Opinion ID: 278155
Heading Depth: 1
Heading Rank: 3

Heading: Kemp's Liability for Makela's Back Pay Obligation

Text: 28 Although we have held that Kemp is obligated to bargain with the union chosen by a majority of Makela's employees, this holding does not compel the further conclusion that Kemp must remedy Makela's unfair labor practices if Makela fails to do so. 3 In N.L.R.B. v. New Madrid Mfg. Co., 215 F.2d 908 (8th Cir. 1954), the case relied upon principally by the Board in imposing this liability on Kemp, the court said: 29 It must be remembered that the Act does not purport to make the consequences of unremedied unfair labor practices a lien upon the enterprise, and there thus is no right to visit them upon a successor on that basis or in that administrative spirit. A successor can be made to bear the burden of his predecessor's labor-relations wrongs, only in sound remedial relationship to the nature and circumstances of his immediate successorship. 215 F.2d at 914. 30 In New Madrid, supra, a basis was found for holding the successor liable in the fact that the successor had personally participated in some of the unfair labor practices of the predecessor. 215 F.2d at 915. The record in this case indicates that Kemppainen was a major participant in the unfair labor practices for which Makela was ordered to provide back pay. The court also found in New Madrid that the successor may have moved his plant in an effort to avoid the labor difficulties of the predecessor. While Kemppainen did not move the plant, the record suggests that he felt the mere purchase of the business would permit him to refuse to deal with the union. 4 In any event, participation by the successor in the unfair labor practices of the predecessor would seem to be of greater importance in determining liability than would the motivation of the successor in making the purchase. 31 Some of the other cases cited by the Board suggest that participation in a managerial capacity in the unfair labor practices of a predecessor is insufficient to render a successor liable to remedy those practices. In N.L.R.B. v. Fred P. Weissman Co., 170 F.2d 952 (6th Cir. 1948) and N.L.R.B. v. Tempest Shirt Mfg. Co., 285 F.2d 1 (5th Cir. 1960), the ownership of the successor was substantially the same as that of the predecessor. In N.L.R.B. v. Parran, 237 F.2d 373 (4th Cir. 1956), the court based the liability of the successor on the following reasoning of the Board: 32 As bearing upon this responsibility, we note that, because of his status as a prospective purchaser, Parran's relation to Oriole prior to his acquisition of this Company was more that of an owner than of a mere general manager.    Parran not only performed the duties of a general manager, he also financed to a substantial extent the operations of Oriole from his own personal funds. 237 F.2d at 375. 33 In our own case of N.L.R.B. v. Herman Pet Supply, Inc., 325 F.2d 68 (6th Cir. 1963), we considered whether a successor was obligated to reinstate employees of a predecessor who had been guilty of unfair labor practices. There, we held that the sale had not resulted in a true change of ownership and had therefore not been bona fide, and we enforced the order of reinstatement. We suggested that reinstatement would not have been ordered if there had been a true change in ownership, 325 F.2d at 70, but we were not called upon to consider whether a back pay obligation could be imposed in the case of a bona fide sale. 34 In the instant case, Kemppainen exercised broad powers in the management of Makela. He handled hiring, firing, work scheduling, and bidding for jobs with little or no consultation with the Makela family. Moreover, he owned ten per cent of the stock of Makela and served as an officer and director of the company. Although the sale of Makela resulted in a substantially complete change of ownership and the Board was correct in finding the sale to have been bona fide, we are of the opinion that given the particular facts of this case, the purposes of the Act will best be served by enforcing the order of the Board with regard to Kemp's liability in the event that Makela does not comply with its obligation to provide back pay. 35 Enforcement of the order of the Board, modified with regard to the length of the back pay period, is granted.