Opposition Brief — Modern Manufacturing Co. v. National Labor Relations Board

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Statement :

A. The Board’s findings of fact and conclusions of law

1. Petitioner’s status as an employer ............

2. The unfair labor practices ..................

3. The facts relating to petitioner’s procedural con-

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CITATIONS

Cases:

National Labor Relations Board v. Don Juan, Inc., 178

MEM US ha duidok arent Ctelwacec avid uss ae

National Labor Relations Board v. Greater New York

Broadcasting Corp., 147 F. 2d 337 ..................

Nati or Relations Board v. MacKay Radio ¢

Telceeted co, 1 4 8 ee eon

National Labor Relations Board v. Nu-Car Carriers, Inc.,

189 F. 2d 756, certiorari denied, 342 U. 8.919 ......

National Labor Relations Board v. Reliable Newspaper

* Delivery, Inc., 187 F. 24 547 ......................

Press Co., Inc. v. National Labor Relations Board, 118 F.

2d 937, certiorari denied, 313 U.S. 595..............

Statutes :

National Labor Relations Act, as amended (61 Stat. 136,

29 U. 8. C., Supp. IV, 141, et seq.) :

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Ynthe Supreme Court of the United States

OcToBER TERM, 1952

No. 54

MopERN Manvracturine Company, INc.,

PETITIONER

v.

Nationa Lasor RELATIONS Boarp

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

BRIEF FOR THE NATIONAL LABOR RELATIONS

BOARD IN OPPOSITION

OPINIONS BELOW

The original opinion of the court below (R. 479-

483) is reported at 193 F. 2d 613. The order deny-

ing rehearing (R. 489) was issued February 13,

1952, without opinion. The findings of fact, con-

clusions of law, and order of the National Labor

Relations Board (R. 15-155), are reported at 90

NLRB 1676.

JURISDICTION .

The judgment of the court below was entered on

February 14, 1952 (R. 490). The petition for a

(1)

2

writ of certiorari was filed on May 9, 1952. The

jurisdiction of this Court is invoked under 28

U.S. C. 1254 and under Section 10 (e) and (f)

of the National Labor Relations Act, as amended.

STATUTE INVOLVED

The pertinent provisions of the National Labor

Relations Act, as amended (61 Stat. 136, 29 U.S. C.,

Supp. IV, 141, et seq.), are set forth in the Appen-

dix to the petition, pp. 10-13.

QUESTIONS PRESENTED

1. The complaint alleged that petitioner unlaw-

fully locked out all of its employees between Octo-

ber 27, and November 29, 1949. At the hearing it

appeared that the lockout continued as to a portion

of the employees after November 29. The legal-

ity of petitioner’s continuation of the lockout was

fully litigated. The Board found that the lockout,

illegal in its inception, was illegally continued after

November 29 and ordered appropriate remedial re-

lief. The first question presented is whether, under

these circumstances, the Board was precluded from

finding that the illegal lockout continued after

November 29, because continuation of the lockout

was not alleged in the complaint.

2. Whether the Board properly found that peti-

tioner, together with Somerset Classics, was respon-

sible as an ‘‘employer’”’ for the unfair labor prac-

tices in question.

3

STATEMENT

A. THE BOARD’s FINDINGS OF FACT AND CONCLUSIONS

OF LAW

Upon the usual proceedings under Section 10

of the National Labor Relations Act, as amended,

the Board, on August 2, 1950, issued its findings

of fact, conclusions of law, and order. In large

part the Board’s decision on the merits is not

presently in issue. The narrow questions presented

here involve only petitioner’s status as an employer

and the sufficiency of one aspect of the complaint.

The facts pertinent to these issues may be sum-

marized as follows:

1, Petitioner’s status as an employer

The complaint alleged and the Board found that

petitioner, Modern Manufacturing Company, Inc.,

and Somerset Classics, Inc., were joint employers

and were jointly responsible for the unfair labor

practices which occurred at Somerset’s plant at

Rome, New York.’ Both petitioner and Somerset

are New York corporations, engaged in the ladies’

garment business. Modern purchases piece goods

for the manufacture of ladies’ dresses, cuts the ma-

terial into garment sections at its own plant,’ ships

the sections to other firms for sewing and com-

* Somerset Classics, Inc., has not appealed from the decision

of the court below. In the proceedings before the court below,

Somerset all that it was insolvent and on the verge of

dissolution (R. 483).

* Modern operates a cutting plant under the trade name of

Beacon Company (R. 101, 162, 171).

4

pletion, and then sells the completed garments to

retail concerns (R. 23, 36; 169). Somerset works

exclusively for Modern (R. 36; 165-166, 325, 350,

362). Outdoor Frocks, Inc., of Philmont, New

York, and Greenwich Garment Company of Green-

wich, New York, like Somerset, also work ex-

clusively on Modern’s garments (R. 23, 36, 132-133;

166, 159, 359-360). These three firms do the bulk

of Modern’s work (R. 133; 400, 458, 460, 461).

Petitioner Modern and its three major contrac-

tors, Somerset, Outdoor and Greenwich, are com-

pletely owned, controlled, and operated as an in-

tegrated enterprise by members of the Friedman

family which consists of Sigmond Friedman,

Bertha, his wife, David their son, and Joseph and

Max Donner (also known as Friedman) the sons of

Mrs. Friedman by a previous marriage (R. 23, 35-

36; 164, 169-170, 172, 352, 356, 468-470). The ma-

jority stockholder of Modern is Sigmond Fried-

man; the remaining shares are held by his wife

and three sons (R. 35, 131; 374-375, 470). Mrs.

Friedman and the three brothers own all the stock

of Greenwich and Outdoor (R. 36, 131-132; 167,

171, 468, 469). Outdoor owns all of the Somerset

stock (R. 24, 36, 132 ; 165, 172, 469). The five mem-

bers of the Friedman family serve as directors and

officers of the various Friedman companies (R.

131-132 ; 468-470). The president, vice president,

and secretary-treasurer of Somerset are also, re-

spectively, second vice president, vice president and

* In the parlance of the ent industry Modern is known

as a jobber and the other » contractors (R. 23, 36; 166).

5

secretary of Modern (R. 23-24 ; 164, 165, 469, 470).*

The business affairs of all the Friedman com-

panies, as a practical matter, are carried on as if

they were one firm.® Sigmond Friedman, founder

of the business, stated that he “ran the whole busi-

ness with the boys and [his] wife as more or less a

family matter.” (R. 406). Although Sigmond

* The following tabulation, based upon exhibits in the record

(R. 469-470), depicts the interlocking character of the Fried-

man enterprises:

on Mod 6 ich Outd

i» Sigmond Friedman Joseph Donner Max Donner David Friedman

2nd V. Pree. David Friedman a _ .

MA Max Donner David Friedman | B. }Max Donner

8. Friedman J. Donner B. Friedman D. Friedman

M. Donner M. Donner M. Donner

BT B. Friedman J. Donner J. Donner

® Historically, as well as operationally, Modern is the parent

company of the Friedman enterprises. Modern was originall

& partnership consisting of Sigmond Friedman and Bertha

ner, @ widow. e two partners were subsequently

married and pe ge J Mrs. Friedman’s sons by her former

oseph, were taken into the business,

along with David Friedman, a son of the present lage.

In 1935, the entire assets of Modern were transferred to a

_— formed corporation of the same name, the ownership

of the new corporation being divided among the various

members of the family (see n. 4). In 1933, prior to the

incorporation of Modern, Friedman formed corpora-

tion, Outdoor Frocks, and distributed the ownership Among

the various members of his family. The Greenwich an

corporations were formed by the Friedmans in 1943

and 1947 respectively, and the ownership and control of these

rations is divided amon the Friedmans in the manner

indicated above = n. 4) (R. 131-132; 374-376, 406, 356-

79-380) .

6

Friedman exercises ultimate control over Modern,

he is aided in the conduct of the business by his

sons, David and J oseph, who are in charge of Mod-

ern’s sales and production matters (R. 24, 133 ; 356,

361-362, 384-385, 406-407). In addition to their

duties for Modern, David and J oseph also exercise

full control over the production operations and la-

bor relations of Somerset, Outdoor and Greenwich

(R. 23, 24, 133, 137 ; 327, 362, 365-367, 371 ; 407-408,

417).

The financial records and books of all the firms

are kept in Modern’s offices in N ew York or at the

office of a commonly employed accountant (R. 134;

168, 171, 378) ; Somerset’s payroll lists are sent to

Modern’s offices where Modern’s bookkeeper per-

forms the necessary clerical work and prepares the

payroll checks on Somerset’s account (R. 134; 350-

351, 426-427, 452); when necessary, Modern ad-

vances funds to Somerset in order to meet the pay-

roll (R. 135, 363) ; no formal billing practices are

followed between Modern and the other Friedman

concerns (R. 135; 160, 162). Each of the three

Friedman brothers draws a salary from the con-

tracting firm of which he is president, and also

draws a salary from Modern (R. 134-135 ; 415, 429-

430).

When Sigmond Friedman became ill in October

1948, at about the time the unfair labor practices

occurred, David acquired the additional responsi-

bility for allocating Modern’s work to the subsidi-

ary firms (R. 19, 24, 139-140 ; 388-389, 389-390, 398-

399, 346-347, 425-426, 433-437). While acting in

=...

7

this capacity, as an officer of Modern, David made

the decision to stop sending work to Somerset,

which was then being organized by the Union, and

to curtail its workload when it resumed operations,

and thus, as the Board found (R. 24, ibid.), “‘made

Modern the means of accomplishing the anti-union

policies of Somerset.’’

On the foregoing facts the Board found (R. 23-

24, 128-140) that Modern and Somerset were en-

gaged in a single integrated enterprise and that

both were employers of the employees involved and

jointly responsible for the unfair labor practices

summarized below.

2. The unfair labor practices

Early in October, 1948, representatives of the

Union * asked Somerset’s local manager for a bar-

gaining conference (R. 22, 116-117, 119, 125; 318,

319). He referred this request to David Friedman

in New York (R. 22, 122, 127; 408, 450). Shortly

thereafter, the shop forelady, wife of the local man-

ager, made a speech to the employees stating that

the plant would be closed if the Union campaign

was successful (R. 17, 39, 41-47; 189-190, 201-202,

210-211, 229, 248-244, 263-264, 271, 291, 301, 304).

A week or so later J oseph Donner [Friedman]

made a similar speech to the Somerset employees

(R. 17, 47-48; 190-192, 202-203, 204-206, 211-212,

220, 230-231, 232-233, 238-239, 244-245, 256-258,

* International Ladies’ Garment Workers Union, A. F. of L,,

which had been designated by the employees as their bargain-

ing agen

TL ean

8

264-266, 291, 292-293, 296, 297-298, 304-305, 311-

315). Thereafter, with the consent of the local

manager (R. 54-60), an anti-union petition was

circulated among the employees (R. 17, 54-60; 244,

252-253, 305, 471-472). Finally, starting October

25, David Friedman, who was then president of

Somerset and also, in his father’s absence, the effec-

tive head of Modern, stopped sending goods to

Somerset, thereby causing the plant to close down

entirely on October 27, 1948 (R. 24, 139-140; 346-

347, 433-437). A month later, Modern, still under

David’s control, resumed shipments to Somerset

but on a greatly curtailed scale (R. 139-140; 425-

426). Thereupon, Somerset partially resumed op-

erations (R. 91-95; 425).

Upon these facts the Board found (R. 17-25; 41-

128) that Modern and Somerset, in violation of

Séction 8 (a) (1) of the Act, interfered with, re-

strained and coerced their employees; in violation

of Section 8 (a) (5), refused to honor the Union’s

bargaining request; and, in violation of Section 8

(a) (3), closed the Somerset plant on October 27,

1948, in order to discourage membership in the

Union. The Board further found (R. 19, 88-95,

110), that Modern and Somerset, in violation of

Section 8 (a) (3), continued, for the same illegal

purpose, partially to maintain the lockout after

November 29. The Board accordingly ordered (R.

27-31) petitioner and Somerset to cease and desist

from the unfair practices found, to bargain col-

lectively with the Union, to reinstate those em-

ployees locked out on October 27 who have not yet

been reinstated, and to make whole all employees

9

for losses of pay suffered by reason of the dis-

criminatory lockout.

3. The facts relating to petitioner’s procedural

contention

The complaint initiating this proceeding alleged,

inter alia, that Modern and Somerset locked out

Somerset’s employees on October 27, 1948, and re-

fused to reinstate them until November 29, 1948

(R. 11). The complaint further alleged, as a sepa-

rate violation, that petitioner and Somerset dis-

criminatorily refused to rehire eleven named em-

ployees after the plant reopened on November 29

(R. 11). On the basis of evidence adduced at the

hearing the examiner found that the lockout of

October 27 was not motivated by economic consid-

erations, as petitioner and Somerset alleged, but

was designed to defeat the Union (R. 64-88). The

examiner also rejected the companies’ contention

that Modern limited its shipments to Somerset

after November 29 for legitimate business reasons,

and found that the reduction in shipments was de-

signed, like the initial lockout, to defeat the Union

(R. 88-95, 110). As a consequence of the reduction

in shipments, of 70 employees on the payroll prior

to October 27, only 49 were taken back on or after

November 29 and 21 remained locked out (R. 96-

97). In these circumstances the examiner found it

unnecessary to pass on the allegation (R. 11, par.

12) that petitioner and Somerset had discrimina-

torily refused to rehire the employees named in the

complaint, stating that ‘‘once an employee’s rights

have been violated by discriminatorily locking him

10

out, it is unnecessary to show that he was twice

wronged by having been further discriminated \

against in the process of rehire’? (R. 90). Al-

though the examiner noted that more than the

eleven persons alleged to have been discrimina-

torily denied reinstatement were affected by the

partial continuation of the illegal lockout after No-

vember 29 (R. 96-97), he did not recommend rein-

statement or back pay for all because they were

not all named in the complaint.

The Board agreed with the examiner’s finding

that the lockout was illegally continued in part

after November 29 (R. 19), and held that it was

not precluded from remedying the violation in full

by the failure of the complaint to allege that the

lockout was partially continued after November 29.

The Board said : ‘‘the violation found is of the same

class of violation as that set up in the charge and

complaint, and was a continuation of it in pur-

suance of the same objective” (R.19,n. 11). Dis-

agreeing with the trial examiner, the Board fur-

ther held that in affording a remedy for this viola-

tion it was not limited by the independent allega-

tion of the complaint, upon which it did not rely,

that eleven employees were discriminatorily denied

reinstatement after November 29. Consequently,

the Board awarded reinstatement and back pay to

all victims of the partial lockout (R. 25, 22, n. 21).

B. THE DECISION OF THE COURT BELOW

The Court of Appeals for the Second Circuit

held that evidence on the record considered as a

:

whole sustained the findings of the Board. The

court found (R. 482) that ‘‘substantial evidence

supports the mutual responsibility of the two cor-

porations [Modern and Somerset] for the acts in

question.”” With respect to petitioner’s proce-:

dural contention the court held (R. 483) that the

Board’s ‘‘jurisdiction having been invoked in re-

gard to the initial plant shutdown and measures

properly remedial thereto, any unfair labor prac-

tice growing out of and related to this form of vio-

lation comes within the Board’s authority.”

ARGUMENT

1, Petitioner’s contention that in the absence of

ay allegation in the complaint that the illegal lock-

out was continued after November 29, the Board

was powerless so to find raises no substantial issue

warranting review by this Court. As the facts set

forth above show, and as the trial examiner, the

Board and the Court of Appeals found, the con-

tinuation of the lockout was part and parcel of the

very transaction alleged in the complaint as a viola-

tion of Section 8 (a) (3) of the Act. Moreover, the

precise question—the reason for reduced shipments

from Modern to Somerset after November 29—

was the subject of proof and counterproof by the

Board and by petitioner at the hearing (R. 421-425,

465, General Counsel’s Exhibits 3 and 4).’ Spe-

"R. 465 shows the number of employees excluded after

Somerset resumed operations on November 29. General

Counsel’s Exhibits 3 and 4 are accounting records of the

Friedman enterprises which were not fully incorporated in

the printed record because of their volume. On the basis of

these accounting records the Board concluded (R. 91-95),

12

cifically, petitioner attempted to prove that the re-

duction in shipments which resulted in the partial

lockout after November 29, was motivated by busi-

ness considerations (R. 421-425). There is thus

no merit in petitioner’s claim (Pet., p. 3), that at

the hearing ‘‘There was no issue of a general or

partial lockout after November 29, 1948,’ and ac-

cordingly, there is no basis for its assertion that

(Pet., p. 7), a “‘question of unfairness’’ is present

which distinguishes this case from National Lico-

rice Co. Vv. National Labor Relations Board, 309

U. S. 350. Indeed, although the trial examiner

found that the continuation of the lockout was il-

legally motivated (R. 88-95), petitioner made no

effort to reopen the record to adduce additional

evidence on that question, and petitioner made no

such motion either to the Board or the court below

even after the Board in its decision granted full

relief to the victims of the partial lockout. Cf.

National Labor Relations Board v. Greater New

York Broadcasting Corp., 147 F. 2d 337, 339

(C. A. 2). Far from raising a substantial due

process issue, petitioner’s claim, at best, is ‘‘highly

technical’’ (National Labor Relations Board Vv.

MacKay Radio and Telesson Co., 304, U. 8. 333,

349-351) and merits no further review. See our

brief in opposition to certiorari in Olin Industries,

Inc. v. National Labor Relations Board, No. 586,

contrary to petitioner’s contention (R. 421-425), that Modern

could have shipped Somerset enough work to keep it operating

at pre-lockout capacity, but failed to do so for the same

illegal reasons which motivated the original lockout.

Pe 13

October Term, 1951, p. 21, certiorari denied, 343

U. 8. 919.

Petitioner’s reliance upon the fact that the Gen-

eral Counsel did not amend the allegation of the

complaint which named eleven specific employees

as having been discriminatorily denied reinstate-

ment after November 29, is misplaced. As the

court below observed (R. 482-483) :

The Board relied upon the trial examiner’s

finding not of discrimination, but of the con-

tinued partial lockout, a violation of Sec. 8

(a) (1) and (3) which affects all those not

rehired.

For this reason, National Labor Relations Board

v. Reliable Newspaper Delivery, Inc., 187 F. 2d

547 (C. A. 3), cited by petitioner (Pet., p. 6), is

not in point, as the court below noted (R. 482).

That case, in the Third Circuit’s view (187 F. 2d,

at 550), involved only allegations that named indi-

viduals had been discriminated against, and did

not involve a blanket unfair labor practice, such as

a lockout, which, by its very nature, affects all em-

ployees.®

2. The holding of the Board and the court below

that petitioner, as well as Somerset, was respon-

sible for the unfair labor practices here involved

rests entirely upon the Board’s factual finding, sus-

*In addition, it should be observed that the language in the

Reliable case to which petitioner refers is merely dictum and

not a holding. The case was decided on entirely different

grounds. 187 F. 2d, at 550.

14

tained by the court below, that the two firms were

operated as a single integrated business (R. 23-24,

128-140, 482). That finding, as the evidence set

forth above (supra, pp. 3-7), shows, is abundantly

supported. In any event, petitioner’s challenge

poses no issue of general importance which war-

rants review by this Court. National Labor Rela-

tions Board v. Nu-Car Carriers, Inc., 189 F. 2d 756

(C.A. 3), certiorari denied, 342 U. S. 919.

Contrary to petitioner’s claim (Pet., p. 8), there

is no conflict on the proposition that when two or

more nominally separate corporations operate as

a single entity, both may be held responsible for

unfair labor practices affecting the employees of

one of the corporations. National Labor Relations

Board v. Stowe Spinning Co., 336 U. 8. 226, 227;

National Labor Relations Board v. Don J uan, Inc.,

178 F. 2d 625, 627-628 (C. A. 2). Indeed, in Press

Co., Inc. v. National Labor Relations Board, 118

F. 2d 937, 947 (C. A. D. C.), certiorari denied on

matters not here relevant, 313 U. 8. 595, with which

petitioner claims conflict (Pet., p. 8), the court

suggested that if the corporate respondents there

involved had operated as a single integrated busi-

ness, the court would have sustained the Board’s

order.

—

15

CONCLUSION

For the reasons stated, it is respectfully sub-

mitted that the petition for a writ of certiorari

should be denied.

Puiuip B. PERLMAN,

Solicitor General.

GeorGE J. Bort,

General Counsel,

Davip P. Finpiina,

Associate General Counsel,

Mozart G. Ratner,

Assistant General Counsel,

Louis ScHwaktTz,

Attorney,

National Labor Relations Board.

JUNE, 1952.

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