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NLRB Update: Nutraceutical / Fresh Organics dba The Real Food Co.

In late March & late April of this year, an NLRB Administrative Law Judge heard testimony on the Nutraceutical / Fresh Organics dba The Real Food Co. case. A decision on the various unfair labor practices charges filed against Nutraceutical prior and subsequent to the abrupt closure of Real Foods/24th St. is expected imminently. Here are some details on the case culled from the hearing transcript. (Although not identified in this trannscript, the IWW is the union discussed herein)

By - Sunday, Jun. 26, 2005


The source for this summary was primarily the transcript from the NLRB hearing. In certain instances, hearing exhibits were also relied upon to provide details. Following the hearing, fifteen or more citizens who'd attended sessions of the hearing met to compare notes and discuss salient aspects of the testimony. This meeting was helpful in terms of later culling material from the hearing transcript, creating a hearing outline, and arranging the material thematically.


The Real Food Co., popularly known as Real Foods, was founded by Jane and Kimball Allen in 1969. Until Winter 2002, The Real Food Co. operated four natural grocery stores and a produce warehouse in San Francisco, as well as a natural grocery store in Sausalito.

Fresh Organics, Inc. is a wholly-owned subsidiary and retail arm of Nutraceutical International Corp.. Fresh Organics was formed in 2002 in order to acquire substantially all of the assets of The Real Food Co.. Fresh Organics presently operates five stores in the San Francisco Bay Area, including three of the former Real Foods outlets ( 24th St., Stanyan St., and Sausalito ), Thom’s Natural Foods on Geary Blvd., and Cornucopia Community Market in Carmel. Nutraceutical / Fresh Organics leases its 24th St. and Stanyan St. stores from Jane and Kimball Allen, who own the properties housing these two stores.

Nutraceutical Corp. is a Utah-based, Delaware-incorporated natural products conglomerate. Since its inception in 1993, Nutraceutical has mostly been known as a national and international manufacturer, distributor and marketer of vitamin and nutritional supplement lines. In addition to the three Real Food Co. outlets it acquired in 2002 upon launching its move into retail, Nutraceutical has since acquired about 23 stores in three states.

Bruce Remund is Fresh Organics’ Vice President and General Manager. Remund also serves on Fresh Organics’ two-person Board of Directors, along with Nutraceutical CFO Leslie Brown.

Bill Gay ( aka Frank W. Gay ) is Nutraceutical’s CEO and Chairman of the Board, as well as Bruce Remund’s boss.

Sergio Diaz ßis Fresh Organics’ Director of Marketing. He is also Bill Gay’s son-in-law.

Dave Kloski was Store Manager at the Real Foods / Fresh Organics outlet on 24th St. from 1999 until early 2003. Kloski worked for Fresh Organics, and previously The Real Food Co., for a total of ten years. From 2003 until roughly mid 2004, Kloski managed the Fresh Organics / Stanyan St. store. Kloski is no longer employed with Fresh Organics.

Conal Wilmot held the position of Store Manager at Fresh Organics / 24th St. from early 2003 until the end of August 2003, when the 24th St. store closed. He currently manages Fresh Organics / Thom’s.

Mitch ( aka Sarah ) Genlot-Joslyn, Adriel Ahern, Simon Knaphus, Jonathan Burkett, Lisa Fagundes, Jessie Dameron, and Kim Rohrbach are amongst the former Fresh Organics employees who were involved in union activity at the 24th St. store during the spring and summer of 2003. Genlot-Joslyn was fired from her job at Fresh Organics in June 2003, and Ahern was fired a month later. Dameron and Fagundes, who were unhappy about Ahern’s termination, quit their jobs after Ahern was dismissed. Knaphus, Burkett, and Rohrbach were terminated when the 24th St. store was closed on August 28, 2003. Rohrbach was subsequently refused reemployment by Fresh Organics after applying for positions at other store locations.

THE HEARING IN A NUTSHELL ( scroll down for specifics of the witnesses'
testimonies )

Three former Store Managers testified that Fresh Organics’ Vice President and General Manager, Bruce Remund, threatened to fire union organizers, or to close stores, in response to union activity.

A former 24th St. Store Manager testified that when he asked Fresh Organics’ Director of Marketing, Sergio Diaz, about the terminated 24th St. employees following the 24th St. closure, Diaz’ response had been, “F-ck em.”

Fresh Organics’ paid expert witness, Thomas James, testified that “it is typically a large mistake” to inform employees, customers, landlords, and others in advance of closing a store. "Retailers who think carefully about branding," James also testified, "always want to control the message.”

Prior to the closure, Fresh Organics had prepared no blueprints or architectural plans in order to execute a 24th St. store remodel, nor had it applied for permits with the city, nor had it generated internal documents detailing plans for a concept store at the 24th St. location.

The 24th St. store could not be closed without Fresh Organics’ Board of Directors first passing a resolution empowering officers to close the store. Bruce Remund testified that the Board did not pass such a resolution until August 25, 2003 - just a few days before the closure.

Two union organizers who were fired from their jobs at Fresh Organics / 24th St. prior to the closure, allegedly for performance reasons, had received no previous discipline or performance correction notices during the two years that they had been employed at the store. One of these fired organizers had been “doing a great job” and “meeting all expectations” according to the most recent performance review she'd received.

Two pro-union 24th St. employees held a meeting with Remund, Diaz, and 24th St. Store Manager Conal Wilmot on August 7, 2003, declaring their union sympathies and presenting a list of employee demands.

On August 29 - the first day that the store was closed - Bruce Remund supplied an affidavit to the National Labor Relations Board concerning the first in a series of unfair labor practices charges to be filed against Fresh Organics by terminated 24th St. employees.


Note: During the hearing, Fresh Organics’ counsel called only three witnesses to testify on behalf of the corporation. These witnesses were Bruce Remund, Sergio Diaz, and Thomas James, an expert who testified that Fresh Organics was paying him $360 an hour for his services.

Former 24th St. and Stanyan St. Store Manager Dave Kloski testified that around June 2003, Bruce Remund told him that Remund’s boss, Bill Gay, would “rather close the [ 24th St. ] store than run a union shop there.”

Bruce Remund denied the having made the above remark attributed to him by Kloski. He also denied having ever discussed “with anyone in the world” Bill Gay’s views concerning union activity at 24th St.. ( Remund later testified that he had “made it very clear” to Kloski that he “didn’t want a union at 24th St..” Remund also testified that he’d had no conversations with Kloski about union activity at the 24th St. store. )

Eric Guy, who managed the Stanyan St. produce department during the 24th St. union campaign, testified that he’d heard directly from Kloski that Remund had stated Bill Gay “would rather shut down the [ 24th St. ] store than see a union there.”

Remund testified that he doesn’t personally think unions are right for Fresh Organics’ retail operations. Remund also testified that he was concerned when he learned 24th St. employees were attending union meetings; that he sought legal counsel immediately, and held a meeting where managers were coached on the “do’s and don’ts” of managing pro-union employees. At this meeting, Remund said, it was made “very clear that you lay off people for performance reasons.” “Oh it was pretty simple to me,” Remund elaborated, “I think there was discussion and we made light of it.”

Kloski testified that the closure “came out of the blue,” and he only learned about it after the store was already closed. Kloski also testified, that when the subject of store renovations came up at managers’ meetings, it “always seemed like Sausalito was the store they [ Remund, executive management ] wanted to renovate first.”

Remund himself testified that he’d had no conversations with Kloski about closing the 24th St. for remodeling.

Kloski testified that, when he told Remund he thought the closure was a mistake, Remund said, “What we did was unethical but I don’t believe it was illegal.” Remund told Kloski that, based on conversations with Fresh Organics’ counsel, there was no actual or legal union drive [ at the 24th St. store ], because the union “hadn’t presented anything formal” to the employer.

Jon Freeman, formerly a produce worker at the Stanyan St. store, testified that he was told by Remund, during a meeting following the 24th St. closure, that Remund “was aware that they [ the 24th St. workers ] were organizing” but, according to Remund, the 24th St. workers “technically ... weren’t part of a union because they didn’t have a representative.” At this same meeting, Freeman testified, Remund also talked about an article by David Lazarus that had come out, and said it was “free publicity” for him, and he didn’t care what customers thought.

Kloski testified that when he asked Sergio Diaz about the terminated 24th St. employees following the 24th St. closure, Diaz' response had been “F-ck em.” Kloski also testified that when he asked Diaz if the closure of the store was “killing two birds with one stone,” Diaz had replied, “Yes, the timing is good for that.”

Jesse Dameron, formerly an employee at 24th St., told the court that, on May 26, 2003, she asked Wilmot “if he was going to the meeting later on that night.” “He asked me what meeting?” Dameron testified, “and I said to him, the union meeting. He said, ‘Who told you about the union meeting?’ And I replied, ‘Mitch,’ as in Mitch Genlot [ aka Sarah Genlot-Josyln ].”

Remund testified that, through conversation with Wilmot in June 2003, he’d learned that an employee, Jessie Dameron, had walked up to Wilmot and said, “Are you going to the union meeting tonight?”

Kloski testified that, through conversations with Remund and with Conal Wilmot, he had learned that employees Adriel Ahern, Jonathan Burkett, Lisa Fagundes, and Kim Rohrbach were involved in union activity at the 24th St. store.

Dot Adams, formerly an employee at 24th St., testified that, on June 10, 2003, Kloski asked her what she knew “about the union stuff at 24th St..” Adams replied that she didn’t know anything. Kloski then asked her what she “knew about Adriel [ Ahern ], Kim [ Rohrbach ] or Mitch [ Genlot-Joslyn ] organizing.” Adams maintained that she didn’t know anything. ( Kloski’s account of the June 10 conversation was that he’d asked Adams “if she had heard anything about the 24th St. store lately” and if “she had talked to Adriel lately.” Kloski testified that Adams had replied no; and as far as he
could recall, “that was the extent of it.” )

Kloski testified that, before Wilmot fired 24th St. employee Adriel Ahern in June 2003, Wilmot had asked Kloski for his advice because Wilmot “felt uncomfortable” about terminating Ahern. “He told me he wanted to talk to Human Resources about it,” Kloski said under oath, “but that Bruce was forcing him to go ahead and terminate her.”
Jerry Burt, former Sausalito Store Manager, testified that in the course of a 2002 conversation with Remund about the 24th St. store and a past union campaign that had taken place there, Remund told him that “anyone caught trying to organize [ at Fresh Organics ] would be fired.”

Jeff Irish, former Assistant Manager at Fresh Organics / Thom’s, testified that, in the course of a November 2002 conversation with Remund about union leafletting that had gone on at Thom’s, Remund told him that “Bill Gay would close the store if they [ the workers ] ever organized.”


Neither 24th St. staff, vendors, nor clientele were provided with any advanced notice of the closure.

Prior to the closure, Fresh Organics / Nutraceutical had obtained no permits from the City, nor had it prepared any blueprints or architectural plans in order to remodel the 24th St. store.

Prior to the closure, no paper trail - i.e., internal documents, Power Point presentations, e-mails, etc. - existed describing a concept store at the 24th St. location. ( During their testimony, both Remund and Diaz cited plans to develop a concept store at 24th St. as the primary motivating factor in their decision to close and renovate the store. )

The corporation’s 24th St. landlords, Jane and Kimball Allen, were not provided with any advanced notice of the closure.

Fresh Organics’ lease stipulates that the tenant must obtain written consent from the landlord in order to make structural alterations to the building costing more than $10,000. ( Remund testified that there were “no plans” to make structural alterations to the building prior to the closure. Yet, Remund cited the overall condition of the store as a factor in Fresh Organics’ decision to turn 24th St. into a concept store and close it for a remodel; and moreover, elements of his testimony seemed to suggest the need for structural alterations at 24th St., specifically in regards to recreating the store’s walk-in refrigerator and “engineering out” other problems with the store. After discussing workers’ comp issues associated with the cramped walk-in, Remund testified that, in 2003, he had not considered the possibility of just replacing the walk-in without closing to remodel. “It was impossible to do to [ sic ] --,” Remund elaborated, “there’s no way you can tear out a walk-in refrigerator, especially one that was as significant as that in terms of the structure that it entailed. And haul it out of the store.” )

Fresh Organics’ two-person Board of Directors, Remund and Nutraceutical CFO Leslie Brown, did not meet to pass a resolution to close the 24th St. store until August 25, 2003. The store was closed on the night of August 28, 2003, and employees received their termination notices the following morning.

The 24th St. store could not be closed without Fresh Organics’ Board of Directors first passing a resolution to close to the store.

There were ten new hires at 24th St. in July and August of 2003 - two of whom completed new employee paperwork on the final day that the store was open.

As far as Fresh Organics’ executives were aware, the 24th St. store was the only Fresh Organics store where there was union activity at the time of the closure.

Upon closing the store, Fresh Organics created no preferential hiring list for the purpose of reemploying its terminated 24th St. workers at remaining Fresh Organics outlets, nor did it create a preferential hiring list for the purpose of reemploying its terminated 24th St. workers at a reopened 24th St. store.

The 24th St. store was not only a profitable store at the time of the closure, but it was the only Fresh Organics outlet turning a profit at all. ( According to Remund, the 24th St.’s annual EBITDA - Earnings Before Interest, Taxes, Depreciation, and Amortization - was roughly $500,000 ).

There was no reduction of inventory at the 24th St. store prior to the closure.

A tremendous amount of product was wasted due to Fresh Organics’ failure to provided advanced notice of the closure to employees or vendors. Remund testified that, although the exact amount of the waste was never calculated, it “probably” came to as much as $10,000 - $20,000.


According to testimony from both Remund and Diaz, the 24th St. store had been chosen, in the spring of 2003, as the location where Fresh Organics would initially implement its store concept. Remund said that, in the corporation’s view, there aren’t “any good small box natural food stores where vitamins and health and beauty aids meets natural foods” providing a pleasant shopping experience in a customer service-oriented environment. Fresh Organics’ store concept, both executives testified, had been in the making since 2002, and could be eventually be rolled at other locations.
Remund testified that, at the time that the decision to execute a concept store at 24th St. was made, Fresh Organics prepared no formal economic analysis of the project and its impact on 24th St. revenues because he and his colleagues knew one thing: “24th St. was making money”, Remund said, “And a concept store, we’re going to put it somewhere where it makes sense to make the investment. ... We knew that after the first year, we could get the investment back.” ( Remund had testified earlier to the importance of a demographic study showing that 20% of 24th St.’s customers had no vehicles of their own - which, in Remund’s view, meant “more of a captive audience
for that store”. Sausalito had originally been considered the likely location for a concept store, Remund testified; but a critical problem with Sausalito was that customers - only 5% of whom lacked vehicles, according to the demographic study - would “just keep driving down the street to Molly Stone’s or Whole Foods” if no parking was available in front of the store. )

Sergio Diaz testified that he sent no e-mails to colleagues in which the implementation of a store concept at 24th St. was discussed because, since he and his colleagues worked “right across the aisle” from one another, there was no need to communicate by e-mail. Diaz, who sat in on the special meeting of Fresh Organics’ two-person Board of Directors which took place August 25, 2003, also testified that his colleagues were not able to meet to pass a resolution to close the store until August because “we are very busy and there are few of us. ... and sometimes our agendas are very particular.”

Remund, who testified that he and co-Member of the Board Les Brown live within thirty minutes of each other and work in the same building, stated that he and Brown did not get together to pass a resolution to close the store until August 25 because, in his mind, “it [ the store ] wasn’t going to be closed down until the end of the produce season anyway”, and “the urgency wasn’t there.”

According to Remund, the decision not to inform employees or customers about the closure was based an assessment of risks. If you gave employees notice, Remund testified, then there might be a “disruption of operations;” you could have people finding jobs and moving on. ( As noted several paragraphs above, there were ten new hires at the 24th St. store in July and August of 2003 alone, which indicates a high rate of turnover even in the absence of store closures. Remund also testified that Fresh Organics had employed 250 individuals in three years. ) You could have “workers comp injuries” or “theft issues,” Remund maintained, and you could have “people who know they’re going to lose their jobs talking further about the issues with the  customers,” thus “souring the customers.” And if you gave customers notice, Remund testified, “then obviously the employees knew ... as with the case with anybody [ to whom you gave notice ] for that matter.”

Remund testified that his own concerns about giving employees advanced notice of the closure were based on prior experience while he was a Regional Manager with Icon Fitness. Remund said that he closed down stores while at Icon, giving employees advanced notice probably in the range of two weeks to a month. People moved on and found jobs, Remund testified; there was “theft of treadmills and expensive, very expensive exercise equipment,” not to mention “workers comp issues.” When asked by counsel what he meant by “workers’ comp issues,” Remund said that there were some injuries that he felt “weren’t completely legitimate.”

Remund testified that Fresh Organics failed to apply for permits for the remodel because “by the city knowing about it [ the remodel ], then it becomes public information, et cetera, et cetera, et cetera.”


Thomas James, who was called by Fresh Organics’ / Nutraceutical’s counsel as an expert witness, testified that when retail stores undergo a temporary or permanent closure, it is “the very rare case that any advanced notice is given” to either landlords, customers, employees, or others; and that “it is typically a very large mistake to do so [ to give advance notice ].”

James testified that retailers don’t typically give customers advance notice of closure because, “by giving notice, you give notice to your competitors” and invite competitors to lure your customers away.

James testified that, if you give employees notice, you are going to be understaffed during the last two weeks that you’re open due to employees leaving, “which leaves in the mind of your customers a bad shopping experience.” Another problem associated with giving employees advance notice, James stated, is “shrinkage” - product being removed from the shelves without anybody paying for it, or in other words, theft. Finally, James said that “retailers who think carefully about branding always want to
control the message,” and an employee who is about to be terminated is "likely to communicate ... all sorts of negative messages about the retailer.”

According to James, landlords are hardly ever given advance notice of closures, because a retailer is typically in the situation where a landlord has “what you call a leverage point in the lease, meaning that, in connection with either a closure or a remodel, the landlord thinks ... they have some approval right,” and may grant approval in exchange for increased rent, or for “some other obligation being shifted from the landlord to the tenant under the lease.” James also said that if the landlord “has or
believes he or she has the right to challenge a closure or an alteration,” then it’s in the retailer’s interest to close and begin work without providing notice, “because once you have done that, it is much, much more difficult for the landlord to go in and get an injunction to get you to reopen.”

When asked if he could think of any reason why a store going through a temporary closure would ever give advance notice to employees, James replied in the affirmative, stating that “people mess up.” James testified that, in his experience, closures that were “supposed to be kept confidential” eventually “got down to the store level,” because “one or two people obviously told their closest one or two friends, who told their closest one or two friends ... and then we had to make an immediate public

Russell Jacobus, who was called by the National Labor Relations Board’s counsel as an expert witness, testified that “generally, retailers try not to close a store for a remodel.” If you keep a store open during remodeling, Jacobus said, there will be dust, debris, and out-of-stocks, so some customers will shop elsewhere and “form shopping habits that don’t include your store.” But if you close the store during remodeling, Jacob asserted, then “100% of your customers are going to go someplace else, and they are
going to develop shopping habits that don’t include your store.” Jacobus also said that retailers generally “retailers try to build excitement around the new store, and let the customers know what is going to be coming,” rather than close without warning customers in advance.

When asked his opinion of the fact that, at the 24th St. store, perishables were ordered as usual right up until the store was closed, Jacobus stated that a retailer would typically let stock run down “very carefully.” On the one hand, a retailer wants to avoid out-of-stocks; but on the other hand, a retailer wants to cut down on movement costs and avoid having “too much merchandise to move around during the remodel process.”

Jacobus testified that, when he worked as an attorney in Safeway’s real estate law division, the first thing his department would do when a remodeling request came in would be “to review the lease and see if there were any restrictions.” If there were such restrictions, Jacobus said, then local real estate personnel would be advised “to contact the lessor right away before any expenditures are incurred, because lessors often have
different agendas than lessees, and better to find out early on whether the lessor is on your side or against you.” Jacobus also said that “seeking the lessors’ consent would be something that we would do as a matter of course before we start the process.”

Jacobus stated that it seemed to him that Fresh Organics would spend $10,000 on structural changes “pretty quickly.” “What I saw in this file,” Jacob testified, “was that the doors were not optimal at this store, so I assume that they were going to try to make structural changes to that.” There also would likely be trenching to do for the cash registers and for new refrigeration lines, Jacobus commented, and condensers might have to be put on top of the building. “As I’m sure they [ Fresh Organics ] are finding out right now,” Jacobus testified when asked whether trenching is structural, “there is always controversy between lessors and lessees about what’s structural and what’s non-structural. I would consider that [ trenching ] to be structural.”

When asked if he reviewed the lease provision on defaults by the landlord, Jacobus said the following: “As I recall, if the lessor had certain obligations to maintain the structural aspects of the building and the lessee could place lessor in default by written notice ... and if they did so and lessor did not cure within 30 days, the lessee could cure those
defaults themselves” and withhold the costs from the rent.

As far as it concerns Fresh Organics’ failure to obtain permits in advance of the closure, Jacobus said that, in his past experience at Safeway and at Furrs Supermarkets, the real estate representatives would “be sure to get their ducks in a row,” because the last thing “a real estate rep wanted to do was to send in a proposed remodel ... and then discover subsequently that the permitting process was going to hang him up.” A retailer would normally contact the permitting agency in advance, Jacobus continued, to make sure that there were no problems with what the retailer wanted to do, and to make
sure there would be no hang ups.


May 2, 2003: Bruce Remund receives an e-mail from Sara Hasson, Fresh Organics’ Produce Product Coordinator, alerting him to a union drive in progress at the 24th St. store. Remund replies to Sara’s e-mail the following day, letting her know that he’ll call 24th St. Store Manager Conal Wilmot as well as the company’s Senior Executive Team as to how he should proceed.

May 14, 2003: Remund informs Fresh Organics’ Store Managers and Product Coordinators that their attendance at a May 22 managers’ meeting is mandatory.

May 22, 2003: Managers’ meeting takes place. Those attending the meeting are informed of what they should avoid saying or doing in the context of managing pro-union employees, and what options remain open to them according to the law.

May 26, 2003: A 24th St. employee, Jessie Dameron, asks Store Manager Conal Wilmot if he will be attending the union meeting later that night; she also tells Wilmot that she learned of the meeting from Mitch ( aka Sarah ) Genlot-Josyln.

June ?, 2003: Remund learns from Wilmot that WIlmot was asked by Dameron if he would be attending the union meeting.

June 26, 2003: Mitch Genlot-Joslyn is fired, after Remund and Wilmot consult and determine that it is appropriate to terminate her. ( During her two-year tenure at the store, Genlot-Josyln never received a performance correction notice, nor was she ever put on a performance improvement plan. )

July 23, 2003: Adriel Ahern is fired, after Remund and Wilmot consult and decide to let her go. ( According to Ahern’s most recent performance review, Ahern was “doing a great job” and was “meeting all expectations.” During her two-year tenure at the store, Ahern never received a performance correction notice, nor was she ever put on a performance improvement plan. )

August 7, 2003: 24th St. employees Simon Knaphus and Jonathan Burkett hold a meeting with Conal Wilmot, Bruce Remund, and Sergio Diaz. Knaphus and Burkett state that they are pro-union, and they present a list of employee demands. Remund agrees to meet with Knaphus and Burkett again on August 20th.

August 12, 2003: Conal Wilmot is notified by the National Labor Relations Board that Ahern has filed a charge against Fresh Organics alleging she was fired because of her Union and / or protected, concerted activities. The NLRB requests from Wilmot a “full and complete written account of the facts”, as well as a statement of the Employer’s position with respect to Ahern’s charges.

August 17, 2003: Burkett e-mails the list of employee demands to Remund. One of the demands made is that employees cease to be employed at will after a probationary period of ninety days.

August 20, 2003: Remund and Wilmot meet with Burkett. Remund tells Burkett that “things” could be discussed at the upcoming store meeting.

August 25, 2003: Fresh Organics’ Board of Directors holds a special meeting called by Remund, and passes a resolution empowering officers “to close the 24th street [ sic ] store and to effectuate a complete remodel of the store,” and to “take such additional steps as are necessary to undertake and complete” the remodel.

August 28, 2003: Around 9pm, Remund and Wilmot announce to employees present at the 24th St. store that they are all terminated and the store is being closed for remodeling.

August 29, 2003: 24th St. employees receive termination packets via Fed Ex. Remund supplies the National Labor Relations Board with his first affidavit concerning Ahern’s charge filed August 11.