N.L.R.B. v. Middleboro Fire Apparatus, Inc.

• Decision Date: 20 December 1978
• Docket Number: No. 78-1173,78-1173
• Citation: 590 F.2d 4
• Parties: 100 L.R.R.M. (BNA) 2182, 85 Lab.Cas. P 10,977 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. MIDDLEBORO FIRE APPARATUS, INC., Respondent.
• Court: U.S. Court of Appeals — First Circuit

Page 4

590 F.2d 4

100 L.R.R.M. (BNA) 2182, 85 Lab.Cas. P 10,977

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. MIDDLEBORO FIRE APPARATUS, INC., Respondent.

No. 78-1173.

United States Court of Appeals First Circuit.

Argued Oct. 4, 1978.

Decided Dec. 20, 1978.

Alan Banov, Atty., Washington, D. C., with whom John S. Irving, Gen. Counsel, John E. Higgins, Jr., Deputy Gen. Counsel, Robert E. Allen, Acting Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Peter M. Bernstein, Atty., Washington, D. C., were on brief, for petitioner.

Lawrence M. Siskind, Brockton, Mass., with whom Ann-Louise Levine, Brockton, Mass., was on brief, for respondent.

Before COFFIN, Chief Judge, ALDRICH and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

This case is before us on the Board's petition seeking enforcement of an order requiring, Inter alia, that respondents Middleboro Fire Apparatus, Inc. (MFA) bargain with the United Electrical, Radio and Machine Workers of America (the union) as the exclusive representative of MFA's employees. The order is predicated on the successorship doctrine. NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). Simply stated, if the Board finds on the totality of the circumstances that a change in ownership did not affect the "essential nature" of the former business, then the new enterprise must recognize and bargain with the union that represented the employees of the former business. NLRB v. Band-Age, Inc., 534 F.2d 1, 3 (1st Cir. 1976); NLRB v. Boston Needham Industrial Cleaning Co., Inc., 526 F.2d 74, 77 (1st Cir. 1975); Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025, 1026-27 (7th Cir. 1969). The exception to this rule relevant here permits the new employer not to bargain with the union if the employer could "reasonably have entertained a good-faith doubt" about the union's continued majority status. Burns, supra, 406 U.S. at 278, 92 S.Ct. at 1577; Band-Age, supra, 534 F.2d at 4. ¹ Ours is not a de novo review. Rather, in evaluating the Board's conclusions, we must be mindful that these decisions are closely tied to the facts of each case and that the decision involves intricate line drawing. We will not reverse so long as the decision is supported by substantial evidence and is rational. Boston Needham, supra, 526 F.2d at 77.

Maxim Industries, Inc. (Maxim) is in the business of building fire fighting vehicles. Until the end of May, 1976, Maxim operated a service department employing fourteen men in a building separate from the main plant. The service department delivered vehicles to purchasers, provided service pursuant to warranties on Maxim products, and did other maintenance work on Maxim and other companies' products. Mr. Vadala was Maxim's Director of Service, and Mr. Haskins ran the service department.

The union was the exclusive bargaining representative of Maxim's employees, including those in the service department. In February of 1976, attempting to cope with financial difficulties, Maxim asked the union to sign a five year contract and to eliminate the service department from the bargaining unit. The union rejected the proposal. Finally Maxim decided to close down the service department effective May 19, 1976.

On May 20 Vadala, as sole stockholder, incorporated MFA. That same day MFA entered into service agreements with Maxim and another company in the industry obligating MFA to do repair, maintenance, and warranty work for the two manufacturers who, in turn, agreed to provide MFA two road service trucks and uniforms for road servicemen; to reimburse MFA for road service expenses; to supply to MFA parts and supplies at prices and terms established by the manufacturers; to pay MFA at rates prescribed in the agreement; and to make collections from MFA's customers. Also on May 20 MFA agreed with Maxim to lease the building that had housed Maxim's service department and to buy three vehicles from Maxim. ² Maxim agreed to cover up to 15 MFA employees through December 31, 1976, in its existing group health plan, to maintain the existing garage owners liability policy until its expiration, to make cash advances to MFA, and to give MFA an option to purchase items in the service department inventory. ³

Between May 19 and June 1, when MFA began operations, Vadala and Haskins, working as MFA's vice president, met with the Maxim service department employees. Vadala offered each one a job with MFA and explained that the options were to "bump" into the main Maxim plant or to take voluntary lay-off status. Many of the employees asked what the status of the union would be at MFA. To those who asked, Vadala responded that he had no obligation to bargain with any union. Seven Maxim workers accepted the offer, and they formed MFA's initial work force. Later MFA hired two people who had worked for Maxim and belonged to the union at an earlier period and one who had never been connected with Maxim.

The union first asserted their right to bargain on behalf of MFA's employees at a meeting with Vadala on May 20. Vadala responded that he did not believe he had any obligation to negotiate with the union. He added during a phone conversation later that day that he would check with a lawyer and would negotiate if he had to. On May 22 the union wrote Vadala requesting bargaining. Vadala, answering on May 25, stated that Maxim had dissolved and that MFA had no connection with Maxim. The union sent a second letter on June 1. On June 8 the union asked Vadala why there had been no response. Vadala explained that he had not received the letter and reiterated that he had a right to start a business without being compelled to negotiate. At this confrontation on June 8 Vadala apparently first suggested that he doubted the union had a majority at MFA. ⁴ A third letter was hand delivered to Vadala that afternoon. A fourth letter, requesting information about MFA's officers, directors, and stockholders, was sent June 24. Vadala never responded to the letters of June 8 or June 24.

We conclude that MFA's business is essentially the same as the business of the Maxim service department. As the ALJ wrote:

"Respondent undertook to perform the same services, utilizing former Maxim supervisors, on the same premises leased from Maxim, with the same employees, exercising the same skills and using the same type of tools and equipment, for the same market of customers, with virtually no hiatus in their employment."

MFA does more "refurbishing" ⁵ than Maxim did and is trying to expand into manufacturing firetrucks which the Maxim service department did not do, but these projects continue to use essentially the same skills and tools, albeit, perhaps, in a more creative manner. As the ALJ found, "activities of this nature are the normal concomitants of a new management and a new approach to a failing business, not a break in the continuity of the employing industry." Here, as in Band-Age, the successor "is reaping the advantages of continuity" ⁶ which helps justify according protection to "the employees' interest in some stability of representation during a period of volatility." Band-Age, supra, 534 F.2d at 4.

MFA points to the extreme reduction in workforce from the approximately 100 workers at Maxim to the 10 at MFA. Reduction in size is relevant, but by no means determinative. Id. MFA would distinguish Band-Age because there the predecessor employer ceased operations entirely, and the entire business shrank; whereas Maxim continues in existence and the successor is replacing only a portion of the former bargaining unit. The successor in Ranch-Way, Inc. v. NLRB, 445 F.2d 625, 627 (10th Cir. 1971) (enforcing order that successor honor predecessor's contract), however, was in the same position, having taken over but one feed mill from the predecessor, who continued to operate the rest of its business. We find no reason to believe that here the reduction would "significantly affect Employee attitudes", Band-Age, supra, 534 F.2d at 6 (emphasis added), so as to give a basis for ignoring the presumption of continued majority status.

Furthermore, this case is distinguishable from International Ass'n of Machinists and Aerospace Workers v. NLRB, 162 U.S.App.D.C. 138, 498 F.2d 680 (1974), on which MFA would rely. There the court enforced the Board's order refusing successorship status. The 41 employees of "the distinct and functionally separate operation of mailing and distributing items" had been joined by "accretion" to the much larger, pre-existing bargaining unit "without opportunity for expression of assent or objection on the part of the 41 persons thus added." Id. 162 U.S.App.D.C. at 141, 498 F.2d at 683. Accordingly, the mere fact that the union had represented those 41 gave no basis for a presumption that any of the 41 would choose the union. Here the carry-over employees had participated in choosing the union. While with the predecessor, the union represented them. They make up a majority of the successor's employees. See Band-Age, supra, 534 F.2d at 4 & n. 6. Therefore, under 29 U.S.C. § 159(a), the union is presumptively their exclusive representative. See Burns, supra, 406 U.S. at 277, 281, 92 S.Ct. 1571.

We turn now to the more difficult question whether MFA, as a successor employer, reasonably entertained a good faith doubt that the union continued to represent a majority of MFA employees. MFA would base its doubts on statements by the employees during the discussions in May of 1976. Certainly an employee's statement can form the basis for the employer's doubt as to...