Zim's Foodliner, Inc. v. NLRB

• Decision Date: 04 April 1974
• Docket Number: No. 73-1199.,73-1199.
• Citation: 495 F.2d 1131
• Parties: ZIM'S FOODLINER, INC., d/b/a Zim's IGA Foodliner, and S&O, Inc., d/b/a Paul's IGA Foodliner, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

495 F.2d 1131 (1974)

ZIM'S FOODLINER, INC., d/b/a Zim's IGA Foodliner, and S&O, Inc., d/b/a Paul's IGA Foodliner, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 73-1199.

United States Court of Appeals, Seventh Circuit.

Argued January 16, 1974.

Decided April 4, 1974.

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Thomas D. Burlage, Samuel W. Witwer, Jr., and Lawrence S. Wick, Chicago, Ill., for petitioners.

Elliott Moore, Deputy Associate Gen. Counsel, Joseph E. Mayer, William Gaus, Corinna Metcalf, Attys., National Labor Relations Board, Washington, D. C., for respondent.

Before HASTINGS, Senior Circuit Judge, and PELL and SPRECHER, Circuit Judges.

HASTINGS, Senior Circuit Judge.

The principal question presented by this case is whether fragmentation of a collective bargaining unit, caused by the piecemeal sale of business assets, precludes the National Labor Relations Board from finding "successorship" and imposing attendant labor obligations upon the successor employer.

Two employers are involved in the instant petition for review. Petitioner Zim's Foodliner, Inc. (hereinafter "Zim's") was found by the Board to have violated § 8(a) (5) of the National Labor Relations Act, Title 29 U.S.C. § 158(a) (5), by refusing to bargain with two unions representing appropriate units of its employees, and by unilaterally changing certain terms and conditions of employment. Zim's also was found to have violated § 8(a) (1) of the Act, Title 29 U.S.C. § 158(a) (1), by engaging in the above § 8(a) (5) violations and by threatening to go out of business in order to discourage employee support for the unions. Petitioner S&O, Inc., doing business as Paul's IGA Foodliner (hereinafter "Paul's"), was found to have violated §§ 8(a) (5) and 8(a) (1) through its refusal to bargain with a single union representative of its employees. Paul's was not found to have instituted unilateral changes or committed independent § 8(a) (1) violations.

Since the underlying facts were quite similar as to each employer, the complaints against both petitioners were consolidated for hearing before an administrative law judge, and a single decision issued. The judge's findings, conclusions and recommended order were subsequently adopted by the Board. The Board order, 201 NLRB No. 141 (1973), is the present subject of review. The Board here cross-petitions for enforcement of its order.

In the summer of 1971, the Kroger Company, a manufacturer, distributor and retailer of food products, undertook to terminate its retail operations in the State of Wisconsin. Pursuant to this undertaking, buyers were sought for its 57 retail outlets in the state.

On July 19, 1971, Kroger executed sales agreements covering two of its Wisconsin supermarkets. The Kroger store in the city of Monroe was purchased by Lowell Zimmer, and the store in Edgerton was purchased jointly by Paul Sanderson and Fred Oreel. Both Monroe and Edgerton are located in the general vicinity of Madison, Wisconsin, and each has a population of less than 10,000. Both businesses were subsequently incorporated by their new owners. The agreements provided for the sale of certain tangible personal property at each store, primarily inventories and equipment, and for the assignment of Kroger's leasehold interests in the store buildings. The purchasers did not agree to buy Kroger good will or other intangibles, and did not generally assume Kroger liabilities. In particular, the agreements contained no provisions for the buyers' assumption of outstanding labor agreements.¹

On July 24, Kroger ceased all operations at the two stores, and on July 26, bills of sale and lease assignments were executed in fulfillment of the July 19 agreements. Both the Monroe and Edgerton stores were opened for business by their new owners on July 27 under the names "Zim's IGA Foodliner" and "Paul's IGA Foodliner," respectively.

The record reveals little regarding the labor relations history of the two stores while operated by Kroger. It appears that for some years prior to 1971 Kroger maintained a bargaining relationship with two unions representing multi-store units which included the Monroe and Edgerton stores. These unions were Retail Clerks Union Local No. 1401 (hereinafter "Retail Clerks") and Amalgamated Meat Cutters & Butcher Workmen of North America Local No. 444 (hereinafter "Meat Cutters").² At the time of the 1971 sales, two collective bargaining agreements of relevance here were in effect. The first contract, executed November 17, 1970, and effective until June 30, 1973, was negotiated with the Retail Clerks and covered employees other than meat department and supervisory personnel at both stores. Employees at nine other Kroger stores in the Madison area were covered by this same agreement, bringing the total number of stores included in the bargaining unit to 11. A second contract, covering meat and delicatessen employees at the Monroe store, was negotiated with the Meat Cutters and executed by the parties on May 4, 1971. Four other stores were covered by this contract, which was to be effective through March 24, 1973. The record does not reveal the total number of employees in either multi-store unit.

Both the Retail Clerks and Meat Cutters agreements contained union security clauses providing for union shops. The record indicates, and the administrative law judge so found, that Zimmer, Sanderson and Oreel were all aware of these contracts at the time they purchased the former Kroger stores.

Immediately prior to the July 1971 sales, 16 employees of the Monroe store and 14 employees of the Edgerton store were covered by the Retail Clerks agreement. The Meat Cutters contract applied to three meat department employees of the Monroe store.

Following Kroger's closedown on July 24, a two day hiatus occurred during which the new owners cleaned and restocked their stores for opening. By the time Zim's opened for business on the 27th, the entire former Kroger complement of employees had been hired, i. e., 16 grocery employees and 3 meat department personnel. In addition, the Kroger store manager was retained in his former position. Paul's, on the other hand, hired only 9 of the 14 former Kroger grocery employees at the Edgerton store. With the exception of part-time helpers in the form of Sanderson's wife, son and daughter, however, these 9 comprised the entire employee complement at Paul's outside of the meat department.³ Like Zim's, Paul's continued to employ the former Kroger store manager.

On July 23, 1971, the Retail Clerks mailed letters to Zimmer and Oreel, informing them of "successor language" in the Kroger collective bargaining agreement and demanding that the agreement be honored. The letters advised that "the successor employer * * * may not unilaterally change wages, hours, or working conditions without committing an unfair labor practice and subjecting itself to a back pay order." The letters concluded by stating that if any "special circumstances" existed of which the union was not aware, it was willing to meet with the purchasers and discuss them. Sanderson received a similar letter on July 28.

On August 20, 1971, the Meat Cutters mailed a letter to Zimmer advising him of his obligation to recognize and bargain with the union with respect to Zim's meat department employees, as well as to "honor, adopt and enforce" the Kroger collective bargaining agreement.

Zim's refused to recognize and bargain with either union; Paul's adopted the same position with respect to the Retail Clerks. Likewise, both employers refused to adopt or be bound by the Kroger collective bargaining agreements.

The parties stipulated that Paul's, on July 27, unilaterally reduced wage rates and work hours below those provided by the Kroger-Retail Clerks agreement. On that date Paul's informed its employees of their wages and working hours and subsequently maintained those wages and hours at their announced levels.

As for Zim's alleged unilateral changes, the parties stipulated that in mid-August, "about three weeks after the opening for business on July 27, 1971," the employer unilaterally reduced wage rates of grocery department employees, and reduced work hours of both grocery and meat department employees, below the levels specified by the Kroger agreements. During the three week period, Zim's had continued the wages and hours in effect under Kroger. Zim's subsequently maintained the new wages and hours established in mid-August.

Unfair labor practice charges against Zim's were filed by the Retail Clerks and the Meat Cutters on August 27 and September 16, 1971, respectively. Each charge alleged that Zim's had refused to recognize the union as collective bargaining representative of its employees; had unilaterally changed terms and conditions of employment without bargaining; and had refused to abide by the terms of the Kroger collective bargaining agreement.⁴ On September 22, 1971, the Retail Clerks filed a charge against Sanderson with respect to Paul's, which was subsequently amended on November 24, 1971, to allege violations similar to those attributed to Zim's. The Acting Regional Director issued complaints against both employers. The cases were consolidated for hearing on January 18 and 19, 1972, along with a third case arising out of the sale of the Kroger supermarket in Middleton, Wisconsin.

As to the latter store, the administrative law judge found that the union majority was dissipated as a result of the transfer, and accordingly dismissed the complaint. As to Zim's and Paul's, however, the judge found that the units of grocery and meat employees at the respective stores were appropriate for collective bargaining,⁵ and that the new owners stood "as the legal successor to Kroger." He thus concluded that petitioners were guilty of the unfair labor practices hereinabove set forth.⁶ The judge's decision recommended the usual remedies, including an order that Zim's and Paul's bargain with the unions and that...