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Saks & Co. v. National Labor Relations Board

decided: November 14, 1980.


Petition for review and cross-petition for enforcement of an order of the National Labor Relations Board (247 N.L.R.B. No. 128) requiring Saks & Company to cease and desist from unfair labor practices. Enforced as modified.

Before Friendly and Meskill, Circuit Judges, and Bonsal, District Judge.*fn*

Author: Bonsal

Saks & Co. ("Saks") petitions for review of a Decision and Order of the National Labor Relations Board ("NLRB") issued against Saks on February 14, 1980 (247 NLRB No. 128). The NLRB cross-appeals for enforcement of its Order. The Amalgamated Clothing and Textile Workers Union ("Union") has intervened in support of the Order.

The NLRB found that Saks had violated Sections 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. ยงยง 158(a)(1) and 158(a)(5), by refusing to bargain with the union representing the alterations employees at the Saks store in Pittsburgh and in unilaterally setting the initial terms and conditions of employment of those employees. The NLRB's Order requires Saks to recognize and, if requested, bargain with the union and to make whole the employees for any losses suffered because of Saks' unlawful conduct.


Saks is a New York corporation which operates a nationwide chain of retail stores. For many years, Saks has operated a "Saks Fifth Avenue" store in Pittsburgh, Pennsylvania located on the sixth floor of the building which houses the department store of Gimbel Brothers, Inc. ("Gimbels"). All of the capital stock of Saks has been owned by Gimbels since 1924. The two companies file consolidated income tax returns. Saks nonetheless operates its stores independently of Gimbels and the two companies have separate officers and separate labor relations policies.

In 1973, Brown and Williamson, Inc. purchased all of the outstanding stock of Gimbels and, since 1975, the chairmen of both Saks and Gimbels have reported directly to the chief executive officer of Brown and Williamson.

Until August 10, 1977, Saks operated its Pittsburgh store in the Gimbels building pursuant to a written lease. Saks subcontracted its alterations work on women's garments to Gimbels, the work being performed by Gimbels employees, Gimbels paying social security taxes and premiums for unemployment insurance and workmen's compensation. Saks reimbursed Gimbels for the cost of labor, paid a fee for supervision by a Gimbels employee, and paid a portion of the fringe benefits of the Gimbels employees working on Saks garments.

Until about August 12, 1977, Gimbels maintained separate work areas for the alterations employees, one being used for alterations work on garments sold by Gimbels, and the other for alterations work on garments sold by Saks.

On August 12, 1977, the two areas occupied a large room, divided in half by a partition, on the thirteenth floor of the Gimbels store. Gimbels employed 18 employees in the Saks area and 10 in the Gimbels area. The Saks area performed alterations only on women's garments, while the Gimbels area performed alterations on both men's and women's garments. While Gimbels' manager of alterations supervised both work areas, Alfred Gianta, Saks' manager of alterations, was responsible for the quality of work performed in the Saks area.

The Union has been recognized by Gimbels since 1937 as the exclusive bargaining representative of its alterations employees. The most recent collective bargaining agreement (February 16, 1976 to February 15, 1979) recognized the Union as the exclusive bargaining representative of its alterations employees in the Pittsburgh metropolitan area. The agreement, which contains union security and check-off provisions, was negotiated between the Union and the Labor Standards Association, a multi-employer association of which Gimbels is a member.

On June 15, 1976, Saks signed a lease for a retail store facility, located one block from the Gimbels store, in downtown Pittsburgh, and at the same time notified Gimbels that it would be closing its operations within the Gimbels store. By letter of July 7, 1977, Saks notified Gimbels that it would be establishing its own alterations workroom in its new Pittsburgh store and therefore would no longer require the services of Gimbels' alterations workroom. On July 15, Richard Mascaro, the director of labor relations at Gimbels, inquired of John Bullis, the senior vice-president of Saks, whether Saks would consider interviewing for employment at its new Pittsburgh store those alterations employees who would be displaced as a result of Saks' relocation decision. Bullis replied that Saks would be happy to arrange such interviews and noted that both the Saks personnel director and the Saks manager of alterations would be interviewing applicants in late July. Mascaro informed the Union's business representative of Gimbels' intention to close the Saks alteration work area. Mascaro then informed the employees in the Saks area of the closing and informed them that they could apply for jobs at Saks' new Pittsburgh store.

Following interviews, Saks hired 16 of the 18 Gimbels employees who had worked in the Saks area. Saks closed its store at the Gimbels location on August 10, 1977, and on August 15, the 16 former Gimbels employees began working at Saks' new Pittsburgh store under the supervision of Mr. Gianta.

At its new store, Saks added men's and children's garments to its line of women's garments, so that the scope of its ...

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