author: HASTINGS, Senior Circuit Judge. PELL, Circuit Judge

text:
    ZIM’S FOODLINER, INC., d/b/a Zim’s IGA Foodliner, and S&O, Inc., d/b/a Paul’s IGA Foodliner, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 73-1199.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 16, 1974.
    Decided April 4, 1974.

      Thomas D. Burlage, Samuel W. Wit-wer, Jr., and Lawrence S. Wick, Chicago, 111., for petitioners.
    Elliott Moore, Deputy Associate Gen. Counsel, Joseph E. Mayer, William Gaus, Corinna Metcalf, Attys., National Labor Relations Board, Washington, D. C., for respondent.
    Before HASTINGS, Senior Circuit Judge, and PELL and SPRECHER, Circuit Judges.
   HASTINGS, Senior Circuit Judge.

The principal question presented by this case is whether fragmentation of a collective bargaining unit, caused by the piecemeal sale of business assets, precludes the National Labor Relations Board from finding “suceessorship” and imposing attendant labor obligations upon the successor employer.

Two employers are involved in the instant petition for review. Petitioner Zim’s Foodliner, Inc. (hereinafter “Zim’s”) was found by the Board to have violated § 8(a)(5) of the National Labor Relations Act, Title 29 U.S.C. § 158(a)(5), by refusing to bargain with two unions representing appropriate units of its employees, and by unilaterally changing certain terms and conditions of employment. Zim’s also was found to have violated § 8(a)(1) of the Act, Title 29 U.S.C. § 158(a)(1), by engaging in the above § 8(a)(5) violations and by threatening to go out of business in order to discourage employee support for the unions. Petitioner S&O, Inc., doing business as Paul’s IGA Foodliner (hereinafter “Paul’s”), was found to have violated §§ 8(a)(5) and 8(a)(1) through its refusal to bargain with a single union representative of its employees. Paul’s was not found to have instituted unilateral changes or committed independent § 8(a)(1) violations.

Since the underlying facts were quite similar as to each employer, the complaints against both petitioners were consolidated for hearing before an administrative law judge, and a single decision issued. The judge’s findings, conclusions and recommended order were subsequently adopted by the Board. The Board order, 201 NLRB No. 141 (1973), is the present subject of review. The Board here cross-petitions for enforcement of its order.

In the summer of 1971, the Kroger Company, a manufacturer, distributor and retailer of food products, undertook to terminate its retail operations in the State of Wisconsin. Pursuant to this undertaking, buyers were sought for its 57 retail outlets in the state.

On July 19, 1971, Kroger executed sales agreements covering two of its Wisconsin supermarkets. The Kroger store in the city of Monroe was purchased by Lowell Zimmer, and the store in Edgerton was purchased jointly by Paul Sanderson and Fred Oreel. Both Monroe and Edgerton are located in the general vicinity of Madison, Wisconsin, and each has a population of less than 10,000. Both businesses were subsequently incorporated by their new owners. The agreements provided for the sale of certain tangible personal property at each store, primarily inventories and equipment, and for the assignment of Kroger’s leasehold interests in the store buildings. The purchasers did not agree to buy Kroger good will or other intangibles, and did not generally assume Kroger liabilities. In particular, the agreements contained no provisions for the buyers’ assumption of outstanding labor agreements.

On July 24, Kroger ceased all operations at the two stores, and on July 26, bills of sale and lease assignments were executed in fulfillment of the July 19 agreements. Both the Monroe and Edg-erton stores were opened for business by their new owners on July 27 under the names “Zim’s IGA Foodliner” and “Paul’s IGA Foodliner,” respectively.

The record reveals little regarding the labor relations history of the two stores while operated by Kroger. It appears that for some years prior to 1971 Kroger maintained a bargaining relationship with two unions representing multi-store units which included the Monroe and Edgerton stores. These unions were Retail Clerks Union Local No. 1401 (hereinafter “Retail Clerks”) and Amalgamated Meat Cutters & Butcher Workmen of North America Local No. 444 (hereinafter “Meat Cutters”). At the time of the 1971 sales, two collective bargaining agreements of relevance here were in effect. The first contract, executed November 17, 1970, and effective until June 30, 1973, was negotiated with the Retail Clerks and covered employees other than meat department and supervisory personnel at both stores. Employees at nine other Kroger stores in the Madison area were covered by this same agreement, bringing the total number of stores included in the bargaining unit to 11. A second contract, covering meat and delicatessen employees at the Monroe store, was negotiated with the Meat Cutters and executed by the parties on May 4, 1971. Four other stores were covered by this contract, which was to be effective through March 24, 1973. The record does not reveal the total number of employees in either multi-store unit.

Both the Retail Clerks and Meat Cutters agreements contained- union security clauses providing for union shops. The record indicates, and the administrative law judge so found, that Zimmer, Sanderson and Oreel were all aware of these contracts at the time they purchased the former Kroger stores.

Immediately prior to the July 1971 sales, 16 employees of the Monroe store and 14 employees of the Edgerton store were covered by the Retail Clerks agreement. The Meat Cutters contract applied to three meat department employees of the Monroe store.

Following Kroger’s closedown on July 24, a two day hiatus occurred during which the new owners cleaned and restocked their stores for opening. By the time Zim’s opened for business on the 27th, the entire former Kroger complement of employees had been hired, i. e., 16 grocery employees and 3 meat department personnel. In addition, the Kroger store manager was retained in his former position. Paul’s, on the other hand, hired only 9 of the 14 former Kroger grocery employees at the Edgerton store. .With the exception of part-time helpers in the form of Sanderson’s wife, son and daughter, however, these 9 comprised the entire employee complement at Paul’s outside of the meat department. Like Zim’s, Paul’s continued to employ the former Kroger store manager.

On July 23, 1971, the Retail Clerks mailed letters to Zimmer and Oreel, informing them of “successor language” in the Kroger collective bargaining agreement and demanding that the agreement be honored. The letters advised that “[t]he successor employer * * * may not unilaterally change wages, hours, [or] working conditions without committing an unfair labor practice and subjecting itself to a back pay order.” The letters concluded by stating that if any “special circumstances” existed of which the union was not aware, it was willing to meet with the purchasers and discuss them. Sand-erson received a similar letter on July 28.

On August 20, 1971, the Meat Cutters mailed a letter to Zimmer advising him of his obligation to recognize and bargain with the union with respect to Zim’s meat department employees, as well as to “honor, adopt and enforce” the Kroger collective bargaining agreement.

Zim’s refused to recognize and bargain with either union; Paul’s adopted the same position with respect to the Retail Clerks. Likewise, both employers refused to adopt or be bound by the Kroger collective bargaining agreements, The parties stipulated that Paul’s, on July 27, unilaterally reduced wage rates and work hours beiow those provided by the Kroger-Retail Clerks agreement. On that date Paul’s informed its employees 0f their wages and working hours and subsequently maintained those wages and hours at their announced levels.

As for Zim’s alleged unilateral changes, the parties stipulated that in mid-August, “about three weeks after the opening for business on July 27, 1971,” the employer unilaterally reduced wage rates of grocery department employees, and reduced work hours of both grocery and meat department employees, below the levels specified by the Kroger agreements. During the three week period, Zim’s had continued the wages and hours in effect under Kroger. Zim’s subsequently maintained the new wages and hours established in mid-August.

Unfair labor practice charges against Zim’s were filed by the Retail Clerks and the Meat Cutters on August 27 and September 16, 1971, respectively. Each charge alleged that Zim’s had refused to recognize the union as collective bargaining representative of its employees; had unilaterally changed terms and conditions of employment without bargaining; and had refused to abide by the terms of the Kroger collective bargaining agreement. On September 22, 1971, the Retail Clerks filed a charge against Sanderson with respect to Paul’s, which was subsequently amended on November 24, 1971, to allege violations similar to those attributed to Zim’s. The Acting Regional Director issued complaints against both employers. The cases were consolidated for hearing on January 18 and 19, 1972, along with a third case arising out of the sale of the Kroger supermarket in Middleton, Wisconsin.

As to the latter store, the administrative law judge found that the union majority was dissipated as a result of the transfer, and accordingly dismissed the complaint. As to Zim’s and Paul’s, however, the judge found that the units of grocery and meat employees at the respective stores were appropriate for collective bargaining, and that the new owners stood “as the legal successor to Kroger.” He thus concluded that petitioners were guilty of the unfair labor practices hereinabove set forth. The judge’s decision recommended the usual remedies, including an order that Zim’s and Paul’s bargain with the unions and that Zim’s make whole its employees for any losses caused by its unilateral changes in wages and hours. Back pay and interest were to be computed according to established Board formulae. As noted above, the Board adopted in their entirety the findings, conclusions and recommended order of the administrative law judge.

Petitioners’ basic contention here is succinctly stated in their brief:

Petitioners submit that, for them to be found successors, a majority of their employees at each store must have been a majority of predecessor Kroger’s employees in the entire mul-ti-store units.

In addition, petitioners argue that the change of employers from a “hierarchical corporation” — Kroger—to small, independent operations owned and managed locally, has essentially changed the nature of the employing industry and has thereby precluded successorship. The Board, on the other hand, contends that a rebuttable presumption of continued majority support for an established bargaining representative applies to, and is not rebutted by, an ownership change such as occurred here. The result, says the Board, is that Zim’s and Paul’s are successor employers and are required to bargain with unions which previously represented a majority of their employees.

I.

Before proceeding to the successorship issues, we initially confront Zim’s contention that the Board’s finding of certain independent § 8(a)(1) violations is unsupported by law or substantial evidence. The consequences of such finding are limited in this case to a cease and desist order and the inclusion of appropriate repentant language in the notice to employees.

The administrative law judge found that on or about August 23, 1971, Lowell Zimmer separately told three grocery employees that he could not afford to pay the wages provided in the Retail Clerks’ contract and would go out of business if the employees voted for the Retail Clerks as their bargaining representative. While the reported conversations varied as to each employee, our review of the record indicates that the judge’s conclusion regarding the import of the conversations is supported by substantial, and indeed uncontradicted, evidence on the record as a whole.

Zim’s argues, however, that the statements were “legitimate economic predictions” and as such are protected by § 8(c) of the Act. Such claim is more than merely colorable, since the statements in context seem to indicate a good faith concern about high labor costs and an inability to compete. It is undisputed that Zimmer shortly thereafter did in fact reduce wages substantially-

Nevertheless, Zim’s argument overlooks the severe burden which has been placed upon employers seeking to justify such statements by NLRB v. Gissel Packing Co., 395 U.S. 575, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969):

“* * * [A]n employer is free to communicate to his employees any of his general views about unionism or any of his specific views about a particular union, so long as the communications do not contain a ‘threat of reprisal or force or promise of benefit.’ He may even make a prediction as to the precise effects he believes unionization will have on his company. In such a case, however, the prediction must be carefully phrased on the basis of objective fact to convey an employer’s belief as to demonstrably probable consequences beyond his control or to convey a management decision already arrived at to close the plant in case of unionization. * * * We therefore agree with the court below that ‘[conveyance of the employer’s belief, even though sincere, that unionization will or may result in the closing of the plant is not a statement of fact unless, which is most improbable, the eventuality of closing is capable of proof.’ 397 F.2d 157, 160. * * * ” 395 U. S. at 618-619, 89 S.Ct. at 1942.

Gissel recognizes that employer predictions of closedown upon unionization are inherently fraught with overtones of reprisal. Furthermore, “a reviewing court must recognize the Board’s competence in the first instance to judge the impact of utterances made in the context of the employer-employee relationship.” 395 U.S. at 620, 89 S.Ct. at 1943. The burden has been placed upon the employer to justify such statements by objective evidence. NLRB v. Sinclair Co., 1 Cir., 397 F.2d 157, 161 (1968), aff’d sub nom. NLRB v. Gissel Packing Co., supra; Mon River Towing, Inc. v. NLRB, 3 Cir., 421 F.2d 1, 11 (1969). Since Zim’s made no attempt to meet this burden before the Board, we conclude that its finding of a § 8(a)(1) violation is supported by substantial evidence. NLRB v. Lenkurt Electric Co., 9 Cir., 438 F.2d 1102 (1971), relied upon by Zim’s, is not contra since there the record affirmatively indicated an objective basis in fact for the employer’s statements. 438 F.2d at 1108. Compare also, NLRB v. River Togs, Inc., 2 Cir., 382 F.2d 198 (1967).

Finally, the fact that the statements were made in the context of a successorship dispute, rather than during an active union organizational campaign, does not relieve the employer of liability. NLRB v. Polytech, Inc., 8 Cir., 469 F.2d 1226, 1231 (1972); cf. Mon River Towing, Inc., supra, 421 F.2d at 11.

II.

Our starting point on the successor-ship question is NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). In Burns, the Supreme Court approved a Board bargaining order against a successor employer where 27 of the 42 employees in the successor’s starting work force had been employed by the predecessor and where the predecessor employees had been represented by a recently certified union. The Court concluded that “[i]n these circumstances, it was not unreasonable for the Board to conclude that the union certified to represent all employees in the unit still represented a majority of the employees and that Burns could not reasonably have entertained a good-faith doubt about that fact.” Id. at 278, 92 S.Ct. at 1577. This was true even though, as the dissenters point out, it was “by no means mathematically demonstrable that the union was the choice of 'a majority of the 42” successor employees. Id. at 297, 92 S.Ct. at 1587. Predictably, there was no indication in the Burns record that all 27 former employees of the predecessor had voted for the union in the recent certification election, or that any of the 15 new employees favored such representation.

Burns thus recognizes that in at least some circumstances, the democratic principle embodied in § 9 of the National Labor Relations Act is not offended,by procedures which leave some doubt as to the actual, immediate desires of employees with regard to representation. On a previous occasion the Supreme Court held that even clear and undisputed evidence that a majority of employees do not desire a particular bargaining representative may not suffice to upset "Board procedures designed to promote stability in the bargaining relationship. Brooks v. NLRB, 348 U.S. 96, 75 S.Ct. 176, 99 L.Ed. 125 (1954). Decisions both in this circuit and elsewhere have recognized this occasional tension between democracy and stability in the labor relations area, and have granted the Board some measure of discretion in achieving a fair balance. NLRB v. Montgomery Ward & Co., 7 Cir., 399 F.2d 409, 412 (1968); NLRB v. Frick Co., 3 Cir., 423 F.2d 1327, 1332 (1970).

Three factors distinguish our present situation from that in Burns. First, the successor in Bums began operations within the one-year period during which the prior certification created an “irre-buttable” presumption of continuing union majority. Here, the record does not reveal whether either union was ever formally certified, and it is undisputed that such certification, if any, occurred “a number of years” prior to the successor’s takeover. Second, no issue was raised in Bums concerning changes in the nature of the employer. Both predecessor and successor apparently operated on a large scale. Here, petitioners strenuously argue that the change from large to small corporate employers is of controlling significance. Third, the bargaining units in Burns were identically defined and of roughly equal size both before and after the employer change. Both units consisted of plant guards employed to fulfill a service contract covering a single plant. The units at Zim’s and Paul’s, in contrast to the multi-store predecessor units, consisted of employee groups at single stores.

Since Burns leaves unresolved these several problems raised by the peculiar facts of this case, we turn to the substantial body of relevant law developed by the Board and the Courts of Appeal.

It is well established that a Board certification creates an almost conclusive presumption of continued majority status for a reasonable period of time, usually one year. Thereafter, there exists a rebuttable presumption of majority representation. Brooks v. NLRB, supra; NLRB v. Burns International Security Services, Inc., supra, 406 U.S. n. 3 at p. 279, 92 S.Ct. 1571. Board orders based on such rebuttable presumption have been enforced on numerous occasions by the Courts of Appeal, including our own. See, e. g., NLRB v. John S. Swift Co., 7 Cir., 302 F.2d 342 (1962); Bally Case & Cooler, Inc. v. NLRB, 6 Cir., 416 F.2d 902 (1969), cert. denied, 399 U.S. 910, 90 S.Ct. 2201, 26 L.Ed.2d 562 (1970); Terrell Machine. Co. v. NLRB, 4 Cir., 427 F.2d 1088, cert. denied, 398 U.S. 929, 90 S.Ct. 1821, 26 L.Ed.2d 91 (1970); NLRB v. Tesoro Petroleum Corp., 9 Cir., 431 F.2d 95 (1970). Furthermore, it is now recognized that the bargaining relationship need not be established by formal certification in order for the presumption to apply. NLRB v. Denham, 9 Cir., 469 F.2d 239 (1972), vacated on other grounds, 411 U.S. 945, 93 S.Ct. 1925, 36 L.Ed.2d 407 (1973); NLRB v. Frick Co., 3 Cir., 423 F.2d 1327 (1970); NLRB v. Master Touch Dental Laboratories, Inc., 2 Cir., 405 F.2d 80 (1968). In Denham, supra, the court applied Burns and enforced a Board bargaining order against a successor where the union had been recognized on the basis of a card check almost 30 years prior to the ownership change. 469 F.2d at 244. See also, NLRB v. Bachrodt Chevrolet Co., 7 Cir., 468 F.2d 963, 968 (1972), vacated on other grounds, 411 U.S. 912, 93 S.Ct. 1547, 36 L.Ed.2d 304 (1973).

The rebuttable presumption does not prevent the employer from petitioning the Board for a new election. NLRB v. Laystrom Manufacturing Co., 7 Cir., 359 F.2d 799 (1966); NLRB v. Auto Ventshade, Inc., 5 Cir., 276 F.2d 303 (1960). Nor does it affect the employees’ statutory right to seek a decertification election upon the requisite showing of substantial interest. See 29 U.S.C. § 159(c)(1) (A) (ii). The effect of the presumption is merely to require the employer to bargain with the previously recognized representative unless it can show (1) that the union in fact has lost its majority, or (2) at the least, that reasonable grounds exist for good faith doubt as to continuing majority support for the representative. Celanese Corp., 95 NLRB 664 (1951); Terrell Machine Co. v. NLRB, supra.

Since some risk is involved in a refusal to bargain, the Board has stated that the better practice is for the employer to continue to bargain while petitioning for a new election. United States Gypsum Co., 90 NLRB 964, 966 (1950). In a successorship case, where grounds for good faith doubt were lacking, the Fifth Circuit observed that “[t]he employer’s proper course is to recognize the prima facie union representation of the employees and to continue to deal with the union, but to petition the Board for a new election.” NLRB v. Auto Ventshade, Inc., supra, 276 F.2d at 307. This may conflict with the Board’s subsequent position that some objective grounds for doubting the union’s majority also must be shown in order to raise a § 9(c) “question of representation.” United States Gypsum Co., 157 NLRB 652 and 161 NLRB 601 (1966). In either event, however, the burden imposed upon employers or employees by Board policy in this area is hardly severe.

Where the Board invokes successorship to impose a bargaining obligation upon a party with no previous relations with the union, it has determined, in effect, that the fact of ownership change does not vitiate the otherwise applicable presumptions of continuing majority. This is made clear by decisions which treat good faith doubt regarding majority status as a defense to the imposition of successorship obligations. See Burns, 406 U.S. at 278, 92 S.Ct. 1571, quoted supra; Tom-A-Hawk Transit, Inc. v. NLRB, 7 Cir., 419 F.2d 1025, 1028 (1969); NLRB v. Interstate 65 Corp., 6 Cir., 453 F.2d 269, 275 (1971); NLRB v. Valleydale Packers, Inc., 5 Cir., 402 F.2d 768, 769 (1968), cert. denied, 396 U.S. 825, 90 S.Ct. 66, 24 L.Ed.2d 75 (1969). In the present case, the administrative law judge specifically found that petitioners did not base their refusals to bargain on good faith doubt. Setting aside the question whether diminution in unit size or changes in the corporate structure of the employer per se should be regarded as justifying such doubts, this finding is not disputed here and is, in fact, well supported by the record.

The Board has held that even informal employee statements to the employer regarding employee sentiment may provide a basis for good faith doubt. Wallace Co., 174 NLRB 416 (1969). Evidence that the employees were represented by a different union prior to their recent inclusion in a multi-store unit, or that other unions are demanding recognition, may also support such doubt. Cf. NLRB v. Downtown Bakery Corp., 6 Cir., 330 F.2d 921 (1964). Nothing comparable was presented here. Indeed, Zimmer’s various attempts to convince his employees to oppose the union might support an inference that he, at least, believed that employee sentiment was pro-union.

As to the problems of unit size and corporate structure, it matters not whether we analyze them in terms of per se doubts regarding union majority, or in terms of their effect upon continuity in the employing industry, the traditional determinant of successorship. See NLRB v. Colten, 6 Cir., 105 F.2d 179 (1939). In either case, the applicable policies are those set forth in Brooks, supra: (1) the employees’ right to select their bargaining representative, (2) the promotion of stable bargaining relationships, and (3) a “due regard to administrative prudence.” 348 U.S. at 103, 75 S.Ct. at 181.

Over the years, the most important element in a successorship determination has been the employee complement of the purported successor. See Goldberg, The Labor Law Obligations of a Successor Employer, 63 Nw.U.L.Rev. 735, 793-799 (1969). Here, all of the employees in the new units were previously employed by the unionized predecessor, and at the same locations. In this respect, the Board’s case is even stronger than in Bums.

There is, however, some authority for petitioners’ contention that a change in the size and operational methods of the employer is also a relevant consideration. See International Association of Machinists v. NLRB, 134 U.S.App.D.C. 239, 414 F.2d 1135, cert. denied, 396 U. S. 889, 90 S.Ct. 174, 24 L.Ed.2d 163 (1969); NLRB v. Alamo White Truck Service, Inc., 5 Cir., 273 F.2d 238 (1959); Atlantic Technical Services Corp., 202 NLRB No. 13 (1973); B&E Supermart, 195 NLRB 349 (1972). Substantial changes in the employing industry may be expected to alter employee expectations and needs, thereby changing employee sentiment with respect to representation. NLRB v. Armate, 7 Cir., 199 F.2d 800, 803 (1952).

The administrative law judge heard considerable testimony respecting the changes instituted by Zim’s and Paul’s subsequent to their takeover of the former Kroger stores. He concluded that:

“Kroger and each Respondent operated at the same location, with substantially the same physical plant and equipment; both sought and served the same customers with the same type of products; and the employees of both had the same primary job functions, immediate supervision, and working conditions, with only minor modifications. While each Respondent’s control of the enterprise and the employees is more localized, this difference is not of such magnitude as to be given controlling effect. Vis-a-vis the employees in light of their statutory bargaining rights, it cannot he held that the nature of the employing industry in each case — that of a retail grocery supermarket — has basically changed.” [Footnotes omitted.]

The changes relied on by the employers here are similar to those found insufficient to defeat successorship in NLRB v. Zayre Corp., 5 Cir., 424 F.2d 1159 (1970), and in NLRB v. Interstate 65 Corp., supra. It is apparent that the .administrative law judge considered petitioners’ contentions but concluded that the changes accompanying this business transfer were not such as to significantly affect employee attitudes. Since such determination is primarily factual and is here supported by substantial evidence, we see no reason to disturb it.

Petitioners also argue that the change here in unit size and definition should bar successorship. Such change, like the change in the size of the employer, permits the possibility that a minority or even none of the employees at Zim’s and Paul’s may now support the unions.

As exemplified by Burns, however, the courts and the Board have imposed the bargaining obligation in situations where mathematics alone might indicate a reasonable basis for doubting continued majority. Numerous cases hold that employee turnover, standing alone, does not give rise to good faith doubts regarding a union’s majority status. See, e. g., NLRB v. Bachrodt Chevrolet Co., supra, 468 F.2d at 968; NLRB v. John S. Swift Co., supra, 302 F.2d at 345; NLRB v. Little Rock Downtowner, Inc., 8 Cir., 414 F.2d 1084, 1091 (1969).

Likewise, mere diminution in the employee complement of the bargaining unit does not relieve the successor of his duty to bargain. Rohlik, Inc., 145 NLRB 1236 (1964) (successor’s work force one-third as large as predecessor’s); Western Freight Association, 172 NLRB 303 (1968) (work force reduced from 500 to 110); Royal Brand Cutlery Co., 122 NLRB 902 (1959) (work force reduced from 296 to 134). Indeed, this court has enforced a Board bargaining order where the successor retained only 8 of its predecessor’s 25 employees. NLRB v. Armato, 7 Cir., 199 F.2d 800 (1952). We there held:

“While the work force was considerably reduced, that factor standing alone did not justify the refusal to bargain. Those employees of [the successor] in the unit defined in the certification were all former [predecessor] employees and members of the union. The fact that they found themselves fewer in number than before warrants no implication that they no longer desired the union to represent them. * * * ” 199 F.2d at 803.

Armato is dispositive of petitioners’ contention that, in order to be held a successor, an employer cannot have hired less than a majority of the employees in the predecessor unit. The case holds, in effect, that the Board may treat a much-reduced bargaining unit as a miniature of the former unit.

Once it is determined that the successor unit is appropriate for bargaining, a change in unit definition, from large to smaller units, would seem not to raise any additional considerations beyond those disposed of in Armato. We therefore do not believe that the Board may be faulted for imposing the same obligation to bargain in the present situation. Cf. NLRB v. Geronimo Service Co., 10 Cir., 467 F.2d 903 (1972). There is here no dispute regarding the appropriateness of the new units. Compare Burns, supra, 406 U.S. at 297-298, 92 S.Ct. 1571 (dissenting opinion); Emerald Maintenance, Inc. v. NLRB, 5 Cir., 464 F.2d 698, 702 (1972). Nor is there any evidence that the employees of the single stores were originally brought within the multi-store unit by accretion, as in Atlantic Technical Services Corp., 202 NLRB No. 13 (1973). The record positively indicates that the grocery employees, at least, were already represented by the Retail Clerks prior to the merger of union locals which gave rise to the 11 store predecessor unit. See note 2, supra. Finally, the Board’s action here is consistent with its previous treatment of a multi-store predecessor unit in the retail food industry. See Avenue Meat Center, 184 NLRB No. 94 (1970).

Petitioners rely upon several Board cases, viz.: Atlantic Technical Services Corp., supra; American Concrete Pipe of Hawaii, Inc., 128 NLRB 720 (1960); B&E Supermart, 195 NLRB 349 (1972); and Thomas Cadillac, Inc., 170 NLRB 884 (1968) enf’d sub nom. International Association of Machinists v. NLRB, supra. We have considered these cases but are not persuaded that they dictate a contrary result.

We accept as true, as we must on the record before us, that no election has ever been held to directly determine the desires of the employees in the presently defined units. Nevertheless, the unavoidable fact is that the new units were composed entirely of former Kroger employees who had been represented for a considerable period of time by these unions, and that petitioners offered no evidence to indicate that such representation was no longer desired by the employees of these particular stores. Under these circumstances the Board acted within its authority in ordering petitioners to bargain.

We hold, therefore, that the change in unit size here presented does not per se relieve petitioners of their duty to bargain. The Board has balanced the competing considerations involved by requiring an employer who succeeds to a portion of a multi-store bargaining unit and who does not choose to bargain with the existing union to show, at the least, some objective basis for doubting the union’s continued representative status. Such requirement accords with the realities of the situation, is true to the policies of the Act, and is an appropriate exercise of Board authority.

III.

We recently held in NLRB v. Bachrodt Chevrolet Co., 7 Cir., 468 F.2d 963 (1972), that a successor employer which unilaterally changes terms and conditions of employment after its bargaining obligation has matured commits an unfair labor practice.

The Bachrodt decision was subsequently vacated by the Supreme Court and remanded to the Board for further proceedings in light of Burns. 411 U.S. 912, 93 S.Ct. 1547, 36 L.Ed.2d 304 (1973). Although our decision in Bach-rodt was rendered after Burns, the Board order which it enforced predated Burns. In its brief remand order, the Supreme Court cited two cases which require that review of an administrative agency decision be limited to the grounds upon which the agency itself purported to act. FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 245-250, 92 S.Ct. 898, 31 L.Ed. 2d 170 (1972); SEC v. Chenery Corp., 318 U.S. 80, 87-88, 63 S.Ct. 454, 87 L.Ed. 626 (1943). On the unilateral changes question, our Bachrodt decision relied in part on a concept propounded in dicta in Bums which the Board had not previously considered.

The original Bachrodt decision was reaffirmed by the Board on remand, 205 NLRB No. 122 (1973), and is now pending here upon the Board’s application for enforcement. The Board’s supplemental decision adopted the reasoning of the Supreme Court as interpreted and applied by the majority in Bachrodt.

Although it would appear that the Supreme Court’s action in Bachrodt was based purely on institutional considerations, we need not pre-judge that case in order to resolve the present controversy. The point of contention in Bachrodt, as emphasized by Judge Stevens’ dissenting opinion, concerned whether the successor was bound by the predecessor’s terms where the successor announced changes on the first day he owned the business. 468 F.2d at 970-972. The majority felt that no changes could be unilaterally instituted subsequent to the formation of the new owner’s intention to hire the predecessor employees, which occurred three days prior to the changeover. Id. at 969.

Here, in contrast, petitioner Zim’s did not institute the challenged wage and hour reductions until some three weeks after its July 27 takeover of the Monroe store. The terms which were changed, while identical to those previously binding on Kroger, had been voluntarily assumed by Zim’s as its own initial terms of employment. Paul’s, in contrast, instituted its changes simultaneously with takeover and accordingly was found by the Board to have acted lawfully. See note 6, supra.

To thus distinguish between Zim’s and Paul’s on the basis of the timing of wage and hour reductions is not contrary to the teachings of Bums. There, the Court held that in the interest of promoting business transfers, a successor may not be compelled to adopt the terms of its predecessor’s labor contract. Commenting on the Board’s alternative theory of unilateral changes, the Court stated, in pertinent part:

“ * * * It is difficult to understand how Burns could be said to have changed unilaterally any pre-existing term or condition of employment without bargaining when it had no previous relationship whatsoever to the bargaining unit and, prior to [the date of takeover], no outstanding terms and conditions of employment from which a change could be inferred. The terms on which Burns hired employees for service after [the date of takeover] may have differed from the terms extended by [the predecessor] and required by the collective-bargaining contract, but it does not follow that Burns changed its terms and conditions of employment when it specified the initial basis on which employees were hired * * *.
“* * * [T]here is no evidence that Burns ever unilaterally changed the terms and conditions of employment it had offered to potential employees * * * after its obligation to bargain with the union became apparent. * * *” 406 U.S. at 294-295, 92 S.Ct. at 1585-1586 (emphasis by the Court).

This language indicates to us that the Court did not intend to preclude application of the unilateral changes doctrine to employers who voluntarily adopt preexisting terms and conditions, but who subsequently have second thoughts, in the matter. Perhaps a line need be drawn somewhere, although Bachrodt, if still good law in this respect, would indicate that the period necessary to establish voluntary adoption is quite brief. In any event, the present three-week period is clearly sufficient in this regard. Accordingly, the Board’s finding of unlawful unilateral changes by Zim’s will be enforced. NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); NLRB v. Bachrodt Chevrolet Co., supra.

IV.

The administrative law judge recommended that Zim’s make whole its employees for losses caused by unlawful unilateral changes and observed that back pay and interest shall be computed “under the established formulae of the Board.” Such recommendation was adopted by the Board.

Zim’s argues that a back pay award cannot be justified. In support thereof, it claims that its sales during the first two months of operation ranged from $18,000 to $23,000 weekly, as compared with a weekly Kroger average of $35,000; that the full Kroger employee complement was retained throughout this period despite the reduction in sales; and that had it not reduced wages and hours when it did, it would have been forced to lay off employees. Accordingly, it is argued, the wage and hour reductions were economically required and represented, in effect, the lesser of two evils.

Since wage reductions were relatively substantial, i. e., 87 cents — 93 cents per hour, per employee, Zim’s estimates that an award of full back pay would exceed $50,000 in amount.

In view of the wide discretion granted the Board in formulating remedies under the Act, we cannot say that no back pay award is proper under these circumstances. NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 73 S.Ct. 287, 97 L.Ed. 377 (1953); Virginia Electric & Power Co. v. NLRB, 319 U.S. 533, 63 S.Ct. 1214, 87 L.Ed. 1568 (1943). Beyond this, the issues are not ripe for determination. “It is the ordinary practice of the Board not to consider the amount of back pay until its general remedial order has been enforced by the court on its merits * * NLRB v. Nickey Chevrolet Sales, Inc., 7 Cir., 493 F.2d 103, 106 (1974). See also, Na-thanson v. NLRB, 344 U.S. 25, 29-30, 73 S.Ct. 80, 97 L.Ed. 23 (1952). The Board concedes in its brief that Zim’s contentions here may be raised in post-decree compliance proceedings.

We merely note that Zim’s estimate of back pay liability in excess of $50,000 overlooks the Board’s own policy of seeking “to bring about, in unfair labor practice cases, ‘a restoration of the situation, as nearly as possible, to that which would have obtained but for the illegal discrimination.’ ” F. W. Woolworth Co., 90 NLRB 289, 292 (1950), citing Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194, 61 S.Ct. 845, 85 L.Ed. 1271 (1941). As we emphasized in Bachrodt, the successor’s duty goes no further than the obligation to bargain with the union until impasse is reached. 468 F.2d at 970. Thereafter, he is free to unilaterally alter terms and conditions as he sees fit, constrained only by his relative economic power vis-a-vis the union. The economic factors here put forward by Zim’s, if substantiated, will be relevant to the question of what actual harm was suffered by Zim’s employees as a result of Zim’s refusal to bargain. Cf. NLRB v. Mastro Plastics Corp., 2 Cir., 354 F.2d 170 (1965), cert. denied, 384 U.S. 972, 86 S.Ct. 1862, 16 L.Ed.2d 682 (1966); Salmon & Cowin, Inc. v. NLRB, 5 Cir., 148 F.2d 941, cert. denied, 326 U.S. 758, 66 S.Ct. 100, 90 L.Ed. 456 (1945).

Review denied.

Enforcement granted.

PELL, Circuit Judge

(dissenting).

Judge Hastings, in writing the majority opinion, has addressed the issues in a scholarly, tightly-reasoned fashion. However, it appears to me, notwithstanding the persuasiveness of the opinion, that it extends the law of successor-ship in the federal labor law area beyond proper limits. I therefore respectfully dissent.

Because of the drastic differences between the operational structures and practices of Kroger, on the one hand, and the sole proprietorship, non-chain grocery stores, on the other, the “wholly different case” adverted to in NLRB v. Burns Int’l Security Services, 406 U.S. 272, 280, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), is presented here. Clearly, the Kroger bargaining unit of 11 stores was no longer an appropriate unit.

While the administrative law judge did not find all of the differences of major consequence, we need look only at his decision to be aware of the vast scope of the changes subsequent to the purchase from Kroger. Each store was converted from a division of a nationwide supermarket chain to an individually owned and operated store. Kroger’s merchandising, pricing, promotion, traffic and the like were centrally controlled. Kroger store managers had extremely limited discretion as they were required to adhere to Kroger’s established programs. After the sale, basically, all decisions were made by the store owners or managers. All personnel matters are handled by the new owners on the local scene. In Kroger’s system, the wages, hours, and conditions of employees were essentially fixed in the master union contracts, in which no store was individually treated. Hiring, discharge and disciplinary matters, while formerly conducted at the store level, were submitted by recommendation to Kroger’s personnel department for final approval or disapproval.

Other differences noted by the administrative law judge but apparently given little weight by him were as follows:

“Respondents operate a friendlier store; spend less money than Kroger for advertising; purchase and sell more local products; generally have a lower pricing structure; do not use the Kroger label on certain products, but have the IGA label on certain products; sell a smaller variety of preeut meat products, thus requiring more cutting in the store; do not use trading stamps as did Kroger; remain open 7 days a week for longer hours, compared to 6 days under Kroger; obtain some of their merchandise from suppliers other than those previously used by Kroger, whereas Kroger had its own meat plant and bakery, and manufactured some of its own grocery products, all of which were supplied to its stores in the area.”

The certification status of the unions is lost in ancient history. There is nothing in the record to indicate that any employee of either store presently desired the particular union representation. The employees were members of the union but they had to be under the union shop provisions of the master contract. Both Zim’s and Paul’s hired employees from no greater than one-eleventh of the Retail Clerks Union unit, i. e., roughly 9% or less of the predecessor’s employees in the eleven-store unit. Zim’s hired meat cutters from only one-fifth of the Meat Cutters Union unit. I fail to see any basis for the existence of a continuing presumption of majority status after such a material fragmentation of the bargaining units.

The majority opinion cites pertinent authority, which I believe should be controlling here, for the proposition that a change in the size and operational methods of the employer has relevance. Included among these cases is NLRB v. Alamo White Truck Service, Inc., 273 F.2d 238 (5th Cir. 1959). The majority opinion, however, then states that the changes relied on are similar to those found insufficient to defeat successorship in NLRB v. Zayre Corp., 424 F.2d 1159 (5th Cir. 1970), and NLRB v. Interstate 65 Corp., 453 F.2d 269 (6th Cir. 1971).

I find little support in these cases for the extension of the suecessorship rule accomplished in the majority opinion. In Interstate there were changes but the acquisition was of a motel which constituted a single bargaining unit. In that case the following principle 'of law is enunciated which I think should be dis-positive of the present case:

“If respondent’s ‘succession’ brought with it a change in the ‘essential nature of the [employing] enterprise,’ then respondent had no duty to bargain. Tom-A-Hawk Transit, Inc. v. N.L.R.B., 419 F.2d 1025, 1027 (7th Cir. 1969).” 453 F.2d at 272.

In Zayre, the claimed successor relied upon Alamo White, supra. The Fifth Circuit found the reliance misplaced and made the following observation, particularly pertinent to the present case.

“It is true that in Alamo White this Court held that a change from a large national employer to a small local one prevented the small transferee from being bound as a successor by the prior bargaining obligations of the transferor. We do not believe, however that Alamo White compels a rejection of the Board’s conclusion here.
To begin with the change in Alamo White was from a large national organization to a small business with direct owner participation. The total number of employees was reduced— only eight of the previously employed 12 mechanics were re-employed — and with the discontinuation of the parts department, a substantial portion of the prior operation was eliminated. Here there was only a change in the type of internal organization. Both Masters and Zayre were large national companies. Moreover, the number of employees and the basic size of the operation stayed the same.” 424 F.2d at 1163. (Footnotes eliminated and emphasis added.)

Of course, there were other differences. There usually are factual differences in cases. However, it appears to me that Alamo White, in its basic large-to-small situation, presents a more significant parallel guideline than does the Zayre large-to-large transfer.

In sum, I think the new owners in the situation here involved took free and clear of any duty to bargain based upon a suecessorship premise. If the employees did desire union representation the matter could have been very easily determined by a resort to election procedures rather than by reliance upon a doubtful presumption which cannot be factually supported on this record.

      . The record indicates that at least one purchaser — Zimmer—strongly rejected a Kroger proposal during the negotiations that he agree to adopt existing labor contracts.

      . Both petitioners admitted in their answers to the complaints that collective agreements covering employees in appropriate multi-store units which included their respective stores had been negotiated “for a number of years prior to * * * July 24, 1971.” The minimal evidence introduced at the hearing on the point related only to the Retail Clerks, and consisted of the following testimony by a union official:
      Q. By what process was Local 1401 recognized as the collective bargaining representative of the employees in [the Edger-ton] store?
      A. That store has been organized for a number of years before my time and also at a time in history when there was a Retail Clerks Union Local 1139 in Janesville which covered the Edgerton store. Approximately January 1st, 1963, the Janes-ville Local 1139 merged with Madison Local 1401.
      Q. And Local 1401 has represented the employees in this store since that time?
      A. Yes.
      * * * * *
      Q. By what process was Local 1401 recognized with regard to [the Monroe] store?
      A. In the same process as previously stated on the Edgerton store.

      . The administrative law judge noted that employee members of the immediate families of the new owners would not properly be included in the new units. See 29 U.S.C. § 152(3). This determination is not entirely free from doubt. See NLRB v. Caravelle Wood Products, Inc., 7 Cir., 466 F.2d 675 (1972). Statements herein to the effect that the alleged successors hired their entire employee complements from among former Kroger employees are subject to this possible qualification with regard to Paul’s. We need not resolve the question in order to decide the successorship issue here presented, since the result would be the same in either event.

      . At the time of the charges, Board law held that a successor’s refusal to abide by the predecessor’s collective bargaining agreement was an unfair labor practice. William J. Burns International Detective Agency, Inc., 182 NLRB 348 (1970), enforcement refused on this issue, 441 F.2d 911 (2 Cir. 1971), aff’d sub nom. NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972).

      . Petitioners had admitted the appropriateness of the single store units in their answers to the complaints.

      . The intervening Burns Supreme Court decision compelled the judge to reject General Counsel’s contention that the successor employers were hound by the Kroger collective bargaining agreements. As to Paul’s alleged unilateral changes, the judge found that the employer had “commenced operation * * * by instituting wage rates and working hours which were less than those provided in the contract under Kroger.” From this the judge concluded that Paul’s “cannot be held to have made unlawful unilateral changes when it had no ‘previous relationship whatsoever to the bargaining unit’ ” (quoting Burns, 406 U.S. at 294, 92 S.Ct. at 1585).

      . Employee John Gordon testified that Zim-mer “said that he wasn’t making any money” ; that “he talked as if we were going to vote on the Union”; and that “he said I can’t tell you how to vote, ‘yes’ or ‘no’ for the Union, but if the Union does get in that he wouldn’t be able to afford to pay up to Union standards, that he would be bankrupt * * Mary Ann Goecks testified that Zimmer told her that “he could no longer work with Union wages * * * ”; that the employees “would at some time possibly be asked to revote in the Union”; and that ‘if you do vote it in, if the Union comes in, I would have to close the doors * * Finally, Raymond Fiala testified that Zimmer told him that “he didn’t think that he could pay the Union scale,” and that “if the Union would stay * * * he is afraid that he would have to close the store and we would probably be all out of jobs.”

      . “(e) The expressing of any views, argument, or opinion * * * shall not constitute or be evidence of an unfair labor practice under any of the provisions of this subchapter, if such expression contains no threat of reprisal or force or promise of benefit.” 29 U.S.O. § 158(e).

      . This mathematical uncertainty was not, however, the principal basis for the Burns dissent. Rather, the four dissenters primarily argued that the absence of any transfer of assets between the predecessor and Burns should preclude successorship. Where a transfer of assets accompanies the hiring of predecessor employees, as in the present case, the dissenters went beyond the majority to indicate that the successor might be required to perform the predecessor’s collective bargaining contract. 406 U.S. at 305, 92 S.Ct. 1571 (Rehnquist, J.).

      . In Brooks, the Court approved as within the administrative authority a Board rule requiring that a certification be honored for a period of one year, absent unusual circumstances. In dicta, the Court indicated that the Board’s establishment of a rebuttable presumption of continuing union majority after the one-year period had expired was likewise within the agency’s authority under the Act. 348 U.S. at 104, 75 S.Ct. 176.

      . “Of fifty-nine cases decided by the Board in the past twenty years in which the question of successorship for bargaining purposes was presented, in fifty-one the alleged the successor had a work force composed of a majority of employees who had worked for a unionized predecessor. In all but four of these the Board found the new employer to be a successor for bargaining purposes.” 63 Nw.U.L.Rev. at 794.

      . A change from a smaller to a larger unit raises more difficult problems due to the inclusion in the successor’s work force of employees not previously represented by the union. Even in such a situation, however, a divided Board has recently held that the unit change was not controlling. Spruce Up Corp., 209 NLRB No. 19 (1974), 42 U.S.L.W. 2482.

      . The Supreme Court also vacated and remanded NLRB v. Denham, supra, on identical grounds. 411 U.S. 945, 93 S.Ct. 1925, 36 L.Ed.2d 407 (1973). Like Bachrodt, Denham had relied on the Burns dicta in upholding the unilateral changes portion of the Board’s order. See 469 F.2d at 246-247.

      . No. 73-2032, filed Nov. 16, 1973.

      . The administrative law judge did find some external control in the contracts of the new owners with Gateway/IG-A. Gateway Foods, Inc., was a wholesale distributor and the stores would participate in cooperative programs of the Independent Grocers Alliance. Comparability between this loose relationship and the tight control exercised by Kroger is not supported by the record and, I note, it apparently plays no part in the majority decision of this court.

      . The Retail Clerks Union contract did separately deal with the cities covered by the contract in the wage schedules which divided the Kroger’s stores into two groups.


source: Caselaw Access Project

author: BRIGHT, Circuit Judge.

license: Public Domain

text:
    Thomas Lee YORK, Appellant, v. The UNITED STATES, Appellee.
    No. 73-1854.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 13, 1974.
    Decided April 18, 1974.

      Walter G. Riddick, Asst. U. S. Atty., Little Rock, Ark., for appellee.
    Before GIBSON, BRIGHT and STEPHENSON, Circuit Judges.
   BRIGHT, Circuit Judge.

Thomas Lee York was indicted on March 2, 1964, for violating the Selective Service laws. 50 U.S.C. App. § 462. Count I charged that he wilfully and knowingly failed on or about May 1, 1963, to keep his local draft board informed as to his current mailing address so that mail could reach him; Count II charged that he wilfully and knowingly neglected to comply with an order for induction on June 24, 1964. The ease was not prosecuted for nearly a decade, however, due to York’s absence from the United States. On October 12, 1973, a jury convicted York on the first count but acquitted him on the second. He brings this appeal, contending principally that he had furnished the draft board a legally sufficient address and thus the conviction cannot stand. We agree and reverse.

York testified that in late 1962 while a graduate student at Duke University, he felt a strong compulsion to go into the bush country of Canada. He wrote his draft board on February 10, 1963, stating that he and his wife were then in Canada with the intentions of becoming Canadian citizens, and listing an address in Ottawa, Ontario. On March 5, •1963, the board forwarded a current information questionnaire addressed to York at this Ottawa address. York completed this questionnaire and responded to the part calling for a mailing address, as follows:

1. Name(s) and address (es) of person (s) other than wife who will always know your address nobody
(cf attached letter)

In an attached letter, York elaborated:

Starting in 3 days and for the next 4 or 5 years I will be living a nomadic life along the following route: from within 75 miles of Bathurst, New Brunswick, on a line with Cape Breton Is., northeast across the Gulf of St. Lawrence by coracle and overland through Newfoundland, then north along the Labroador [sic] Highlands to Hudson Strait and across to Baffin Is. where I plan to winter with the Dorset Eskimoes; then up Baffin Is. (which by snowshoe will take about 2 years) to Pond Inlet and across to Devon and Ellesmere Islands, from thence to Lands End and the start of the Polar Cap, where I will deposit mss [sic] and either die or return. Should I return I will perhaps at that time apply for Canadian citizenship. Until that time, there are no mail routes handy.
My wife I will deposit at a cabin approximately 75 miles south of Bath-urst, my point of departure. More exact location would place it in the midst of the Serpentine Mountains. The Canadian National RR runs within 25 miles of it, and that is its closest link with civilization. So she also will have no address.
The only stable address I can give is that of my parents, Mr & Mrs H. C. York who live at Rt. 3, Bx 390, Little Rock, Ark.

Even though York advised that he would not remain in Ottawa, the board on March 18, 1963, sent to the Ottawa address an order for him to report for an armed forces physical examination at Little Rock, Arkansas. His wife received this notice on April 5, 1963, when she returned to Ottawa from New Brunswick to pick up her mail. She wrote the board advising of her present inability to reach her husband. Upon receipt of this letter from Mrs. York the board mailed a notice of delinquency to the same Ottawa address. York had been declared a delinquent because of his failure to report for the physical examination and his failure to request permission from his local board to leave the United States. On May 17, 1963, the board issued an order requiring York to report for induction. This order was mailed to the return address that Mrs. York had used in her latest communication to the draft board, 66 Upton Street, Moncton, New Brunswick.

York testified that the Moncton, New Brunswick, address used by his wife in her letter to the draft board was not his address but that of a friend whom he had visited on one occasion. The testimony also established that while in the wilderness country, York received mail from his parents through a one-man railroad-telegraph station. However, he did not receive either the order to report for his physical examination, the notice of delinquency, or the induction order, since, although his wife had received the first two documents, she returned them to the draft board. He lived in the wilds of New Brunswick until he joined the United Church of Canada in 1964 and thereafter began the study of the ministry of that faith, ultimately being ordained in 1967.

We are presented the direct question whether York unlawfully failed “to keep his local board informed as to his current address where mail would reach him.” We considered a similar situation recently in United States v. Burton, 472 F.2d 757 (8th Cir. 1973), where the defendant-appellant had also furnished his local draft board with the address of his mother as the person who would always know his whereabouts. In upholding the defendant’s contentions that the address was sufficient, we then explained :

We agree with the defendant on the basis of the decisions of the Supreme Court in Ward v. United States, 344 U.S. 924, 73 S.Ct. 494, 97 L.Ed. 711 (1953), rev’g, 195 F.2d 441 (5th Cir. 1952), and Venus v. United States, 368 U.S. 345, 82 S.Ct. 384, 7 L.Ed.2d 341 (1961), rev’g, 287 F.2d 304 (9th Cir. 1960). See also, Bartchy v. United States, 319 U.S. 484, 63 S.Ct. 1206, 87 L.Ed. 1534 (1943). Under these cases “[a] registrant is not required to remain at one place or report to the board every move that he makes. The regulation is satisfied if a ‘good’ address is furnished. Cf. Kokotan v. United States, 408 F.2d 1134 (10th Cir. 1969).” United States v. Ebey, 424 F.2d 376, 377 (10th Cir. 1970). [472 F.2d at 762-763 (footnotes omitted).]

Here the record shows that York furnished a good address — that of his parents — and that his mother did in fact keep in touch with him by mail.

Without a showing by the prosecution that the local board mailed any notice to the address York gave to the board this conviction should not stand under the “good address” principle stated in Burton. Under these circumstances, we reverse the conviction and the three-year sentence imposed upon York.

Reversed.

      . This appears to be a typogrhpaical error in the indictment, since he had been ordered to report on June 24,1963.

      . The applicable regulation specifies that, “It shall be the duty of each registrant to keep his local hoard advised at all times of the address where mail will reach him.” 32 G. F.R. § 1641.3.


author: MATTHES, Senior Circuit Judge.

text:
    Harriet FRAZIER, Appellant, v. The CURATORS OF the UNIVERSITY OF MISSOURI et al., Appellees.
    No. 73-1759.
    United States Court of Appeals, Eighth. Circuit.
    Submitted April 15, 1974.
    Decided May 2, 1974.
    Dana B. Badgerow, Biersmith & Badgerow, Kansas City, Mo., for appellant.
    Marvin E. Wright, Columbia, Mo., for appellees.
    Before MATTHES, Senior Circuit Judge, ROSS and WEBSTER, Circuit Judges.
   MATTHES, Senior Circuit Judge.

By this appeal, we are again called upon to resolve a controversy between a member of the teaching profession and school authorities. More specifically, in this case, Dr. Harriet Frazier, whom we shall designate throughout as plaintiff, formerly a nontenured assistant professor at the University of Missouri-Kansas City, seeks declaratory and injunc-tive relief and damages in the sum of $500,000. Named as defendants are the Curators of the University of Missouri; James C. Olson, Chancellor of the University of Missouri-Kansas City; Edwin J. Westermann, Dean of the College of Arts and Sciences of the University; Robert M. Farnsworth, Chairman of the Department of English, College of Arts and Sciences of the University; and six professors or instructors of English in the College of Arts and Sciences of the University.

In her second amended complaint, plaintiff alleged that jurisdiction was premised on 42 U.S.C. §§ 1983, 1985(3); 28 U.S.C. §§ 1331, 1343(2), 2201, 2281, 2284, and the first, fifth and fourteenth amendments to the United States Constitution.

The case was submitted to the district court on stipulations, affidavits, depositions and other written material. On September 24, 1973, the court filed its findings of fact and conclusions of law, and entered an order based thereon dismissing plaintiff’s action. She has appealed and presents several contentions in an effort to demonstrate that the court’s judgment of dismissal cannot stand.

The core of the dispute is the failure of the University to offer tenure to plaintiff as a professor and in the position that she occupied. Instead, she was offered a terminal employment contract for the 1970-1971 academic year, but declined to accept it as more fully discussed below. The defendants have maintained from the inception of this litigation that plaintiff was terminated for permissible and legal reasons and that under the circumstances extant and the governing rules and regulations of the University they were under no mandate to afford her tenure status or to continue her employment. Conversely, plaintiff submits that the reasons assigned for the action taken by the University authorities were pretextual, and that she was refused continued employment because she exercised her first amendment privilege by criticizing and complaining of the conduct of one of her colleagues and of a student. Coupled with this contention is the argument that she was denied procedural and substantive due process.

Thus, it is apparent that a resume of the relevant circumstances is essential to a proper understanding of the controversy. Plaintiff was first employed by the University as an assistant professor of English for the 1967-1968 school year, a one year term, pursuant to the Academic Tenure Regulations established by the Board of Curators of the University. These regulations provided that

holders of academic staff positions under term appointments shall have no rights of permanent or continuous tenure. * * * The non-reappointment of any appointee on term appointment shall carry no implication that either his work or his conduct has been unsatisfactory. For this reason it shall not be necessary for his dean or department chairman to provide him with any statement of causes or reasons for not recommending reappointment.

Thus it is clear that the regulations made no provision for a hearing on a decision to decline to reappoint a nontenured academic employee.

After her initial year of employment with the University, plaintiff was reappointed for successive one year terms for the 1968-1969 and 1969-1970 academic years.

Initially, the plaintiff’s relations with her students and faculty colleagues were uneventful. But in the fall of 1968, plaintiff had several unpleasant encounters with a colleague, one Robert Smith-ey. Plaintiff appealed to several fellow faculty members and to the chairman of the department, Dr. French, but no affirmative steps were undertaken by anyone in the department to resolve the differences between plaintiff and Smithey.

In the spring of 1969 plaintiff had several violent or threatening confrontations with Arnold Stead, a student in one of her classes. Plaintiff was sufficiently disturbed by Stead’s conduct toward her that she once again consulted with the department chairman. Dr. French was unreceptive, and plaintiff spoke with the Dean of Students, a colleague on the English faculty, and the Dean of Arts and Sciences, as well as telephoning the Chancellor of the University. Once again, no action on plaintiff’s appeals was undertaken by anyone,

and there were no further episodes involving plaintiff and either Smithey or Stead.

In the late fall of 1969, a departmental faculty committee first considered whether plaintiff should be extended tenure, and thereby assured a permanent position on the English faculty of the University. Adverse comments were made during the meeting about plaintiff’s frequent absence from class due to illness and about her “emotional appeals” to University officials outside the English faculty concerning her difficulties with Stead.

Nevertheless, the Tenure Committee postponed a final decision on plaintiff’s continued employment at the University until April, 1970. At two meetings, on April 24 and 28, 1970, the Tenure Committee considered plaintiff’s performance as a professor at the University. Various committee members expressed dissatisfaction about her teaching techniques, her behavior toward colleagues, and the general quality of her scholarship. Specifically, there were suggestions that the department required a scholar in plaintiff’s field of specialty who possessed qualifications superior to those demonstrated by plaintiff. There is evidence that the plaintiff’s appeals to higher University officials over the Stead matter were not discussed or considered by the committee at these April meetings.

The committee members voted to offer plaintiff a terminal employment contract providing that the 1970-1971 school year would be her final two semesters at the University. Although not required to do so by the University’s tenure regulations, the Chairman of the Tenure Committee, Dr. Robert Farnsworth, notified plaintiff in writing of the reasons for the committee’s decision to terminate her association with the University.

This notification, dated April 29, 1970, offered the plaintiff the opportunity to appear before the committee to express her views on the decision. Such a meeting was arranged for the latter part of May, but the plaintiff declined to appear on the advice of counsel, who had been retained by her.

There was an exchange of letters between plaintiff and defendant Farns-worth between May 8, 1970, and September 4, 1970. On September 15, 1970, plaintiff’s retained attorney wrote the following letter to the attorney representing the University:

This is to advise you that Dr. Harriet Frazier will not pursue the above-captioned action against U. M. K. C. Also, she does not intend to sign a contract to teach at the university.
However, Dr. Frazier does intend to seek employment elsewhere. Your regulations state that failure to obtain tenure does not blemish the teacher’s record. Therefore, any letters of reference should not carry any derogatory information regading [sic] her failure to obtain tenure.

Nevertheless, this action was filed alleging that the plaintiff was denied due process since she was allegedly denied a fair hearing before the tenure committee on the termination of her employment and because the reasons stated by the committee for its decision were arbitrary and capricious.

It is now firmly established that a nontenured teacher has no constitutional right to a statement of reasons or a hearing on a university’s decision not to rehire him. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Freeman v. Gould Special School District, 405 F.2d 1153 (8th Cir.), cert. denied, 396 U.S. 843, 90 S.Ct. 61, 24 L.Ed.2d 93 (1969). Consequently, the University tenure regulations were entirely proper, and plaintiff, a nontenured assistant professor, had no expectancy in continued employment which would allow her to insist upon a statement of reasons and a hearing as a constitutional right.

But here the Tenure Committee did provide plaintiff with a statement of reasons why the committee had resolved to recommend she be offered a terminal contract. As stated, plaintiff urges that the reasons set forth in the April 29 letter by Dr. Farnsworth are arbitrary, capricious and without basis in fact, and contends that due process prohibits her dismissal for such allegedly arbitrary reasons. It is settled doctrine, however, that a nontenured instructor may be dismissed provided the dismissal is not in fact based upon some constitutionally impermissible ground, such as racial or religious discrimination or retaliation for assertion of rights guaranteed by law or the Constitution. See Scheelhaase v. Woodbury Central Comm. School Dist., 488 F.2d 237 (8th Cir. 1973); Freeman v. Gould Special School District, supra. See also Harnett v. Ulett, 466 F.2d 113 (8th Cir. 1972).

We have weighed with care plaintiff’s claim that despite the reasons enunciated in Dr. Farnsworth’s letter of April 29, the terminal contract was in fact motivated by a constitutionally impermissible reason; namely, in reaction to the exercise of her alleged first amendment right in consulting with University officials for assistance with her difficulties with Smithey and Stead. Assuming her complaints to her superiors constituted the exercise of a protected first amendment right, we disagree that the ultimate action taken by the University was provoked by any complaints plaintiff may have registered. The burden was upon the plaintiff to demonstrate that the committee’s action in recommending a terminal contract was for an impermissible reason. Calvin v. Rupp, 471 F.2d 1346, 1349 (8th Cir. 1973); Wilson v. Pleasant Hill School District, 465 F.2d 1366, 1368-1369 (8th Cir. 1972). The plaintiff utterly failed to sustain this burden. Indeed, she offered no convincing evidence on this issue. Conversely, the district court’s finding that plaintiff was dismissed for the reasons delineated in Dr. Farnsworth’s letter and not in retaliation for her appeals to the Dean and Chancellor is supported by substantial evidence introduced by the defendants. Beyond cavil, the findings of the district court are to be left undisturbed unless clearly erroneous. Watts v. Board of Curators, 495 F.2d 384 (8th Cir. 1974). We find no rational basis for interfering with the court’s findings.

In affirming, we. like the Tenth Circuit, echo the pronouncement of Judge Holtzoff in Greene v. Howard University, 271 F.Supp. 609, 615 (D.D.C.1967), rev’d in part, 134 U.S.App.D.C. 81, 412 F.2d 1128 (1969):

* * * It would be intolerable for the courts to interject themselves and to require an educational institution to hire or to maintain on its staff a professor or instructor whom it deemed undesirable arid did not wish to employ. For the courts to impose such a requirement would be an interference with the operation of institutions of higher learning contrary to established principles of law and to the best traditions of education.

See Jones v. Hopper, 410 F.2d 1323, 1329 (10th Cir. 1969).

Other points relied upon for reversal have been considered. They are without substance and do not merit discussion.

      . For cases decided by this court involving questions similar to those in issue here, see Watts v. Board of Curators, 495 F.2d 384 (1974); Birdwell v. Hazelwood School Dist., 491 F.2d 490 (1974); Scheelhaase v. Woodbury Central Comm. School Dist., 488 F.2d 237 (1973); Wellner v. Minnesota State Junior College Board, 487 F.2d 153 (1973); Gieringer v. Center School Dist. No. 58, 477 F.2d 1164, cert. denied, 414 U.S. 832, 94 S.Ct. 165, 38 L.Ed.2d 66 (1973); Fisher v. Snyder, 476 F.2d 375 (1973); Calvin v. Rupp, 471 F.2d 1346 (1973); Rozman v. Elliott, 467 F.2d 1145 (1972); Wilson v. Pleasant Hill School Dist., 465 F.2d 1366 (1972); Reed v. Board of Educ. of Parkway School Dist., 460 F.2d 824 (1972); Long v. Board of Educ. of City of St. Louis, 456 F.2d 1058 (1972); Ahern v. Board of Educ. of School Dist. of Grand Island, 456 F.2d 399 (1972); Cooley v. Board of Educ. of Forrest City School Dist., 453 F.2d 282 (1972); Thomas v. Kirkwood Community College, 448 F.2d 1253 (1971).

      . For the purpose of this opinion, the term “University” refers to a branch of the University of Missouri located at Kansas City, Missouri.

      . The letter from Dr. Farnsworth to plaintiff stated in material part:
      At your request I shall summarize in writing the discussion of the Tenure Committee which led to the Committee’s vote to offer you a terminal contract for the sehool year 1970-71.
      The Committee first considered your status last fall. There was at that time considerable question about your judgment and emotional balance stemming from your inability to meet your classroom obligations the previous spring and your emotional appeals to the Dean and the Chancellor. However, it was then decided to defer judgment on your status until this spring, recognizing that this meant assuring you a contract for 1970-71. This meeting was the basis for the letter you received from Dr. French assuring you of a contract for next year.
      The Committee met again on April 24th and 28th to discuss your status. The members of the Committee emphasized various points in reaching their collective decision. There was general recognition that you were adequately fulfilling your minimal responsibilities during this last year, but the Committee still had serious reservations about your effectiveness as a teacher and scholar suited to our particular needs. The student evaluations, while not harshly critical, seemed lukewarm. One committee member was particularly disturbed by the students describing the learning method in your Shakespeare classes ás “rote memorization.” This criticism was reinforced by committee members’ testimony that they were unimpressed with your critical ability in informal discussions and in discussions arising from departmental duties. Some committee members feel that your critical approach is rather pedantic. It is concerned too frequently with insignificant scholarly minutiae and ignores central critical problems.
      There was some feeling that a teacher of Shakespeare is in a key position in our department and that we need a person particularly in this area who will attract students to our program and who will win respect for critical scholarship.
      As a general summary the committee recognizes that there is some evidence of teaching effectiveness and scholarly ability, but it does not consider your performance of sufficient strength to encourage you to think of becoming a permanent member of our department.
      The members of the committee making this decision were Professors Aryanpur, Cappon, Farnsworth, Jaffe, McLeod, Ryan and Spatz.
      We have agreed to hear your response to our decision. I would like to set the meeting for 9 a. m., May 14.

      . The attorney who represented plaintiff and wrote the above letter does not represent her in this action.

      . Plaintiff does not specifically rely upon the de facto tenure doctrine enunciated in Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972), decided on the same day the Roth opinion was filed. We detect, however, a veiled suggestion in plaintiff’s brief that the Perry rationale does apply. We reject such an implication for lack of any evidence to support such a theory.


author: DUNIWAY, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Clive HOLLINSHEAD, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Johnnie Brown FELL, Defendant-Appellant.
    Nos. 73-2525, 73-2526.
    United States Court of Appeals, Ninth Circuit.
    April 11, 1974.
    Rehearing Denied in No. 73-2525 June 3, 1974.
    Rehearing Denied in No. 73-2526 June 17, 1974.
    Ramon C. Grolock (argued), Sun Valley, Cal., for defendant-appellant Hol-linshead.
    Alvin S. Michaelson (argued), Los Angeles, Cal., for defendant-appellant Fell.
    Earl E. Boyd, Asst. U. S. Atty. (argued), Los Angeles, Cal., for plaintiff-appellee.
    Before DUNIWAY, CARTER and WRIGHT, Circuit Judges.
   OPINION

DUNIWAY, Circuit Judge:

These are consolidated appeals from judgments of conviction of conspiracy to transport stolen property in interstate commerce and of causing the transportation of stolen property in interstate commerce in violation of 18 U.S.C. § 2314. Between them, Fell and Hollins-head raise nine claims of error. However only one of them is sufficiently col-orable to warrant serious consideration.

In barest outline, the salient facts are these. Hollinshead, a dealer in pre-Co-lumbian artifacts, arranged with one Alamilla, a co-conspirator, to procure such artifacts in Central America, and to finance Alamilla in doing so. Although there were other such artifacts handled by the conspirators, the evidence centered primarily on one of them. This is a pre-Columbian stele known as Machaquila Stele 2, a rare and choice item worth many thousands of dollars. It was found in a Mayan ruin in the jungle of Guatemala, cut into pieces, and brought to Fell’s fish packing plant in Belize, British Honduras. There the pieces were packed in boxes and marked “personal effects” and addressed to Hol-linshead at Santa Fe Springs, California. This was done in the presence of Hollinshead and Fell as well as other conspirators. Also present were some Guatemalan officers, who departed after receiving bribes. The stele was shipped to Miami, Florida, where Fell and another conspirator, Dwyer, picked it up. They attempted, without success, to sell it to various collectors and museums in this country, traveling with it to Decatur, Georgia, to New York City, to Wisconsin and to Raleigh, North Carolina. Ultimately it wound up in Hollinshead’s possession in California, and he, too, attempted to sell it.

Eight of the claims raised by appellants relate to the sufficiency of the evidence or to the admission or exclusion of particular evidence at the trial. We have reviewed each of these claims and find none of them meritorious. There was ample independent evidence of the conspiracy to support the admission of evidence of co-conspirator’s declarations and acts against each defendant. There was certainly enough evidence of the existence of a single conspiracy to submit the issue to the jury. The trial judge properly exercised his discretion when he permitted certain cross-examination of Hollinshead to which objection was made and when he disallowed the improper cross-examination of witnesses Feeney and Dwyer; United States v. Brown, 9 Cir., 1972, 455 F.2d 1201, 1204; United States v. Haili, 9 Cir., 1971, 443 F.2d 1295, 1299. The admission of witnesses Lujan’s expert testimony was also proper.

Appellants’ one arguable contention is that the court erroneously instructed the jury that there is a presumption that every person knows what the law forbids. Devitt & Blackmar, § 13.04, pages 274-5. They point to the fact that it is the law of Guatemala that characterizes the stele as stolen property, and that there is no presumption that they knew Guatemalan law. Essentially their claim is that the instruction was overbroad and that it should have been supplemented with or limited by an instruction requested by appellants which made it clear that there is no such presumption as to knowledge of foreign law.

The court had received expert testimony as to the law of Guatemala regarding artifacts such as Machaquila Stele 2. Under that law, all such artifacts are the property of the Republic, and may not be removed without permission of the government. There was also overwhelming evidence that the defendants knew that it was contrary to Guatemalan law to remove the stele, and that the stele was stolen. Both their conduct and admissions that they made to investigators and others almost compel such a conclusion. It would have been astonishing if the jury had found that they did not know that the stele was stolen.

Early in his instructions, in defining the offenses charged, the judge defined the word “stolen” as used in 18 U.S.C. § 2314:

“ ‘Stolen’ means acquired, or possessed, as a result of some wrongful or dishonest act or taking, whereby a person willfully obtains or retains possession of property which belongs to another, without or beyond any permission given, and with the intent to deprive the owner of the benefit of ownership.”

There was no objection to this instruction.

Later in his instructions, the judge gave the instruction to which appellants objected and now object. He did so because the law under which the appellants were charged was the law of the United States, and also, because, while the government was required to prove that appellants knew that the stele was stolen, McAbee v. United States, 9 Cir., 1970, 434 F.2d 361, 362, it was not required to prove that appellants knew where it was stolen, cf. Pugliano v. United States, 1 Cir., 1965, 348 F.2d 902, 903. It follows that it was not necessary for the government to prove that appellants knew the law of the place of the theft. Appellants’ knowledge of Guatemalan law is relevant only to the extent that it bears upon the issue of their knowledge that the stele was stolen. The judge specifically instructed the jury that it must find beyond a reasonable doubt that appellants knew that the stele had been stolen. Thus, the judge’s failure to clarify the issue of the proof of knowledge of the law of Guatemala, while it may have been error, was not, in our opinion, prejudicial. Viewing the instructions as a whole, we think it most unlikely that the jury thought that the questioned instruction referred to the law of Guatemala. Cf. Cohen v. United States, 9 Cir., 1967, 378 F.2d 751, 752.

Affirmed.


author: PER CURIAM:

text:
    In the Matter of A. K. Electric Corp., Debtor. A. K. ELECTRIC CORP., Appellee, v. The CITY OF NEW YORK, Appellant.
    No. 590, Docket 73-2277.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 28, 1974.
    Decided April 5, 1974.

      S. A. Hauptman, Brooklyn, N. Y. (Hauptman & Hauptman, Brooklyn, N. Y., on the brief), for appellee.
    Samuel J. Warms, New York City (Adrian P. Burke, Corp. Counsel, City of New York, Cornelius P. Roche, Louis Pollack, New York City, of counsel), for appellant.
    Before KAUFMAN, Chief Judge, and FEINBERG and MULLIGAN, Circuit Judges.
   PER CURIAM:

The debtor, A. K. Electric Corp., filed a petition in the United States District Court, Eastern District of New York, on August 4, 1971 for an arrangement with creditors under Chapter XI of the Bankruptcy Act. The City of New York filed its proof of claim on November 2, 1971 for estimated excise and income tax deficiencies in the sum of $2,200. During an examination of the debtor’s books, a City auditor discovered that in 1966 the debtor had realized net income of $105,287.22, which it had failed to report on its general corporation tax return for 1966, thus avoiding a tax of $5,293.97 on which interest of $1,402.91 had accrued. The City thereupon, on September 1, 1972, filed an amended proof of claim including the 1966 corporation tax deficiency plus interest. The debtor successfully petitioned the Bankruptcy Court for an order expunging the additional tax claim. The Referee’s order of March 19, 1973 expunging the claim in question relied on two grounds: (1) the “amended” proof of claim was in reality a “new” claim filed more than six months after the date of the first meeting of creditors and was therefore time barred under Section 57 (n) of the Bankruptcy Act (11 U.S.C. § 93(n)); and (2) the general corporation tax became due and payable more than three years before the debtor filed its petition, and therefore it was discharged pursuant to Section 17(a)(1) of the Bankruptcy Act (11 U.S.C. § 35(a) (1)). The order of the Referee was affirmed by the United States District Court, Eastern District of New York, Hon. Mark A. Costantino, in a decision and order dated June 29, 1973, and by order dated July 16, 1973. The City appeals from these orders. The orders appealed from are reversed and the matter is remanded to the Bankruptcy Court for a hearing to determine the dischargeability of the 1966 general corporation tax due the City.

The District Court, in its affirmance, assumed arguendo that the City had a valid claim for corporate taxes, despite the three-year limitation of Section 17(a)(1), because of the debt- or’s fraud, but held that the claim was barred in any event by Section 57(n) of the Bankruptcy Act. The difficulty with this position, as the appellee candidly admitted on this appeal, is that Section 57(n) is not applicable. That Section does provide that, with certain exceptions, claims not filed within six months after the first date set for the initial meeting of creditors cannot be allowed. The Section, however, applies to ordinary bankruptcy proceedings under Chapters I through YII of the Act, but does not apply to an arrangement under Chapter XI. 9 Collier on Bankruptcy j[ 7.09 [1] (14th ed. 1940). Section 57(n) does not textually mention Chapter XI proceedings and in its opening phrase states “Except as otherwise provided in this Act.” Chapter XI in Section 355 (11 U.S.C. § 755a) clearly provides otherwise: It expressly states that proofs of claim may be filed “before confirmation.” The City’s amended claim here, dated September 1, 1972, was concededly filed before any plan of arrangement had been confirmed. Indeed, no plan had as yet been confirmed when the briefs in this case were filed in January, 1974. Whether the claim be termed an “amended” or “new” claim is therefore immaterial.

Since the Court below affirmed the Referee on a point which is not sustainable, we will consider the second ground in the Referee’s opinion which the District Court did not consider on the merits. The Referee also justified the expunging of the City tax claim on Section 17(a)(1), which provides a discharge if the taxes were due and owing more than three years preceding the bankruptcy. Section 17(a)(1)(d), however, makes an exception which excludes from a discharge taxes “with respect to which the bankrupt made a false or fraudulent return, or willfully attempted in any manner to evade or defeat.” The City urged in the Bankruptcy Court that the 1966 general corporation tax return filed by the debtor was false or fraudulent and that the debtor willfully attempted to evade or defeat the tax. During the argument before the Bankruptcy Court, the Referee indicated that he did not have to hold a hearing or trial on the City’s claim that a false or fraudulent return was filed here because the City had not complied with Section 17(c) (2) of the Act. This was a clearly erroneous ruling.

Section 17(c)(2) requires a creditor, who asserts that a claim is nondischar-geable “under clauses (2), (4), or (8) of subdivision (a) of [Section 17],” to file his application for a determination of dischargeability within the time fixed by the court pursuant to Section 14(b)(1) of the Act. Section 14(b)(1) requires the court to fix a time for the filing of objections. Not only did the Referee below fix no time but in any event Section 17(c) (2) on its face is not here applicable. It applies only to debts claimed to be nondischargeable under clauses (2), (4) or (8). The debt claimed by the City falls under clause (l)(d) of Section 17(a).

The debtor on this appeal does not dispute this reading of the statute but simply urges that the parties “explicitly and implicitly” agreed to submit the issue here to the Bankruptcy Court without a hearing. We find no support at all for this position in the record. Believing the tax claim time barred, the Referee did not provide the City with any opportunity to establish its claim. In view of the allegations of falsity, fraud and willful evasion made by the City, a hearing upon notice should be conducted by the Bankruptcy Court so that the dischargeability of the tax in dispute can be determined.

Reversed and remanded.

       Section 17 is made applicable to Chapter XX proceedings by the express language of Section 371 (11 XJ.S.C. § 771). 9 Collier on Bankruptcy f 9.32 [7], at 398 (14th ed. 1940).