Thie Alexander Milburn Company And United Electrical, Radio & Machine Workers Of America, C. I. O., 747 (1948)

In the Matter of THIE ALEXANDER MILBURN COMPANY and UNITED ELECTRICAL, RADIO & MACHINE WORKERS OF AMERICA, C. I. O.

Case No. 5-C-1564 Messrs. Earle K. Shawe and Sidney J. Barban, for the Board.

Mr. Jacob Bluim, of Baltimore, Md., appearing specially, for the Respondent.

Messrs. William F. Howe and John E. Ritzert, of Washington, D.C., appearing specially, for The Black Manufacturing Company.

Mr. Jack Myers, of Baltimore, Md., and Mrs. Ruth Roemer, of Washington, D. C., for the Union.

SUPPLEMENTAL DECISION AND AMENDED ORDER July 30, 1947 On March 28, 1947, Trial Examiner Irving Rogosin issued his Supplemental Intermediate Report in the above-entitled proceeding, finding that The Black Manufacturing Company, Baltimore, Maryland, herein called the Black Company, was, and had been since February 1, 1945, the successor of the Respondent, and responsible for remedying the unfair labor practices engaged in by the Respondent,' and that, by failing to remedy such unfair labor practices, the Black Company had engaged in unfair labor practices, within the meaning of Section 8 (1), (3), and (5) of the Act. He therefore recommended that the Respondent and the Black Company cease and desist from their unfair labor practices and take certain affirmative action, as set forth in the copy of the Supplemental Intermediate Report attached hereto.

Thereafter, the Respondent and the Black Company filed exceptions to the Supplemental Intermediate Report, and the Black Company 'In our original Decision and Order herein, issued June 18, 1945 ( we found that the Respondent, The Alexander Milburn Company, had engaged in unfair labor practices, within the meaning of Section 8 (1), (3), and (5) of the National Labor Relations Act, and directed that it and its officers, agents, successors, and assigns cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. The provisions of Section 8 (1), (3), and (5) of the Act, insofar as material herein, are continued in Section 8 (a) (1), (3), and (5) of the Act as amended by the Labor Management Relations Act, 1947.

filed a brief in support of its exceptiolls. Oit January 29, 1948, oral argument was heard by the Board ill Washington, ID. C. The Black Company and the I'nion participatetd. 'The Respondent did not appear.

The Board has reviewed the rulings made by the Trial Examiner at the reopened hearing, and filids that no prejutdicial error was comnmritted. The rulings are hereby afirledl. The Board has considered the Supplemental Intermediate Report, thie exceptions and brief, and the entire record in the case, and hereby adopts thile findiqngs, coiicliisions, and recomniendations of the Trial El-ami1iier' wNith the exceptions, additions, and modifications noted below.

1. We agree with the Trial Examiner's fiindings that the Black Company is a successor to the Respondent and, as such, responsible for riemedying its unfair labor practices.

   The record shows, as the Trial Examinier has found, that thile Black C'onlmany, oil or about Febriai y 1. 194-5, acquired the business and assets of the Respondent. Since that time, the Black (Comnpany has occupied the plant undter a lease fromn the Respondent, and has continuedt to mnanufacture, nnler Ipatcut licenses acquired fromi the Respondent, produncts which the Respondent formerly manufactured.

   The Black Company undertook to complete all unfulfilled contracts of thile Respondent. It retainedl all the Respon(dent's employees. and otherwise has operated the business without any outward evidence of change in personnel or supervision, except that Alexander Jenkinlls, the Respondent's president and general manager, was succeeded by S. IDuncan Black, Jr., president of the Black Company, and the authority of William Graham, the plant manager, was somewhat curtailed.

   Further, the Trial Examiner has found, and we agree, that the Black Company acquired the business with kno'ledlce of the existence of this unfair labor practice proceeding pending against the Respondent. Nevertheless, the Black Company contiiued, from the time of its acquisition of the business until the reopeneld heariing in this case, to 2 The Black Company excepts to the Trial Examiner s finding that it had knowledge of the Respondent's unfair labor practices, on the ground that he erred in crediting the testimony of Jacob Blum. the Resnondent's attorney, as against that of Enos Stockhridge, the attorney who represented the Black (Company in its negotiations with the Respondent, as to a eonversation between them in January 1945. As we have previously stated, however, it is an estahblished principle of this Board that a Trial Examiner's credibility findings are entitled to great weight heeause, in resolving conflicting testimony, he is in a position to observe the demeanor of the witnesses on the stand: we are therefore reluctant to disturh such findings unless they clearly appear to be unreasonable. Matter of Robbhins Tire & Rubber Co., Furthermore, Stockbridge's own testimony shows that Blum informed him, in answer to his inquiry, that a question of the Union's representative status was pending before the Board.

   We are of the opinion that this information was sufficient to put him on notice of the pending proceeding.

   749 perate the business without discernible change in labor policy. Thus the Black Company has effectively substituted itself not only as successor in the Respondent's business enterprise, but also as beneficiary of the Respondent's unremedied unfair labor practices. The coercive effects of such unfair labor practices must be presumed to have continued, in the absence of evidence that some steps have been taken to mitigate the restraint thus imposed upon the employees in the exercise of their right to organize and bargain collectively under the Act.

   Under these circumstances, we are convinced that, in order to restore to the employees the free exercise of their statutory rights and to effectuate the purposes of the Act, the Black Company must be held to have assumed the obligation of remedying these unfair labor practices.' We find that the Black Company is a successor to the Respondent within the meaning of our Order of June 18, 1945, and that it is responsible, jointly and severally with the Respondent, for taking the remedial action described therein.' In excepting to the Trial Examiner's findings, however, the Black Company contends, inter alia, that under the decision of the Supreme Court in Regal Knitwear Comnpany v. N. L. R. B.,5 our Order of June 18, 1945, cannot reach the Black Company. We find no merit in this contention.

   It is true that in the Regal Knitwear case, the Supreme Court held that the inclusion of the term 'successors and assigns' in a Board order, although permissible, may not enlarge the scope of the order beyond that defined by Rule 65 of the Federal Rules of Procedure, which provides, in part, that 'Every order granting an injunction and every restraining order... is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.' In that case, however, the Court had no specific facts regarding successorship before it, and did not attempt to define the kinds of successors that might be reached under the terms of the rule. We do not, therefore, interpret the decision as implying that a successor such as that involved herein, which, with knowledge of the commission of unfair labor practices, takes over the entire business, personnel, and labor relations of its predecessor, is not responsible for taking the 3 See Matter of National Garment Company, cert. denied June 14, 1948.

   4 For discussion of a related problem under the Selective Training and Service Act of 1940, as amended, see Interpretative Bulletin and Legal Guide of the U. S. Department of Labor (January 1948), pp. 61-63.

   5 324 U. S. 9.

   necessary measures to mitigate the effect of such unfair labor practices and restore to its employees the free exercise of their rights guaranteed by the Act.

   Furthermore, although the liability of successors under our orders has not been conclusively determined except where the successor operates merely as a 'disguised continuance' or alter ego of an employer found to have engaged in unfair labor practices,' the courts have indicated that under some circumstances good faith successors may also be reached. Thus, in the case of Le'Torneau Company of Georgia v. N. L. R. B.,7 decided since the Regal Knitwear decision, the Circuit Court of Appeals for the Fifth Circuit, in discussing the effect of a decree enforcing a Board order, said:

   A decree of injunction, like other personal judgments, binds parties and their privies, and only these. This Company's officers, agents and successors, though not parties to this case personally, are privies of the Company. All that is necessary hereafter to bind any of them is to notify them of the injunction...

   As to assigns, they may or may not be bound by such an injunction.

   If the assignment be of the Company's whole plant and business, it is probable the assignee would be bound as a successor.8 Consideration of the public interest involved in effectuating the policies of the Act clearly supports this view, and we interpret Rule 65 accordingly.

   In the case before us, there is no showing that the Black Company is, in any sense, an alter ego or disguised continuance of the Respondent, or that it participated with the Respondent in the commission of the Respondent's unfair labor practices. It is plain, however, that, insofar as the employees are concerned, the transfer of the Respondent's business to the Black Company made no real difference. They performed the same work after as before the transfer, in the same place, under the same terms and conditions of employment, and under the direction...