Morton's I.G.A. Foodliner

National Labor Relations Board - Board Decisions

Mar 7, 1979

240 N.L.R.B. 1246 (N.L.R.B. 1979)

1246 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Clinton Foods, Inc., d/b/a Morton's I.G.A. Foodliner:
and its alter ego or joint employer Sam & Ed's, Inc.,
d/b/a/ Sam & Ed's I.G.A. and Sam Morton, and
Amalgamated Meat Cutters and Butcher Workmen
of North America, AFLCIO Local 576 and Retail
Store Employees Union. Local No. 782, affiliated
with Retail Clerks International Association. Cases
17 CA 7739 and 17 CA 7781
March 7, 1979
DECISION AND ORDER
BE MEMBERS JINKINS, MI RPIY, ANI) TRk ISI)AI
On June 29, 1978, Administrative Law Judge Jul-
ius Cohn issued the attached Decision in this pro-
ceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions together with sup-
porting briefs, Respondent Clinton Foods, Inc., filed
cross-exceptions together with a supporting brief,
and Respondent Sam & Ed's filed a brief in answer
to the exceptions of the General Counsel and the
Charging Party.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings,' and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.2
I1 he Administralive Iaw Judge's Decsitll reflects Ihat. of the It)(x)
shares of stock outstanding in Respon(ldent Sam & Edl)'s. 2 of those ,u ncrs.
Sam Morton and Jack Payne, hold I00 shares. I he record. however estah-
lishes that each owns 300 shares
-We agree with the Administrative L.aw Judge's conclusion, for the ret-
sons stated by him and by us below. that Respondent Clinton and ReslpoTl-
dent Sam & Ed's are not alter egos. A finding of ler ego status requires.
among other factors, the presence f suhstantiall) identical'' ownership
between two enterprises. Here. neither Blackburn Foods. Inc.. which ora ncd
82 percent of the outstanding stock in Respondent ('linton nor an', of the
five individual owners of Blackburn is an investor in Respondenit Samll &
Ed's or is in any wa involved in its operatio. The only stockholder presel
in both enterprises is Sam Morton. who owned 18 percent of the outstanild-
ing stock in Respondent Clinton and who has a 30 percent interest in Re-
spondent Sam & Ed's. His interests in both enterprises. stalnditng along .aie
insufficient to establish "substantially identical" ownership.
(Crawford Dirir Sules Coirparnm. In . and Cordt ) oor (otipatlr. I ,. 226
Nl.RB 1144 (1976). and the other cases relied on bh our dissenting colleague
are readily distinguishable. as they involved situalions where both enteprls-
es were either wholly owned by members if the same family tr nlearl\
totally owned by the same indisiduals, or where the alleged rlicr crgo was
franchise in which the real financial control remained in the frailchioi
Thus, unlike here. in each iof tlose cases the ownership of the 'tIo enrellris-
es was substantially identical.
Our dissenting colleague. ho esver. wo uld pparelitli require onlIN thit
there be some ownership link between the two enterprises But hs oiuld
constitute an unjustifiable broadening of the lsir ego doctine and leadto it
holding that enterprises with ionli hited sililarities in I nrship OlIld he
treated its (ilter egro without other es\ldenc tIhlt the ew enlltit is hs t
240 NLRB No. 179
Respondent Clinton has excepted to the Adminis-
trative Law Judge's finding that it violated Section
8(a)(5) and ( I ) of the Act by failing to notify either of
the Unions herein of its decision to cease operations
or to bargain as to the effects of that decision. Re-
spondent C('linton contends that it received neither
timel: notice nor opportunity to defend against such
allegations and. in support thereof, it relies on the
following: (I) a charge filed May 23. 1977. contain-
ing allegations to the above effect, was withdrawn on
July 5. 1977: (2) the complaint does not allege a re-
fusal to bargain over the decision to cease operations
or the effects thereof and the General Counsel first
alleged an "effects theory" at the close of his case-in-
chief: and (3) the Administrative Law Judge denied
its request for a continuance based on its claim of
surprise.
As to Respondent Clinton's contention that an
8(a)(5) finding is precluded by the withdrawal of the
charge filed May 23, 1977. alleging a unilateral dis-
continuance of the operation without bargaining, the
remaining charge dated August 10. 1977. alleges that
" [s]uch action was taken without bargaining with the
Union . . . in violation of the Act." Thus, the pend-
ing charge encompasses the violation here found.
As to Respondent ('linton's second contention, the
refusal to bargain based on the failure to notify the
Unions of the decision to close or to bargain con-
cerning its effects on employees is not unrelated to
the violation alleged in the complaint. The complaint
alleges that Respondent Clinton violated Section
8(a)(5) by discontinuing its operations, resuming
them under a different name, and thereafter refusing
to bargain with Local 576 or and Local 782. It goes
on to allege that Respondent Sam & Ed's. Inc.,
should have continued such bargaining as the alter
ego of Respondent Clinton. In these circumstances,
the General Counsel, by announcing his intention to
pursue an "effects theory" at the close of his case-in-
chief, merely raised a variance to the complaint:
namely, a refusal to bargain in connection with the
same basic facts. The additional basis for finding the
violation constituted neither an obligation imposed
under a different section of the Act nor a significant
alteration of the theory underlying the alleged 8(a)(5)
violation. Accordingly. we conclude that Respondent
Clinton was afforded sufficient notice concerning the
violation found.3
diseuised contlinuation of the fnlnel compalin. See t1 S BrooA.i Eleitrr
/ .ci al. 23 N.RBH 89 1l977} Such .in exlenson would hae the unusar-
-lanted elfect of precludinig tile hobia fide sale ofr . business to ains new
cnterprise ahlse stockholders icluided ne who formerls held a niinor in-
teiest i the losed enterprise here. Respondent ('linton. since in all those
silltla llons there would be stirl colntiliats iof direcltil nd conltrol
li-,in.lirt i OI(t: ti ( . 2/ l111 N I RI 854 (1974). relied on bh Respion-
denl ( lilton . is distilllguislaie. since the respondent herein received noi
notce o iai .allegatilions f il utinlaw ful refusal t hbrgai, cuonternilg the
MORTON'S I.G.A. FOODLINER 1247
As to Respondent Clinton's final contention, its
president and store manager, Sam Morton, admitted
that no prior notice was given to the Unions herein.
Although Respondent claims that the failure to grant
it a continuance constituted prejudice, it has neither
made an offer of proof nor otherwise proposed the
existence of any defense to rebut its record admission
as to the failure to bargain.4 despite the presence
throughout the hearing of its chief executive officer
in possession of exclusive control over labor rela-
tions. We therefore find that, even assuming the Ad-
ministrative Law Judge erred in refusing to grant a
continuance. Respondent was not prejudiced by such
ruling. 5
Accordingly, we agree with the Administrative
Law Judge that Respondent Clinton violated Section
8(a)(5) and (I) of the Act by its failure to notify the
Unions herein as to the decision to cease operations
and to bargain concerning the effects of its closure
on its employees.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the Respondent, Clinton Foods. Inc..
d/b/a Morton's I.G.A. Foodliner. Clinton, Missouri.
its officers, agents. successors, and assigns, shall take
the action set forth in the said recommended order.
except that the attached notice is substituted for that
of the Administrative Law Judge.
MEMBER JENKINS. dissenting in part:
I join my colleagues in finding that Respondent
violated Section 8(a)(5) and (I) of the Act by failing
to notify the Unions of its decision to cease operating
as Morton's I.G.A. Foodliner and by failing to bar-
gain over the effects of that action on the employees.
However, I dissent from their adoption of the Ad-
ministrative Law Judge's finding that Respondent
Clinton and Respondent Sam & Ed's are not alter
egos constituting one enterprise. Accordingly, I
would find that Respondents violated Section
decislin tI close operations r its effects on emploees pnor to he ssuance
of the Administrative Law Judge's decision. and since. In ans eent the
record failed to estabhlish the existence of uch a lollation
4 Thus,. although Respondent (Chnton's counsel indicated at the hearing
that one of the other members of the Board of Directors could swell have
notified the Unions of the decision to cease operations. Respondent (Clinton
neither made an offer of proof to that effect during the hearing nor does it
now allege that it stands reads to adduce such evidence at a new hearing,
In its brief to the Board. Respondent (lnlo n, in passing. contend Ih; l
the applicable contracts contain proslsins which coser plant closure lind
that. since neither Union requested bargaining, each e'iderced an intent to
rel, on its contract. Respondent dies not specif?. nor does a reading of
either contract reveal, an\ proslsion dealing with cls ure.
8(a)( 1), (3), and (5) of the Act by terminating all em-
ployees, withdrawing recognition from the Unions,
and unilaterally changing terms and conditions of
employment.
Respondent Clinton was incorporated in Septem-
ber 1973. Blackburn Foods, Inc., a holding company
owned by 5 individuals, held 700 of the 850 shares of
Respondent Clinton issued, with Sam Morton own-
ing the balance. Morton purchased his shares with a
loan from a local bank secured by a note cosigned by
the five individuals comprising Blackburn Foods.
Morton acted as president of Clinton, as well as store
manager and as a member of the board of directors.
All day-to-day control of Clinton was vested in Mor-
ton, who directed the work force, controlled labor
relations, handled daily finances, and, in general, was
in overall charge of the store and its operations. Also.
Morton negotiated Clinton's contract with the
Unions and administered the contract on behalf of
Clinton. including the handling of employee griev-
ances.
The Administrative Law Judge credited, but paid
little heed to, the testimony of six Clinton employees
who stated that Morton told them and numerous
customers that the store was losing money and would
have to close due to the "high union wages." More
particularly, employee Victor Titus testified that on
April 29, 1977,6 Morton told him the store would be
closing, "because we can't pay union scale and make
a profit," and that the "wages that he was trying to
pay because of the Union were killing him, and that
he couldn't make a profit under that arrangement."
Employees Stanley Wilson, Harold Strause, and Julie
Brown testified similarly. Even more revealing is the
testimony of employees Fred Whitted and Robert
Downing. Whitted stated that, in November 1976,
Morton told him that Clinton would not negotiate a
new contract with the Retail Clerks, that "there
wouldn't be any new contract," that "he would not
have a new contract after this one," and that "he
would never have a union store again after this con-
tract." Whitted further testified that during the
month of April Morton told him that "he was talking
about closing the store down because the wages were
too high, and the Union was making him go broke."
During the same conversation, Morton again assert-
ed that he would never again operate a "union
store." Finally. in late April, Morton told employee
Downing that "his backers had backed out, had
pulled out on him, that he had to close the store and
Saturday night would be [Downing's] last night."
(Emphasis supplied.) The store closed on May 14.
On or about June I, Respondent Sam & Ed's was
incorporated. Of the 1,000 common shares of stock
' 1 dalles are 1977 unless otherilse indicated
MORTON'S IGA. FOODLINER .... . . _v A_ .......... A_
1248 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
issued, 300 were to Morton, 300 to Ed Young, and
400 to Morton's father-in-law, Jack Payne, who is
strictly a financial backer and whose shares will be
retired when he is no longer liable on the bank loan
used to finance the purchase. 7 Following the pur-
chase of Clinton's assets, Respondent Sam & Ed's
reopened the store for business on or about June 15.
As found by the Administrative Law Judge, the oper-
ation of the store was continued without substantial
change, except that none of the former Clinton unit
employees was hired or even contacted concerning
employment. However, Morton did hire the supervi-
sors who were employed by Clinton.
The legal principles to be applied in determining
whether two facially separate employers are in fact
alter egos are well settled. The Administrative Law
Judge correctly noted that the Board has generally
found alter ego status "where the two enterprises
have 'substantially identical' management, business
purpose, operation, equipment, customers, and su-
pervision, as well as ownership." Crawford Door Sales
Company, Inc., 226 NLRB 1144 (1976).8 However. in
that case we also stated that identical corporate own-
ership is not required, and cautioned that "each case
must turn on its own facts."
In finding that the foregoing test was not satisfied
in the instant case, the Administrative Law Judge
found that each of the enumerated factors was pres-
ent except the element of ownership. In finding the
ownership criterion unsatisfied, the Administrative
Law Judge stated that Morton's position in Clinton
was "a very minor one," and that, in any event, Mor-
ton relinquished his ownership interest in Clinton
prior to the "sale" to Sam & Ed's. I disagree. First,
Morton owned 18 percent of the outstanding stock of
Clinton, and was the president and a member of the
board of directors of Clinton. In my view, this is
hardly a "very minor" position with Clinton. More-
over, I do not believe that Morton's brief relinquish-
ment of his interest in Clinton is at all relevant
herein. The record reveals that Morton terminated
his interest in Clinton in contemplation of attempting
to take over the business with new "backers." As we
have recognized, "corporate forms being largely pa-
per arrangements do not always reflect the business
realities of a given situation." Scott Printing Corpora-
tion, 237 NLRB No. 97 (1978).
Thus, I would find that the record establishes the
presence of a substantial ownership link between Re-
spondents. At all times material herein, Morton held
an 18 percent ownership interest in Clinton, and a 30
percent interest in Sam & Ed's. Neither of these own-
ership interests can reasonably be considered de min-
imis or insubstantial, particularly in view of Morton's
pervasive control over all aspects of Respondent's
operations and his avowed determination to avoid
his obligations under the union contracts.9
As it is undisputed that all of the other factors we
have required as a predicate to finding two enterpris-
es to be alter egos are present in the instant case, it
follows that Respondent Clinton and Respondent
Sam & Ed's constitute alter egos. Had the individuals
comprising Blackburn Foods chosen to sell their in-
terest in Clinton to other individuals, there would be
no question but that Clinton's bargaining obligation
and existing contracts would be unaffected. Miller
Trucking Service, Inc. and/or Miller Trucking Service,
Inc., a subsidiary of Tulsa Crude Oil Purchasing Com-
panr, 176 NLRB 556 (1969). That Morton was forced
to secure new "backers" in his venture, and utilized
that fact to alter the corporate name, should not
change the result. It is clear that the food store ven-
ture was Morton's enterprise. Although his financial
backers have changed, the enterprise is still that of
Morton. To allow Morton to avoid his contractual
and bargaining obligations with the Unions through
the strategem of securing new "backers" would be a
manifest injustice which we should not, and I will
not, condone. I would find that Respondent Sam &
Ed's is an alter ego of Respondent Clinton and, that
Respondents violated Section 8(a)(1), (3), and (5) of
the Act by terminating all employees, withdrawing
recognition from the Unions, and unilaterally chang-
ing terms and conditions of employment.
The purchase involved no cash outlaN to an) of the shareholders, but
was secured with the equits in Young's and Morton's homes and a contract
on Plne's farm.
Also. see Big Bear Supermalrkets .3 239 NIRB 179 (1978): EdwardJ
White. Inc. and irs Ater tEg, Reparrs. Inc., 237 NL.RB 152 (1978): Ramos
Ira l; 4 ,rks, Inc. and Rosol Engineering. 234 NLRB 896 (1978): Co-Ed Gar-
ment (oelparn and its Alter .go Delia Manufacturing Corporation, 231
NLRB 848 11977).
9 Apparentl m colleagues misinterpret my position. This is not a situa-
lion where only a minor ownership link connects the two supposedly sepa-
rate employees. Indeed. the enterprise was Morton's undertaking. His
"hackers" have changed: the enterprise has nt.
APPENDIX
Norc-E To EMPLOYEES
POSTIED BY ORDER OF THE
NAtIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
After a hearing at which all sides had the opportunity
to present their evidence, the National Labor Rela-
tions Board has found that we violated the Act and
we have been ordered to post this notice.
WE WILL, upon request, bargain collectively
with Amalgamated Meat Cutters and Butcher
Workmen of North America. AFL-CIO Local
MORTON'S I.G.A. FOODLINER 1249
576, and Retail Store Employees Union, Local
No. 782, affiliated with Retail Clerks Interna-
tional Association, with respect to the effects of
our decision to close our Clinton store on the
employees who were employed there, and re-
duce to writing any agreement reached as a re-
sult of such bargaining.
WE wit.L pay the employees who were em-
ployed at our Clinton store their normal wages
for a specified period, plus interest.
CLINTON FOODS. INc.. d/b/a MoRloNs
I.G A FOODINER
DECISION
STATEMENT OF THE CASE
JULIUS COHN. Administrative Law Judge: This case was
heard at Clinton. Missouri, on November 21 and 22, 1977.
The charges in this proceeding were filed against Clinton
Foods, Inc., herein called Respondent Clinton or Clinton,
and Sam & Ed's Inc., herein called Respondent Sam & Ed
or Sam & Ed, by the Amalgamated Meat Cutters and
Butcher Workmen of North America, AFL-CIO, Local
576, herein called Meat Cutters, and by Retail Store Em-
ployees Union, Local No. 782 affiliated with Retail Clerks
International Association, herein called Retail Clerks.
Upon these charges and amended charges, the Regional
Director for Region 17 issued separate complaints on be-
half of each Union aginst both Respondents, and an order
consolidating the two cases for hearing. The complaints,
which are virtually identical, allege that the two Respon-
dents are alter egos and, as such, engaged in various viola-
tions of Section 8(a)(1), (3), and (5) of the Act. Both Re-
spondents filed answers denying the commission of unfair
labor practices.
Issues
Whether the Respondents are alter egos.
Whether if Respondents are alter egos, they violated Sec-
tions 8(a)(1), (3), and (5) of the Act by terminating all em-
ployees, withdrawing recognition from the Unions, and
unilaterally changing conditions of employment.
Whether, assuming Respondents are not alter egos, Re-
spondent Clinton violated Section 8(a)(1) and (5) of the
Act by failing to notify the Unions of its decision to termi-
nate the employees and go out of business and by refusing
to bargain over the effects of such action.
All parties were given full opportunity to participate, to
introduce relevant evidence, to examine and cross-examine
witnesses, to argue orally, and to file briefs. All parties
submitted briefs which have been carefully considered.
On the entire record in this case and from my observa-
tion of the witnesses and their demeanor, I make the fol-
lowing:
FINDINGS OF FACT
I THE BUSINESS OF RESPONDENTS
Clinton, a Missouri corporation, was engaged at least
until May 14, 1977, in the retail sale of groceries at Clinton,
Missouri. During the calendar year 1976, Clinton's sales of
groceries were in excess of $500,000, and, during the same
period, it purchased goods and materials valued in excess
of $50,000 from sources located within the State of Mis-
souri, which sources, in turn, purchased such goods direct-
ly' from sources located outside the State of Missouri. I
find, on the foregoing facts, admitted by Clinton. that Re-
spondent Clinton has been an employer engaged in com-
merce within the meaning of Section 2(6) and (7) of the
Act.
Sam & Ed, a Missouri corporation, has been engaged in
the retail sale of groceries since June 15, 1977, in Clinton,
Missouri. Its annual gross volume on a projected basis will
exceed $500,000, and its annual projected purchase of
goods from sources located within the State of Missouri
exceeds $50,000, which sources, in turn, will purchase such
goods directly from sources located outside the State of
Missouri. On the basis of the above admitted facts, I find
that Respondent Sam & Ed is an employer engaged in
commerce within the meaning of Section 2(6) and (7) of
the Act.
ii THE LABOR ORGANIZATIONS INVOLVED
The Meat Cutters and the Retail Clerks are labor organi-
zations within the meaning of Section 2(5) of the Act.
11 THE ALLEGED UNFAIR LABOR PRAcTICES
A. Facts
Respondent Clinton was organized in September 1973
and at that time took over the operation of a retail store
managed by Sam Morton and owned by Wetterau Foods,
a wholesale food supplier in Missouri. The stockholders of
Clinton were another corporation named Blackburn
Foods, Inc., and Sam Morton. Of the 850 shares of stock
issued by Clinton, 700 were owned by Blackburn and 150
shares by Sam Morton. The stockholders of Blackburn
were five individuals. Charles Cockelreas had 67 shares of
Blackburn and four other individuals named Morris,
Hook, Hoffman, and Blackburn each owned 158 shares.
Blackburn and Morton paid $100 per share of Clinton
stock for capital in connection with the purchase and oper-
ation of the store. Sam Morton borrowed $15,000 for the
purchase of his shares from a local bank in Clinton. He
and his wife signed a note which was cosigned by the five
principals of Blackburn.
Morton and the five stockholders of Blackburn were di-
rectors of Clinton. Morton was elected president and store
manager for the corporation, while Cockelreas was the sec-
retary and the four other individuals were vice presidents.
The premises occupied by Clinton were owned by a real
estate company in St. Louis which had leased it to Wetter-
au Foods, the prior owner and operator. Clinton took over
MORTON'S IGA. FOODLNER
..... .... Ad a I . a as
1250 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
occupancy on the basis of a sublease from Wetterau.
As store manager. Sam Morton was responsible for the
day-to-day operation of the business. He hired, fired,
scheduled, and directed the work force. He also took care
of the ordinary finances by making deposits, signing
checks, and the like. Morton was directly responsible for
labor relations, negotiated contracts with the Unions, and
dealt with the various union representatives concerning
grievances and similar matters.]
Apparently the store had always lost money but this
trend became accentuated in the early part of 1977. The
financial statements for a 26-week period preceding March
26, 1977, showed that the store had sustained a loss of
almost $25,000. Of this loss, approximately $12,500 oc-
curred in the last 10 weeks preceding March 26. Upon re-
ceiving these results, the Blackburn owners of Clinton de-
termined that the operation had to be terminated as
quickly as possible. None of the Blackburn people resided
in Clinton, but in the middle of April, Cockelreas. Hoff-
man, and Morris went there and met with Morton. They
told him that they had decided to close the operation and
asked him if he would go along with that decision. As Mor-
ton put it, he only had a 15 percent interest, so he felt he
had no alternative but to agree. The store remained in op-
eration for a short period of time and the two Meat Cutter
employees were laid off permanently on April 30 as were
six other employees represented by the Retail Clerks. The
store continued open and was finally closed on May, 14.
Several employees credibly testified to conversations
they themselves had with Morton or which they overheard
Morton having with customers during the few months
prior to the final closing of the store. Morton told them
and the customers that the store was losing money, it could
not afford to pay the high union wages which were eating
up its profits, and that the store would have to close down.
Morton himself testified that he had not given notice to
the Unions of the decision to close the store.
After the closing of the store on May 14, Morton re-
The most recent collective-bargaining agreement with the Me;lt (ttllers
runs from November 7. 1976. throuih No\emlher 4. 1978. he uit coNred
by said agreement. as stipulated b the parties at the hearing is:
All employees engaged in the receiving. cutting, grinding. slicing, cur-
ing. displaying, preparing. processing. sealing. wrapping. bagging. pric-
ing. prefabricating and selling of all meat products., sausage. pultr.
rabhits. fish and seafood products. canned hams. bacon, pork liins and
picnics. whether such products are fresh. frozen. chilled. cooked. cured.
smoked ior harbequed, including those employees operating equipnient
used n wrapping, cubing. tenderizing of such meat products and who
perform their duties in all areas where such products are prepared.
displayed and offered for retail sale in service or self-service cases li-
cated in retail markets that are presently owned. le;lsed, acquired. oper-
ated or supervised by Clinton.
The last agreement between linton and the Retail Clerks ran fromn Septem-
ber I, 1974 through November 12, 1977 the appropriate unit coxered by
such contract, and as also stipulated b) the parties, is:
All employees employed by Clinton working in its present antid future
retail establishments situated within (Clinton. Missouri, in within I milec
of the city limits engaged in handling or selling merchandise or per-
forming other services incidental or related thereto except supervisors
employees within the meaning of the National Lahor Relations Act of
1947, as amended, and cerplosees whose work is exclusively atnd holls
performed within the meat department locations of the retail estab-
lishment.
signed as president of Clinton on May 17 and also turned
over his 150 shares of stock to Clinton. As of that time,
Morton still owed the bank approximately $12,400 of the
$15.000 he had borrowed to pay for the stock.
The Blackburn people then offered Morton an opportu-
nity to buy the store, provided he could obtain the finan-
cial resources. Morton interested an old friend. Ed Young.
an experienced meatcutter and meat market manager, to
form a partnership. He also enlisted financial assistance
from his father-in-law, Jack Payne. The three were able to
obtain a loan from a Clinton bank of $155,000. secured by
mortgages on their homes as well as a farm owned by
Payne. Respondent Sam & Ed was then incorporated, with
Morton and Young owning 100 shares each and Payne 400
shares, and an agreement was made with Respondent Clin-
ton to purchase the store, the remaining inventory, and
equipment for $99,000. In addition, Respondnet Clinton
assumed the outstanding liabilities and also paid off the
note of Morton which still had a balance of $12,400. Black-
burn Foods also assigned its sublease from Wetterau to
Sam & Ed, Blackburn, however, remaining liable under the
original sublease. Respondent Sam & Ed thereupon com-
menced rent payments directly to Wetterau.
The transaction was completed on or about June 9, and
the store reopened for business approximately June 15. The
operation was continued with very few changes. In Sam &
Ed. Morton has pretty much the same authority as he pre-
viously did, only more so since he is now an owner of a
considerably larger portion of the enterprise. In any case,
Morton controls the labor relations, including hiring, fir-
ing, and discipline of employees of Sam & Ed's, as he did
with Clinton. In the new operation, Morton hired two su-
pervisors who had been with him in Clinton, the assistant
store manager, and the head of the produce department.
On the other hand, he did not hire any of the former em-
ployees of Clinton, nor did he communicate with any of
them with regard to working for Sam & Ed. Two Clinton
employees actually visited the store during the interval be-
tween the purchase by Sam & Ed and its opening and in-
quired concerning work, and no offer was forthcoming
from Morton.
B. Discussion and Analysis
The facts set forth above are basically uncontroverted. It
is the contention of the General Counsel that the two Re-
spondents are alter egos and, as such, one continuing enter-
prise which violated Section 8(a)(l). (3). and (5) by termi-
nating the employees, withdrawing recognition from the
Unions, and thereafter unilaterally changing conditions of
employment at the store. The overriding issue therefore is
whether Clinton and Sam & Ed are indeed alter egos.
In Craford Door Sales Company, Inc., 226 NLRB 1144
(1976), the Board noted that it generally, has found alter ego
status "where the two enterprises have 'substantially identi-
cal' management, business purpose, operation, equipment,
customers and supervision, as well as ownership." The
missing element in the instant case is, of course. ownership.
The General Counsel states that Morton had a substantial
ownership position in both corporations. It is clear that his
position in Clinton was a very minor one, but in any case.
MORTON'S I.G.A. FOODLINER 1251
his stock ownership of Clinton was given up when the store
was closed and before Morton was able to obtain other
financial backing and organize Sam & Ed with new part-
ners. The General Counsel would like to infer something
very suspicious with regard to Morton's relinquishing his
stock certificate in Clinton, but I see nothing strange or
unusual in that transaction. Morton had never put up any
cash for his interest in Clinton, but merely borrowed
$15,000 from the bank upon which there was a balance of
$12,400. His equity position in Clinton at that point, if any,
was thus limited to $2600. In addition, he was personally
liable on the note, as were the Blackburn group. As the
store admittedly had been a losing proposition, it is diffi-
cult to place any real value on his equity when he gave it
up.
The important factor is that none of the other principals
of Clinton, namely the stockholders of Blackburn. has any
stock or ownership interest in Sam & Ed. There is no evi-
dence that any of the prior owners owned, controlled, or
benefited from the operation of Sam & Ed. The transaction
has not been shown to have been simply a change effected
under the control and guidance of the Blackburn interests,
nor is there any indication that Sam & Ed is being operated
as a front for the Blackburn stockholders.2
In short, nothing has been presented to reveal any in-
volvement in the operation of Sam & Ed of the Blackburn
people. I find nothing unusual as a matter of business prac-
tice, as inferred by General C'ounsel, in the fact that Black-
burn remained the guarantor of the rent payments to Wet-
terau, the original leasee of the premises. There is no
reason why Wetterau should release its subleasee from lia-
bility merely because the latter desires to transfer its sub-
lease to another. Nor does it seem strange that Clinton. as
a seller, should assume payment of the outstanding debts
and liabilities of its own operation. Nor is anything essen-
tially peculiar or wrong in the payment by Clinton of
Morton's outstanding note, when such payment is made
from the proceeds of the sale of the store. After all, pre-
sumably, the Blackburn people were equally anxious to be
relieved of their liability as endorsers of Morton's note.
While undoubtedly Morton controlled and directed the la-
bor relations for both Clinton and Sam & Ed, that is not
sufficient. To predicate liability on that alone, would pre-
clude the sale of any business by an owner to its resident
manager or by one partner to another, for in both situa-
tions there would be a continuity of direction and control.
Alter ego, unlike successorship, requires the element of
ownership or some form of control.
On the basis of the above, I find and conclude that Sam
& Ed and Clinton are not alter egos.3
At the conclusion of General Counsel's case, during the
Jcrve, Juniors. Inr. 230 NLRB 329 (1977): \ 1 R B x Bl ( e ltirmll.
In.. 561 IF2d 1264 (1977)
3 he cases relied upon bh General (Counsel re inapposile II S Brl*s
Elec(tri. Inc.. 233 N.RB 889'. involved a situation where a husband and wife
formed a new corporatio n ith the wife as president and graduall look
over the business of the former corporallon he Board affirmed the finding
tha there was continued owvnership and no real change ParAlnll, tI,,or
(o,. Inc and M'lernin Ribtiro d b a ParllrAfland Ilroseri. tir a/lr crt, 203
NLRB 597 (1973.), involved a sllti;liltn of a franchlse operalion. c.,mpletels
different from the operations invsolved in the instant cise
discussion of motions by the Respondents for dismissal,
the General Counsel categorically stated that the only
predicate for violations by Sam & Ed would be on the basis
of a finding of alter ego status. He agreed that, should alter
ego not be found, the complaint would then be dismissed
with regard to Sam & Ed. Respondent Sam & Ed proceed-
ed to litigate the matter only as to the alter ego question. In
such circumstances, as I have found that there is no alter
ego status between the two Respondents, there is no alter-
native to dismissal of the complaints against Respondent
Sam & Ed in their entireties, and I so recommend.
There remains for consideration the question as to
whether Respondent Clinton violated Section 8(a)(5) by
failing to give notice to either of the Unions of its decision
to close its operations and afford the Unions the opportu-
nity to bargain over the effects of the shutdown and termi-
nation of employees. Actually there is no question that
Morton, as manager of Clinton, did not give notice to the
Unions of the decision made by Respondent Clinton to
terminate its operation in mid-April. This has been admit-
ted by Morton in his testimony during the hearing. Re-
spondent Clinton however contends that this allegation
was not specifically included in the charges or the comp-
laints. The complaints allege various violations of Section
8(a)(5) of the Act including repudiation of the collective-
bargaining agreement. altering wages and other terms and
conditions of employment without notice to the Unions,
and withdrawing recognition from the Unions. As the issue
of notice of shutdown and termination of the employees is
"intimately related to the subject matter of the complaint,"
and as the issue was litigated particularly noting the admis-
sion by Morton, I shall find Clinton's conduct in this re-
gard unlawful, even though it was not specifically alleged
to be an unfair labor practice in the complaints. 4
Accordingly I find that Respondent Clinton violated
Sections 8(a)(l) and (5) of the Act by its failure to give
timely notice to the Unions and afford them an opportuni-
ty to bargain over the effects.' Allstate Factors, 205 NLRB
1122 (1973). In all other respects I shall recommend that
the complaints against Respondent Clinton be dismissed.'
4Hllilh tanor ursing Hnte,. 235 NL.RB 426 119781. (Cro n-Zellerhbah
(,rl,ralt,in. 225 NLRB 911 (19761. ('f. International (Offset ('orp . 210
NLRB 854 1974) relied upon b Clinton. In that case. however, the com-
plaint allegation did not encompass the failure to bargain about effects. nor
did the General Counsel lihtigate or argue such iolation In his brief
I do not find as uggested b Respondent Clinton. the conersation
btlu een a representatise of Retail (Clerks and Morton during the course of
a prior unfair labor practice hearing on Ma) 4, 1977, to he adequate notice
of ( linton'S decision to terminate its operations. This ccurred after the
emploees had been terminated and failed to give the Unions an opportuni-
ts to, bsrgain concerning the effects of the shutdown before the emplosees
were lermn;ated. Nor is the fact that witnesses for the LUnions indicated that
the. had heard rumnor, of the closedown a substitute for proper nolllC. As to)
this last. (linton relies again on International O/ffe (rp. tupra But that
insolsed more than rumors. as union agents were aware of transfers of
machiners and knew from newspaper advertisements and consersations
with the emplo er's representatlies that its assets were for sale.
I here is also no basis for finding of an s olation against Sam Morton
personallI. vho il joined in tie iiption as a Respondenl le acted solell as
agCent for the corporate Respirdcn ls Moreos.er. during the hearing or in the
hriefs. no contention is made that he be held responsible personalls.
MORTONS IGA.FOODLINER
1252 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON
COMMERCE
The activities of Respondent Clinton set forth in section
III, above, occuring in connection with its operations de-
scribed in section 1, above, have a close, intimate, and sub-
stantial relationship to trade, traffic, and commerce among
the several States and tend to lead to labor disputes, bur-
dening and obstructing commerce and the free flow of
commerce.
v. THE REMEDY
Having found that Respondent Clinton has engaged in
certain unfair labor practices, I shall recommend that it be
ordered to cease therefrom and to take certain affirmative
action designed to effectuate the policies of the Act.
It has been found that Respondent Clinton decided to
terminate its operation and close its store sometime in mid-
April, that the employees were terminated on April 30, and
the operation of the store ceased on May 14. It has been
further found that Respondent Clinton failed to notify the
Meat Cutters and the Retail Clerks of its decision to close
and unlawfully failed to bargain about the effects of such
closing. Because of this, Clinton's employees were denied
an opportunity to bargain through their contractual repre-
sentatives at a time prior to the shutdown when such bar-
gaining would have helped in easing the hardship on em-
ployees whose jobs were being terminated. In these
circumstances a bargaining order alone cannot serve as an
adequate remedy for the unfair labor practices of Respon-
dent Clinton.7
To insure meaningful bargaining and to effectuate the
purposes of the Act, I shall recommend, in addition to an
order to bargain over the effects of the shutdown, a limited
backpay requirement designed both to make whole the em-
ployees for losses suffered as a result of the violation and to
re-create in some practical manner a situation in which the
parties' bargaining positions are not entirely devoid of eco-
nomic consequences for Respondent Clinton. Moreover to
effectuate the purposes of the Act, said Respondent will be
required to pay not less than the amounts its employees
would have earned during a 2-week period of employment.
I shall therefore order Respondent Clinton to bargain
with the Meat Cutters and Retail Clerks, upon request,
about the effects on its employees of the shutdown of the
Clinton Grocery and to pay these employees amounts at
the rate of their normal wages when last in Clinton's em-
ploy from 5 days after the date of this Decision until the
occurrence of the earliest of the following conditions: (I)
the date Respondent Clinton bargains for agreement with
the Unions on those subjects pertaining to the effects of the
closing of the Clinton Grocery; (2) a bona fide impasse in
bargaining; (3) the failure of the Union to request bargain-
ing within 5 days of this Decision or to commence negotia-
tion within 5 days of Clinton's notice of its desire to bar-
gain with the Union; or (4) the subsequent failure of the
Union to bargain in good faith; but in no event shall a sum
7 Transmarine Navigation Corporation, 170 NLRB 389 (1968).
paid to any of these employees exceed the amount he
would have earned as wages from April 30, 1977, the date
on which Respondent Clinton terminated the employees,
to the time he secured equivalent employment elsewhere,
or the date when Respondent Clinton offered to bargain,
which ever occurred sooner; provided, however, that in no
event shall this sum be less than these employees would
have earned for a 2-week period at the rate of their normal
wages when last in the Respondent Clinton's employ.8 The
amount of backpay shall be computed in the manner set
forth in F. W. Woolworth Company, 90 NLRB 289 (1950),
with interest thereon to be computed in the manner pre-
scribed in Florida Steel Corporation, 231 NLRB 651
(1977). 9 Respondent Clinton shall also be required to bar-
gain about the effects of the closing of its store on all mat-
ters, including, but not limited to, vacation pay, severance
pay, and payments to relevant pension and health and wel-
fare funds.
Finally, as Respondent Clinton no longer operates the
grocery store involved, I shall direct it to mail copies of the
notice appended hereto to the Unions and its former em-
ployees.
CONCLUSIONS OF LAW
1. Respondents Clinton and Sam & Ed are employers
engaged in commerce within the meaning of Section 2(6)
and (7) of the Act.
2. The Meat Cutters and the Retail Clerks are labor or-
ganizations within the meaning of Section 2(5) of the Act.
3. Respondent Clinton and Respondent Sam & Ed are
not alter egos.
4. The following constitute units of employees of Re-
spondent Clinton appropriate for the purposes of collective
bargaining within the meaning of Section 9(b) of the Act:
All employees engaged in the receiving, cutting, grind-
ing, slicing, curing, displaying, preparing, processing,
sealing, wrapping, bagging, pricing, prefabricating and
selling of all meat products, sausage, poultry, rabbits,
fish and seafood products, canned hams, bacon, pork
loins, and picnics, whether such products are fresh,
frozen, chilled, cooked, cured, smoked or barbequed,
including those employees operating equipment used
in wrapping, cubing, tenderizing of such meat prod-
ucts and who perform their duties in all areas where
such products are prepared, displayed and offered for
retail sale in service or self-service cases located in
retail markets that are presently owned, leased, ac-
quired, operated or supervised by Clinton; and
All employees employed by Clinton working in its
present and future retail establishments situated with-
in Clinton, Missouri, or within I mile of the city limits
engaged in handling or selling merchandise or per-
forming other services incidental or related thereto ex-
cept supervisory employees within the meaning of the
National Labor Relations Act of 1947, as amended,
and employees whose work is exclusively and wholly
lrainmlarine Navigarion (rporhorlin. vupra. Al/trate Factors. 205 NLRB
1122 (1973).
See. generally. Iis Plumbing Heating ( o., 138 NLRB 716 (1962).
MORTON'S I.G.A. FOODLINER 1253
performed within the meat department locations of
the retail establishment.
5. At all times material herein the Meat Cutters and the
Retail Clerks have been exclusive representatives of the
employees in the respective units described above for the
purpose of collective bargaining.
6. By failing to notify the Meat Cutters and Retail
Clerks and refusing to bargain with them with respect to
the effects on its employees of the decision to close its store
in Clinton, Missouri, Respondent Clinton violated Section
8(a)(5) and (1) of the Act.
7. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
8. Except as set forth above, Respondent Clinton has
not otherwise violated the Act.
9. Respondent Sam & Ed and Respondent Sam Morton
individually have not violated the Act, as alleged in the
consolidated complaints.
Upon the foregoing findings of fact, conclusions of law,
and upon the entire record, and pursuant to Section 10(c)
of the Act, I hereby issue the following recommended:
ORDER '0
The Respondent, Clinton Foods, Inc., Clinton, Missouri,
its officers, agents, successors, and assigns, shall:
I. Cease and desist from refusing to bargain with Amal-
gamated Meat Cutters and Butcher Workmen of North
America, AFL-CIO, Local 576 and Retail Store Employ-
ees Union, Local No. 782 affiliated with Retail Clerks In-
ternational Association with respect to the effects on its
employees of its decision to close the Clinton retail store.
2. Take the following affirmative action designed to ef-
fectuate the policies of the Act:
(a) Pay the employees of its former Clinton store their
normal wages for the period set forth in the section of this
Decision entitled "The Remedy."
(b) Upon request, bargain collectively with the Butcher
Workmen and the Retail Clerks, with respect to the effects
on its employees of its decision to close the Clinton store,
and reduce to writing any agreement reached as a result of
such bargaining.
(c) Preserve and, upon request, make available to the
Board or its agents, for examination and copying, all pay-
roll records, social security payment records, timecards,
personnel records and reports, and all other records neces-
sary to analyze the amount of backpay due under the terms
of this Order.
In the eent no exceptions are filed as provided b Sec 102.46 of the
Rules and Regulations of the National Labor Relations Board. the findings.
conclusions. and recommended Order herein shall, as provided in Sec.
102 48 of the Rules and Regulations. be adopted b the Board and become
Its findings. conclusions. and Order. and all objections thereto shall be
deemed waived for all purposes
MORTON'S IGA. FOODLINER