Petition — Yorke v. National Labor Relations Board, 104 S. Ct. 1276 (1984) (No. 83-810)
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No. 83- erase
SORES —Sapeme Court, U.S.
FILED
IN THE NOV 14 1983
Supreme Court of the UnitedjStates
CLERK
OcTOBER TERM, 1983
IN RE:
NATHAN YORKE, TRUSTEE IN BANKRUPTCY,
THE SEEBURG CORPORATION
v.
Petitioner,
NATIONAL LABOR RELATIONS BOARD,
Respondent.
WAREHOUSE, MAIL ORDER, OFFICE, PROFESSIONAL
AND TECHNICAL EMPLOYEES UNION
LOCAL 743,
INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF
AMERICA,
Intervening-Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
NARCISSE A. BROWN,
MALCOLM M. GAYNOR
STEVEN M. BAZER,
SCHWARTZ, COOPER, KOLB
& GAYNOR CHARTERED,
33 North LaSalle Street
Suite 2222
Chicago, Illinois 60602
(312) 726-0845
Attorneys for Petitioner.
Pandick Press Midwest, Inc., Chicago * 454-7600
i
QUESTIONS PRESENTED
1. Whether the National Labor Relations Board may
override the claims and priority requirements of the Bankruptcy
Code in favor of ex-employees at the expense of the estate’s
creditors?
2. May any remedy be predicated on an unfair labor
practice neither charged, litigated or found by the Board?
3. May the Board order a “back pay” remedy where
admittedly the employees who are the beneficiaries of the
Board’s largesse have been rightfully terminated?
PAS ra
TABLE OF CONTENTS
PAGE
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A. Bankruptcy Proceedings ...........sssscssssssscsssseeeees 2
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C. Court of Appeals Proceedings .............ccccceeeeseeees 4
REASONS FOR GRANTING THE WRIT................... 4
Il.
THE COURT AND THE BOARD HAVE DECIDED
THAT, IF THE TRUSTEE CANNOT SERVE
TWO MASTERS, THE ONE SERVED WILL BE
i soon cacteenhabtaindeguscisoes ocibshidnoobese 7
Il.
THE FUNDAMENTAL RIGHT TO NOTICE WAS
VIOLATED BY THE COURT'S INDEPENDENT
FINDING OF AN UNFAIR LABOR PRACTICE
NEITHER ALLEGED IN THE BOARD COM-
PLAINT NOR FOUND BY THE BOARD.................. 10
THE TRANSMARINE REMEDY, IN THE CIR-
CUMSTANCES OF THIS CASE, IS EITHER PE-
NAL OR AN ATTEMPT TO FIX A CONTRACT
ili
TABLE OF AUTHORITIES
Cases
In re Ad Service Engravings Co., 338 F. 2d 41 (6th
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In re Brada Miller Freight System, 702 F. 2d 890,
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NLRB v. American National Insurance Co., 343
U.S. 395, 96 L. Ed. 1027, 72 S.Ct. 824 (1952)...
NLRB v. Blake Construction Co., Inc., 663 F. 2d
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NLRB v. Downtown Bakery Corp., 330 F. 2d 921,
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NLRB v. Sure-Tan, Inc., 672 F. 2d 592, rehearing
denied 677 F. 2d 584 ( 7th Cir. 1982) wee
Railway Labor Executives Assn. v. Gibbons, 455
U.S. 457, 71 L. Ed. 2d 335, 102 S.Ct. 1169
rehearing denied 72 L. Ed. 2d 459, 102 S.Ct.
Transmarine Navigation Corp., 170 NLRB 389
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PAGE(S)
13
IN THE
Supreme Court of the Anited States
OcTOBER TERM, 1983
IN RE:
NATHAN YORKE, TRUSTEE IN BANKRUPTCY,
» THE SEEBURG CORPORATION
Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent.
WAREHOUSE, MAIL ORDER, OFFICE, PROFESSIONAL
AND TECHNICAL EMPLOYEES UNION LOCAL 743,
INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF
AMERICA,
Intervening- Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
OPINIONS BELOW
The opinion of the United States Court of Appeals for the
Seventh Circuit is reported at 709 F. 2d 1138. A copy of the
opinion is made a part of the Appendix. (A 70-94). The
decision and order of the National Labor Relations Board is
reported at 259 NLRB N. 105 ( Dec. 28, 1981).
2
JURISDICTION
The judgment of the Court of Appeals was entered on June
1, 1983. The decision of the Court of Appeals, denying
petitioner’s timely petition for rehearing with suggestions for
rehearing en banc, was entered on August 26, 1983 and is
unreported. A copy of the decision is made a part of the
Appendix (A 95).
STATUTES AND RULES INVOLVED
Section 1104(a)(1) of the Bankruptcy Code, 11 U.S.C.
1104(a)(1); Section 501 of the Bankruptcy Code, 11 U.S.C.
501, Section 502 of the Bankruptcy Code, I! U.S.C. 502;
Section 507 of the Bankruptcy Code, 11 U.S.C. 507, Section
8(a)(5) of the National Labor Relations Act, 29 U.S.C.
158(a)(5); Section 9(a) of the National Labor Relations Act,
29 U.S.C. 159( a); Section 554 of the Administrative Procedures
Act, 5 U.S.C. 554, Section 557(c)(A) of the Administrative
Procedures Act, 5 U.S.C. 557(c)(A) are all set forth in the
Appendix hereto.
STATEMENT OF THE CASE
A. BANKRUPTCY PROCEEDINGS
This is a case of first impression involving two vitally
important, though conflicting, national policies: the revitaliza-
tion of financially troubled business enterprises and the regu-
lation of labor-management relations through collective
bargaining.
The case centers on the problems of a Trustee in bank-
ruptcy appointed in the aftermath of operations by a debtor in
possession under Chapter |! under the then new Bankruptcy
Code (“Code). The Trustee was appointed pursuant to Section
1104(a)(1) of the Code as the result of the fraud and
mismanagment of the debtor in possession. (A 97). At the
my)
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, -O*® aye
time of his appointment the work force had declined to seven
and funds were unavailable to pay them. The Trustee sought
and obtained permission from the Bankruptcy Court to close
the operation and did so immediately. Afterwards, he received
a communication from the Union requesting information and a
meeting. The Trustee promptly responded by letter to the
Union’s letter, furnished information that the operation had
been closed, and expressed willingness to furnish further infor-
mation.
The Union, without responding to the Trustee’s letter, filed
unfair labor practice charges almost immediately and the Board
issued a complaint charging that the Trustee on February 11,
1980, terminated operations without prior notice to the Union
and without having afforded the Union an opportunity to
negotiate.
The National Labor Relations Board filed a claim in the
bankruptcy proceedings on behalf of the employees whose
employment was terminated at the plant’s closing in the
amount of $142,000.00. Later, the Board reduced this claim to
$55,000.00. This amount was sequestered to meet any potential
liability arising from the claim and, thereafter, a plan of
liquidation was approved by the Bankruptcy Court. The
Bankruptcy Court ordered the unfair labor practice proceedings
stayed and announced that it would decide the charges in-
volved in those proceedings. (A 56-63).
The Board successfully appealed this order to the District
Court, asserting the exclusive jurisdiction of the Board to hear
and determine unfair labor practice charges. The District Court
ruled in its favor. (A 65-68). The hearing on the unfair labor
practice charge proceeded before an Administrative Law
Judge.
B. BOARD PROCEEDINGS
At the hearing, the literal truth, although not the illegality,
of the charge of the amended complaint was conceded, i.e., that
the Trustee had closed the plant without prior notice to the
4
Union and without giving an opportunity to bargain on the
effects of the closure. Evidence of what transpired in the
aftermath of the closure was to go only to the remedy.
The Administrative Law Judge found that the failure to
give prior notice and an opportunity to bargain as alleged in the
Board’s complaint constituted a violation of Section 8(a)(5) of
the National Labor Relations Act but refused any back pay
remedy. (A 17-40). The Board upheld the finding of illegality
and granted a Transmarine remedy, requiring payment of
- funds from the estate. (A 41-50).
The Transmarine remedy is that announced by the Board
in Transmarine Navigation Corp., 170 NLRB 389 (1968).
Essentially, the remedy as applied here requires the Trustee to
pay a minimum two weeks “back pay” to the employees
terminated on the plant’s closing and bargain with the Union.
The “back pay” will continue to accumulate beyond the
minimum two week period until agreement or impasse is
reached on a “collective bargaining agreement.”
C. COURT OF APPEALS PROCEEDINGS
The Court of Appeals reversed the only finding of an
unfair labor practice made by the Board. The Court concluded
that the emergency circumstances faced by the Trustee and the
authorization of the bankruptcy court justified the Trustee in
terminating the operation without notice to the Union and
without affording the opportunity to bargain. Fulfilling the law
of Murphy’s prophecy, the Court went on to find an unfair
labor practice which was not charged, i.e., that, in the aftermath
of the closing, the Trustee failed to bargain. On this non-
existent charge and finding, the Court permitted the remedy of
the Board to stand. (A 84).
REASONS FOR GRANTING THE WRIT
“This case raises vitally important questions concerning the
relative jurisdictional roles of the bankruptcy court and the
NLRB in the context of Chapter XI bankruptcy proceed-
H- gt
Lee,
5
ing, questions of critical importance not only to the respec-
tive tribunals bur to future litigants as well as the entire
bench and bar. The majority’s rote and mechanistic
application of principles that may be appropriate in the
normal employer-employee relationship ignores the fact
that this case arises in the context of a Federal Bankruptcy
Chapter XI proceeding. Furthermore, the majonity fails to
respect the severe limitations imposed on the authority of
Chapter XI Bankruptcy Trustees, thus encroaching on the
Bankruptcy Court’s exclusive jurisdiction over Chapter XI
bankruptcy proceedings. In failing to adequately consider
the limited powers of a Trustee in bankruptcy, the major-
ity’s decision undermines Congress’s goal in enacting
Chapter XI of the Federal Bankruptcy Act, that of pre-
serving the viability of financially troubled business entities
whenever possible. See, Jn re Huntington, Ltd., 654 F. 2d
578 (9th Cir. 1981). The majority’s decision makes vir-
tually impossible the Trustee’s ‘thankless task of determi-
ning who should share the losses incurred by an unsuccess-
ful business and how the values of the estate should be
apportioned among creditors....’S. Rep. No. 95-989 (95th
Cong. 2nd Sess. 10 reprinted in 1978 U.S. Code Cong. &
Ad. News, 5787, 5796) and, furthermore violates Con-
gress’s purpose, expressed in the National Labor Relations
Act, of achieving industrial harmony and prosperity by
‘recognizing! the rights of all interested parties in labor
relations...being! scrupulously fair to each—the employer,
the employees, and the public.’ H.R. Rep. No. 245, 80th
Cong. Ist Sess. (1947) reprinted in 1 NLRB, Legislative
History of the Labor Management Relations Act, 1947 at
295.” (A 85-86).
From Judge Coffey’s dissent in the Court of Appeals.
This case is another case in which the National Labor
Relations Board displayed its indifference to or disregard of the
policies and requirements of Federal bankruptcy policies and
statutory requirements.' It is a case of first impression in
determining whether a Trustee in bankruptcy may be required
' In re Bildisco, 682 F. 2d 72, at 874 (3d Cir. 1982) cert. granted,
74 L. Ed. 992.
6
to bargain to agreement and pay ex-employees for work not
done as a priority claim unprovided for in the claim structure of
the Bankruptcy Code, Title 11 U.S.C. 501, 502, 507; it is a case
of first impression in the Board’s determination that the Trustee
is required to pay a minimum “back pay” to ex-employees
whose status as ex-employees is permanent. The case is similar
to NLRB v. Sure-Tan, Inc., 672 F. 2d 592, rehearing denied,
677 F. 2d 584 (7th Cir. 1982), on which this Court granted
certiorari, March 7, 1983, Docket No. 82.945, where the Board’s
disregard of the “tension between labor and immigration
policies.” 677 F. 2d 585, called forth an anguished dissent as
well as this Court’s grant of certiorari.
The majority in the Court of Appeals saw the case as one
where the bone of contention is whether or not a Trustee is
bound by the labor laws. The dissenter correctly saw the case
as one where the Trustee is bound by both the labor and
bankruptcy laws with the bankruptcy laws paramount as to the
expenditure of estate funds. The Court’s holding is counter to
the effect, if not the legal principle of Railway Labor Executives
Assn. v. Gibbons, 455 U.S. 457, 71 L. Ed. 2d 335, 102 S.Ct. 1169,
reh. den. 72 L. Ed. 2d 459, 102 S.Ct. 1997 (1981), where an
attempt to legislate compensation for ex-employees at the
expense of the bankrupt estate was held by the District Court to
violate the Fifth Amendment’s prohibition against taking of
property without compensation.
The case also presents a due process problem because of
the Court of Appeals disregard of the absence of pleading or
findings by the Board on the unfair labor practice which the
Court, not the Board, found the Trustee guilty of and for which
the Court approved a remedy. The Court absolved the Trustee
of guilt in the practices complained of in the Board’s complaint
and yet found, on its own hook, that the Trustee was guilty of a
failure to bargain in the aftermath of the Court approved
closure.
Ax
-
Finally, this Court has never passed on the Board’s so-
called Transmarine remedy.? An after-the-fact payment is not
“back pay” which the Board may require as a remedy for unfair
labor practices, but is hy design, a penalty for past failures.
Even as a penalty for failure to give adequate notice, the
remedy is suspect. Where the failure of the Trustee to give
notice is excused, as it was here, then no imbalance to redress
could exist and the penalty is simply a club to insure submission
to a Union’s demands, interdicted by this Court long ago in
Republic Steel Company v. NLRB, 3ll U.S. 7 (1940).
THE COURT AND THE BOARD HAVE DECIDED THAT,
IF THE TRUSTEE CANNOT SERVE TWO MASTERS,
THE ONE SERVED WILL BE THE LABOR BOARD
Deference to the policies of the Labor Management Rela-
tions Act and to the expertise of the National Labor Relations
Board should not also include a blindness to the policies of the
bankruptcy laws and to the rule of the courts and its officers
under those laws. What this case involves is the Board’s
determination that the Trustee must yield his duties under the
Bankruptcy Laws and bargain and grant to ex-employees the
$55,000 in funds which remain in the estate.
As emphasized in Judge Coffey’s dissent:
“To facilitate the goals of Chapter XI, Congress has vested
the bankruptcy court with exclusive jurisdiction over the
entire Chapter XI bankruptcy proceedings, and has dele-
2 After the Board decision in Transmarine Navigation Corp., \70
NLRB 389 (1968), as noted in the Court of Appeals decision in that
case, 380 F. 2d 933, an attempt was made to conceal from the union
information as to the closing there involved; a status quo ante remedy
appropriate to such duplicity is grossly inappropriate where the Board
found the Trustee did not know of the Union and, as found by the
Court, did nothing illegal in closing down the operation pursuant to
Court order.
8
gated extremely limited author'ty to the Trustee to admin-
ister the debtor’s estate. The Chapter XI Trustee, an
officer of the bankruptcy Court, derives his authority
exclusively from the Bankruptcy Act, and his power to act
independently of the bankruptcy court is extremely circum-
scribed.” (A 86)
To state that a liquidation trustee is also subject to the
labor law is also certainly true so far as it goes. But a
liquidating trustee’s function is to preserve the estate for the
benefit of creditors. He is not to play the role of Lady Bountiful
at the expense of creditors or for the benefit of anyone but those
creditors. His role is not to continue operations except as an aid
to liquidating the estate. Judge Coffey’s dissent accurately
portrays the Trustee as the central figure and the Bankruptcy
Code as the script in any scenario concerning the bankruptcy
estate after the closing of the plant. (A 93).
Judge Coffey suggests that an accomodation of the respec-
tive jurisdictions would be accomplished by obtaining a go
ahead from the bankruptcy court for the trustee to negotiate
with the unions. Such a go ahead would necessarily involve the
disclosure of the potential areas of bargaining and a determina-
tion as to the presence or absence of limitations on the scope of
the bargaining. (A 92).
Judge Coffey further stated:
“If the Bankruptcy Court refused to allow the Trustee
to bargain, or if the Trustee subsequently failed to bargain
in good faith, then, and only then, should the Union be
permitted to bring an unfair labor practice charge before
the NLRB. Undue encroachment by the NLRB in the
Bankruptcy Court’s exclusive jurisdictional sphere would
be avoided, or at least minimized, by affording the Bank-
ruptcy Court an opportunity to act within their proper
realm before instituting an unfair labor practice proceeding
with the NLRB. The course of action adopted by the
Union and the NLRB in this case, on the other hand, fails
to respect the authority of the Bankruptcy Court and the
9
severe limitations on a bankruptcy Trustee’s powers. In
sanctioning the Union’s actions, the majority’s decision will
inevitably lead to jurisdictional conflicts between two
separate federal tribunals, the Bankruptcy Court and the
NLRB.” (Emphasis by Judge Coffey) (A 92)
In the present case, it would appear that a proper limita-
tion limitation would insure that no assets of the estate would
be sacrificed at the expense of the creditors of the estate without
a real consideration. This case is about the $55,000 held in the
bankruptcy court. There is no right or duty of the Trustee to
deliver this into the Board’s hands. The conflict between the
Board’s demands and the trustee’s duty should be resolved in
the first instance in the Bankruptcy Court. Judge Coffey quoted
from In re Brada Miller Freight System, 702 F. 2d 890, 897
(11th Cir. 1983) as follows:
. “We do not contemplate that Congress intended the
ultimate fate of a corporation under Chapter XI to rest so
largely in the hands of the company’s protected employees.
There simply exist too many other critical interests, those
of other employees, creditors, and shareholders, the protec-
tion of which provides the stimulus for the bankruptcy
laws, for this Court to conclude that the collective bargai-
ning agreement was meant to hold a stranglehold position
we” (A 93)
Judge Coffey went on here:
“I dissent as I believe the majority’s decision foists an
unreasonable burden on business enterprises involved in
Chapter 11 bankruptcy proceedings. It is the height of
absurdity for the NLRB to exert a fatal chokehold on
Congress’s specific intent to allow mortally wounded busi-
nesses a chance to make a financial comeback at a time
when our basic industries are struggling to survive. Courts
not only have the obligation to interpret and apply the law,
but must also continue to be aware of economic reality
while showing fiscal responsibility in their decisions and
must not decide cases in an economic vacuum.” (A 93-94)
oa
a
&
or rr % ares oe ere
10
Il.
THE FUNDAMENTAL RIGHT TO NOTICE WAS VIO-
LATED BY THE COURT’S INDEPENDENT FINDING
OF AN UNFAIR LABOR PRACTICE NEITHER AL-
LEGED IN THE BOARD COMPLAINT NOR FOUND BY
THE BOARD
Due process in the context of the unfair labor practice case
is that required by statute and rule. The argument in the Court
of Appeals centered only on the unfair labor practice alleged
and found. On the petition for rehearing, the Trustee pointed
out, that he had been found by the Court to have committed an
unfair labor practice neither charged, found nor litigated. The
amended complaint pertinently states:
XI
“(a) On or about February 8, 1980, Respondents
terminated operations at its facility in Chicago, Illinois and
discharged its employees.
(b) Respondents engaged in the acts and conduct
described above in paragraph XI(a) without prior notice
to the Union and without having offered the Union an
opportunity to negotiate or bargain concerning the effect of
such conduct.”
XII
(a) By the acts and conduct described above in
Paragraph XI, and by each of said acts, Respondents both
individually and collectively as Respondents have failed
and refused, and are failing and refusing, to bargain
collectively with the representative of its employers, and
Respondents thereby have been engaging in unfair labor
practices affecting commerce within the meaning of Sec-
tions 8(a)(5) and (1) and 2(6) and (7) of the Act.” (A
6).
11
At the Board hearing, counsel for the Trustee conceded
that the Trustee had failed to give prior notice and an
opportunity to bargain prior to closing the plant pursuant to the
order of the Court. Counsel was advised by the Administrative
Law Judge that subsequent events “though perhaps it would
not negate the existence of an unfair labor practice previously,
might affect whether a remedy is appropriate.” On his petition
for rehearing in the Court of Appeals, the trustee emphasized
that the Court had found an unfair labor practice that the
Board had not found. The Board in its response to the Court
seriously misled the Court as to the Administrative Law Judge’s
findings.
The Board assured the Court that the Administrative Law
Judge “specifically found that ‘Yorke failed to bargain with the
Union about the shutdown’s effects on employees even after it
found out about the shutdown,**.” This quote is part of her
“analysis and conclusions,”’* but Board counsel failed to inform
the Court that the Administrative Law Judge in her conclusions
of law did not find this to be violative of the Act. Tracking the
allegations of the amended complaint, supra she concluded:
“10. On February 11, 1980, The Seeburg Corpo-
ration, Seeburg Service Parts, and Yorke terminated oper-
ations at the Chicago, Illinois, facility, and discharged the
emplo) °s at that facility, without prior notice to the Union
and wii ut having afforded the Union an opportunity to
negotiate and bargain concerning the effects of such con-
duct on unit employees.
11. By engaging in the conduct described in conclusion
of law 10, The Seeburg Corporation, Seeburg Service
Parts, and Yorke engaged in unfair labor practices within
3The Administrative Procedure Act, Title 5 U.S.C.A. § 554
requires that a party to a complaint be “timely informed” of the
matters of fact and law asserted; decisions of the administrative
agency, pursuant to § 557(c)(A), must include findings and con-
clusions of all material issues.
“She also “found” that bargaining did go on in August of 1980
(A 31) although it did not lead to anything.
12
the meaning of Section 8(a)(5) and (1) of the Act, which
unfair labor practices affect commerce within the meaning
of Section 2(6) and (7) of the Act.” (Emphasis supplied )
(A 35).
These were her findings and conclusions. She did not go
beyond the Amended Complaint. The Board in its Decision
simply echoed her in this respect:
“The Administrative Law Judge found, and we agree,
that Respondent violated Section 8(a)(5) and (1) of the
Act by terminating its operations at its Chicago, Illinois,
facility without prior notice to the Union and without
affording it an opportunity to bargain with Respondent
concerning the effects of such conduct on unit employees.”
(A 42).
The Court of Appeals refused to follow this finding as an unfair
labor practice. The Court, notwithstanding the record, has
found another and distinct failure to bargain in the “aftermath”
of the closing.
The Court had neither the duty nor the right to search the
record and determine whether or not the Trustee might have
been charged with other transgressions and might have been
found guilty if other charges had been made. As it stands, the
Trustee (and more importantly the creditors of the estate) is
being held responsible for matters with which he was not
charged and as to which the Board found no violation of the
Act.
The evidence in the record as to the circumstances under
which the Trustee acted was offered, not to dispute the unfair
labor practices charge which, as charged, was admitted but as
an ameliorative to any remedy. It is an anomaly that the
evidence, which includes evidence that the Trustee did bargain
is now used as a basis for a further finding that the Trustee did
not bargain and used as a justification for a penal remedy.
“(A) remedial order based on an erroneous finding of
unfair labor practices cannot stand” NLRB v. Downtown Bakery
Corp. 330 F. 2d 921, 928 ( 8th Cir. 1964).
13
The resultant effect of all this is set at naught the “due
process” requirement of the Administrative Procedures Act, 5
U.S.C.A. 554, 557(c)(A) and the Board’s own rules.
The Court’s action here creates a direct Conflict on the
holding in NLRB v. Blake Construction Co., Inc., 663 F. 2d 272
(D.C. Cir. 1981) that the procedural requirements of the
Administrative Procedures Act and, the Board’s own rules sét
the procedural “due process” standards as a matter of
“fundamentai fairness.”
Ill.
THE TRANSMARINE REMEDY, IN THE CIRCUM-
STANCES OF THIS CASE, IS EITHER PENAL OR AN
ATTEMPT TO FIX A CONTRACT TERM
In the original Transmarine decision, the Board professed
to be guided by the principle that the wrongdoer rather than
the victim should bear the consequences of unlawful conduct
and the remedy should be adopted to the situation that calls for
redress. Here, of course, there were no “victims” for the right
to terminate their employment without prior notice and
opportunity to bargain and in accordance with the Bankruptcy
Court’s order has been vindicated. The situation being “reme-
died” is a post closing situation where the Trustee has only
limited powers and not the power to pay “back pay” or even
“severance pay.” See Jn re Ad Service Engravings Co., 338 F.
2d 41 (6th Cir. 1967). Terms and conditions of employment,
the normal bargaining grist, closing, were a thing of the past.
Section 8(a)(5) of the Act requires an “employer” which
the Trustee was not, after the closing, to bargain collectively
with the representatives of his employees, subject to the provi-
sion of Section 9(a) of the Act. Section 9(a) describes the
representation as “for the purposes of collective bargaining in
respect to rates of pay, wages, hours, of employment or other
conditions of employment.” Unless “condition of employment”
14
is a phrase of infinite elasticity, it must snap at attempting to
encompass ex-employees of a closed, bankrupt company.
Against the contrast of the deceit in failing to notify the Union
in Transmarine, the Board here found the Trustee lacked
knowledge of the existence of the Union, yet in Procrustian
fashion adjusted the remedy to the present circumstances well
beyond the rationale for its creation. The absence of any
knavery here condemns the application of the remedy here as
“penal” under this Court’s holding in Republic Steel Company
v. NLRB, 31l U.S. 7 (1940).
The order superimposes on bargaining a “back pay”
requirement that has nothing at all to do with “back pay.” The
label is attached simply because 10 of the Act provides that the
Board may require “back pay” in its remedial orders; but
calling the payment “back pay” here is nonsense. Here the
Board orders payment measured by what could have been
earned with no relationship to reality. The order, particularly
in those aspects which pyramid the payment to the exhaustion
of the $55,000 with no incentives to hold short of that figure,
has the effect of dictating the terms of any putative agreement.
This the Board may not do. See NLRB v. American National
Insurance Co., 343 U.S. 395, 96 L. Ed. 1027, 72 S.Ct. 824
(1952).
wee
15
CONCLUSION
The words of Judge Wood, dissenting from the 7th
Circuit’s unwillingness to reconsider its decision in Sure-Tan,
supra., are apt to this case also.
“The NLRB seems to use only its private knothole to
view these issues and sees nothing except its own labor
goals. I think this Court instead of peering through the
NLRB’s knothole should look over the fence for a better
understanding of the whole problem.” 677 F. 2d 585.
The Seventh Circuit has been led into sharing the Board’s
distorted vision by less than clear sight of the necessities of due
process and the limitations on the Board’s remedial powers.
As Judge Coffey observed:
“As a case of first impression, this court’s decision will
have a direct impact on the resolution of future cases
pertaining to the scope of a Chapter XI bankruptcy
Trustee’s duty to bargain with the bankrupt corporation’s
unionized employees. Therefore, I believe it is essential for
this court to achieve an equitable balance between the
goals of revitalizing financially troubled corporations and
encouraging harmonious labor relations, a balance which
will not frustrate the financial recovery of corporations
involved in Chapter XI bankruptcy proceedings. I believe
the majority opinion in this case fails to achieve this
equitable balance, and rather takes a myopic and short-
sighted view of the critical interests involved in Chapter XI
bankruptcy proceedings.” (A 93)
For all the foregoing reasons, certiorari should be granted
with respect to each of the questions for which it is sought.
Respectfully submitted,
NARCISSE A. BROWN,
MaLcoLM M. GAaYNor
STEVEN M. BAZER,
SCHWARTZ, COOPER, KOLB
& GAYNOR CHARTERED,
33 North LaSalle Street
Suite 2222
Chicago, Illinois 60602
(312) 726-0845
Attorneys for Petitioner.
APPENDIX
INDEX TO APPENDIX
AMENDED COMPLAINT OF NATIONAL LA-
BOR RELATIONS BOARD ...........cccccssseseesseeeenees
PETITIONERS ANSWER. ........c.cccccsccccserccessscserseees
ADMINISTRATIVE LAW JUDGE DECISION
NEE Ay. 8 PUD yeoscninerchinssceinpisinsoninevescobbtoerccns
DECISION AND ORDER OF NATIONAL LA-
BOR RELATIONS BOARD OF DECEMBER
REIN sacinhesesiss tpncnbnabiatbincecticcsnbeibvesbieesitetnvesmnovtuncih
ORDER OF BANKRUPTCY COURT OF FEB-
EE Sas UD ivtirctssintiiisepeyscomsisetanbnetiaimonianatosense
ORDER AND DECISION OF BANKRUPTCY
SIE SIN GUE. Ey BPO ciccctscnccncescsesesenosezceves
DECISION OF JUDGE DECKER OF NOVEM-
Se ED bithvcscensshonseentiboumecnbentetsetanecdvonsdsvoncoes
ORDER OF 7th CIRCUIT COURT OF AP-
PARFAIT SUSEUES By BIOS cccncsaserecceccndpesdecovvececeeses
OPINION OF 7th CIRCUIT COURT OF AP-
PRALS OF JUNE 1, 1963 .....cccrcrccoseccescssssercosoreece
ORDER OF 7ih CIRCUIT COURT OF AP-
PEALS DENYING PETITION FOR RE-
FUPRRERE TGR BEES AD We rccscsccoresccqsccssiesingtsducstocsecece
STATUTES AND RULES INVOLVED.................
Al-All
Al2-Al6
A17-A40
A41-A50
A51
A52-A63
A64-A68
A69
A70-A94
A95-A96
A97-A108
la
UNITED STATES OF AMERICA
Before The National Labor Relations Board
Region 13
NATHAN YORKE, Trustee in Bank-
ruptcy, Successor in Bankruptcy or
Alter Ego to the SEEBURG COR-
PORATION AND SEEBURG
SERVICE PARTS CO., A Single
Employer
and Case 13-CA-19631
LOCAL UNION 743, WARE-
HOUSE, MAIL ORDER, TECH-
NICAL AND PROFESSIONAL
EMPLOYEES UNION, INTER-
NATIONAL BROTHERHOOD
OF TEAMSTERS, CHAUF-
FEURS, WAREHOUSEMEN
AND HELPERS OF AMERICA
AMENDED COMPLAINT AND NOTICE OF HEARING
It having been charged by Local Union 743, Warehouse,
Mail Order, Technical and Professional Employees Union,
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America (herein called the
Union) that Nathan Yorke, Trustee in Bankruptcy, (herein
called Respondent Yorke); The Seeburg Corporation (herein
called Respondent Seeburg) and Seeburg Service Parts Co.
(herein called Respondent Seeburg Service) (herein jointly
called Respondents), have engaged in, and are engaging in,
certain unfair labor practices affecting commerce as set forth
and defined in the National Labor Relations Act, as amended,
29 U.S.C., Sec. 151, et seg. (herein called the Act), and
2a
Complaint and Notice of Hearing having hereto issued on June
17, 1980 the General Counsel of the National Labor Relations
Board, on behalf of the National Labor Relations Board
(herein called the Board), by the undersigned Regional Direc-
tor for Region 13, pursuant to Section 10(b) of the Act and
Section 102.15 of the Board’s Rules and Regulations, Series 8,
as amended, hereby issues this Amended Complaint and Notice
of Hearing and alleges as follows:
(a) The Charge herein was filed by the Union on February
28, 1980, and was served on, Respondent Seeburg, Respondent
Yorke, by registered mail, on March 4, 1980.
(b) The first amended charge herein was filed by the
Union on June 6, 1980, and was served on, Respondent
Seeburg, Respondent Yorke, and Respondent Seeburg Service,
by registered mail, on June 12, 1980.
(c) The second amended charge herein was filed by the
Union on June 12, 1980, and was served on Respondents, by
registered mail, on June 16, 1980.
I}
(a) At all times material herein, until February 8, 1980,
Respondent Seeburg, a Delaware Corporation, with an office
and place of business in Chicago, Illinois, has been engaged in
the manufacture of jukeboxes and other machinery.
(b) During the past calendar year, a representative period,
Respondent Seeburg, in the course and conduct of its business
operation described above in paragraph II(c), sold and
shipped goods and materials valued in excess of $50,000
directly to points located outside the State of Illinois.
BA.
3a
(c) At all times material herein, Respondent Seeburg
Service, a Delaware Corporation, with an office and place of
business located in Chicago, Illinois, has been engaged in the
manufacture and/or distribution of parts.
(d) During the past calendar year, a representative period,
Respondent Seeburg Service, in the course and conduct of its
business operations described above in paragraph II(i), sold
and shipped goods and services valued in excess of $50,000
directly to points located outside the State of Illinois.
(e) During the past calendar year, a representative period,
Respondents, in the course and conduct of its business oper-
ations described above in paragraph II, collectively sold and
shipped goods and provided services valued in excess of
$50,000 directly to points located outside the State of Illinois.
(a) At all times material herein, Respondent Seeburg, and
Respondent Seeburg Service have been affiliated business
enterprises with common officers, ownership, directors, man-
agement, and supervisions; have formulated and administered
a common labor policy affecting employees of said operations;
have shared common premises and facilities; have provided
services for and made sales to each other; have interchanged
personnel with each other; and have held themselves out to the
public as a single integrated business enterprise.
(b) by virtue of its operations described above in para-
graph III(a), Respondents constitute a single integrated busi-
ness enterprise and single and/or joint employer within the
meaning of the Act.
4a
IV
(a) Since on or about February 4, 1980, and continuing to
date, Respondent Yorke has been duly designated trustee in
bankruptcy with full authority to continue operations and
exercise all powers necessary to the Administration of the
business of Respondent Seeburg and Respondent Seeburg
Service.
(b) by virtue of the events described above in paragraph
IV(a), Respondent Yorke is and has been at all times material
herein a successor in bankruptcy of Respondent Seeburg and
Respondent Seeburg Service.
(c) By virtue of the acts and conduct described above in
paragraph IV(a), Respondent Yorke and Respondent Seeburg
and Respondent Seeburg Service are, and have been at all
times material herein, alter egos within the meaning of the Act.
Vv
(a) Respondent Seeburg, Respondent Yorke, and Re-
spondent Seeburg Service each is now, and each has been at all
times material herein, an employer engaged in commerce
within the meaning of Section (2), (6) and (7) of the Act.
(b) Respondents collectively are now, and have been at all
times material herein, an employer engaged in commerce
within the meaning of Section (2), (6) and (7) of the Act.
VI
The Union is now and has been at all times material
herein, a labor organization within the meaning of Section 2( 5)
of the Act.
et
Sa
Vil
At all times material herein, the following named persons
occupied the positions set forth opposite their respective names,
and are now, and have been at all times material herein,
supervisors of Respondents within the meaning of Section
2(11) of the Act and agents of Respondents within the
meaning of Section 2( 13) of the Act:
Joseph Dillon — Chairman of the Board of
Respondent Seeburg
James Nardini — Vice President for Industrial
Relations of Respondent
Seeburg
Vill
The following employees of Respondents and/or Re-
spondent Yorke, alter ego or successor in bankruptcy to Re-
spondent Seebuig and Respondent Seeburg Service constitute a
union appropriate for the purposes of collective bargaining
within the meaning of Section 9(b) of the Act:
All plant clerical, and all production and maintenance
employees at the Chicago, Illinois Plant, excluding executive,
supervisory employees, timekeepers, foremen with power to
hire and fire or to effectively recommend such action, office
clerical employees, guards and professional employees as de-
fined in the Act.
IX
Since in or about 1967, and at all times material herein, the
Union has been the designated exclusive collective bargaining
representative of the employees in the unit described above in
paragraph VIII, and since said date the Union has been
recognized as such representative. Such recognition has been
6a
embodied in successive collective bargaining agreements, the
most recent of which is effective by its terms for the period
October 1, 1977 to September 29, 1980.
X
At all times since in or about 1967, the Union, by virtue of
Section 9(a) of the Act, has been, and is, the exclusive
representative of the employees in the unit described above in
paragraph VIII, for the purpose of collective bargaining with
respect to rates of pay, wages, hours of employment and other
terms and conditions of employment.
XI
(a) On or about February 8, 1980, Respondents termi-
nated operations at its facility in Chicago, Illinois and dis-
charged its employees.
(b) Respondents engaged in the acts and conduct de-
scribed above in paragraph XI(a) without prior notice to the
Union and without having afforded the Union an opportunity
to negotiate and bargain concerning the effect of said conduct.
XII
(a) By the acts and conduct described above in paragraph
XI, and by each of said acts, Respondents both individually
and collectively as Respondents have failed and refused, and
are failing and refusing, to bargain collectively with the repre-
sentative of its employees, and Respondents thereby have been
engaging in unfair labor practices affecting commerce within
the meaning of Sections 8(a)(5) and (1) and 2(6) and (7) of
the Act.
7a
PLEASE TAKE NOTICE that on the 17th day of Febru-
ary, 1981, at 11 a.m. in Room 881, 219 South Dearborn,
Everett McKinley Dirksen Building, Chicago, Illinois 60604, a
hearing will be conducted before a duly designated Adminis-
trative Law Judge of the National Labor Relations Board on
the allegations set forth in the above Complaint, at which time
and place you will have the right to appear in person, or
otherwise, and give testimony.
YOU ARE FURTHER NOTIFIED that, pursuant to
Sections 102.20 and 102.21 of the Board’s Rules and Regu-
lations, Series 8, as amended, the Respondent shall file with the
undersigned Regional Director, acting in this matter as an
agent of the National Labor Relations Board, an orginal and
four copies of an Answer to said Complaint within 10 days from
the service thereof, and that unless it does so, all of the
allegations in the Complaint shall be deemed to be admitted to
be true and may be so found by the Board. Immediately upon
the filing of its Answer, Respondent shall serve a copy thereof
on each of the other parties.
Form NLRB-4668, Statement of Standard Procedures in
Formal Hearings Held Before the National Labor Relations
Board in Unfair Labor Practice Cases, is attached.
DATED at Chicago, Illinois, this 28th day of November,
1980.
/s/ MARTIN H. SCHNEID
Martin H. Schneid,
Acting Regional Director
National Labor Relations Board
Region 13
Everett McKinley Dirksen Building
219 S. Dearborn Street, Room 881
Chicago, Illinois 60604
8a
(C Cases)
SUMMARY OF STANDARD PROCEDURES IN FORMAL
HEARINGS HELD BEFORE THE NATIONAL LABOR
RELATIONS BOARD IN UNFAIR LABOR PRACTICE
PROCEEDINGS PURSUANT TO SECTION 10 OF THE
NATIONAL LABOR RELATIONS ACT, AS AMENDED
The hearing will be conducted by an Administrative Law
Judge of the National Labor Relations Board who will preside
at the hearing as an independent, impartial trier of the facts and
the law whose decision in due time will be served on the parties.
The offices of the Administrative Law Judges are located in
Washington, D. C., and San Francisco, California.
At the date, hour, and place for which the hearing is set,
the Administrative Law Judge, upon the joint request of the
parties, will conduct a “prehearing” conference, prior to or
shortly after the opening of the hearing, to assure that the issues
are sharp and clearcut; or the Administrative Law Judge may
independently conduct such a conference. The Administrative
Law Judge will preside at such conference, but may, if the
occasion arises, permit the parties to engage in private dis-
cussions. The conference will not necessarily be recorded, but it
may well be that the labors of the conference will be evinced in
the ultimate record, for example, in the form of statements of
position, stipulations, and concessions. Except under unusual
circumstances, the Administrative Law Judge conducting the
prehearing conference will be the one who will conduct the
hearing; and it is expected that the formal hearing will com-
mence or be resumed immediately upon completion of the
prehearing conference. No prejudice will result to any party
unwilling to participate in or make stipulations or concessions
during any prehearing conference.
yr. |
9a
(This is not to be construed as preventing the parties from
meeting earlier for similar purposes. To the contrary, the parties
are encouraged to meet prior to the time set for hearing in an
effort to narrow the issues.)
Parties may be represented by an attorney or other repre-
sentative and present evidence relevant to the issues.
An official reporter will make the only official transcript of
the proceedings, and all citations in briefs and arguments must
refer to the official record. The Board will not certify any
transcript other than the official transcript for use in any court
litigation. Proposed corrections of the transcript should be
submitted, either by way of stipulation or motion, to the
Administrative Law Judge for approval.
All matter that is spoken in the hearing room while the
hearing is in session will be recorded by the official reporter
unless the Administrative Law Judge specifically directs off-the-
record discussion. In the event that any party wishes to make
off-the-record statements, a request to go off the record should
be directed to the Administrative Law Judge and not to the
official reporter.
Statements of reasons in support of motions and objections
should be specific and concise. The Administrative Law Judge
will allow an automatic exception to all adverse rulings and,
upon appropriate order, an objection and exception will be
permitted to stand to an entire line of questioning.
All exhibits offered in evidence shall be in duplicate.
Copies of exhibits should be supplied to the Administrative
Law Judge and other parties at the time the exhibits are offered
in evidence. If a copy of any exhibit is not available at the time
the original is received, it will be the responsibility of the party
offering such exhibit to submit the copy to the Administrative
Law Judge before the close of hearing. In the event such copy
is not submitted, and the filing thereof has not for good reason
10a
shown been waived by the Administrative Law Judge, any
ruling receiving the exhibit may be rescinded and the exhibit
rejected.
Any party shall be entitled, upon request, to a reasonable
period at the close of the hearing for oral argument, which shall
be included in the stenographic report of the hearing. In the
absence of a request, the Administrative Law Judge may ask for
oral argument if, at the close of the hearing, it is believed that
such argument would be beneficial to the understanding of the
contentions of the parties and the factual issues involved.
Any party shall be entitled, upon request made before the
close of the hearing, to file a bnef or proposed findings and
conclusions, or both, with the Administrative Law Judge who
will fix the time for such filing.
Attention of the parties is called to the following require-
ments laid down in Section 102.42 of the Board’s Rules and
Regulations, Series 8, as amended, with respect to the proce-
dure to be followed before the proceeding is transferred to the
Board:
No request for an extension of time within which to submit
briefs or proposed findings to the Administrative Law Judge
will be considered unless received by the Chief Administrative
Law Judge in Washington, D.C., (or, in cases under the San
Francisco, California, branch office of Administrative Law
Judges, the Deputy Chief Administrative Law Judge in charge of
such office) at least 3 days prior to the expiration of time fixed
for the submissiun of such documents. Notice of request for
such extension of time must be served simultaneously on all
other parties, and proof of such. service furnished to the Chief
Administrative Law Judge or Deputy Chief Administrative
Law Judge, as the case may be. All briefs or proposed findings
filed with the Administrative Law Judge must be submitted in
triplicate, and may be in typewritten, printed, or mimeographed
form, with service on the other parties.
lla
In due course the Administrative Law Judge will prepare
and file with the Board a decision in this proceeding, and will
cause a copy thereof to be served on each of the parties. Upon
filing of this decision, the Board will enter an order transferring
this case to itself, and will serve copies of that order, setting
forth the date of such transfer, on all parties. At that point, the
Administrative Law Judge’s official connection with the case
will cease.
The procedure to be followed before the Board from that
point forward, with respect to the filing of exceptions to the
Administrative Law Judge’s decision, the submission of
supporting briefs, requests for oral argument before the Board,
and related matters, is set forth in the Board’s Rules and
Regulations, particularly in Section 102.46 and following sec-
tions. A summary of the more pertinent of these provisions will
be served on the parties together with the order transferring the
case to the Board.
Adjustments or settlements consistent with the policies of
the Act reduce government expenditures and promote amity in
labor relations. If adjustment appears possible, the Adminis-
trative Law Judge may suggest discussions between the parties
or, upon request, will afford reasonable opportunity during the
hearing for such discussions.
12a
UNITED STATES OF AMERICA
Before the National Labor Relations Board
Region 13
NATHAN YORKE, Trustee in Bank-
ruptcy of THE SEEBURG COR-
PORATION, et al
and Case 13-CA-19631
LOCAL UNION 743, WARE-
HOUSE, MAIL ORDER, TECH-
NICAL AND PROFESSIONAL
EMPLOYEES UNION, INTER-
NATIONAL BROTHERHOOD
OF TEAMSTERS, CHAUF-
FEURS, WAREHOUSEMEN
AND HELPERS OF AMERICA
ANSWER TO AMENDED-COMPLAINT
Now comes The Seeburg Corporation (“Seeburg”) and
Nathan Yorke, Trustee in Bankruptcy of Seeburg (“*Yorke’’),
by their attorneys, and answer the Amended Complaint of the
National Labor Relations Board as follows:
(a)-(c). Said Respondents admit that the charge de-
scribed in Paragraph I(a), the first amended charge described
in Paragraph I(b), and the second amended charge described
in Paragraph I(c) were all filed by the Union and served upon
Respondent, Yorke, on or about the dates alleged in Paragraph
I. Said Respondents deny that the charge described in Para-
graph I(b) were served upon the Respondent, Seeburg. Said
l3a
Respondents admit that the second amended charge described
in Paragraph I(c) was served upon the Respondent, Seeburg.
Said Respondents affirmatively allege that no charge has been
| a cad Union at any time charging the Respondent,
eeburg.
IL
Said Respondents deny the allegations of Paragraphs
II(a), (b), (c), (d) and (e).
Ill
Said Respondents deny .each and every allegation of
Paragraphs III(a) and (b).
IV
Said Respondents admit that on February 4, 1980, Re-
spondent, Yorke, was appointed Trustee in Bankruptcy of The
Seeburg Corporation and deny each and every remaining
allegation in Paragraphs [V(a) through (c).
Vv
Said Respondents deny each and every allegation of
Paragraphs V(a) and (b).
VI
Said Respondents admit the allegations of Paragraph VI.
l4a
Vil
Said Respondents deny each and every allegation of
Paragraph VII.
Vill
Said Respondents deny each and every allegation of
Paragraph VIII.
IX
Said Respondents deny each and every allegation of
Paragraph IX.
X
Said Respondents deny each and every allegation of
Paragraph X.
XI
Said Respondents admit that on February 11, 1980, Yorke,
as Trustee in Bankruptcy for Seeburg in proceedings for
reorganization under Chapter 11 of the Bankruptcy Code, Case
No. 79 B 39597, and pursuant to an order of the United States
Bankruptcy Court entered as of that date, terminated all
personnel who were then employed by Seeburg with the
exception of certain key individuals who were retained for
services he deemed necessary in furtherance of the aforemen-
tioned reorganization proceeding. Said Respondents deny each
and every allegation contained in Paragraph XI(b).
XIl
Said Respondents deny each and every allegation of
Paragraph XII.
3
15a
WHEREFORE, The Seeburg Corporation and Nathan
Yorke, Trustee in Bankruptcy, pray for the entry of an order
dismissing the amended complaint of the National Labor
Relations Board.
THE SEEBURG
CORPORATION
By
One of its Attorneys
NATHAN YORKE
By:
One of his Attorneys
JOSEPH L. MATZ and NEIL P.
GANTZ TELLER, LEVITT &
@ SILVERTRUST, P.C.
One North LaSalle Street, Suite 1825
Chicago, Illinois 60602
312-782-3970
MALCOLM M. GAYNOR and
CHAD H. GETTLEMAN
SCHWARTZ, COOPER, KOLB &
GAYNOR CHARTERED
33 North LaSalle Street, Suite 2222
Chicago, Illinois 60602
312-726-0845
i
l6a
CERTIFICATE OF SERVICE
I, Chad H. Gettleman, hereby certify that on December 16,
1980, I filed and caused to be personally served the original and
four (4) copies of the foregoing Answer to Amended Com-
plaint upon Donald J. Crawford, Regional Director, National
Labor Relations Board, Everett McKinley Dirksen Building,
219 South Dearborn Street, Room 881, Chicago, Illinois 60604,
and further caused copies of the foregoing Answer to be
deposited in the United States Mail Chute at 33 North LaSalle
Street, Chicago, Illinois 60602, properly addressed, postage
prepaid, addressed to the following:
Local 743, Warehouse
Employees Local
300 South Ashland Boulevard
Chicago, Illinois 60607
Edwin H. Benn, Esq.
Asher, Goodstein, Pavalon, Gittler
& Segall, Ltd.
228 North LaSalle Street
Chicago, Illinois 60601
CHAD H. GETTLEMAN
Chad H. Gettleman
17a
JD-196-81
Chicago, IL
UNITED STATES OF AMERIC?
Before The National Labor Rei-i:ons Board
Division of Judges
NATHAN YORKE, TRUSTEE IN
BANKRUPTCY, SUCCESSOR IN
BANKRUPTCY, OR ALTER EGO
TO THE, SEEBURG CORPO-
RATION AND SEEBURG SER-
VICE PARTS CO., A SINGLE EM-
PLOYER
and
LOCAL UNION 743, WARE-
HOUSE, MAIL ORDER, TECHNI-
CAL AND PROFESSIONAL EM-
PLOYEES UNION, INTER-
NATIONAL BROTHERHOOD OF
TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELP-
ERS OF AMERICA
William G. Kocol, Esq., of Chicago,
IL, for the General Counsel.
Edwin H. Benn, Esq., of Chicago, IL,
for the Union.
Narcisse A. Brown, Esq., of Chicago,
IL, for Nathan Yorke, Trustee in
Bankruptcy, The Seeburg Corpo-
ration.
Neil Gantz, Esq., of Chicago, IL, for
The Seeburg Corporation.
DECISION
Case No. 13-CA-19631
Statement of the Case
NANCY M. SHERMAN, pee TT
proceeding was heard before me on February 17, 1981,
18a
pursuant to a charge filed on February 28, 1980, and amended
on June 6 and 12, 1980, and a complaint issued on June 17,
1980, and amended on November 28, 1980. The complaint
alleges that Respondent The Seeburg Corporation (“Seebyrg’’)
and Respondent Seeburg Service Parts Co. (“Seeburg Ser-
vice”) constitute a single integrated business enterprise and
single and/or joint employer within the meaning of the Nation-
al Labor Relations Act, as amended (“the Act”). The com-
plaint further alleges that since about February 4, 1980,
Respondent Nathan Yorke, who is admittedly trustee in bank-
ruptcy for Seeburg, has had authority to continue operations
and exercise all powers necessary to the administration of
Seeburg and Seeburg Service.
The complaint goes on to allege that Respondents violated
Section 8(a)(5) and (1) of the Act about February 8, 1980, by
terminating operations, and discharging employees, without
prior notice to Local Union 743, Warehouse, Mail Order,
Technical and Professional Employees Union, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America (“the Union”) and without having af-
forded the Union an opportunity to negotiate and bargain
concerning the effect of said condiict. An answer to the
complaint was filed by counsel for Seeburg and counsel for
Yorke, but not by Seeburg Service as such.
At the hearing, appearances were filed on behalf of Yorke
and Seeburg, but not on behalf of Seeburg Service as such. On
the basis of the entire record, including the demeanor of the
witnesses, and after due consideration of the briefs filed by
counsel for Yorke, counsel for the Union, and counsel for the
General Counsel (“the General Counsel”), I hereby make the
following:
19a
Findings of Fact
I. Jurisdiction; the Relationship between
Seeburg and Seeburg Service;
the Appropriate Unit
At all material times until February 8, 1980, Seeburg, a
Delaware corporation, has been engaged in the manufacture of
juke boxes and other machinery in Chicago, Illinois. During
the calendar year preceding November 28, 1980, a representa-
tive period, Seeburg sold and shipped goods and materials
valued in excess of $50,000 directly to points outside Illinois. At
all times material herein, Seeburg Service, a Delaware corpo-
ration, has been engaged in the manufacture and/or dis-
tribution of parts in Chicago, Illinois. During the calendar year
preceding November 28, 1980, a representative period, Seeburg
Service sold and shipped goods and services valued in excess of
$50,000 directly to points outside Illinois. During the calendar
year preceding November 28, 1980, a representative period,
Seeburg, Seeburg Service, and Yorke as trustee, in the course of
the business operations described above, collectively sold and
shipped goods and provided services valued in excess of
$50,000 directly to points located outside Illinois. I find that
Seeburg and Seeburg Service were at all material times each
engaged in commerce within the meaning of the Act; and that
Respondents collectively were at all material times engaged in
commerce within the meaning of the Act. Further, I find that
the Board’s jurisdictional standards are satisfied by the oper-
ations of Seeburg, of Seeburg Service, and of Respondents
collectively.
Seeburg and Seeburg Service are both owned by the same
entity; both operated at the same Chicago, Illinois facility; both
were run by the same management, both purchased goods and
services from the same customers; and both shipped their
products to the same customers. Seeburg Service kept an
inventory and filled orders on request for spare parts relating to
the finished product that Seeburg sold. All the employees on
20a
the Seeburg Service payroll had formerly been on the Seeburg
payroll. I find that Seeburg and Seeburg Service constitute a
single integrated business enterprise and single and/or joint
employer within the meaning of the Act. Sakrete of Northern
California, 137 NLRB 1220 (1962), 140 NLRB 765 (1963),
enfd. 332 F.2d 902 (C.A. 9, 1964), cert. den. 379 U.S. 961
(1965).
In November 1977, Seeburg and the Union entered into a
collective-bargaining agreement effective between October
1977 and September 1980, with respect to a unit of “all plant
clerical, and all production and maintenance employees of the
Company [The Seeburg Products Division of the Seeburg
Corporation of Delaware] at its Chicago, Illinois Plant” ex-
cluding “executive, supervisory employees, timekeepers, fore-
men with power to hire and fire or to effectively recommend
such action, office clerical employees, guards and professional
employees, as defined in the [ National Labor Relations Act],
as amended.” In October 1978, certain employees on Seeburg’s
payroll were transferred to Seeburg Service’s payroll. All of the
employees on Seeburg Service’s payroll about January 1980
had at one time worked for Seeburg. The terms of the 1977-
1980 collective-bargaining agreement were applied to the em-
ployees on the Seeburg Service payroll. Joseph P. Dillon,
Seeburg’s treasurer and the chairman of its board, testified that
the contract was so applied on a “voluntary basis.” However,
Dillon further testified that at least some Seeburg Service
employees were subject to the arrangement, set forth in the
contract, that on an employee’s written request, the employer
would deduct union dues from his wages and pay them to the
Union. Also, the contract contains a union-shop clause; and all
of Seeburg’s Service’s plant clerical, production, and mainte-
nance employees were union members. Sections 8(a)(3) and
302(c)(4) of the Act forbid an employer to pay to a union any
membership dues deducted from his employees’ wages, and to
require union membership as a condition of employment,
i £
zy
“ue es +
_~ me es
2la
without a collective-bargaining agreement calling for such
action. I conclude that the Seeburg-Union agreement covered
Seeburg Service’s employees. Accordingly, I find that at all
material times herein, the appropriate unit consisted of both
Seeburg’s and Seeburg Service’s employees with the job
classifications described in the collective-bargaining agreement.
On February 4, 1980, Yorke was appointed by the United
States Bankruptcy court to act as Seeburg’s trustee in bank-
ruptcy. As shown infra, a few days later he closed down the
operations of both Seeburg and Seeburg Service. At the
hearing before me, Seeburg’s attorney, Neil P. Gantz, stated
without disagreement from any party that in preparing the
schedules in the Bankruptcy Court, he had considered Seeburg
Service’s assets to be Seeburg assets, “and as it turned out, we
agreed later on that [Seeburg Service’s assets] were, in fact,
part of the assets of the Seeburg Corporation.”' Gantz further
stated, in effect, that parts received from Seeburg Service by
various distributors after the filing of Seeburg’s petition for
reorganization were received by them pursuant to petitions filed
with and ruled on by the Bankruptcy Court. I find that Yorke
was the trustee in bankruptcy for both Seeburg and Seeburg
Parts. I find that at all material times after February 4, 1980,
Yorke has been an employer within the meaning of the Act,
and (for reasons stated infra Part II E) an alter ego of Seeburg
and Seeburg Parts.
1 Gantz stated that he had believed until late 1979 or January
1980 that Seeburg Service was a subsidiary of Seeburg rather than, as
it in fact was, a subsidiary of the same corporation which owned
Seeburg. When the real corporate relationship was ascertained,
separate bank accounts and payrolls were established. The Seeburg
Service accounts were controlled by Seeburg treasurer Dillon. The
record fails to show what other role, if any, he played in managing
Seeburg Service.
22a
II. The Alleged Unfair Labor Practices
A. Background
Before mid-July 1979, Seeburg and Seeburg Service had
an active payroll of about 385 or 395 employees. The
traditional vacation period was in late July or early August.
However, because in 1979 Seeburg had financial or cash-flow
problems, the vacation period that year began in Mid-July; and
(although the vacation period proper ended in mid-August),
nobody was called back to work until mid-September. Also, at
that time only about 250 unit employees were recalled.
On October 19, 1979, Seeburg filed a petition for reorgan-
ization under Chapter 11 of the Bankruptcy Act. At about this
time, further layoffs were effected, and the complement was
reduced to about 150 unit employees. About early January
1980, the complement was again reduced to no more than 60
employees, mostly on Seeburg’s payroll. By February 4, 1980,
only about 7 unit employees were still actively working. Be-
tween October 19, 1970, and February 8, 1980, when except for
the last 4 days Seeburg was a debtor in possession, Seeburg lost
about $350,000.
The foregoing recalls and (inferentially) layoffs were
effected in accordance with the seniority provisions of the
collective-bargaining agreement. The Union never requested
bargaining about the matter of the layoffs effected before
February 4, 1980.
B. The Appointment of Trustee Yorke;
The Shutdown of Operations
On February 4, 1980, the Bankruptcy Court appointed
Yorke to act as trustee in bankruptcy for Seeburg. Yorke
testified that his duties as trustee were to investigate Seeburg’s
financial condition and determine whether Seeburg had oper-
ated at a profit while it was a debtor in possession, to evaluate
Seeburg’s assets, and to attempt to file a plan of reorganization
23a
on which creditors could vote. He further testified that he
assumed that when he was appointed on February 4, he had
full authority to operate Seeburg.
On February 4, 1980, at about 2 p.m., Yorke paid his first
visit to the plant being used by Seeburg and Seeburg Parts. He
was accompanied by attorney Malcolm Gaynor, who represent-
ed the creditors’ committee, and a man named Greenhouse,
who represented Seeburg. During this visit, Yorke saw only the
first-floor production area, where the lights were turned off and
nobody was present, and the office, where he saw only Dillon
and a bookkeeper. However, as of that date, about 7 unit
employees were still on the payroll.
At the first creditors’ meeting on February 8, 1980, Dillon
told them and Yorke under oath that Seeburg had lost about
$350,000 since it filed its October 19 petition, it had about
$5,000 in the bank, and it owed Seeburg’s employees (unit and
nonunit) more than $5,000 in wages.? Dillon further stated that
Seeburg was on a secured lending basis with the Chase
Manhattan Bank, all of Seeburg’s receivables and inventory
were pledged to Chase in return for periodic loans to Seeburg,
and Chase had joined with other creditors in the petition to
appoint a trustee. As of that date, Seeburg’s liabilities exceeded
$8 million and the book value of its assets approximated $6
million; when liquidated, its assets amounted to about $1.5
million.
Yorke testified that as trustee, he had the power to
continue the business in operation without the approval! of the
Bankruptcy Court. He further testified that he sought an order
to shut it down. On an undisclosed date between the close of
the creditors’ meeting on Friday, February 8, and the issuance
of an order of the Bankruptcy Court on Monday, February 11,
2 They had been paid through February 2, 1980, but not for work
performed thereafter. Dillon had control of a separate fund sufficient
to meet the payroll of Seeburg Service (see supra fn. 1).
af ae
24a
Yorke filed a motion, which is not in the record before me, with
that Court. On February 11, 1980, the Bankruptcy Court issued
an “Order Authorizing Trustee to Curtail Operations of the
Debtor,” which stated, in part:
THIS CAUSE coming on to be heard on the application of
Nathan Yorke, trustee in bankruptcy, for authority to curtail
the debtor’s operations; due written notice having been given to
all parties entitled thereto and the court being fully advised in
the premises, it appearing that continued operations of the
debtor in a manner similar to that which has been followed
since the initiation of these proceedings, would be unprofitable
and counter-productive to the instant reorganization proceed-
ing;
IT IS ORDERED that Nathan Yorke, trustee in bank-
ruptcy, be and he hereby is, authorized to curtail the debtor’s
operations by:
(a) Terminating all personnel save certain key indi-
viduals who will be retained for services the trustee deems
necessary in furtherance of the instant reorganization; ...
C. The Shutdown without Notice
to the Union
Yorke received this Order the day it was issued, February
11. That same day, he shut down the plant facility being used
by both Seeburg and Seeburg Service, and released all the
personnel, including about 7 unit employees. Yorke did not,
before taking this action, give any notice to the Union that such
action was contemplated.? He credibly testified that when he
took this action, he did not know that a union represented
Seeburg’s employees; “the only one I spoke to was Mr. Dillon,
and he didn’t advise me of it.”
3One of the laid-off employees was the union steward. No
contention is made that whatever notice he received of his own layoff
constituted legally adequate notice to the Union that the operation
had been shut down.
25a
D. Events after the February 11, 1980 Shutdown
1. The February 1980 correspondence
between the Union and Yorke
On February 15, 1980, union attorney Edwin H. Benn sent
virtually identical letters to Yorke and to Seeburg which read in
part as follows:
The undersigned represents Local 743, 1.B.T. The
Union has a collective bargaining agreement covering the
employees of Seeburg Corporation....
...It has also come to our attention that the remaining
employees of Seeburg Corp. have been locked out as of
February 11, 1980.
This is also to demand that an immediate meeting be set
up so that we can discuss the decision and effects that your
action has on our bargaining unit employees.
The letters went on to inquire the identity of the share-
holders of Seeburg, X Cor International, Inc., and Choice Vend,
Inc., and asked a number of other questions whose answers
would tend to show whether these three corporations were
interrelated in a manner which might impose duties on X Cor
and/or Choice Vend with respect to employees on Seeburg’s
payroll.4 Further, the letters asked for the names and addresses
4The June 1980 initial complaint herein alleged, inter alia, that
“Respondent X Cor, Respondent Seeburg, Respondent Choice
/Vend/, Respondent Yorke, ... Respondent Seeburg Service” and
other corporations were a single employer, a joint employer, or alter
egos, and that Yorke was a successor in bankruptcy to Seeburg and/or
the other corporations. The June !980 complaint also included
allegations that ail the respondents named therein had violated
Section 8(a)(5) and (1) when Choice Vend transferred unit work to
Windsor Locks, Connecticut, from the Chicago plant involved herein,
and discharged Chicago employees, without prior notice to the Union
and without affording the Union an opportunity to negotiate regard-
ing the decision to transfer and its effects. Prior to the hearing before
me, the case was apparently settled with respect to X Cor, Choice
Vend, and the other corporations named in the June 1980 complaint
but not in the November 1980 complaint before me.
26a
of any prospective purchasers of Seeburg. The letters con-
cluded:
Please be advised that we expect our collective bargaining
agreement to be abided by and we expect a response to this
letter by close of business February 22, 1980. Failure to answer
this letter by the time indicated will necessitate the institution of
the proper proceeding.
Seeburg as such never answered this letter. Yorke’s reply
is dated February 25, 1980, and reads in its entirety:
I am in receipt of your letter dated February 15, 1980.
Please be advised that the undersigned was appointed Trustee
on February 4, 1980. Be further advised that the Trustee
discontinued the operation of the business and has no employ-
ees.
In reply to your questions, Excor [sic] is a publicly owned
company. Consolidated Entertainment owns all the stock of the
Seeburg Corporation. I do not know who owns Choice Vend. I
do not know if Choice Vend or Excor have any collective
bargaining agreements with labor organizations.
If there is any further information you desire, I will be
happy to furnish same.
Benn filed the initial charges herein on February 28, 1980,
and made no further attempt to get in touch with Yorke.
Meanwhile, on February 19, Yorke received about $6,000,
apparently constituting all of Seeburg’s cash on hand, which
monies, pursuant to an order of the Bankruptcy Court, he used
on February 25 to pay the Seeburg employees’ wages for
periods through Saturday, February 9, 2 days before the
terminations.
27a
2. Arrangements made between the Union and
Yorke to recall a few employees
Thereafter, the Bankruptcy’ Court authorized Yorke to
offer some parts for sale. During an early April 1980 confer-
ence initiated by Yorke and Dillon, they discussed with union
representative Harry Peters a plan to recall two or three unit
employees to assist in the sale of the parts. Later, Peters
telephoned Yorke that Peters would commit York and Dillon
to recall certain individuals, and they were in fact recalled.
Yorke and/or Dillon asked Peters for a letter authorizing this
recall, and he sent that letter.
3. Yorke’s efforts to reject the
bargaining agreement
On an undisclosed date after February 15, Yorke filed with
the Bankruptcy Court an application to reject the collective-
bargaining agreement. This application was opposed by both
the Union and the Board, and was subsequently withdrawn.
However, the contract was eventually rejected under the specif-
ic terms of the plan of arrangement eventually approved by the
Bankruptcy Court on July 28, 1980.
4. The July 22, 1980, settlement meeting
After the issuance of the original complaint herein, Gay-
nor, the attorney for the creditors’ committee, telephoned union
attorney Benn and requested a meeting. Benn told Gaynor that
“we could discuss the charges, the complaint, and hopefully
settlement.” During this meeting, which was held on July 22,
1980, Gaynor made an unsuccessful effort to induce the Union
to withdraw its unfair labor practice charges. At the hearing
and in posthearing briefs, the General Counsel and union
counsel requested me to disregard the evidence about what was
5 The record fails to show whether these parts were owned by
Seeburg or by Seeburg Parts. See supra Part I.
~
28a
said during this July 22 meeting, on the ground that it
constituted “compromise negotiations” within the meaning of
Rule 408 of the Federal Rules of Evidence. I conclude that
their position in this respect is well taken.®
5. Bankruptcy Court proceedings
On July 28, 1980, the Bankruptcy Court ruled that the
backpay claimed by the Board as due in the instant proceedings
was an administrative expense entitled to priority order under
Section 507(a)(1) of the Bankruptcy Code. Seeburg Corp. v.
N.L.R.B., 105 LRRM 3050, 5 B.R. 364.7 As of that date, the
Board had modified its proof of claim so as to total $55,000.
Also on July 28, the Bankruptcy Court approved a reorganiza-
tion plan under which Seeburg and its purchaser in liquidation,
Stern Electronics, Inc., agreed to set aside $49,000 of the
estate’s assets should a finding of backpay liability ultimately be
made. Stern Electronics agreed to commit to cover the
remaining $6,000 of the potential liability. Seeburg, supra, 105
LRRM at 3356.
6 Rule 408 is applicable to compromise offers made by a party to
the litigation to a nonparty. 2 Weinstein’s Evidence para. 408/01/,
p. 408-13 (1980). Accordingly, I need not and do not consider
whether Yorke’s status as a party hereto rendered the creditors’
committee a party also. Yorke Exhibit 1, a July 23, 1980, letter from
Benn to Gaynor purporting to summarize the July 22 meeting, was
offered by the General Counsel, and received in evidence, solely for
the purpose of showing that the July 22 meeting was a settlement
discussion.
7 The Court also granted the request of Seeburg, Yorke, and the
creditors’ committee for an order enjoining the Board from processing
the instant unfair labor practice case, which the Court said would be
disposed of by the Court itself. On November 13, 1980, the United
States District Court for the Northern District of Illinois vacated the
Bankruptcy Judge’s order, and directed him to refrain from hearing
the unfair labor practice charges. 105 LRRM 3355.
29a
The July 25, 1980, hearing on confirmation before the
Bankruptcy Court was attended by, inter alia, attorney William
G. Kocol on behalf of the NLRB, Benn on the Union’s behalf,
Gaynor on behalf of the creditors’ committee, attorney Joseph
Matz on Seeburg’s behalf, and Yorke. Matz stated on the
record that following the Bankruptcy Court’s order confirming
the plan of arrangement, there would be a closing as provided
for in the contract, and Seeburg’s assets would be transferred in
due course to Stern. Matz went on to say that as of that
moment there would be no more need for Yorke to maintain
any operation whatsoever, that he would be terminating the
remaining employees, and that he had told Matz that three of
these employees were union employees. Gaynor said that if the
Union wanted Yorke to bargain with respect to the effect of
what he was doing pursuant to the plan and in the order of
confirmation, “he is here and we would be glad to do such
bargaining in open court. ... I think we should do this first.”
The Bankruptcy Judge said that he would not attend bargain-
ing, but his courtroom could be used for that purpose. Benn
said that the Union would be more than happy to sit down with
Yorke immediately, but might be unable to do so that day
because the Union’s bargaining representative, business agent
Peters, was not there. Gaynor said that he wanted a steno-
graphic record of the bargaining. Benn said that“... the Labor
Board has held repeatedly that is unlawful [cf. infra fn. 10]. It
takes away from the give and take of what happens at the
bargaining table ... I am happy [Gaynor] recognizes his right
as of this point to let the bargainers do whatever they want to
do.” Gaynor said that there should be a stenographic record;
“There is no give and take because there is nothing that Mr.
Yorke has to give.” The Bankruptcy Judge said, ““Mr. Gaynor,
we have the record here. You have made it very clear. This
stenographic reporter is available. You have made your offer to
negotiate, counsel has responded.”
6. The late August discussions
By letter to Yorke dated July 31, 1980, union attorney
Benn demanded that negotiations commence immediately
30a
“concerning the effects of the final phase out of the Seeburg
operation which was accomplished July 28, 1980.” In con-
sequence of this letter, a late August 1980 meeting was held
between Seeburg attorney Gantz, creditors’ committee at-
torneys Gaynor and Gettleman, union attorney Benn, union
representative Peters, and Yorke. Benn asked how many
employees had been on the Seeburg payroll as of February
1980. Gantz said seven. Benn asked for their names, wage
rates, and classifications, and Gantz said he would get that
information for Benn. There is no claim that Gantz failed to do
so. Benn said that 300 or 400 people had been on layoff status
when Seeburg filed its October 1979 petition, and asked
whether Yorke could obtain jobs for them with Stern Elec-
tronics, the purchaser in liquidation. Yorke replied that he had
no control over Stern. He said that letters of reference would be
furnished to these employees, but no such letters were ever
furnished. Benn asked if payments to the pension plan were
current. He was told that they were, and accepted this
representation. Benn asked whether payments had been made
to the hospitalization insurance carrier. Gantz said that a claim
for the premiums had been filed by the carrier, there was going
to be no objection, the Bankruptcy Court was going to allow it,
and employees would thereby obtain coverage for that period
of time.
Benn said that he would like to discuss severance pay.
Gaynor and Yorke told him to show some authority where
Yorke could give severance pay. Benn said that the Bankruptcy
Court had set aside $55,000 and had determined that it would
“come off the top” as a cost of administration; that the Labor
Board settlement, if agreed to, would amount to $7,000 or
$8,000; and that the remainder could be distributed among the
400 employees (aside from the 7 retained on the payroll) as
severance pay. Gaynor and Yorke said that they did not know
under what section of the Bankruptcy Act Yorke would be able
to make such a distribution, that these 300 or 400 employees
whose jobs had been terminated in October 1979 had filed no
3la
claims in the bankruptcy proceedings, and that the time had
expired for them to file such claims. Benn said that he was not
talking about the bankruptcy code, that he was talking about
obligations under the National Labor Relations Act and the
duty to bargain about effects. Yorke said that he did not
operate under the labor laws, he operated under the Bank-
ruptcy Act.
Gaynor said that as to the Labor Board case, the Govern-
ment had a “bullshit case,” and that Benn and NLRB attorney
Kccol had conspired to file a fraudulent claim. Benn suggested
that Gaynor tell this to the Bankruptcy Court judge. Benn said
that he had heard from Kocol that there were discussions
concerning settlement of the Labor Board case. Gaynor said
that he would not settle the Labor Board case. Benn said that
someone should tell that to Kocol, because Benn felt that Kocol
was “being led down the path.” Gaynor replied, “.. . they only
listened to the Labor Board’s offer, they were not going to settle
it.” Gaynor then asked Benn whether “we had bargained.”
Benn replied, “I suppose that remains to be seen at a later
date.” Nobody suggested a future meeting.®
8 My findings as to what was said during this late August meeting
are based mostly on the testimony of union attorney Benn, who was
called as a witness by Respondent Yorke. I perceive no basis in
Benn’s credible testimony for his statement, at the end of his direct
testimony, that “the entire meeting was settlement.” A finding that at
least part of this meeting constituted a settlement discussion would be
warranted were I to credit Yorke’s testimony that Gaynor said “he
wouldn't suggest settling with the National Labor Relations Board
unless the Union was a party to it... because that would leave the ©
Union as an open end to the agreement.” However, such testimony is
inconsistent with Benn’s credible testimony regarding Gaynor’s ex-
pressed position, Yorke’s counsel makes no contention that Benn’s
testimony varied from his contemporaneous notes (which he supplied
to Yorke’s counsel), and Yorke’s testimony as a whole shows that he
had a poor memory. Accordingly, I do not accept the testimony of
Yorke summarized in this footnote. Hence, I perceive no credible
factual predicate for Benn’s contention, not renewed in his brief, that
evidence as to the late August meeting is inadmissible under Rule 408
of the FRE as “statements made in compromise negotiations.”
32a
E. Analysis and Conclusions
When an employer decides to terminate or close its entire
operation it must, once that decision is made, afford the
employees’ collective-bargaining representative the opportunity
to bargain over the impact and effect of that decision on unit
employees. Burgmeyer Bros., Inc., 254 NLRB No. 126 (1981);
Summit Tooling Co., 195 NLRB 479 (1972), enfd. 474 F.2d
1352, 83 LRRM 2044, 2047 (C.A. 7, 1973). This duty is not
relieved by the employer’s bankruptcy, and any consequent belief
by it that it would be financially unable to meet any of the union’s
bargaining demands. Burgmeyer, supra. A trustee in bank-
ruptcy is the alter ego of the bankrupt employer, and, like that
employer, is under a duty to comply with the National Labor
Relations Act, including the requirement to engage in collective
bargaining. Jersey Juniors, Inc., 230 NLRB 329, 331-332
(1977); Burgmeyer, supra.
Immediately after the General Counsel and the Union had
rested, counsel for Respondent Yorke admitted the truth of the
complaint allegation that about February 8, 1980, Respondents
terminated operations, and discharged the employees, without
prior notice to the Union and without having afforded the
Union an opportunity to negotiate regarding the effect of such
conduct. Moreover, the record as a whole establishes that on
February 11, 1980, Respondents in fact did this. The foregoing
establishes, at least prima facie, that Respondents thereby
violated Section 8(a)(5) and (1) of the Act.
Respondent Yorke defends his own failure to give the
Union such notice on the ground that when he shut down the
plant, he did not know that the employees had a collective-
bargaining representative. Because Seeburg and Seeburg Parts
obviously did know, I doubt the legal sufficiency of Yorke’s
defense in this respect. See N.L.R.B. v. E.D.S. Service Co., 466
F.2d 157 (C.A. 9, 1972); Jersey Juniors, supra, 230 NLRB at
331-332; N.L.R.B. v. Albuquerque Phoenix Express, 368 F.2d
451, 452-453 (C.A. 10, 1966).
33a
In any event, Yorke failed to bargain with the Union about
the shutdown’s effect on employees even after it found out about
the shutdown and made a written “demand that an immediate
meeting be set up so that we can discuss the. . . effects that your
action has on our bargaining unit employees.” Yorke’s written
response did not refer to the request for a meeting, but merely
said that he had discontinued the operation of the business and
had no employees, gave some of the information requested by
the Union regarding corporations allegedly related to Seeburg,
and said that he would be happy to furnish further informa-
tion. Furthermore, during the July 25, 1980, Bankruptcy
Court session, Yorke remained silent when the attorney for the
creditors’ committee stated that there could be no give and take
in bargaining because Yorke had nothing to give, and when
Gaynor adhered to his insistence on a stenographic transcript of
any bargaining sessions, notwithstanding Benn’s statement that
the Union would exercise its right to commence negotiations
without a stenographer.'° Indeed, at the hearing before me,
Yorke attributed to himself some of the remarks which the
Bankruptcy Court transcript shows were in fact made by
Gaynor. Finally, when in August 1980 the Union asked Yorke
to discuss severance pay, Yorke said that he had no authority
under the Bankruptcy Act to make such payments and that he
operated under that Act and not the labor laws. Indeed, Yorke
® Yorke’s counsel stated at the outset of the hearing that the
Union’s letter included a request that Yorke “bargain about the
effects of” the closing. I agree, and do not accept counsel’s contention,
on page 4 of his post-hearing brief, that this letter was “ambiguous.”
See Hankamer Ready Mix Concrete Co., 234 NLRB 608, 615 (1978);
Richmond, Division of Pak-Well, 206 NLRB 260, 261 (1973).
Moreover, I find that Yorke’s failure to answer that portion of the
letter constituted a refusal to bargain. First National Maintenance
Corp. 242 NLRB No. 72, fn. | (1979), enfd. 627 F.2d 596 (C.A. 2,
1980), cert. granted, Jan. 12, 1981; Summersville Industrial Equip-
ment Co., Division of Marathon Coal Bit Co., 197 NLRB 731, 735
(1972).
10 Bartlett-Collins Co., 237 NLRB 770 (1978), enfd. 106 LRRM
2272 (C.A. 10, 1981).
34a
did not even keep the promise which he gave during that
meeting, after he was asked about obtaining jobs for the
employees with Stern, to furnish the employees with letters of
reference.
Conclusions of Law
1. At all material times until February 8, 1980, The
Seeburg Corporation was engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
2. At all material times herein, Seeburg Service Parts
Corporation was engaged in commerce within the meaning of
Section 2(6) and (7) of the Act.
3. At all material times herein, The Seeburg Corporation,
Seeburg Service Parts Corporation, and Nathan Yorke, Trustee
in Bankruptcy, collectively, were engaged in commerce within
the meaning of Section 2(6) and (7) of the Act.
4. At all material times herein, The Seeburg Corporation
and Seeburg Service Parts Corporation have constituted a
single integrated business enterprise and single and/or joint
employer within the meaning of the Act.
5. At all material times on and after February 4, ‘1980,
Yorke has been the trustee in bankruptcy for The Seeburg
Corporation and Seeburg Service Parts Corporation, and an
employer within the meaning of Section 2(1) and (2) of the
Act.
6. At all material times on and after February 4, 1980,
Yorke has occupied alter ego status with respect to The Seeburg
Corporation and Seeburg Parts Corporation.
7. The following employees of The Seeburg Corporation,
Seeburg Service Parts Corporation, and/or Yorke, constitute a
unit appropriate for the purposes of collective bargaining within
the meaning of Section 9(b) of the Act: All plant clerical, and
all production and maintenance employees at the Chicago,
Illinois plant, excluding executive, supervisory employees, time-
keepers, foremen with power to hire and fire or to effectively
recommend such action, office clerical employees, guards and
professional employees as defined in the Act.
35a
8. The Union is a labor organization within the meaning
of Section 2(5) of the Act.
9. By virtue of Section 9(a) of the Act, the Union has been
at all material times and still is the exclusive representative of
the unit described in conclusion of law 7.
10. On February 11, 1980, The Seeburg Corporation,
Seeburg Service Parts, and Yorke terminated operations at the
Chicago, Illinois, facility, and discharged the employees at that
facility, without prior notice to the Union and without having
afforded the Union an opportunity to negotiate and bargain
concerning the effects of such conduct on unit employees.
11. By engaging in the conduct described in conclusion of
law 10, The Seeburg Corporation, Seeburg Service Parts, and
Yorke engaged in unfair labor practices within the meaning of
Section 8(a)(5) and (1) of the Act, which unfair labor
practices affect commerce within the meaning of Section 2(6)
and (7) of the Act.
The Remedy
Having found that Respondents have violated the Act in
certain respects, I shall recommend that Respondents be re-
quired to cease and desist therefrom. Affirmatively, Respond-
ents will be required to bargain with the Union, on request, with
respect to\the effects on employees of the decision to terminate
operations, and to mail appropriate notices.
I agree with Respondent that under National Terminal
Baking Corp., a Subsidiary of Kosher Kitchens, 190 NLRB 465
(1971), mo backpay order should issue here. Although it is
unclear just when Yorke reached his decision to ask the
Bankruptcy Court for permission to shut down the plant, 97
percent of the unit employees had been laid off before he
became trustee, Seeburg had lost $350,000 during the 4 months
before he became trustee, and Yorke had been trustee for only
a week before receiving and acting on permission to shut down
36a
the plant. Under these circumstances, as in National Terminal,
Respondents’ failure to bargain about effects did not occur at a
time when the Union was in a position of economic strength.
The backpay orders in the cases cited by the General Counsel
and the Union constituted efforts to assure meaningful bargain-
ing by restoring such strength in situations where, if the
employer had timely complied with his duty to bargain about
effects, the union could have imposed some economic pressure
to compel the employer to accede to the union’s demands."'
The Union requests an order affording it “bargaining
expenses, attorneys’ fees and other costs” on the ground that
because “the Respondent [sic] has admittedly stated that it
purposely refused to acknowledge its obligations under the Act,
it is apparent that the defenses raised are patently frivolous.” In
further support of this contention, the Union alleges that the
unfair labor practices in this case are “flagrant” and that it was
“required to participate” in “many forays. . . in Respondent’s
[sic] actions in the bankruptcy court seeking injunctive relief
against the Board proceedings.” To the extent that the Union is
requesting its costs in the proceedings before the Bankruptcy
Court and the District Court, the Union’s request should be
directed to those Courts and not to me. Further, Board precedent
points to the denial of “costs” in connection with the instant
litigation before the agency itself, because a major issue in this
case is whether a backpay order should issue and, if so, to whom;
and as to this issue, I have found Yorke’s position not only
nonfrivolous, but warranted. See Heck’s, Inc., 215 NLRB 765
(1974); Wellman Industries, Inc., 248 NLRB 325 (1980).
Indeed, I note that although the General Counsel and the Union
'! Burgmeyer, supra; First National Maintenance, supra, 242
NLRB No. 72; Thompson Transport Co., 184 NLRB 38 (1970);
Transmarine Navigation Corp., 170 NLRB 389 (1968). See also
Drapery Manufacturing Co., Inc., 170 NLRB 1706 ( 1968), enfd. 425
F.2d 1026 (C.A. 8, 1970), where there was a possibility that the
employees who lost their jobs could have been absorbed into one of
the employer’s other overations.
37a
both seek a backpay order, they disagree between themselves as to
whether the beneficiaries should include the employees on layoff
before the shutdown.
Upon the entire record, and pursuant to Section 10(c) of
the Act, I hereby issue the following recommended Order: '2
ORDER
Respondents Nathan Yorke, Trustee in Bankruptcy; The
Seeburg Corporation; Seeburg Service Parts Corporation; their
officers, agents, successors, and assigns, shall:
1. Cease and desist from failing to bargain with Local
Union 743, Warehouse, Mail Order, Technical and Professional
Employees Union, International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, about the
effect, on employees in the following unit, of the decision to
terminate operations on February 11, 1980:
‘All plant clerical, and all production and maintenance
employees on the payroll of The Seeburg Corporation and
Seeburg Service Parts Corporation at the Chicago, Illinois,
plant, excluding executive, supervisory employees, timekeepers,
foremen with power to hire and fire or to effectively recommend
such action, Office clerical employees, guards and professional
employees as defined in the Act.
2. Take the following affirmative action which will
effectuate the policies of the Act:
12In the event no exceptions are filed as provided by Section
102.46 of the Rules and Regulations of the National Labor Relations
Board, the findings, conclusions, and recommended Order herein
shall, as provided in Section 102.48 of the Rules and Regulations, be
38a
(a) Upon request, bargain collectively with the above-
named labor organization with respect to the effect on
employees in the above-described unit of the decision to
terminate operations on February 11, 1980, and reduce to
writing any agreement reached as a result of such bargain-
ing.
(5) Mail a copy of the attached notice marked
“Appendix”? to each employee in the appropriate unit
(whether actively working or on layoff status) as of
February 11, 1980. Copies of said notice, on forms
provided by the Regional Director for Region 13, after
being duly signed by Respondents’ authorized representa-
tives, shall be mailed immediately upon receipt thereof.
(c) Notify the Regional Director for Region 13, in
writing, within 20 days from the date of this Order, what
steps Respondents have taken to comply herewith.
Dated Washington, D.C. April 23, 1981
/s/ Nancy M. SHERMAN
Nancy M. Sherman
Administrative Law Judge
3 In the event that this Order is enforced by a Judgment of a
United States Court of Appeals, the words in the notice reading
“POSTED BY ORDER OF THE NATIONAL LABOR RELA-
TIONS BOARD” shall read “POSTED PURSUANT TO A JUDG-
MENT OF THE UNITED STATES COURT OF APPEALS
ENFORCING AN ORDER OF THE NATIONAL LABOR RELA-
TIONS BOARD.”
39a
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE NATIONAL LABOR
RELATIONS BOARD
AN AGENCY OF THE UNITED STATES GOVERNMENT
After a hearing in which all parties had a chance to present
their evidence, it has been found that we violated the Act in
certain ways. We have been ordered to mail you this notice.
We intend to carry out the order of the Board and abide by the
following:
WE WILL NOT fail to bargain with LOCAL UNION 743,
WAREHOUSE, MAIL ORDER, TECHNICAL AND
PROFESSIONAL EMPLOYEES UNION, INTER-
NATIONAL BROTHERHOOD OF _ TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN AND HELPERS
OF AMERICA, about the effect on employees in the
following unit of the decision to terminate operations on
February 11, 1980:
All plant clerical, and all production and maintenance
employees on the payroll of The Seeburg Corporation and
Seeburg Service Parts Corporation at the Chicago, Illinois,
plant, excluding executive, supervisory employees, time-
keepers, foremen with power to hire and fire or to effectively
recommend such action, office clerical employees, guards and
professional employees as defined in the Act.
40a
WE WILL, on request, bargain collectively with respect to the
effect on employees in the above-described unit of the decision to
terminate operations, and reduce to writing any agreement
reached as a result of such bargaining.
NATHAN YORKE, TRUSTEE IN BANKRUPTCY
(Employer)
a
( Representative ) ( Title )
THE SEFBURG CORPORATION
(Employer)
a
( Representative ) ( Title )
SEEBURG SERVICE ParTS Co.
(Employer)
| aoe
( Representative ) (Title)
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED
BY ANYONE
This notice must remain posted for 60 consecutive days from the date of posting
and must not be altered, defaced, or covered by any other material. Any questions
concerning this notice or compliance with its provisions may be directed to the Board’s
Office, Everett McKinley Dirksen Building, 219 S. Dearborn Street, Chicago, IL 60604,
Telephone (312) 353-7597.
4la
259 NLRB No. 105
Chicago, IL
UNITED STATES OF AMERICA
Before the National Labor Relations Board
NATHAN YORKE, TRUSTEE IN
BANKRUPTCY, SUCCESSOR IN
BANKRUPTCY, OR ALTER EGO
TO THE SEEBURG CORPO-
RATION AND SEEBURG SER-
VICE PARTS CO.,' A SINGLE EM-
PLOYER
and
LOCAL UNION 743, WARE-
HOUSE, MAIL ORDER, TECHNI-
CAL AND PROFESSIONAL EM-
PLOYEES UNION, INTER-
NATIONAL BROTHERHOOD OF
TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELP-
ERS OF AMERICA
Case 13—CA—19631 »
DECISION AND ORDER
On April 23, 1981, Administrative Law Judge Nancy M.
Sherman issued the attached Decision in this proceeding.
Thereafter, the General Counsel and the Union filed exceptions
and supporting briefs and Respondent filed cross-exceptions
and an answering brief.
Pursuant to the provisions of Section 3(b) of the National
Labor Relations Act,.as amended, the National Labor Rela-
' Herein respectively called Seeburg and Seeburg Service.
42a
tions Board has delegated its authority in this proceeding to a
three-member panel.
The Board has considered the record and the attached
Decision in light of the exceptions and briefs and has decided to
affirm the rulings, findings, and conclusions of the Adminis-
trative Law Judge and to adopt her recommended Order, as
modified herein.
The Administrative Law Judge found, and we agree, that
Respondent violated Section 8(a)(5) and (1) of the Act by
terminating its operations at its Chicago, Illinois, facility with-
out prior notice to the Union and without affording it an
opportunity to bargain with Respondent concerning the effects
of such conduct on unit employees. However, we disagree with
her further finding that no Transmarine backpay order? is
warranted in the circumstances of this case.
The record shows that the unit employees were covered by
a 3-year collective-bargaining agreement effective to September
1980. Prior to the vacation period which traditionally ends in
mid-August, Respondent Seeburg had in mid-July 1979 an
active payroll of about 385 or 395 employees. However, as
Seeburg had financial or cash-flow problems, no one was called
back to work until mid-September 1979 when only 250 unit
employees were recalled.
On October 19, 1979, Seeburg filed a petition for reorgani-
zation under Chapter 11 of the Bankruptcy Act. At this time,
there were further layoffs, and by January 1980, the com-
plement was reduced to about 60 employees. By February 4,
1980, only seven employees wee still actively working.? It
appears the layoffs and recalls took place in accordance with
2 Transmarine Navigation Corporation and its Subsidiary, Inter-
national Terminals, Inc., 170 NLRB 389 (1968).
3 Their names appear in the record as follows: G. Pawlick, Mr.
Szafader, Johnnie Miller, Mr. Kopezynski, T. Swienton, Mr. Lakos,
and T. A. Valenza.
43a
the seniority provisions of the parties’ collective-bargaining
agreement and that the Union did not request bargaining or
object to any of the layoffs when they occurrd.
On February 4, 1980, the Bankruptcy (Court appointed
Nathan Yorke to act as Seeburg’s trustee in bankruptcy and
Yorke was given authority to continue to operate the business.
At a creditors’ meeting on February 8, 1980, Yorke learned
from Joseph P. Dillon, Seeburg’s treasurer and chairman of its
board, that Seeburg had lost about $350,000 since it had filed
its October 19, 1979, petition, and that its liabilities exceeded $8
million and the book value of its assets approximated $6 million
which, when liquidated, amounted to about $1.5 million. On
February 11, 1980, Yorke requested, and the Bankruptcy Court
issued, an order authorizing him, inter alia, to curtail Seeburg’s
operations by “terminating all personnel save certain key
individuals who will be retained for services and the trustee
deems necessary in furtherance of the instant reorganiza-
gas.
Upon receipt of the order on February 11, Yorke shut
down the plant facility used by both Seeburg and Seeburg
Service and released all personnel including the seven unit
employees who were still working on that date.* Four days
later, the Union found out about the shutdown and demanded
that an immediate meeting be set up to discuss, inter alia, the
effects of Yorke’s action. In his reply of February 25, Yorke
failed to accede to this demand. Thereafter, the Bankruptcy
Court authorized Yorke to offer some parts for sale and, in
April 1980, Yorke and Dillon made arrangements with the
Union to recall two or three individuals to assist in this
endeavor. According to Yorke, he “operated the business”
until July 1980, when, pursuant to a court-approved reorganiza-
4 Pursuant to an order of the Bankruptcy Court, Yorke paid these
employees their wages through February 9, 1980. Yorke did not
notify the Union of the shutdown. If fact, Yorke at that time did not
know that a union represented Seeburg’s employees.
44a
tion plan, Seeburg and its purchaser in liquidation, Stern
Electronics, agreed to set aside $49,000 of the estate’s assets
should a finding of backpay liability ultimately be made by the
Board.5 In addition, Stern Electronics agreed to cover an
additional $6,000 of potential backpay liability. Upon com-
pletion of the sale at the end of July 1980, Yorke terminated the
employees who had been recalled in April 1980.
As stated above, the Administrative Law Judge properly
found that Respondent violated Section 8(a)(5) and (1) of the
Act by failing to bargain with the Union regarding the effects
on unit employees of its decision to terminate operations on
February 11, 198C. However, as already indicated, she found
that a Transmarine backpay remedy as sought by the General
Counsel was not warranted. In this connection, she pointed to
the fact that 97 percent of the unit employees had been laid off
before Yorke became trustee, that Seeburg had suffered a
$350,000 loss during the 4 months before Yorke became
trustee, and that Yorke served as trustee for only | week before
shutting down the plant. In these circumstances, she also relied
on the Board’s Decision in National TerminaF to support her
holding that, contrary to the 7ransmarine line of cases upon
which the General Counsel relied, Respondent’s failure to
bargain about the effects of the closing did not occur at a time
when the Union was in a position of economic strength. We
find that National Terminal, supra, is inapposite as the employ-
er therein was forced to close “in an almost emergency
situation” because of “a calamitous event,” namely, the theft of
its delivery trucks which made it impossible to continue its
operations.” In significant contrast, Respondent still had valu-
able assets at the time of the shutdown and, in fact, found it
5 By that time the charge in the instant proceeding had been filed
with the Board by the Union.
® National Terminal Baking Corp., a Subsidiary of Kosher Kitch-
ens, Inc., {90 NLRB 465 (1971).
7 See National Terminal Baking Corp., supra at 466-467.
45a
necessary to recall some employees to operate the business until
its sale to another company. Thus, we find, contrary to the
Administrative Law Judge, that in the instant case, unlike the
situation in National Terminal, supra, a measure of balanced
bargaining power existed prior to and at the time of the
shutdown. As we held in Burgmeyer Bros., Inc., 254 NLRB No.
126 (1981), and the cases cited therein, an employer is not
relieved of its obligation to provide backpay in accordance with
the Transmarine formula merely because it has become a
debtor-in-possession under the Bankruptcy Act and believes
that, as a result therecf, it wwuld be financially unable to meet
any of the Union’s bargaining demands.
Accordingly, we shall, in addition to ordering Respondent
to bargain with the Union concerning the effects of the shut-
down, accompany said Order with a limited backpay require-
ment for the seven employees who were actively working as of
the time of the shutdown. The Union contends that the
backpay remedy should also extend to the laid-off employees.
We find no merit in this contention as the layoffs were lawfully
made pursuant to the collective-bargaining agreement of the
parties and the Union interposed no objection to them at the
time they occurred. However, in view of the employee status of
the individuals who were laid off prior to February 4, 1980, we
specifically find that the bargaining order extends to them as well
as to the employees who worked until the time of the shutdown.
THE REMEDY
Having found that Respondent has engaged ix and is
engaging in unfair labor practices within the meaning of
Section 8(a)(5) and (1) of the Act, we shall order that
Respondent cease and desist therefrom and take certain
affirmative action designed to effectuate the policies of the Act.
46a
We shall also order that Respondent bargain with the
Union over the effects on its employees of the discontinuance of
its operations. It is clear, however, that a bargaining order
alone cannot fully remedy the unfair labor practices committed
by Respondent because, as a result of Respondent’s failure to
bargain with the Union about the effects of discontinuing
operations, Respondent’s employees were denied an opportu-
nity to bargain through their exclusive representative at a time
when such bargaining would have been meaningful. Mean-
ingful bargaining cannot now be assured until some measure of
economic strength is restored to the Union. Accordingly, in
order to effectuate the purposes of the Act, we shall accompany
our order to bargain with a limited backpay requirement
designed both to make whole the seven employees, who were
on the payroll on February 11, 1980, for losses suffered as a
result of the violation and to recreate in some practicable
manner a situation in which the parties’ bargaining position is
not entirely devoid of economic consequences for Respondent.
We shall do so in this case by requiring Respondent to pay
backpay to its employees in a manner similar to that required in
Transmarine Navigation Corporation, supra. As in Trans-
marine, we shall require that the backpay for those employees
be not less that the amounts they would have earned during a
2-week period of employment,® at the rate of their normal
wages when last in Respondent’s employ.
Accordingly, we shall order Respondent to bargain upon
request with the Union about the effects on its employees of the
discontinuance of its operations; and to pay these employees
amounts at the rate of their normal wages when last in
Respondent's employ from 5 days after the date of this
® Despite his dissent in Transmarine, Member Jenkins notes that
the remedy there has been accepted by the courts and the Board and,
since some type of remedy for the misconduct is needed, he is
therefore willing to join in the Decision herein. Underwood Hair
Adaption Prucess, Inc., 242 NLRB 1017, fn. 6 (1979); Uncle John's
Pancake House, 232 NLRB 438, fn. 7 ( 1977).
47a
Decision until the occurrence of the earliest of the following
conditions: (1) the date Respondent bargains to agreement
with the Union on those subjects pertaining to the effects of
Respondent’s discontinuance of its operations; (2) a bona fide
impasse in bargaining; (3) the failure of the Union to request
bargaining within 5 days of this Decision, or to commence
negotiations within 5 days of Respondent’s notice of its desire
to bargain with the Union; or (4) the subsequent failure of the
Union to bargain in good faith; but in no event shall the sum
paid to any of these employees exceed the amount each would
have earned as wages from the time Respondent discontinued
its operations to the time each secured equivalent employment
elsewhere, or the date on which Respondent shall have offered
to bargain, whichever occurs first; provided, however, in no
event shall this sum be less than such employees would have
earned for a 2-week period at the rate of their normal wages
when last in Respondent’s employ. Backpay shall be based
upon earnings which the discharged employees would normally
have received during the applicable period, less any net interim
earnings, and shall be computed on a quarterly basis in the
manner set forth in F. W. Woolworth Company, 90 NIPP 289
(1950), with interest thereon computed in the manner provided
in Florida Steel Corporation, 231 NLRB 651 (1977).9
ORDER
Pursuant to Section 10(c) of the National Labor Relations
Act, as amended, the National Labor Relations Board adopts
as its Order the recommended Order of the Administrative Law
Judge, as modified below, and hereby orders that the Respond-
ent, Nathan Yorke, Trustee in Bankruptcy, Successor in Bank-
ruptcy, or Alter Ego to the Seeburg Corporation and Seeburg
See, generally, Jsis Plumbing & Heating Co., 138 NLRB 716
(1962).
Member Jenkins would compute interest on backpay in accor-
dance with his partial dissent in Olympic Medical Corporation, 250
NLRB 146, 148 (1980).
48a
Service Parts Co., a Single Employer, Chicago, Illinois, its
Officers, agents, successors, and assigns, shall take the action set
forth in the said recommend Order, as so modified:
1. Add the following as paragraph 1(b):
“(b) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of their rights
guaranteed under Section 7 of the Act.”
2. Add the following as new paragraphs 2(b) and (c)
respectively and reletter the subsequent paragraphs accord-
ingly:
“(b) Provide backpay to G. Pawlick, Johnnie Miller, T.
Swienton, T. A. Valenza, Mr. Szafader, Mr. Kopezynski, and
Mr. Lakos in the manner set forth in the section of the Board’s
Decision entitled ‘The Remedy.’
“(c) Preserve and, upon request, make available to the
Board or its agents, for examination and copying, all payroll
records, social security payment records, timecards, personnel
records and reports, and all other records necessary to analyze
the amount of backpay due under the terms of this Order.”
3. Substitute the attached notice for that of the Adminis-
trative Law Judge.
Dated, Washington, D.C. December 28, 1981
John H. Fanning,
Member
Howard Jenkins, Jr.,
Member
Don A. Zimmerman,
Member
NATIONAL LABOR RELATIONS
(SEAL) BOARD
49a
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE NATIONAL LABOR
RELATIONS BOARD
AN AGENCY OF THE UNITED STATES GOVERNMENT
After a hearing at which all sides had an opportunity to present
evidence and state their positions, the National Labor Relations
Board found that we have violated the National Labor Rela-
tions Act, as amended, and has ordered us to post this notice.
WE WILL NOT fail to bargain with Local Union 743,
Warehouse, Mail Order, Technical and Professional Team-
sters, Chauffeurs, Warehousemen and Helpers of America,
about the effect on employees in the following unit of the
decision to terminate operations on February 11, 1980:
All plant clerical, and all production and mainte-
nance employees on the payroll of The Seeburg Corpo-
ration and Seeburg Service Parts Corporation at the
Chicago, Illinois, plant, excluding executive, super-
visory employees, timekeepers, foremen with power to
hire and fire or to effectively recommend’ such action,
Office clerical employees, guards and profession’ em-
ployees as defined in the Act.
WE WILL NOT in any like or related manner inter-
fere with, restrain, or coerce employees in the exercise of
the rights guaranteed them under Section 7 of the Act.
WE WILL, upon request, bargain collectively with
respect to the effect on employees in the above-described
unit of the decision to terminate operations, and reduce to
writing any agreement reached as a result of such bar-
gaining.
> + a ere t
50a
WE WILL pay the following unit employees who were
discharged on February 11, 1980, when we terminated our
operations, their normal wages, for the period set forth in
the remedy section of the Board’s Decision and Order, plus
interest:
G. Pawlick Mr. Szafader
Johnnie Miller Mr. Kopezynski
T. Swienton Mr. lakos
T. A. Valenza
NATHAN YORKE, TRUSTEE IN BANKRUPTCY
(Employer)
Dated By
( Representative ) (Title)
THE SEEBURG CORPORATION
(Employer)
Dated By
( Representative ) ( Title)
SEEBURG SERVICE Parts Co.
(Employer)
Dated By
( Representative ) (Title)
This is an official notice and must not be defaced by
anyone.
This notice must remain posted for 60 consecutive days
from the date of posting and must not be altered, defaced, or
covered by any other material. Any questions concerning this
notice or compliance with i*s provisions may be directed to the
Board’s Office, Everett McKinley Dirksen Building, 219 S.
Dearborn Street, Chicago, Illinois 60604, Telephone 312-353- /
7597.
Sla
YORKE EX. 2
IN THE UNITED STATES BANKRUPTCY COURT
For the Northern District of Illinois
Eastern Division
IN RE:
THE SEEBURG CORPORATION,
a Delaware corporation, Case No. 79 B 39597
Debtor
ORDER AUTHORIZING TRUSTEE TO CURTAIL
OPERATIONS OF THE DEBTOR
At Chicago, in said District, on the 11th day of February, 1980.
THIS CAUSE coming on to be heard on the application of
Nathan Yorke, trustee in bankruptcy, for authority to curtail
the debtor’s operations; due written notice having been given to
all parties entitled thereto and the court being fully advised in
the premises, it appearing that continued operations of the
debtor in a manner similar to that which has been followed
since the initiation of these proceedings, would be unprofitable
and counter-productive to the instant reorganization proceed-
ing,
IT IS ORDERED that Nathan Yorke, trustee in bank-
ruptcy, be and he hereby is, authorized to curtail the debtor’s
operations by: .
(a) Terminating all personnel save certain key indi-
viduals who will be retained for services the trustee deems
necessary in furtherance of the instant reorganization; and
(b) Attempting to reduce utility and rental expenses to
the lowest possible amount by agreement with debtor’s
landlord, Xcor International, Inc.; and
(c) Employing such other and further steps as the
trustee feels are necessary to maintain and preserve the
debtor’s estate.
ENTER:
UNITED STATES BANKRUPTCY JUDGE
52a
IN THE UNITED STATES BANKRUPTCY COURT
For the Northern District of Illinois
Eastern Division
IN THE MATTER OF ‘
THE SEEBURG CORPORATION,
a Delaware corporation,
DEBTOR
THE SEEBURG CORPORATION,
NATHAN YORKE, Trustee of In a pode
THE SEEBURG CORPO-| Gai
Chapter 11
RATION, and the OFFICIAL
CREDITORS’ COMMITTEE OF ( No. 80 B 39597
THE SEEBURG CORPO- | Adversary Proceeding
RATION, No. 80 A 1088
PLAINTIFFS
vs.
NATIONAL LABOR RELATIONS
BOARD,
DEFENDANT J
ORDER
At Chicago, in said District, on the 28th day of July, 1980.
THIS CAUSE coming on to be heard upon the complaint
of The Seeburg Corporation, debtor, Nathan Yorke, trustee in
Bankruptcy, and the Official Creditors’ Committee for a prelim-
inary and permanent injunction against the National Labor
Relations Board (NLRB) and the answer of the NLRB to said
complaint, the court having considered the memoranda of law
filed by the parties hereto and the statements of counsel; all
parties entitled thereto having received due written notice of
said hearing and the court being fully advised in the premises
finds:
53a
1. On October 19, 1979, the debtor filed its petition for
relief under Chapter 11 of the Bankruptcy Code (“Reorganiza-
tion Proceeding’’).
2. On February 4, 1980, Nathan Yorke was duly appoint-
ed trustee in the Reorganization Proceeding by the U. S.
Trustee pursuant to this Court’s order.
3. On February 11, 1980, this Court entered an order
authorizing the Trustee to curtail the debtor’s operations by,
among other things, terminating all personnel save certain key
individuals who would be retained for services the Trustee
deemed necessary in furtherance of the Reorganization Pro-
ceeding; in accordance therewith, the Trustee did, in fact, so
curtail the debtor’s operations.
4. On June 17, 1980, the NLRB filed a Complaint and
Notice of Hearing against the debtor and the Trustee, among
others, alleging that they had engaged in unfair labor practices
in that certain union members who were employed by the
debtor had been terminated without prior notice to the union
and without having afforded the union an opportunity to
negotiate and bargain concerning the effects of said termina-
tion.
5. The NLRB has set Friday, August 1, 1980, as the date
by which the debtor and the Trustee must file answers to its
Complaint. Failure to file such an answer will be deemed by
the NLRB as an admission of the truth of all of the allegations
in said Complaint.
6. The NLRB, by order dated June 23, 1980, has
scheduled a hearing on this matter for January 19, 1981.
7. On June 10, 1980, the debtor, its Trustee and Com-
mittee filed a Plan of Reorganization (“Plan”) and accom-
panying Disclosure Statement in the Reorganization Proceed-
ing. The approved Disclosure Statement and the Plan have
been mailed to all creditors impaired by the Plan. The Plan
54a
contemplates the sale of substantially all of the debtor’s assets
to Stern Electronics, Inc. The debtor's corporate identity will
remain in edistence until the terms and conditions of the Plan
have been fully performed, but, upon confirmation of the Plan,
the debtor will essentially cease to exist. The Disclosure
Statement clearly reflects the precarious nature of the Plan’s
economic feasibility. Should the debtor’s estate during the
remainder of the Reorganization Proceeding incur or be forced
to reserve amounts for administrative expenses and attorneys’
fees beyond those currently estimated, the Plan will fail.
8. On July 10, 1980, the debtor, Trustee and Committee
filed their Complaint against the NLRB seeking an order
enjoining the NLRB from proceeding against the debtor and
the Trustee for certain alleged unfair labor practices.
9. It would cause irreparable injury to the debtor and the
creditors of its estate if debtor and trustee were required to
appear in the NLRB administrative proceeding and respond to
allegations made therein of unfair labor practices.
10. The NLRB administrative proceeding constitutes a
direct attack upon the assets of this estate.
11. The NLRB has filed its claim herein in the amount of
$142,413.60 which has been reduced in open court to $55,000.
This court has original jurisdiction to hear and determine said
claim.
NOW, THEREFORE, the Court concludes that:
(a) The Court has jurisdiction over the subject matter and
over the parties herein.
(b) The actions of the NLRB in instituting an adminis-
trative proceeding against the debtor and the Trustee after the
filing of the Reorganization Proceeding are subject to the
control of and within the jurisdiction of this Court.
55a
(c) It would cause irreparable injury to the debtor and the
creditors of this estate if the debtor and Trustee were required
to expend those funds necessary to appear in the NLRB
administrative proceeding and respond to the allegations made
therein of unfair labor practices.
IT IS, THEREFORE, HEREBY ORDERED as follows:
(1) The National Labor Relations Board, its agents and
employees, be and they are hereby permanently restrained and
enjoined from continuing to prosecute The Seeburg Corpo-
ration and Nathan Yorke, Trustee of The Seeburg Corporation,
for damages for certain alleged unfair labor practices.
(2) Hearing upon the National Labor Relations Board’s
administrative claim filed herein in the amount of $55,000 be
and the same is hereby set for the 23rd day of September, 1980,
at the. hour of 11:00 A.M. without further notice.
ENTER:
BANKRUPTCY JUDGE
Pig” rH aad i sak
S6a
IN THE UNITED STATES BANKRUPTCY COURT
For the Northern District of Illinois
Eastern Division
EOD JUL 28 1980
IN RE:
THE SEEBURG CORPORATION,
Debtor.
THE SEEBURG CORPORATION, |In Proceedings for a
NATHAN YORKE, Trustee of THE page omer +
SEEBURG CORPORATION, and by oh acinudeny
the OFFICIAL CREDITORS’ COM- . Code
PORATION,
Plaintiffs,
Adversary
woe No. 80 A 1088
NATIONAL LABOR .ELATIONS
BOARD,
Defendant. )
" MEMORANDUM OPINION
This matter coming on to be heard upon the Complaint of
THE SEEBURG CORPORATION, NATHAN YORKE,
Trustee of THE SEEBURG CORPORATION, and the OFFI-
CIAL CREDITORS’ COMMITTEE of THE SEEBURG COR-
PORATION for the entry of an order enjoining the Defendant
from prosecuting its action for damages against THE SEE-
BURG CORPORATION and NATHAN YORKE, Trustee of
THE SEEBURG CORPORATION, before the National Labor
Relations Board, Region 13, Case 13-CA-19631, and upon
Defendant’s Answer thereto, and the parties appearing by their
respective attorneys, and
The Court having examined the pleadings filed in this
matter, and having heard the arguments of counsel, and having
57a
received and examined Memoranda of the parties in support of
their respective positions, and the Court being fully advised in
the premises;
The Court Finds:
1. On October 19, 1979, THE SEEBURG CORPO-
RATION, a Delaware corporation, filed its voluntary petition
for relief under chapter || of the Bankruptcy Code. NATHAN
YORKE was duly appointed Trustee of THE SEEBURG
CORPORATION by the United States Trustee for the North-
ern District of Illinois on February 4, 1980.
2. On February 11, 1980, this Court entered an Order
which provided in relevant part as follows:
a
.
IT IS ORDERED that Nathan Yorke, trustee in
bankruptcy, be and he hereby is, authorized to curtail the
debtor’s operations by:
(a) Terminating all personnel, save certain key indi-
viduals who will be retained for services the trustee deems
necessary in furtherance of the reorganization.
“ ”
- oe Ss
Pursuant to the aforesaid order, NATHAN YORKE terminated
all the Debtor’s personnel save certain key individuals whose
services were deemed necessary in furtherance of the instant
reorganization. Subsequent thereto, the Trustee, pursuant to
court order, rehired in connection with the sale of parts
inventory some of the employees previously terminated.
3. On or about June 10, 1980, Plaintiffs filed a Plan of
Reorganization and Disclosure Statement in the instant
reorganization proceedings. The Plan of Reorganization in-
cludes and incorporates by reference a settlement agreement
which contemplates the sale to Stern Electronics, Inc. of
substantially all of the assets of THE SEEBURG CORPO-
58a
RATION. The Agreement further provides that if the Con-
firmation Order has not been entered and become final before
August 15, 1980, the Agreement will terminate and be of no
force and effect.
4. On June 17, 1980, NATIONAL LABOR RELATIONS
BOARD, Region 13 filed a Complaint before the National
Labor Relations Board, Region 13, Case 13-CA-19631, alleging
that THE SEEBURG CORPORATION and NATHAN
YORKE, Trustee of THE SEEBURG CORPORATION,
among others, engaged in unfair labor practices affecting
commerce by terminating employees of the Debtor without
prior notice to their union and without having afforded the
union an opportunity to negotiate and bargain concerning the
effects of said conduct.
5. On July 2, 1980, this Court entered an Order approving
the aforesaid Disclosure Statement and setting the hearing on
confirmation of the Plan of Reorganization for July 25, 1980.
6. On July 22, 1980, three days before the scheduled
hearing on confirmation, the NATIONAL LABOR RELA-
TIONS BOARD filed on behalf of certain former employees of
the Debtor a proof of claim in the amount of $142,413.60,
alleging that the claim was entitled to priority. The alleged
basis for the claim is the violation by Debtor of the National
Labor Relations Act, as amended, as set forth in the Complaint
in Case 13-CA-19631 before the National Labor Relations
Board, Region 13.
The Court Concludes and Further Finds:
1. § 507 of the Bankruptcy Code provides in pertinent part
as follows:
“(a) The following expenses and claims have
priority in the following order:
(1) First, administrative expenses allowed
under section 503(b) of this title....
”
.
59a
§ 503(b) of the Bankruptcy Code provides in relevant part
as follows:
“(b) After notice and a hearing, there shall be
allowed, administrative expenses, other than claims
allowed under section 502(f) of this title, including—
(1)(A) the actual, necessary costs and ex-
penses of preserving the estate, including wages,
salaries, or commissions for services rendered after
the commencement of the case. . .
”
The alleged unfair labor practices occurred during the
administration of the instant chapter 11 proceeding. The claim,
insofar as it represents a claim for back pay, seeks a reparation
order designed to vindicate public policy by making the
employees whole for losses suffered on account of an unfair
labor practice. See Nathanson v. National Labor Relations
Board, 344 U.S. 25, 97 L.Ed. 23, 73 S.Ct. 80 (1952). The
claim, essentially one for damages for injury to the employees,
is one of the “actual, necessary costs and expenses of preserving
the estate” within the meaning and purview of § 503(b) (1)
(A). See Reading Company v. Brown, 391 U.S. 471, 20 L.Ed.
751, 88 S.Ct. 1759 (1968). It is an administrative expense
entitled to priority under § 507(a)(1) of the Bankruptcy Code.
2. § 1129 of the Bankruptcy Code provides in relevant part
as follows:
“(a) The court shall confirm a plan only if all of the
following requirements are met:
(9) Except to the extent that the holder of a
particular claim has agreed to a different treatment of
such claim, the plan provides that—
(A) with respect to a claim of a kind speci-
fied in section 507(a)(1) or 507 (a) (2) of this
title, on the effective date of the plan, the holder
of such claim will receive on account of such
claim cash equal to the allowed amount of such
claim;
60a
Under this provision, the Cour: shall not confirm a plan unless
administrative expenses ar: paid. It is therefore essential in
connection with the hearing on confirmation that the claim of
the NATIONAL LABOR RELATIONS BOARD be liqui-
dated.
3. This Court has jurisdiction to determine the underlying
liability and to liquidate the claim of the NATIONAL LABOR
RELATIONS BOARD. § 241(a) of Title II of the Bankruptcy
Reform Act of 1978 provides as follows:
“(a) Title 28 of the United States Code is amended by
inserting immediately after chapter 89 the following:
§ 1471. Jurisdiction.
(b) Notwithstanding any Act of Congress that confers
exclusive jurisdiction on a court or courts other than the
district courts, the district courts shall have original but not
exclusive jurisdiction of all civil proceedings arising under
title 11 or arising in or related to cases under title 11.
(c) The bankruptcy court for the district in which a
case under title 11 is commenced shall exercise all of the
jurisdiction conferred by this section on the district courts
§ 402(a) of Title IV of the Bankruptcy Reform Act of 1978
provides that the aforesaid amendment shall take effect on
April 1, 1984. However, § 404(a) of Title IV provides that the
courts of bankruptcy existing on September 30, 1979 shall
continue through March 31, 1984 to be the courts of bankruptcy
for purposes of the Bankruptcy Reform Act of 1978, and
§ 405(b) of said Title further provides as follows:
“(b) During the transition period, the amendments
made by sections 241, 243, 250, and 252 of this Act shall
apply to the courts of bankruptcy continued by section
6la
404(a) of this Act the same as such amendments apply to
the United States bankruptcy courts established under
section 201 of this Act.”
This court therefore has original but not exclusive jurisdiction of
all civil proceedings arising under title 11 or arising in or related
to cases under title 11. The determination of the underlying
liability and the liquidation of the claim of the NATIONAL
LABOR RELATIONS BOARD fall within this grant of
jurisdiction.
4. This Court also has jurisdiction to issue the prayed for
injunction pursuant to the powers granted under § 105(a) of
the Bankruptcy Code:
“(a) The bankruptcy court may issue any order,
process, or judgment that is necessary or appropriate to
carry out the provisions of this title.”
The issuance of an injunction against the NATIONAL
LABOR RELATIONS BOARD in this case is both necessary
and appropriate to carry out the provisions of title 11 of the
United States Code. The Supreme Court, in Nathanson v.
National Labor Relations Board, supra, indicated that the
bankruptcy court should normally stay its hand pending the
decision of the Board:
“The bankruptcy court normally supervises the liqui-
dation of claims. See Gardner v. New Jersey, 329 U.S. 565,
573. But the rule is not inexorable. A sound discretion
may indicate that a particular controversy should be
remitted to another tribunal for litigation. See Thompson
v. Magnolia Co., 309 U.S. 478, 483. And where the matter
in controversy has been entrusted by Congress to an
administrative agency, the bankruptcy court normally
should stay its hand pending an administrative decision.”
Nathanson v. National Labor Relations Board, supra at 30. The
instant case, however, does not present the normal situation
involving the reorganization of a debtor, since the subject claim
62a
is one for an administrative expense, the determination of
which is an exclusive function of this Court and which is directly
related to the Court’s responsibility in its consideration of the
entry of an order confirming a plan of reorganization.
The Ninth Circuit Court of Appeals, in Re Bel Air Chateau
Hospital, Inc., 611 F.2d 1248 (9th Cir. 1979), distinguished
between the automatic stay provision of Bankruptcy Rule 11-44
and a stay issued as an exercise of discretion. The court could
not determine in that case whether the stay imposed was an
automatic or a discretionary stay and held, in light of the
Supreme Court’s suggestion in Nathanson that the bankruptcy
court should be reluctant to interfere with Board proceedings,
that it would be inappropriate to hold that such proceedings are
automatically stayed. However, the Ninth Circuit Court of
Appeals indicated that if reorganization proceedings threaten
the assets of the estate, the decision is issue a stay can be made
on a discretionary basis. The court therein found that the stay
granted by the bankruptcy court, even if issued as an exercise of
discretion, should not have been imposed. It appeared that the
bankruptcy court issued the stay because a receiver was oper-
ating the business and constituted “...‘a new and distinct
juridical entity’ agazinst whom the prior unfair labor practices
could not be remedied.” Jn re Bel Air Chateau Hospital, Inc.,
supra at 1251. The court pointed out that whether or not the
receiver was a successor to the earlier employer and an entity
against whom the unfair labor practices could be remedied was
a matter of federal labor law. The court stated:
“It is by no means clear in the event that the Board should
determine that Bel Air committed unfair labor practices
that it cannot enforce a remedial order against the Receiv-
er, see, e.g., NLRB v. Coal Creek Coal Co., 204 F.2d 579
(10th Cir. 1953), especially in light of established policy
against allowing employers to change their legal form as a
means of evading their responsibility under the Act.”
Id.
63a
The most recent pronouncement in this area is In re
Shippers Interstate Service, Inc., 618 F.2d 9 (7th Cir. 1980),
which involved the automatic stay of Bankruptcy Rule 11<44.
The court quoted the above language from Bel Air and
emphasized the distinction between liquidation and reorganiza-
tion, warning that Chapter XI should not be used as an easy
sanctuary from federal regulatory proceedings. The court held:
“...[W]here, as here, it appears that the assets of the
estate are not threatened and the company is being
reorganized rather than liquidated, Bankruptcy Rule 11-44
shall not apply and regulatory proceedings of the National
Labor Relations Board are not subject to the automatic
stay provisions of that bankruptcy rule. This does not
preclude imposition of a stay where a proper showing was
made that the regulatory proceedings threatened the estate
assets or that the bankruptcy or other proceedings would
result in the liquidation of the Company.”
Id. at-13.
In the instant case, the alleged unfair labor practices
occurred during the administration of the Chapter 11 proceed-
ing. THE SEEBURG CORPORATION did not file its Chapter
11 petition in order to avoid obligations under the National
Labor Relations Act. The Plan of Reorganization provides for
the sale of substantially all of the Debtor’s assets to Stern
Electronics, Inc. Since the Chapter 11 proceedings will result in
the liquidation of the corporation if the Plan of Reorganization
is confirmed, the imposition of a stay is appropriate and not
precluded under Jn re Shippers Interstate Services, Inc., supra.
Concurrent herewith, an injunctive order will be entered in
favor of Plaintiffs against Defendant, NATIONAL LABOR
RELATIONS BOARD.
Dated at Chicago, Illinois, this 28th day of July, A.D.,
1980.
ENTER
Pk ® 4
i
* .
Siac ¥*
mrt bates
Pees.
64a
UNITED STATES DISTRICT COURT
Northern District of Illinois
Easte:n Division
Name of Presiding Judge, Honorable Bernard M. Decker
Cause No.: 79 B 39597—80 C4624 Date: Nov. 13, 1980
Title of Cause: In the matter of the Seeburg Corporation,
Debtor. The Seeburg Corporation, et al. v. National Labor
Relations Board
Brief Statement of Motion:
The rules of this court require counsel to furnish the names
of all parties entitled to notice of the entry of an order and
the names and addresses of their attorneys. Please do this
immediately below (separate lists may be appended).
Names and Addresses of moving counsel:
Representing:
Names and Addresses of other counsel entitled to notice and
names of parties they represent:
Reserve space below for notations by minute clerk
Memorandum Opinion and Order entered. For the rea-
sons set forth in said opinion and order, the court concludes that
the NLRB’s appeal is well taken. The bankruptcy judge’s order
staying the Board’s unfair labor practice proceeding is hereby
vacated. The bankruptcy judge is hereby ordered to refrain
from hearing the unfair labor practice charges. (DRAFT)
Docketed Nov. 14, 1980
Decker, J.
Hand this memorandum to the Clerk.
Counsel will not rise to address the Court until motion has been
called.
65a
IN THE UNITED STATES DISTRICT COURT
For the Northern District of Illinois
Eastern Division
IN THE MATTER OF 4
THE SEEBURG CORPORATION, NO. 79 B 39597
Debtor
THE SEEBURG CORPORATION,
et al., >
' 4624
Plaintiffs, NO. 80 C 462
-VS-
NATIONAL LABOR RELATIONS
BOARD,
Defendant.
Y
MEMORANDUM OPINION AND ORDER
On February 8, 1980, the trustee in bankruptcy for Seeburg
Corporation, acting on the authorization of the bankruptcy
judge, discharged certain of Seeburg’s employees and termi-
nated certain of its operations. In so doing, the trustee allegedly
failed to notify and negotiate with the collective bargaining
representative of the terminated employees. The NLRB has
charged that this conduct violated sections 8(a)(1) and
8(a)(5) of the National Labor Relations Act. 29 U.S.C.
§§158(a)(1), 158(a)(5). A hearing on these charges was set
before the National Labor Relations Board for September 15,
1980. On July 9, 1980, the bankrupt company, the trustee, and
the creditors committee all requested that the bankruptcy judge
held on July 25, the Board reduced its proof of claim against
the company from $142,000 to $55,000. With the bankruptcy
judge’s approval, the company and its purchaser in liquidation
7
;
« 5
66a
agreed to set aside $49,000 of the estate’s assets should a
finding of backpay liability ultimately be made. The purchaser
agreed to commit to cover the remaining $6,000 of potential
liability. Accordingly, the motion for a stay of the NLRB
proceedings was granted at that time.
On July 28, 1980, the bankruptcy judge entered a memo-
randum opinion affirming his oral order and stating that he,
rather than the Board, would adjudicate the unfair labor
practice charge. A hearing date was set for September 23. On
August 4, 1980, the Board filed an emergency petition seeking
to stay the bankruptcy court’s hearing. At the same time, the
Board filed its appeal from the bankruptcy judge’s order. Both
motions were docketed on August 29, and, on September 10,
this court stayed both the unfair labor practice proceeding
before the bankruptcy court, and the unfair labor practice
proceeding before the National Labor Relations Board. Brief-
ing on the appeal having been recently completed, the merits of
this case are now ripe for disposition.
The Seventh Circuit has recently and expressly held that
proceedings of the National Labor Relations Board are not
automatically stayed by a bankruptcy filing. Jn the Matter of
Shippers Interstate Service, Inc., 618 F.2d 9 (7th Cir. 1980).
The court so held primarily on the basis of the strong public
policies favoring exclusive disposition of substantive labor law
questions by the NLRB.
In asserting his jurisdiction in this matter, the bankruptcy
judge distinguished Shippers on the basis of that case’s closing
paragraph:
“On balance, we agree with Bel Air that ‘[i]f regulatory
proceedings threaten the assets of the estate, the decision to
issue a stay can then be made on a discretionary basis. .. .
But where, as here, it appears that the assets of the estate
are not threatened and the company is being reorganized
rather than liquidated... regulatory proceedings of the
National Labor Relations Board are not subject to the
—— os
67a
automatic stay provisions of... [the Bankruptcy Act]...
This does not preclude imposition of a stay where a proper
showing was made that the regulatory proceedings threat-
ened the estate assets or that the bankruptcy or other
proceedings would result in the liquidation of the com-
pany.” Shippers, supra, 618 F.2d at 13.
The bankruptcy judge below reasoned that any backpay award
to issue from the NLRB action would have priority over other
claims on the bankrupt’s assets because it would arise from the
court’s administration of the bankrupt’s estates. This, the court
concluded, would constitute a “threat” to the estate within the
meaning of the Shippers decision. The judge also concluded
that, since virtually all of the assets of the bankrupt are going to
be sold to a third party, this bankruptcy is more in the nature of
a liquidation than a reorganization.
Regardless of the priority that the unfair labor practice
claims may have, the transcript of the July 25 hearing plainly
reveals that the company, its purchaser, and the bankruptcy
judge have already approved a reorganization plan which
includes a provision setting aside the full potential backpay
claim. Accordingly, the court finds it difficult to understand the
sense in which a Board finding of backpay liability will
materially threaten the estate’s assets.
Problems also arise with the bankruptcy judge’s conclusion
that this is really a liquidation proceeding. Shippers dis-
tinguishes between reorganizations and liquidations on the
grounds that a reorganized corporation may be subject to
liability under the NLRA as a successor of the entity which
originally went bankrupt. The court emphasized that, under
such circumstances, the underlying unfair labor practice charge
and the question of successorship both implicate significant
labor law issues that should be left to the Board’s superior
expertise. The liquidation case was distinguished on the
grounds that no possible successor entity exists in that situation,
thus mooting all of the potential labor law problems. Shippers,
68a
618 F.2d at 12. In this case, virtually all of the bankrupt’s
assets are being sold to a single entity which is making the
purchase with full knowledge of the pendency of the unfair
labor practice charges and which agreed to terms of sale that
also accommodate the possibility of a backpay assessment.
Under these circumstances, the Board might well conclude that
the purchaser could be held liable under the NLRA as the
bankrupt’s successor. See, e.g., Golden State Bottling v. NLRB,
414 U.S. 168 (1973). The likelihood that the successorship
doctrine might apply here seems to implicate the policies which
the Seventh Circuit has deemed dispositive in the reorganiza-
tion context. Accordingly, the rule developed in the reorganiza-
tion cases would seem applicable to the July 28 stay.
For all of the above reasons, the court concludes that the
NLRB’s appeal is well taken. The bankruptcy judge’s order
staying the Board’s unfair labor practice proceeding is hereby
vacated. The bankruptcy judge is hereby ordered to refrain
from hearing the unfair labor practice charges.
ENTER:
/s/ BERNARD M. DECKER
Bernard M. Decker
United States District Judge
DATED: November 13, 1980.
69a
Opinion by Judge Timbers
Judge Coffey dissenting
NLRB JUDGMENT—ORAL
ARGUMENT
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
") June |, 1983
Before
Hon. RICHARD D. CUDAHY, Circuit Judge
Hon. JOHN L. COFFEY, Circuit
Hon. WILLIAM H. TIMBERS, C
No. 82-1334
Nathan Yorke, Trustee in Bankruptcy |
The Seeburg Corporation,
Petitioner,
VS.
National Labor Relations Board,
Respondent.
Warehouse, Mail Order, Office, Pro-
fessional and Technical Employees
Union Local 743, International
Brotherhood of Teamsters, Chauf-
feurs, Warehousemen and Helpers
of America,
Intervening-Respondents.
Judge
ircuit Judge*
an Order of the Na- .
tional Labor Rela-
tions Board.
an 0 for Review of
This cause came on ‘o be heard~on the record from the
National Labor Relations Board, and was argued by counsel.
On consideration whereof, IT IS ORDERED AND AD-
JUDGED by this Court that the decision of the National Labor
Relations Board is MODIFIED AND
, AS MODIFIED, EN-
FORCED, with costs, in accordance with the opinion of this
Court filed this date.
* The Honorable William H. Timbers of the United States Court
of Appeals for the Second Circuit, is sitting by designation.
70a
Ju the |
United States Court of Appeals
Bor the Seventh Cirrnit
No. 82-1334 j
NATHAN YORKE, TRUSTEE IN BANKRUPTCY,
THE SEEBURG CORPORATION,
Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent,
WAREHOUSE, MAIL ORDER, OFFICE, PROFESSIONAL AND
TECHNICAL EMPLOYEES UNION, LOCAL 743, INTER-
NATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS OF AMERICA,
Intervenor.
Petition for Review of Order of the
National Labor Relations Board
Cross-App!i*ation for Enforcement of Order
ARGUED DECEMBER 1, 1982—DEcIDED JUNE 1, 1983
Before CUDAHY, COFFEY, and TIMBERS", Circuit
Judges.
* Of the Second Circuit, by designation.
Tla
2 No. 82-1334
TIMBERS, Circuit Judge. Nathan Yorke, Trustee in
Bankruptcy of the Seeburg Corporation (Company),!
titions for review of an order of the National Labor
lations Board, 259 N.L.R.B. 819 (1981), finding that
the Trustee violated §§ 8(a)5) and 8(a)(1) of the National
Labor Relations Act, 29 U.S.C. §§ 158(aX5), 158(a)(1)
(1976), by failing to bargain over the effects of his deci-
sion to close the Company’s plant in Chicago. The Board
has filed a cross-application to enforce its order.
Without giving Local 743, International Brotherhood of
Teamsters (Union), prior notice or affording it a subse-
quent opportunity to bargain, the Trustee terminated
operations and discharged the seven remaining em-
ployees who were Union members. The Board deter-
mined that a bargaining order by itself would not
remedy the unfair labor practice since the plant closure
had decimated the Union's bargaining strength. Accor-
dingly, to restore the Union’s position, the Board ordered
a limited backpay remedy, requiring the Trustee to pay
wages to the seven employees for a period beginning five
days after the date of the Board’s decision until (1) the
parties reached an agreement, or (2) the parties reached
an impasse, or (3) the Union failed to request bargaining
within five days after the decision, or (4) the Union failed
to bargain in good faith. While the backpay requirement
was conditioned on the number of days lapsing before the
parties reached impasse or an agreement, the Board im-
posed a minimum two week backpay period to discourage
artificially quick impasse.
Although we are not in complete accord with the
Board’s reasoning, we conclude that substantial evidence
supports the Board’s findings of violations of §§ 8(aX5)
and &a)(1). We enforce the Board’s remedial order with
the condition specified herein.
! The Administrative Law Judge (ALJ) found that Seeburg
Service Parts Co. and Seeburg Corp. constituted a single in-
tegrated business enterprise. The Trustee filed no exception to
that finding.
ght - a |
72a
No. 82-1334 3
I.
The Company, a Delaware Corporation, was engaged
in the manufacture of juke boxes and other machinery at
its facility in Chicago. In November 1977, it entered into
a three-year collective bargaining agreement with the
Union with respect to a unit of “all plant clerical, and all
production and maintenance employees of the Company”.
As of July 1979, Seeburg employed approximately 3
employees. Shortly thereafter, the Company experienc
severe financial reversals. It began laying off employees.
The Union did not challenge the propriety of the layoffs.
On November 1, 1979, the Company filed a petition for
reorganization under Chapter 11 of the Bankruptcy .
Code, 11 U.S.C. §§ 1101-1174 (Supp. III 1979). At the
time, the Company still employed 150 members of the
bargaining unit. The Company as debtor-in-possession
continued its operations on a diminishing basis. It con-
tinually reduced its complement of employees, reaching a
low of seven in early 1980. Because of allegations of fraud
and mismanagement, the bankruptcy court appointed
Nathan Yorke as Trustee in Sg y for the debtor
company on February 4, 1980. As Trustee, Yorke as-
sumed full control of the Company. His duties primarily
were to evaluate Seeburg’s assets and formulate a plan of
reorganization which would be acceptable to all creditors.
11 U.S.C. § 1106(a) (Supp. III 1979).
Yorke first visited the plant on the day of his mae iF
ment, February 4. He found no unit a mig working
in the production area. Seven unit employees, however,
remained on the Company —— The ALJ credited
Yorke’s testimony that he did not know that the em-
ployees belonged to a union.
At the first creditors’ meeting on February 8, Yorke
learned that the Company owed its employees more than
the $5000 it had in the bank and that its $6,000,000 in un-
liquidated assets (worth approximately $1,500,000 if liq-
uidated) were eclipsed by overall liabilities ‘exceeding
$8,000,000. Following the meeting, Yorke decided that
73a
4 No. 82-1334
it was in the Company’s best interest to terminate
operations completely. He immediately applied to the
bankruptcy court for authorization. The court granted
the application on February 11. Yorke closed the plant
the next day. Yorke obtained $6000 in funds from
Seeburg’s cash on hand to pay the employees for the
period through February 9. He admittedly did not notify
the Union of his decision to terminate operations.
By a letter dated February 15, the Union, through its
attorney Edwin H. Benn, requested bargaining over the
effects of the plant closure. In pertinent part, the letter
read as follows:?
“Gentlemen:
The undersigned represents Local 743 I.B.T. The
Union has a collective bargaining agreement cover-
ing the employees of Seeburg Corporation. As you
are well aware, this agreement governs the wages,
hours and working conditions of those employees.
It is apparent to the undersigned that the rights of
these employees are being seriously undermined. It
has come to our attention that numerous employees
whom we represent are being transferred to do work
for different companies within your corporate struc-
ture and that work, covered by our contract, is being
performed elsewhere. It has also come to our atten-
tion that the remaining employees of Seeburg Corp.
have been locked out as of February 11, 1980....
This is also to demand that an immediate meeting
be set up so that we can discuss the decision and
effects that your action has on our bargaining unit
employees. ...
. . . [WJhat were the reasons that the Seeburg
employees were denied the ability to come to work
2 In view of their direct bearing on the issues before us, we set
forth at length the pertinent portions of the Union’s letter of
February 15 and the Trustee's reply of February 25.
74a
No. 82-1334 5
on February 11, 1980. Will they be transferred to
other payrolls of either Choice Vend, XCor or any
other companies under those companies’ control?
What has happened to the Seeburg supervisory per-
sonnel? Have they been transferred to either Choice
Vend, XCor or any companies under those com-
panies’ control?
Third, are you aware of any prospective pur- }
chasers of the Seeburg Corporation? If so, please
identify their names and addresses. If a sale or other
disposition of the Seeburg Corporation is con-
templated, please inform us what will happen to the
existing facility, such as the property, fixtures,
machinery, trucks, furniture, etc.? In particular, we
would desire to know if there will be a sale or
transfer to other companies within the XCor Cor-
poration. If there will be an acquisition by another
XCor Corporation company, we would like to know
the intentions of XCor concerning future employ-
ment of the managerial, supervisory, or other non-
union employees who have been working for Seeburg.
This would also include any transfer of employees to
Choice Vend. Further, we would desire to know
what will happen to existing accounts receivable and
payable, existing lease agreements or contracts,
other existing liabilities as well as good will. We
would further desire to know the disposition of any
existing commitments to customers or creditors. We
are particularly interested in knowing what will be
the disposition of work done by Seeburg employees
covered by our collective bargaining agreement.
Will that work be transferred to any other entity
within the XCor Corporation or Choice Vend?
Please be advised that we expect our collective
bargaining agreement to be abided by and we ex-
pect a response to this letter by close of business
February 22, 1980. Failure to answer this letter by
the time indicated will necessitate the institution of
the proper proceeding.”
75a
6 No. 82-1334
Yorke responded to this letter on February 25, stating:
“I am in receipt of your letter dated February 15,
1980. Please be advised that the undersigned was ap-
pointed Trustee on February 4, 1980. Be further ad-
vised that the Trustee discontinued the operation of
the business and has no employees.
In reply to your questions, Excor is a publicly
owned company. Consolidated Entertainment owns
all the stock of the Seeburg Corporation. I do not
know who owns Choice Vend. I do not know if Choice
Vend or Excor have any collective bargaining
agreements with labor organizations.
If there is any further information you desire, I
will be happy to furnish same.”
The Union interpreted Yorke’s letter as a refusal! to
bargain and consequently filed an unfair labor practice
complaint on February 28, alleging that the Trustee had
committed various unfair labor practices, including fail-
ing to bargain in good faith. No discussions between the
Trustee and the Union ensued.
In April, Yorke informed the Union that the Company
planned to recall several employees to assist in selling
parts as authorized by the bankruptcy court. Ultimately,
three bargaining unit employees worked at the plant
for the next three to four months. The General Counsel
filed a complaint in June, alleging that the Trustee’s
failure to give notice that he was terminating operations
and his subsequent failure to bargain over the effects of
that decision constituted violations of §§ 8(aX5) and
8(a)(1) of the Act.
3’ The complaint alleged that the Company had violated the
Act by transferring employees w:thout prior notification to the
Union and by refusing to furnish information that the Union
) 2 woe The Regional Director chose not to press these
arges.
76a
No. 82-1334 . 7
Within the month following the filing of the General
Counsel’s complaint, the Trustee located a potential
purchaser for the remaining assets of the Company.
Creditors agreed to the Trustee’s plan of liquidation in
July. The bankruptcy court approved the plan on July 28.
At that time, the court also ruled that the Board’s
backpay claim on behalf of the employees, pending the
unfair labor practice proceeding, was an administrative
expense entitled to priority under the Bankruptcy Code.
After negotiations among the Board, the Trustee, and the
prospective purchaser of the Seeburg assets, the pur-
chaser agreed to set aside $49,000 of assets and $6000
of its own money to cover the backpay claim in the event
the Company ultimately should be found liable.
Upon concluding the unfair labor practice hearing in
February 1981, the ALJ determined that the Trustee had
committed the violations as charg a consequence,
the ALJ recommended issuing a bargaining order. The
Board adopted the ALJ’s findings but found that a
bargaining order by itself was insufficient to remedy the
violations. Consequently, the Board imposed a sliding
backpay requirement upon the Trustee in accordance
with its decision in Transmarine Navigation Corp., 170
N.L.R.B. 389 (1968). This was to strengthen the Union’s
bargaining position to a point approximating the one the
Union enjoyed at the time the Trustee closed the plant.
The Trustee petitions to review and set aside the
Board’s order. The Board has filed a cross-application to.
enforce its order. The Union as intervenor filed a
brief urging that the Board’s order be enforced.
¢.
Il.
We start with the proposition that a Trustee in
Bankruptcy, like any other employer, must abide by the
labor laws, as long as they prescribe conduct consistent
with the duties imposed by the Bankruptey ptcy Code. Local
Joint Executive otel Circle, Inc., 613 F 2d 210,
215 (9th Cir. 1980) (duty to bargain continues); *
Local No. 455 v. Kevin Steel Products, Inc., 519 F 2d 698,
*.
77a
8 No. 82-1334
704 (2nd Cir. 1975) (“obligation to comply with the Labor
Act [continues]”); NLRB v. Bachelder, 120 F.2d 574, 576
(7th Cir.) (duty to bargain and honor employees’ rights to
self-organization), cert. denied, 314 U.S. 647 (1941). Cf
In re Bildisco, 682 F.2d 72, 82-83 (3rd Cir. 1982) (while
debtor-in-possession may reject collective bargaining
agreement as executory contract, “it may be required to
recognize and bargain with the union”), cert. granted, 51
U.S.L.W. 3525 (U.S. Jan. 18, 1983) (No. 82-818).
The law in question—the duty to bargain over the
effects of a decision to terminate operations—strikes us
as critical to protect employees from the ravages of
economic dislocation. NLRB v. Royal Plating & Pub-
lishing Co., 350 F.2d 191, 196 (8rd Cir. 1965); NLRB
v. Adams Dairy, Inc., 350 F.2d 108, 115 (8th Cir. 1965),
cert. denied, 382 U.S. 1011 (1966); Burgmeyer Bros., Inc.,
254 N.L.R.B. 1027, 1028 (1981). So-called “effects”
bargaining provides the Union with an opportunity to
bargain in the employees’ interest for such benefits as
severance pay, payments into the pension fund, preferen-
tial hiring if the employer continues operating at other
plants, and reference letters with respect to other jobs.
First National Maintenance Corp. v. NLRB, 452 US.
666, 681-82 (1981). We therefore termine whether
imposing ere to bargain Over
the effects isi i ons is conso-
or with the Trustee’s functions under the Bankruptcy
e.
We believe that recognizing a duty to bargain would
not unduly impede the Trustee’s discharge of his respon-
sibilities. To protect creditors, the Trustee must ad-
minister the debtor corporation, 11 U.S.C. § 704(1) (Supp.
III 1979), and thereby take responsibility for “the actual,
necessary costs and expenses of preserving the estate, in-
cluding wages, salaries, or commissions for services
rendered after the commencement of the case.” 11 U.S.C.
§ 503(b)1A) (Supp. III 1979). Since the obligation to
bargain arises only with the Trustee’s decision to ter-
minate operations in the overall interests of the creditors,
the costs concomitant with that decision properly can be
oe ae
78a
No. 82-1334 9
attributed to the Trustee’s efforts to “preserve the estate”
on the creditors’ behalf. As the bankruptcy court here
determined, therefore, costs stemming from “effects”
bargaining can be considered administrative expenses
and thus fall within the ambit of the Trustee’s authority.
Cf. Reading Co. v. Brown, 391 U.S. 471, 482-84 (1968)
(those injured during administration of estate by Trustee
entitled to priority claim as administrative expense); Jn
re W.T. Grant Co., 620 F.2d 319 (2nd Cir.) (severance
payments to employees entitled to priority as ad-
ministrative expense), cert. denied, 446 U.S. 983 (1980).
But cf. In re Mammoth Mart, Inc., 536 F.2d 950, 955 (1st
Cir. 1976) (claim for severance pay based upon services
rendered before bankruptcy not an administrative ex-
pense). While the Trustee’s discretion might be con-
strained by his need for authorization from the bankrupt-
cy court, that limitation can be taken into account in any
bargaining. With these considerations in mind, we must
determine whether the Trustee’s failure to — in
this case violated §§ 8(aX5) an a 0
The Board predicated its § 8(a)b) conclusion on two
findings: f
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