N.L.R.B. v. Jeffries Lithograph Co.

• Decision Date: 25 January 1985
• Docket Number: No. 83-7100,83-7100
• Citation: 752 F.2d 459
• Parties: 118 L.R.R.M. (BNA) 2681, 102 Lab.Cas. P 11,328 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. JEFFRIES LITHOGRAPH COMPANY, a subsidiary of Ticor Printing Group, Inc., Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 459

752 F.2d 459

118 L.R.R.M. (BNA) 2681, 102 Lab.Cas. P 11,328

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. JEFFRIES LITHOGRAPH COMPANY, a subsidiary of Ticor Printing Group, Inc., Respondent.

No. 83-7100.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 9, 1984.

Decided Jan. 25, 1985.

Linda Weisel, Washington, D.C., for petitioner.

Alan V. Friedman, Munger, Tolles & Rickershauser, Los Angeles, Cal., for respondent.

On Petition for Enforcement of an Order of the National Labor Relations Board.

Before PREGERSON and NORRIS, Circuit Judges, and SOLOMON, ^* Senior District Judge.

PREGERSON, Circuit Judge:

The only question before us is whether substantial evidence supports the National Labor Relations Board's finding that Jeffries Lithograph Co. is the successor employer to Biltmore Press, Inc. After reviewing the record as a whole, we conclude that substantial evidence supports this finding. Therefore, we enforce the Board's order, which finds Jeffries guilty of committing unfair labor practices for failing to bargain with Local 262 of the Graphic Arts International Union (the union).

FACTS

Biltmore Press was a small printing operation located in Carson, California. Biltmore employed about 20 production employees who answered to a single foreman. The two owners, Arthur and Robert Sollima, handled all other managerial and administrative matters.

The union represented the production employees under a collective bargaining agreement that expired on April 30, 1981. The agreement contained no successorship clause, but represented the latest product of a bargaining relationship that had lasted 20 years.

A. The Company Decides to Expand

During fall 1980, Ticor Printing Group, a holding company consisting of several printing operations located in California, Illinois, New York, and Texas, decided to expand and upgrade its printing capabilities. Biltmore owned a four-color Hantscho press of the type that Ticor sought and expected delivery of a similar six-color press that was on order. As a result, during spring 1980, Ticor started negotiations to purchase Biltmore.

On November 25, 1980, Ticor and the Sollima brothers signed an agreement providing that Ticor would purchase Biltmore's assets. Ticor also promised to assume Biltmore's contract to buy the six-color press. The Sollima brothers agreed to serve as consultants to the successor company for one year and promised not to compete with the company for three years.

On December 9, Ticor and the Sollima brothers signed a second agreement. Under it, Ticor agreed to lease Biltmore's old Carson plant for nine months. Ticor planned to use the plant as a temporary base of operations while it refitted a much larger facility on which it had signed a 10-year lease.

At the same time it was making plans to purchase Biltmore's assets, Ticor was also making arrangements to hire Biltmore's production employees. Jeffries Lithograph, the subsidiary that Ticor had created to operate its new printing business, began interviewing job applicants. Jeffries interviewed 65 applicants, including all 20 of the old Biltmore production workers.

The Biltmore plant closed on December 19. On January 5, it reopened as Jeffries Lithograph. All 19 of the new company's production employees were former Biltmore employees. Biltmore's foreman, Wayne Clark, also came aboard.

When Jeffries opened on January 5, it planned to become a substantially larger operation than Biltmore had been. Biltmore's 1980 sales totaled $2 million. But Jeffries projected sales of $8.9 million in 1981 and $17 million in 1982.

The new company also made extensive plans to transform the old Biltmore business from a local "Mom and Pop" outfit into a growing national enterprise. During December 1980, Jeffries started hiring a management team and a national sales staff. Jeffries hired a vice-president, a chief estimator, 10 salespeople, a scheduler, a prep supervisor, a bindery supervisor, two press foremen, a prep foreman, a bindery foreman, and a plant superintendent. Except for the position of press foreman, Biltmore did not have comparable positions.

Jeffries also began preparing the newer, larger facility it had leased for the 10-year period. The company made various leasehold improvements that totaled about $1.5 million.

Finally, Jeffries refitted old and purchased new equipment. After modifying Biltmore's old four-color press and changing Meanwhile, Jeffries's production staff steadily expanded. In April 1981, when the union demanded recognition, Jeffries employed 29 production employees, 19 of whom had worked for Biltmore. By October 1981, when the company moved to its new, permanent facility, it employed a full complement of 65 production workers, the same 19 of whom had worked for Biltmore.

the new press order to double the six-color machine's capacity, Jeffries spent another $600,000 on improving the two presses after they were both in place. Jeffries also purchased $400,000 in finishing line equipment, which provided the company with the capacity to produce over 500 different items that neither Biltmore nor any other firm in the Western United States could produce.

B. The Union Demands Recognition

In the months after Jeffries opened for business, the union sought recognition as the exclusive bargaining representative of Jeffries's production employees. ¹ On January 14, 1981, Douglas Maloney, president of the union, wrote to Arthur Sollima and requested information about changes in Biltmore's status. On January 27, Sollima replied that Ticor had purchased Biltmore on December 19, 1980.

On February 20, 1981, the union wrote to President Hugh McDonald, President of Jeffries, to demand recognition and request a meeting with company representatives. On March 4, McDonald wrote back to say the company refused to recognize the union. On March 25, Maloney sent a second letter demanding recognition. This letter was returned unopened due to insufficient postage, which the company refused to pay.

Later, on April 23, William Kerwin, a special union representative, visited the plant and asked to meet with McDonald. McDonald refused. Kerwin tendered the returned March 25 letter, but McDonald refused to accept the letter. Then, according to the administrative law judge, "Kerwin was informed that there was no further need for his presence and he was asked to leave." Jeffries Lithograph Co., 265 N.L.R.B. 1499, 1502 (1982) (Wieder, A.L.J.). After Kerwin's failure to meet with McDonald, the union on the same day sent McDonald a mailgram demanding recognition and requesting a meeting. On April 24, McDonald responded to the mailgram by advising the union that "the company declines to recognize Local 262 as the representative of our production and maintenance employees." Id. at 1502.

When Kerwin visited the plant, 19 of Jeffries's 29 production employees were former Biltmore employees. The record shows that they were performing essentially the same work that they had performed for Biltmore, but that they were making about $2 per hour less and working about five hours per week more. Id. at 1501-02 & n. 11.

The union filed unfair labor practice charges. The ALJ held a hearing and found the company guilty of violating National Labor Relations Act Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5) (1982), for failing to bargain with the certified bargaining representative. ² The Board then filed this petition for enforcement.

STANDARD OF REVIEW

We must enforce the Board's order unless, reviewing the record as a whole, we conclude that its factual findings are not supported by substantial evidence in the record or that it has incorrectly applied the law to those facts. Premium Foods, Inc. v. NLRB, 709 F.2d 623, 626-27 (9th Cir.1983); see also Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464,

95 L.Ed. 456 (1951) (applying same standard).

ANALYSIS

A. Legal Background

A successor employer is a firm which, having hired most of its employees from a predecessor employer's workforce, conducts essentially the same business that the predecessor did. E.g., Premium Foods, Inc. v. NLRB, 709 F.2d 623, 627 (9th Cir.1983) (citing leading authorities). When a properly recognized or Board-certified union has represented the predecessor's employees, the law presumes that a majority of the successor's employees support the same union. Id. at 627. This presumption places the successor employer under a duty to bargain with the union over wages, hours, and working conditions. See id. at 630.

The reason for the presumption is that a mere change in ownership, without an essential change in working conditions, is not likely to change employees' attitudes toward union representation. NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 278-79, 92 S.Ct. 1571, 1577, 32 L.Ed.2d 61 (1972). If the Board and the courts failed to bind a successor to the labor law obligations of the predecessor, then the successor could deprive employees of the benefits they previously had won through collective action--a move that might disrupt industrial peace by disappointing workers's legitimate expectations in their terms of employment. See, e.g., Golden State Bottling Co. v. NLRB, 414 U.S. 168, 184, 94 S.Ct. 414, 425, 38 L.Ed.2d 388 (1973); Goldberg, The Labor Law Obligations of a Successor Employer, 63 Nw.U.L.Rev. 735, 743-45 (1969).

Pointing to its extensive and successful plan for transforming the old Biltmore operation into a national enterprise, Jeffries contends that the scope and nature of its business is completely different from Biltmore's. As a result, Jeffries reasons, we should not find that Jeffries is Biltmore's successor for purposes of imposing a bargaining obligation under Sec. 8(a)(5).

In Kallmann v. NLRB, 640 F.2d 1094 (9th Cir.1981), we developed a two-part test for determining successorship in the context of imposing a duty to bargain. We held that the new owner of a business is a...