United Food and Commercial Workers Intern. Union, AFL-CIO, Local 152 v. N.L.R.B.
| Decision Date | 15 August 1985 |
| Docket Number | LOCAL,AFL-CI,84-1126,L,Nos. 84-1077,s. 84-1077 |
| Citation | 768 F.2d 1463 |
| Parties | 119 L.R.R.M. (BNA) 3473, 120 L.R.R.M. (BNA) 2865, 248 U.S.App.D.C. 30, 103 Lab.Cas. P 11,557 UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION,152, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Spencer Foods, Inc., Intervenor. SPENCER FOODS, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, United Food and Commercial Workers International Union,ocal 152, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.
Peggy A. Hillman, Chicago, Ill., with whom Eugene Cotton, Chicago, Ill., and George R. Murphy, Washington, D.C., were on brief, for United Food and Commercial Workers Intern. Union, AFL-CIO, Local 152, petitioner in No. 84-1077 and intervenor in No. 84-1126. Carol Clifford, Washington, D.C., entered an appearance, for Local 152 as intervenor in No. 84-1126.
John J. McGirl, Jr., Minneapolis, Minn., with whom Lisa M. Hurwitz, Minneapolis, Minn., was on brief, for Spencer Foods, Inc., petitioner in No. 84-1126 and intervenor in No. 84-1077.
Barbara A. Atkin, Atty., N.L.R.B., Washington, D.C., with whom Wilford W. Johansen, Acting Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Patrick J. Szymanski, Atty., N.L.R.B., Washington, D.C., were on brief, for respondent.
Before WRIGHT and TAMM, Circuit Judges, and OBERDORFER, * District Judge.
Opinion for the court filed by District Judge OBERDORFER.
This case is before us on the consolidated petitions of the United Food and Commercial Workers International Union, AFL-CIO, Local 152 ("the Union") (No. 84-1077) and Spencer Foods, Inc. ("SF") (No. 84-1126) to review and set aside or modify an order of the National Labor Relations Board ("the Board"), reported at 268 N.L.R.B. 1483 (1984). We address each petition separately below.
The Union in this case charged, inter alia, that SF violated Sections 8(a)(5) and (1) of the National Labor Relations Act ("the Act"), 29 U.S.C. Sec. 158(a)(5) and (1) (1982), 1 by refusing to recognize or bargain with the Union following the closing of SF's Spencer, Iowa plant ("the Spencer plant") and the transfer of SF's stock to a new owner, Land O'Lakes, Inc. ("LOL"). Contrary to the recommendation of the Administrative Law Judge ("ALJ"), 2 the Board rejected the Union's contentions on this issue, on the ground that, under the "successorship" doctrine, there was no substantial continuity in business operations at the Spencer plant following the stock transfer and ensuing operational alterations. Spencer Foods, Inc., 268 N.L.R.B. 1483, 1483-85 (1984). The Board, accordingly, dismissed the section 8(a)(5) allegations in the complaint. The Union, in No. 84-1077, seeks reversal of the Board's ruling on this issue.
SF is engaged in the slaughter of beef cattle and the fabrication of beef products. The company was incorporated in 1952, and for a lengthy period of time conducted operations solely at the Spencer plant. In 1970, SF acquired another major production facility, in Schuyler, Nebraska. Also in the early 1970's, SF acquired four additional production facilities that were related to, but much smaller than, the main operations in Spencer and Schuyler. 3
The Union's representation of SF employees has been limited to the production and maintenance employees at the Spencer plant. From SF's inception until 1971, SF and the Union had readily negotiated a series of collective bargaining agreements with respect to these Spencer plant employees. In 1971 and 1974, however, SF and the Union encountered considerable difficulty in reaching agreement due to a new and strong effort by SF to limit the wages and benefits of its Spencer production and maintenance employees to a level below the industry pattern. On each occasion, agreement was reached only following a strike of several months' duration (18 months in 1971, 3 months in 1974). In 1977, difficulties arose again, but this time no resolution was achieved. With the approach of the expiration--on October 31, 1977--of the then-pending collective bargaining agreement, SF indicated that it desired a one-year wage and benefit freeze. It stated to the Spencer employees--all of whom voluntarily belonged to the Union 4--that their failure to accept the proposal would result in the suspension of work at the plant and that SF would regard the work suspension as due to a "labor dispute." 268 N.L.R.B. at 1495. The Union rejected the proposal pursuant to a vote of its members. On October 31, 1977, SF Chairman, President and Chief Executive Officer Gerald L. Pearson announced to Spencer employees that "we are closing the plant and will place it up for sale." Id.
In the meantime, beginning in the fall of 1977, even before the closing, SF and LOL had been in touch with each other and had commenced negotiations with regard to the possible sale of SF's Spencer plant. Indeed, the ALJ found that at the time of the closure of the Spencer plant, it was SF's desire "to sell all [of SF's plants] but the [relatively more] successful Schuyler plant." Id. Nonetheless, the ALJ also found, based on SF's own statements, that despite SF's interest in selling off some of its plants, SF had "no fixed intent ... to permanently sever [the Spencer plant] employees at plant closure." Id. at 1509. 5 In fact, within 15 days of the closing, Pearson wrote a letter to LOL proposing not the sale of particular SF plants, but rather the sale of SF itself, in its entirety, as a going concern.
LOL continued to express interest in acquiring only certain facilities--namely, the Spencer and Schuyler plants--and in January of 1978 offered to buy those plants alone for $10 million in a simple assets purchase. However, it became apparent that an assets purchase would have required either SF or LOL to pay a substantial federal tax based on the recapture of certain tax benefits that SF had previously claimed. Therefore, the assets purchase plan was abandoned and SF and LOL ultimately arrived at an alternative arrangement: SF and LOL agreed that LOL would simply acquire all of SF's stock, subject to certain special provisions ensuring the eventual disposition of all the properties but the Spencer and Schuyler plants. The tax problem was thus avoided by expressly having the Spencer and Schuyler operations remain under the continuing corporate ownership and control of SF, while LOL gained control of all of SF's stock.
SF and LOL apparently reached agreement on this alternative arrangement by March of 1978. A certain delay ensued in consummating the agreement because LOL initially sought to effect the stock purchase through a new LOL subsidiary, Mid-West Cattle Producers Cooperative. By September of 1978, however, this effort was aborted and LOL instead purchased the bulk of the stock directly through a friendly tender offer, which was concluded by October 27, 1978. 6
Following LOL's acquisition of SF's stock, a number of alterations--meticulously documented by the ALJ--were made in SF's corporate and operational structure. Basically, SF remained as a corporate entity with headquarters located at Spencer, Iowa, but its articles of incorporation were amended to allow it to operate as a farmer cooperative. The members of SF's board of directors were replaced by LOL officials, but Pearson remained as President of SF and gained the additional position of vice president of LOL's new "beef division"--i.e., the Spencer and Schuyler operations. Pearson also remained as CEO of SF and remained in charge of day-to-day operations, though "subject to goals, objectives, and financial policy as determined by LOL." Id. at 1498. Cattle purchases from LOL's cooperative farmer members were indicated, but local cattle purchases also continued.
Actual operations at the Spencer plant resumed on February 26, 1979. The ALJ's findings indicate that at least seven of 19 supervisors and managers, including the plant supervisor in charge of production, were individuals who were employed by SF prior to the closure. 7 Production at the plant was reduced from two shifts to one shift, and operations were changed from part kosher/part non-kosher to totally kosher (with an accompanying adjustment in SF's customer list). An investment of $1.3 million was made on physical plant improvements--some of which were "cosmetic," e.g., plastering, and others of which were of more significance, e.g., new equipment. Although "[s]ome jobs were eliminated and some combined," id. at 1501, the ALJ found that "[b]asically, the production process was the same [as that prior to the closure]," id.
By March of 1978, when SF and LOL agreed in principle to the transfer of SF's stock to LOL, accounts of the negotiations and the planned reopening of the Spencer plant had appeared in the press. Lowell Lauritsen, president of the Union, sent a letter to appropriate SF and LOL personnel taking note of the press accounts and stating that "the employees of [the Spencer] plant are available for return to work upon notice." Id. at 1497. Lauritsen's letter further stated that "[w]e hereby request an opportunity to meet with the appropriate representatives of management to resume negotiations with respect to the terms and conditions of employment at the plant." Id. This letter, as well as subsequent, similar letters from Lauritsen to SF and LOL, received no response until November 17, 1978. On that date, an appropriate LOL official responded, as stated by the ALJ, that "LOL did not currently have employees at Spencer, Iowa, nor did it 'contemplate the hiring of employees at such location.' " Id. at 1498. The letter also indicated that "S.F. had been requested to respond" to the Union inquiry. Id. A December 13, 1978 letter from an...
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