found Winkelman a generally unreliable witness. This was within his province. Winkelman's self-serving testimony thus discredited, Garwin points to nothing which would demonstrate that the Trial Examiner's finding was without basis.⁵ Moreover, the record discloses that the decision to move had already been made before this account was lost in July.⁶ Nor does Garwin explain why the loss of one account, no matter how harmful to the company, would be the type of economic consideration that would justify a transfer of operations. To justify a move as being economically motivated, the transfer must be calculated to cure the difficulty; no causal nexus between the claimed economic considerations and the move are shown here.

The Board's Remedy

To redress the injuries occasioned by this "runaway," the Board ordered the Employer to offer full reinstatement to its workers and to compensate them for any loss of earnings resulting from the discrimination against them. It further ordered the employer to bargain with the Union either at the New York plant, if it returned there,⁷ or at the new Florida location, irrespective of whether the Union had majority status.

The essence of the remedy fashioned by the Board is that the new employees in Florida are compelled to accept the Union as their bargaining agent for one year since the "runaway" employer is not directed to return to New York or likely to do so and since the remedy is premised on the New York workers not moving to Florida.

At issue is the appropriateness of requiring the company to bargain with the Union in Florida as the legal representative of employees who have not selected this Union and who are strangers to it. That these Florida workers are not before us asserting their legally protected right to freedom of choice of a bargaining agent is not controlling. Indeed their very absence indicates the need for this court to carefully scrutinize the Board's remedy.

The Board reasoned that this...