Ref-Chem Company v. NLRB

• Decision Date: 04 November 1969
• Docket Number: No. 25837,25981,25990.,25837
• Parties: REF-CHEM COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. EL PASO PRODUCTS CO., Respondent. EL PASO PRODUCTS COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

418 F.2d 127 (1969)

REF-CHEM COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. EL PASO PRODUCTS CO., Respondent.

EL PASO PRODUCTS COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

Nos. 25837, 25981, 25990.

United States Court of Appeals Fifth Circuit.

November 4, 1969.

John Edward Price, John B. Nelson, Fort Worth, Tex., for Ref-Chem Co. Marcel Mallet-Prevost, Asst. Gen. Counsel, William H. Carder, Atty., N.L. R.B., Washington, D. C., Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Glen M. Bendixsen, Attys., N.L.R.B., for National Labor Relations Board.

Charles J. Morris, Dallas, Tex., for intervenor, Intl. Assn. of Heat & Frost Insul. & Asbestos Workers, Local 66, AFL-CIO.

John B. Mason, Odessa, Tex., William D. Deakins, Jr., Ross N. Sterling, Charles L. Berry, Houston, Tex., for El Paso Products Co.; Vinson, Elkins, Searls & Connally, Houston, Tex., of counsel.

Before AINSWORTH and GODBOLD, Circuit Judges, and DAWKINS, District Judge.

GODBOLD, Circuit Judge:

The Board found that Ref-Chem Company and El Paso Products Company, as joint employers, violated § 8(a) (5) and (1) of the Act by refusing to recognize and bargain with the union and by unilaterally changing wage rates. Enforcement of the Board order must be denied.

The plant of El Paso is located at a common situs with other plants in the area of Odessa, Texas, known as the Odessa complex. In 1961 insulation maintenance work¹ in the El Paso plant and in other plants of the complex, was being done by Insulation and Specialties, Inc. (I & S), which had taken over a contract for that work from a predecessor company owned by the same persons.

In 1961 I & S became a party to a multiemployer contract made by a bargaining group of insulation contractors with Local 66.² A new multiemployer contract was signed in 1962 to run until June 30, 1965, and at approximately the same time I & S signed a separate agreement with the union with the same expiration date and incorporating the same terms. I & S claimed that its insulation maintenance employees at the Odessa complex were not covered by the contracts. The issue went to arbitration. The arbitration was decided in favor of the union, and it filed suit to enforce the award. I & S transferred its assets to Leona Lee, a new corporation with the same general group of principals, which, with El Paso's consent, assumed the agreement with El Paso. An injunction issued against I & S, requiring it to recognize the union as bargaining agent for the "mechanics and improvers" performing insulation maintenance work for it at Odessa complex plants and to apply the terms of the 1962 contract to them.

Leona Lee, as successor to I & S, began complying with the injunction. This necessitated a pay raise, and beginning December 14, 1964 it began paying the new scale. On January 16, 1965 Leona Lee sought El Paso's consent to the new rate, as it was required to do by the contract with El Paso. Two days later El Paso, without explanation, notified Leona Lee it had decided to terminate the contract. Leona Lee laid off the insulation maintenance men.

El Paso asked Ref-Chem to take over the insulation maintenance, and Ref-Chem agreed to do so. For many years Ref-Chem had performed various types of maintenance and repair work for El Paso at the Odessa complex. Also it engaged in construction of industrial plants. It employed approximately 100 workmen at the complex, divided into numerous crews. Under its existent contract with El Paso, entered in 1963, it could be required on request of El Paso to perform the insulation maintenance work, but it had not previously been called on to do so.

The foreman and nine men from the Leona Lee insulation maintenance crew were hired by Ref-Chem and began to do the insulation maintenance work for El Paso, assisted in some respects by other Ref-Chem employees having other skills. The workmen were hired at wage rates consistent with Ref-Chem's existent contract, which in some cases were lower than provided by the union contract. Ref-Chem gave no notice to the union of the wage rates.

On June 11, 1965, nineteen days before the union contract would expire, the union demanded of Ref-Chem that it bargain. Ref-Chem did not reply. The union filed charges against Ref-Chem on July 6, and on October 25 filed amended charges charging El Paso as well. The complaint issued November 25. It charged that Ref-Chem was the successor to Leona Lee, and that El Paso had been a joint employer with I & S and Leona Lee and that it was a joint employer with Ref-Chem.

Before the Trial Examiner the Board sought to prove a succession of employers, under the established doctrine that if assets and employees are transferred from one employer to another and the identity of the employing enterprise remains substantially intact, the successor employer must recognize the contract of the union with its predecessor.³ The evidence adequately supported a conclusion that Leona Lee was such a successor to I & S that it was bound by the union contract with I & S. But the evidence did not show succession between Leona Lee and Ref-Chem, and the Trial Examiner found there was none. He considered it unnecessary to decide whether El Paso was a joint employer with Ref-Chem. He recommended dismissal of the charges.⁴

The Board decision took a different tack. It concluded that El Paso was a joint employer with Leona Lee, that it became a joint employer with Ref-Chem, that no intervening circumstances affected El Paso's obligation to bargain, so that its obligation attached to Ref-Chem when that company became a joint employer.

Substantial evidence justifies the conclusion that El Paso was a joint employer with Leona Lee and that it became a joint employer with Ref-Chem. The terms of the agreements with these two companies gave El Paso the right to approve employees, control the number of employees, have an employee removed, inspect and approve work, pass on changes in pay and overtime allowed. In practice El Paso exercised its control, though in varying degrees. The evidence showed El Paso would "share, or co-determine, those matters governing essential terms and conditions of employment." NLRB v. Greyhound Corporation, 368 F. 2d 778, 780 (5th Cir. 1966).

In its order the Board did not set out case authority, nor are we furnished with any in this court, sustaining the use of the joint employer doctrine to pass the obligation to bargain from one employer to another by means of their common but successive joint employer, where none of the employers is a successor or alter ego of another. Assuming, without deciding, that in this particular instance Ref-Chem became subject to the agreement with the union, we conclude that the Board's case fails on other grounds.

To sustain a violation the Board must prove that at the time it occurred the union represented a majority of the employees in an appropriate bargaining unit. NLRB v. Richard W. Kasse Co., 346 F.2d 24 (6th Cir. 1965); Ramada Inns, Inc., 171 NLRB No. 115; Barney Wilkerson Constr. Co., 147 N.L.R.B. 704 (1963). The unilateral wage change violations were found to have occurred on or about January 26 and on July 1. The refusal to recognize and bargain was found to have occurred on January 18 and thereafter. (The Board conclusion of the date of January 18 does not rest on knowledge by Ref-Chem of the union contract or knowledge that the union claimed to represent the men hired, because no such knowledge is shown. It rests on the premise that as a matter of law Ref-Chem acquired the obligation to recognize and bargain at the moment of hiring. The demand for bargaining was not received until June.)

In earlier litigation between I & S and the union, I & S insisted that its insulation maintenance men were not under the multiemployer contract with the union. But it was established that the contract included the employees of I & S performing...