Shield-Pacific, Ltd.

SHIEI.D-PACIFIC, LTD. Shield-Pacific, Ltd. and West Hawaii Concrete, Ltd. and Operating Engineers Local Union No. 3, Inter- national Union of Operating Engineers, AFL-CIO. Case 37-CA- 1464 September 26, 1979 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND PENELLO On April 5, 1979, Administrative Law Judge David G. Heilbrun issued the attached Decision in this pro- ceeding. Thereafter, Respondents filed exceptions and a supporting brief, and the General Counsel filed cross-exceptions and a brief. Respondents also filed an answering brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and briefs and has decided to affirm the rulings, findings,' and conclusions of the Administrative Law Judge and to adopt his recommended Order, as modified herein.2 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Rela- tions Board adopts as its Order the recommended Or- der of the Administrative Law Judge, as modified be- low, and hereby orders that the Respondents, Shield- Pacific, Ltd. and West Hawaii Concrete, Ltd., Kailua- Kona and Waimea, Hawaii, their officers, agents, suc- cessors, and assigns, shall take the action set forth in the said recommended Order, as so modified: 1. Substitute the following for paragraph (d): "(d) In any like or related manner interfering with, restraining, or coercing employees in the exercise of their rights under Section 7 of the Act." I Respondents have excepted to certain credibility findings made by the Administrative Law Judge. It is the Board's established policy not to over- rule an administrative law judge's resolutions with respect to credibility un- less the clear preponderance of all of the relevant evidence convinces us that the resolutions are incorrect. Standard Drv Wall Products, Inc., 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for reversing his findings. 2 We find merit in the General Counsel's cross-exception to the Adminis- trative Law Judge's failure to require affirmatively that Respondents recog- nize and bargain with the Union and give retroactive application to the 1977-80 collective-bargaining agreement. Accordingly, we shall modify the Order in this respect. Also, in light of our recent determination in Hickmott Foods, Inc.. 242 NLRB 1357 (1979), we shall change the broad order recommended by the Administrative Law Judge to a narrow order. 2. Insert the following as paragraph 2(a) and re- letter the subsequent paragraphs accordingly: "(a) Upon request. recognize and bargain with Op- erating Engineers Local Union No. 3. International Union of Operating Engineers, AFL-CIO. in the unit herein found appropriate and give retroactive appli- cation to the existing collective-bargaining agree- ment." 3. Substitute the attached notice for that of the Administrative Law Judge. APPEN D)1X NO I CE To EMPI.OYitiS POStlD) BY ORDER OF ITlHE NAIIONAE LABOR RELATIONS BOARD An Agency of the United States Government WE WIL.L NOT refuse to recognize Operating Engineers Local Union No. 3, International Union of Operating Engineers. AFL-CIO. and to honor and apply the current collective-bar- gaining agreement with this Union. which is ef- fective to February 29, 1980, and covers the fol- lowing unit for which this Union is exclusive representative: All employees employed on the Island of Ha- waii, State of Hawaii, excluding office clerical employees, professional employees, watchmen, and supervisors as defined in the Act. WE WILL NOT lay off or in any other manner discriminate against employees to discourage their membership in the Union, or in any other labor organization. WE WILL NOT tell employees that continued membership in the Union will limit their oppor- tunity for return to work. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of their rights under Section 7 of the Act. WE WILL, upon request, recognize and bargain with the Union in the unit found appropriate above and give retroactive application to the ex- :sting collective-bargaining agreement. WE WILL offer Charles Aiu, Anthony Aki, Claude Caravalho, Lloyd Case, Clifford Denis. Melvin Fujihara, Perfecto Ganancial, Alvin Hao, Francis Hao, Abraham Keanaaina, David Lewi, Takita Okubo, Joseph Ontiveros, and James Santos immediate and full reinstatement to their former positions or, of those jobs no longer exist, to substantially equivalent positions of employment without prejudice to seniority or other rights and privileges previously enjoyed, and WE WILL make them whole, with interest, 245 NLRB No. 51 409 DECISIONS OF NATIONAL LABOR RELATIONS BOARD along with Herbert Alapai, Raymond Branco, Berkley Kala, Raymond Kaluau, David Kauhi, Virgil Macy, Albert Mitchell, Charles Mitchell, Fred Solomon, and Kenneth Wersing for losses in pay resulting from their being laid off on No- vember 1, 1977, and along with Harvard Kane- shiro for loss in pay resulting from his not being reinstated or rehired by us on or after March 1, 1978, with interest. SHIELD-PACIFIC, LTD. WEST HAWAII CONCRETE, LTD. DECISION STATEMENT OF THE CASE DAVID G. HEILBRUN, Administrative Law Judge: This case was heard in Kailua-Kona, Hawaii, during late Sep- tember 1978, and was based on an amended complaint al- leging that West Hawaii Concrete, Ltd., as alter ego of, or in the alternative successor to, Shield-Pacific, Ltd., both enti- ties having been denominated together in the complaint as collective Respondents, and sometimes so called in this de- cision, violated Section 8(a)(1), (3), and (5) of the Act by failing and refusing to bargain collectively with Operating Engineers Local Union No. 3, International Union of Oper- ating Engineers, AFL-CIO, called the Union. by discrimi- natorily discharging or laying off numerous employees be- cause of their membership in or activities on behalf of the Union and in order to avoid Respondent's asserted duty to bargain with the Union, and by various coercive utterances made to employees following which Respondents main- tained and gave effect to an invalid no-solicitation rule. Upon the entire record,' my observation of the witnesses, and consideration of post-hearing briefs2 read in connection with Respondent West Hawaii Concrete's post-hearing mo- tion to strike I make the following: FINDINGS OF FACT AND CONCLUSIONS OF LAW From 1968 and 1977 Shield-Pacific was engaged in the production and sale of ready-mix concrete, concrete block, aggregate, and related products at its plants and quarries located in Kailua-Kona, Waimea, and Hilo on the Island of Hawaii.4 Prior to April 1974, Charles Menning was pres- Various errors in this lengthy transcript are evident from the context in which they appear, or do not otherwise affect sense of the record as to warrant itemizing. 2 Pursuant to Sec. 102.42 of the Board's Rules and Regulations, I draw on many portions of General Counsel's post-heanng brief. deeming it a perti- nent, lucid, well-organized expression of "proposed findings and conclu- sions." as equivalent to findings of fact and conclusions of law. 'The motion to strike is denied, as it intrinsically lacks merit, constitutes an unauthorized partial reply brief, and chiefly because the case shall be decided on grounds other than those addressed by the motion. 4 Based on operations conducted in western portions of the Island of Ha- waii, State of Hawaii, where at all material times both Shield-Pacific. Ltd.. and West Hawaii Concrete, Ltd., have successively engaged in this category of business. and have each annually received gross revenue in excess of $500,000, while purchasing and receiving goods and materials valued in ex- cess of $50,000 from suppliers located within the State of Hawaii which, in ident of Shield-Pacific, in charge of day-to-day operations. Robert McClean, holder of an ownership and managerial interest in this Company since 1968, assumed presidency of Shield-Pacific on April I, 1974, and has been in overall charge of its operations since then. Shield-Pacific's officers are Robert McClean, president, and his wife Jeanette McClean, secretary-treasurer. Its directors are Robert McClean, Jeanette McClean, and an individual named Clark Guild. A holding company, Shield American. Inc.. owns 95 percent of Shield-Pacific's stock and is in the pro- cess of acquiring the remaining 5 percent. Robert McClean owns approximately 60 percent of Shield American, his son James McClean owns approximately 7 percent, Jeanette McClean owns approximately 6 percent, and all but I per- cent of the remainder is owned by other children of Robert McClean. This configuration of officers, directors, and own- ership has applied to Shield-Pacific since 1974. In June 1974, Shield-Pacific acquired Volcanite, Ltd., as part of a lawsuit settlement. At all material times Volcanite has been engaged in the production and sale of light-weight aggregate from its quarry in nearby Puuwaawaa, located approximately 22 miles from Kailua-Kona. Volcanite has been a wholly owned subsidiary of Shield-Pacific since June 1974, its officers being Robert and Jeanette McClean, and its directors being this couple along with Phyllis Sakamoto, who has been the regular bookkeeper for both Shield-Pa- cific and Volcanite. At various times between June 1974 and October 1977, Robert McClean transferred nonsupervi- sory employees between Shield-Pacific's and Volcanite's payroll. Thus, around late 1975 or early 1976, all Volcanite personnel were transferred to Shield-Pacific's payroll: then around July 1977 a number from Shield-Pacific were trans- ferred back to Volcanite's payroll. In April 1977 Shield-Pacific closed down its Hilo plant. Since then, Shield-Pacific's activity at Hilo has been limited to selling off inventory, arranging for excavation of fill ma- terial, and leasing certain real property. Kenneth Wersing has been assigned since April 1977 to oversee these residual operations. James McClean, formerly in charge of the Hilo plant, became Shield-Pacific's manager of operations in April 1977, responsible for assisting Robert McClean in day-to-day handling of all Shield-Pacific's remaining loca- tions. During the period from April to early November 1977, George Lincoln was in charge of Shield-Pacific's non- quarrying Kailua-Kona operations, and Mel Macy was in charge of Waimea, while John Ventura was responsible for Shield-Pacific's two quarries and that of Volcanite. Around April 1977, Shield-Pacific's offices relocated into small adjacent buildings situated approximately 100 yards from its Kailua-Kona plant. Robert and Jeanette McClean, Sakamoto, and two office clericals, Eileen Koyanagi and Mitsui Akazawa, occupied space there. The land on which these two buildings and the Kailua-Kona plant were lo- cated was owned by, and leased from, McClean Ranch Properties, which is wholly owned by Shield American. turn, obtained those same goods and materials from outside the State of Hawaii, I find that Shield-Pacific. I.d., and West Hawaii Concrete. L.d.. both individually and collectively, are employers within the meaning of Sec. 2(6) and (7) of the Act. I also find that the Union is a labor organization within the meaning of Sec. 2(5). 410 SHIELD-PACIFIC. LTD. In 1968 Shield-Pacific had recognized the Union as col- lective-bargaining representative of all of its nonsupervisory employees, excluding office clericals. Volcanite had recog- nized the Union in a similarly described unit some time prior to 1968. Both corporations had entered into a series of collective-bargaining agreements with the Union. In June 1974, Robert McClean signed such an agreement for Shield-Pacific, effective from March 1, 1974. to February 28, 1977. Following Shield-Pacific's acquisition of Vol- canite, the Union and Volcanite made a separate agreement in March 1975, replacing the 1973-76 contract that had been executed by Volcanite's prior owner. The substituted Volcanite agreement, signed by Robert McClean, was al- most identical to the 1974-77 Shield-Pacific agreement. and had the same expiration date of February 28, 1977. In June 1975, Shield-Pacific and Volcanite, both of which had been experiencing financial difficulties, instituted chap- ter XI bankruptcy proceedings. In September 1976, the bankruptcy court approved a plan of reorganization which enabled the two companies to avoid bankruptcy and con- tinue their operations. Pursuant to the plan, Shield-Pacific obtained financing from Aetna Business Credit, a Califor- nia lender, and settled with its creditors. This left one major debt, a $950,000 obligation to Aetna, to be paid off in monthly installments over a 5-year period. The arrange- ment with Aetna was embodied in a General Loan and Security Agreement signed by Robert McClean on Septem- ber 14, 1976. In this document, Shield-Pacific, Volcanite, McClean Ranch Properties, and Robert McClean person- ally all guaranteed the debt to Aetna. Commencing in February 1977, Shield-Pacific and the Union engaged in negotiations for a new contract. The ne- gotiations lasted several months and culminated in an agreement effective from March 1, 1977, to February 29, 1980. No separate Volcanite contract was executed, and the testimony is in conflict as to reasons why. Robert McClean testified that upon completion of negotiations he assumed two separate contracts would be executed, and when Willie Crozier, union business representative, presented him with a draft agreement naming only Shield-Pacific. he (McClean) expressed a desire to have separate contracts naming both corporations. Crozier asserted in response was that the agreement had been negotiated on the basis of Shield-Pacific alone and the Union was unwilling to pre- pare a separate Volcanite contract. Contrarily, Crozier tes- tified that there was no specific discussion during the 1977 negotiations as to whether a Volcanite agreement would be executed, and the Union saw no need for such an agree- ment inasmuch as there were no longer any Volcanite em- ployees in the bargaining unit (all having been previously transferred to Shield-Pacific's payroll). Crozier testified fur- ther that Robert McClean never expressed the desire to reach a separate Volcanite contract, and that the Union at no time refused to execute such a contract, which it was actually willing to do.' 5Crozier added that the first time any discussion about a separate Vol- canitc agreement ensued in 1977 was around August or September. when Robert McClean, who by then was transferring employees from Shield-Pa- cific's to Volcaimte's payroll, told ('rozier he wanted to make fringe benefit contributions in Volcanite's name Crozier's recalled replying that although the Union would accept a check drawn on Volcanite's account. it swould still The period from May through October 1977 was marked by certain friction between the Union and Shield-Pacific, resulting primarily from attempts to enforce provisions of the contract. In May, a dispute arose between Crozier and Robert McClean over the use of' supervisors to perform unit work, a matter that was not fully resolved before November 1977. Another dispute concerned Shield-Pacific's failure to pay retroactive wage rate increases as provided for in the 1977 contract. Crozier made numerous unsuccessful at- tempts during the summer and fall of 1977 to obtain this money for his members. In addition, Crozier had received complaints from employees whose medical bills were not being paid because of Shield-Pacific's delinquency in health and welfare contributions. In fact, Shield-Pacific was delin- quent in payments during 1977 and has not submitted such trust fund contributions for work performed after Jul, 1977. This problem caused a number of meetings between Crozier and Robert McClean. as the Union sought to ob- tain Shield-Pacific's compliance with terms of the contract. Crozier testified that by October 1977 his calls to McClean were being ignored. Late that month Crozier prepared an inventory of Shield-Pacific's assets and submitted this with a report to his superiors recommending that the Union take legal action to enforce the contract.' On November 1, all but three of Shield-Pacific's bargain- ing unit employees (and those who had previously been transferred nominally to Volcanite's payroll) were laid off. Testimony of Robert and James McClean was that the Company had been losing money throughout 1977. and the precipitating cause of the November I layoffs was a cash shortage resulting from failure of a Canadian customer to pay $50,000 owed for the purchase of Volcanite aggregate. Robert McClean had gone to the mainland in late October to collect this sum, but he was unsuccessful because of a dispute between the customer and the shipper. On or about October 31 Robert McClean telephoned James long dis- tance and told him to shut down Shield-Pacific. James McClean suggested the Company retain one or two unit employees at each location and keep facilities in operation at least for the sake of appearance. Robert McClean ac- cepted that suggestion, and it was decided that three of the most senior and versatile employees, Harvard Kaneshiro, Ralph Alapai, and Howard Alapai, would be retained and all others immediately laid off. Robert McClean asked James to handle the layoff in a nice way "because we had some really fine employees." The verbal advice made to affected employees at the time reflected James McClean's view that such layoffs were "temporary" in nature. From November I through the end of that week, James McClean, Lincoln, Macy, and Ventura, along with the three unit employees (Kaneshiro and the two Alapais). car- ried on the operations of the business. About November 4. Crozier visited the Waimea, Puuwaawaa, and Kailua-Kona locations. He found only the three unit employees working. be considered a Shield-Pacific contribution for recordkeeping purposes since the collectise-bargaining agreement named only Shield-Pacific. Crozier of- fered at the time to prepare a separate Volcanite agreement, but McClean declined this "updatlingl." 6 All dates hereafter in the months of October. November. and December refer to 1977. and those in the months of January through May refer to 1978. unless sho, n otherwise 411 DECISIONS OF NATIONAL LABOR RELATIONS BOARD thus learning of the layoffs for the first time. Anticipating the instructions of his superiors, Crozier told the three em- ployees to complete their shift but refrain from reporting for further work until notified by the Union. They all obeyed and did not return to work for at least the balance of 1977. Crozier's reason for actuating strike action was Shield-Pacific's failure to abide by the contract, particularly with respect to fringe benefit contributions. During the fol- lowing week, he contacted most of the newly laid-off em- ployees to notify them of the Union's action. In that same period, beginning Monday, November 7, Shield-Pacific's supervisors (James McClean, Lincoln, Macy, and Ventura) kept the Kailua-Kona and Waimea plants in continuous operation notwithstanding the Union's strike. Concurrent with these developments, Robert and James McClean had collaborated in the creation of West Hawaii Concrete. Robert McClean had returned from the mainland in early November claiming to be in a mood of disgust over Shield-Pacific's financial problems. When he expressed this, James McClean responded that there ought to be some way the business could be run successfully. James McClean sug- gested the possibility that he, together with Lincoln, Macy, Ventura, and Sakamoto, might put together some kind of a "deal" and try to "start all over again." Robert McClean was willing to consider such an arrangement, and over the next few days James briefly discussed such an idea with these four other persons, who expressed interest in pursuing it. A meeting was held at Robert McClean's home the eve- ning of November 10, attended by Robert and James McClean, Lincoln, Macy, and Ventura. Robert McClean produced a handwritten list of Shield-Pacific's operating as- sets on which his opinion of fair market value for each item was entered. The total valuation of all listed equipment was $1,250,000. Robert McClean offered to sell the equipment for that price, and there was a brief discussion of each item. James McClean, Lincoln, Macy, and Ventura accepted Robert McClean's total price as well as his price for each individual item without change. Discussion then turned to the structure of the new company, and it was decided that Robert and James McClean would each own 40 percent, and other four persons, as prospective corporate subscrib- ers, would each own 5 percent.7 Robert McClean also of- fered to transfer Shield-Pacific's inventory to the new com- pany at book value, estimating this to be $200,000. The overall result of this -hour meeting was a joint decision that the six prospective corporate subscribers would pur- chase Shield-Pacific's Kailua-Kona and Waimea facilities, intending to commence immediate operations as new en- tity. James McClean deemed commencement of West Hawaii Concrete, unnamed at the time, to be on November II, with himself as chief operating officer and Lincoln, Macy, and Ventura as the remaining work force. Neither payroll I James McClean, although his recollection of the November 10 meeting was admittedly vague, believed it was Robert who decided what percentage of the new company each person would own. Robert McClean had told James on November 5 that he wanted to retain an ownership interest in the new company, and to "stay close to the situation" because of his obligation to Aetna. records nor testimony is adequate to determine which cor- porate entity compensated individuals employed in busi- ness operations during the week-long period ending No- vember 18. Sometime between November 10 and 16, attorney Robert Smolenski. who had served Shield-Pacific at various times in the past, was retained to prepare Articles of Incorporation. They were signed by Robert McClean, James McClean, and Sakamoto and were filed November 16. Meanwhile, also between November 10 and 16, Robert McClean, as seller, drafted an agreement of sale to which the previously handwritten list of assets was attached in typed form. The proposed agreement provided that assets be sold for $1,250,000, payable in monthly installments of $20,000 at 8 percent interest. Shield-Pacific was to retain legal title to the property as a security interest until the full price was paid. Robert McClean had the proposed agree- ment reviewed by Smolenski, who at the same time was preparing West Hawaii's incorporation papers. West Ha- waii Concrete obtained no independent appraisals or legal advice with respect to the transaction. The sales agreement was signed as written on or about November 17 by Robert and James McClean.8 A first payment of $12,500 was not actually made by West Hawaii Concrete to Shield-Pacific until March 2. From February 28 to the time of hearing, West Hawaii had made 19 payments on various dates total- ing $102,800, or approximately $70.000 less than the amount then fully owed under the agreement. Sometime after November 17, Shield-Pacific effectuated the sale of its inventory to West Hawaii at the $200,000 price. This was done verbally, and there is no indication that West Hawaii has made any actual payments to Shield-Pacific pursuant to the transfer. West Hawaii has similarly rented its office and Kailua-Kona plant from McClean Ranch Properties on the basis of mere oral understanding. The officers, directors, and owners of West Hawaii Con- crete have not changed since its inception. Officers are James McClean, president, and Sakamoto, secretary-trea- surer. Directors are Robert and James McClean, Sakamoto, Lincoln, Macy, and Ventura. These same six individuals are the sole stockholders. with Robert and James McClean owning 40 percent and the others each owning 5 percent as originally contemplated. The initial capitalization of West Hawaii was formally proposed as $20,000. Lincoln, Macy, Ventura, and Sakamoto each paid in $1,000 on or about November 17, while the remaining $16,000 subscription of Robert and James McClean together was paid on a later date. Robert McClean did not notify Aetna about Shield-Pa- cific's sale of its assets to West Hawaii Concrete until around December or January. When Aetna officials learned of the transactions, they insisted that West Hawaii also jointly and severally assume obligations under the loan agreement.9 While in California on February 14, Robert 'James McClean was unable to recall circumstances under which the agreement was executed. He testified that he did not know or could not recall who drafted the agreement, whether Shield-Pacific used an attorney. how the agreement was presented to him for signature, when or where he signed it, and who. if anybody, was present at execution. ' The original General Loan and Security Agreement provides, in perti- nent part: §4. Ownership of Collateral-Debtor represents, warrants, and cov- enants to Aetna that the Collateral is nov, and so long as Debtor is 412 SHIELD-PACIFIC, LTD. McClean, on behalf of West Hawaii Concrete as a director, signed documents obligating West Hawaii to assume Shield-Pacific's $850.000 debt to Aetna. Robert McClean had discussed the decision to so obligate West Hawaii with James McClean and Sakamoto, but not with other direc- tors. Since November 17, West Hawaii Concrete has operated the Kailua-Kona and Waimea plants and quarries formerly run by Shield-Pacific. There was no hiatus between cessa- tion of Shield-Pacific's operations at those locations and commencement of West Hawaii's. The activity which West Hawaii Concrete took over from Shield-Pacific constituted all production operations in which Shield-Pacific was then engaged. Virtually all equipment used by Shield-Pacific at Kailua-Kona and Waimea was covered by the sales agree- ment to West Hawaii, and it has been used by West Hawaii since November. West Hawaii purchased no new or addi- tional equipment in its first months of operation, and has made only minor purchases of equipment since then. The general nature of West Hawaii's business is the same as was Shield-Pacific's: providing ready-mix concrete, block, and aggregate to commercial and residential customers in the western half of the Island of Hawaii. Approximately 80 percent of West Hawaii's customers were customers of Shield-Pacific prior to the sale, and approximately 80 per- cent of West Hawaii's suppliers, including all of its major suppliers, were suppliers of Shield-Pacific. West Hawaii's supervisors are essentially the same as Shield-Pacific's. with Lincoln in charge of the Kailua-Kona plant, Macy in charge of the Waimea plant, and Ventura in charge of quarrying operations (including those of Volcanite at Puu- waawaa). West Hawaii's accounting office is located in one of the two adjacent buildings formerly utilized as Shield-Pacific's obligated to Aetna, will be owned by Debtor and that no other person, firm or corporation has any right, title. interest, claim or lien therein or thereto . . . and that Debtor shall promptly notify Aetna in writing of and duly account to Aetna for the sale or other disposition of said Collateral or any part thereof or the collection of any Accounts resulting therefrom ... §5. Location of Collateral-It is expressly understood that the Collat- eral and all books and records are to remain, at all times. in the premises in which they are now located and that Debtor may not transfer the Collateral, books or records from such premises to other locations. whether in or out of the county or counties where now located, without the prior wnritten approval of Aetna, except for sales of inventory in the ordinary course of business. §9. Debtor Representations, Warranties and Covenants-As an in- ducement to Aetna to make advances hereunder, Debtor represents. warrants, and covenants to Aetna that. . it will maintain its existence as required by the laws of any jurisdiction in which it is organized or does business, including the payment of all applicable personal prop- erty, sales, use, franchise, income or similar taxes required by law and will cause to be paid when due all amounts necessary to fund in accord- ance with its terms, all pension plans presently in existence or hereafter created; . .. it will not sell, assign, lease, transfer: mortgage. pledge encumber or other wise dispose of the Collateral or any other of its properties, or any part thereof or any interest therein, or attempt so to do (except for sales of inventory in the ordinary course of business) it will not sell. assign, or otherwise dispose of any of its goods, wares, merchandise constituting stock in trade (except sales of inventory in the ordinary course of business), and it will not sell, pledge, assign or other- wise dispose of any of its Accounts except to Aetna .. headquarters. The other building is still used by Shield- Pacific and contains Robert McClean's own office. The en- trances to the two buildings are approximately 15 feet apart, where signs show their respective corporate names. Jeanette McClean, employed and compensated by West Hawaii, nevertheless occupies office space in the Shield-Pa- cific building, where she functions as Robert McClean's personal secretary, plus being an officer and director of both Shield-Pacific and Volcanite. Koyanagi and Sakamoto occupy office space in the West Hawaii building, where Koyanagi is now a clerical employee of West Hawaii, while Sakamoto, in addition to being a director, stockholder and bookkeeper for West Hawaii, is bookkeeper for both Shield-Pacific and Volcanite and a director of the latter cor- poration. '0 The telephone number for headquarters of Shield-Pacific and West Hawaii Concrete is the same. Incoming calls for either company are answered by Koyanagi or Sakamoto in the West Hawaii building. If the call is for Shield-Pacific, they ring Robert or Jeanette McClean on an intercom. Telephone numbers for West Hawaii's Kailua-Kona and Waimea plants are the same as those used by Shield-Pacific at those locations before November 10. The mailing address for Shield-Pacific and West Hawaii is the same, while a xerox machine located in the Shield-Pacific building is shared with no attempt to separately record the number of copies made by each company. With respect to the roles of Robert and James McClean. it was contemplated in the sale of the business that Robert would not remain active in day-to-day operations at Kai- lua-Kona and Waimea, but that James would assume over- all control. Robert and James McClean both testified that West Hawaii Concrete has been operated on that basis, and that Robert's role, apart from his capacity as a director and 40-percent owner, has been limited to advising West Ha- waii concerning financial matters. Robert McClean testified that he now spends a greater proportion of his time than he did before November on the mainland tending to real estate interests, and is physically present in Kailua-Kona only 40 percent of the time. James McClean testified that he does not discuss or consult with Robert concerning his opera- tional decisions, although he still resides in Robert's home for about half the time and does not maintain a residence of his own. In November, December, and January, West Ha- waii placed advertisements in two local newspapers, notify- ing the public of its acquisition of the business formerly operated by Shield-Pacific. These named "Bob" McClean as being one of the six individuals who comprise West Ha- waii Concrete and who are "open and ready to serve you with ready-mixed concrete, blocks & aggregate." James McClean testified that he made a number of oper- ational changes after West Hawaii Concrete commenced operations. These changes included adjustments to certain pieces of equipment, renovating certain previously inoper- ative equipment, moving equipment from one place to an- other, changing the Company's policy regarding sale of " In a required annual report for prepaid health care filed for calendar year 1977 by Sakamoto on behalf of West Hawaii Concrete. the dollar amount of employer contributions was noted to have been "paid by Shield- Pacific. Ltd. towards premiums." 413 DECISIONS OF NATIONAL LABOR RELATIONS BOARD "seconds," and altering certain job classifications. However, the major change has been with respect to sand produced by Volcanite. James McClean devised certain changes in the mixture of Volcanite sand, thereby making it lighter in weight. As a result of this, West Hawaii Concrete has sub- stantially increased the amount of sand it purchased from Volcanite compared to the amount formerly purchased by Shield-Pacific. A related consequence has been a substantial amount of work for Volcanite loading and hauling sand to West Ha- waii Concrete. However, Volcanite has not hired any em- ployees to perform this work. Instead, as suggested by Rob- ert McClean, Volcanite and West Hawaii Concrete entered into an agreement whereby employees of West Hawaii drive green Volcanite-owned trucks (which were not cov- ered by the sales agreement) and perform all loading and hauling work. For bookkeeping purposes, West Hawaii Concrete charges this labor back to Volcanite with the amount offset against the purchase price of aggregate. Again, this situation is based solely on a verbal arrange- ment worked out between Robert and James McClean. Louisa Rivera, a dispatcher, has been the only nonmanage- rial employee at Volcanite since November. Shield-Pacific has continued to employ only one individual, Kenneth Wersing, who prior to November was a member of the bar- gaining unit. Payroll records of West Hawaii Concrete show, however, that from January through May Wersing was carried on the payroll of West Hawaii. James McClean testified that he did not know why Wersing's name ap- peared on the West Hawaii Concrete payroll, and that it was an apparent "error." Shield-Pacific sold 13 trucks to West Hawaii Concrete as part of the sales agreement, most of them red and white "mixers" which contained the Shield-Pacific name and logo on their doors. It was months after the November sale that West Hawaii Concrete began to place its decal on the trucks to cover up the Shield-Pacific name. James McClean testified this was due to delay in obtaining the decals from a printer. Howard Alapai, who became employed by West Hawaii Concrete around March 1, testified that the West Hawaii decal was placed on his truck during the week the hearing began, and that he was first told about the new decals by Lincoln approximately a month earlier. After Crozier first heard rumors of West Hawaii Con- crete's formation in late November, he made several unsuc- cessful attempts to contact Robert McClean." Crozier ulti- mately located Robert and James McClean in Hilo on or about February I and asked them to meet with him that day. A meeting was held that afternoon in the Union's Hilo office, in which Crozier began by asking Robert McClean what was happening with "his operation." Robert McClean replied that the newly formed West Hawaii Concrete (nam- ing six shareholders) had purchased the Waimea and Kai- lua-Kona operations. Crozier stated that the Union wanted to negotiate a contract, and after some discussion of repre- 1 By then Crozier saw that the early November strike was proving totally ineffective. He called a meeting of 12 to 15 former Shield-Pacific employees on or about January 5 and told them to go back to work if they could, even if the Company was nonunion. Crozier then called most of the remaining employees within the following few days and conveyed the same message. sentation principles. Robert McClean said he would confer with stockholders and provide a answer by February 7. Crozier called Robert McClean on February 7, who tempo- rized by saying he wanted to go to Honolulu and consult an attorney. On February 9. Robert McClean sent Crozier a letter on Shield-Pacific stationary stating as follows: I was unable to meet with our attorney in Honolulu on Wednesday, February 8th as planned. I will return to Honolulu next Tuesday, February 14th. and will meet with him later next week. I will respond to you as soon as I have had an opportunity to meet with our attor- ney. However, this was followed on February 17 only by a letter on West Hawaii stationery, sent from James McClean to the Union, which stated: You have requested this company to recognize the Operating Engineers Local Union 3 as bargaining agent for the company's wage employees. We believe a majority of our employees do not be- long to your Union, or otherwise do not look to you for representation. Accordingly, we are not able to recog- nize you Union as you request. You indicated you will solicit our employees to de- termine the interest of each of them in having your Union represent them. In this regard, we point out our company has had a policy of"No Solicitation" for any purpose on company premises, and we respectfully re- quest that in your solicitation efforts you respect our policy. It is undisputed that West Hawaii Concrete has not recog- nized the Union at any time since February 1. Robert McClean regards the Shield-Pacific contract as still "in full force and effect," but he testified there have been no per- sons employed in the Shield-Pacific bargaining unit since November. Shield-Pacific has not made any fringe benefit contributions or otherwise performed any affirmative obli- gation of this contract since November. From commencement of West Hawaii Concrete's opera- tions through the end of 1977, it employed 13 different indi- viduals (including supervisors), 10 of whom had worked for Shield-Pacific just prior to the sale. During 1978, however, West Hawaii's operations expanded considerably because of increased sales and the closing of its major competitor. Thus, by early March West Hawaii Concrete was employ- ing a total of 36 employees, including supervisors and cleri- cal staff. Since March, the total number of employees has ranged between 36 and 39. James McClean testified that he is in charge of West Hawaii Concrete's hiring and has made the final decision on all new hires. He described how he or Lincoln seeks out the "most qualified" or "best suited" for job openings from among persons in the community known to be available. 2 In late November, Claude Caravalho, Jr., a former Shield-Pacific employee, appeared and spoke with James iI James McClean testified that during discussions resulting in West Ha- waii Concrete's purchase of the Shield-Pacific business, there was no particu- lar mention of what would happen to laid-off Shield-Pacific employees nor an) later policy established regarding them, although "it was assumed that we would use some of those people." 414 SHIELD-PACIFIC. LTD. McClean at the Kailua-Kona plant. Caravalho asked about getting his vacation money and other backpay, to which James replied that his father was on the mainland trying to make collections. Caravalho testified that James McClean then told him that in order to get this money, he would have to write a letter terminating himself from Shield-Pa- cific. James McClean assertedly stated that after writing this letter Caravalho would "no longer be in the Union, and they might hire me for West Hawaii Concrete," adding that the Union was taking the Company to court so that if he were hired by West Hawaii and the Union won the case. the Union might have the right to "put [him] out" for work- ing at a nonunion company. Caravalho's wife Sandra wrote and sent such a letter addressed "to whom it may concern" at Shield-Pacific; however, the effort was futile. James McClean's version of the conversation was that he merely relayed his father's position that because Shield-Pacific em- ployees were on temporary layoff status, they would have to be permanently separated in order to receive vacation pay. He invited a letter from Caravalho to achieve this purpose, but denied (as did Robert McClean), ever seeing one on the subject. James McClean also denied any mention of the Union or Caravalho's possible return to employment at West Hawaii Concrete. David Lewi, a former Shield-Pacific employee in attend- ance at Crozier's meeting of January 5, telephoned Lincoln later that day, identified himself, advised about the union meeting, and asked if there were any job openings. Lincoln said, according to Lewi, that there were none at the time, and while it would be good to have some of the old boys back, he would have to have more nonunion than union men. Lewi further testified that he called Lincoln back a few weeks later, and was told there were not yet any open- ings. Lincoln's first version of this conversation was that he told Lewi a majority of people hired by then were not union members, making West Hawaii Concrete a nonunion com- pany. Lincoln later modified this testimony be saying that while he knew when talking with Lewi that a majority of the employees hired by West Hawaii Concrete were not formerly with Shield-Pacific, his only remark on the point was confined to West Hawaii's being a nonunion company. Around mid-January, Lloyd Case, another laid-off Shield-Pacific employee telephoned Macy. He asked Macy whether any jobs were available, and was told no, nor did Macy know when Volcanite would be starting up again. Case testified that Macy then said, "I guess you heard if you come to work for the company it has to be on a non- union basis." Macy assertedly continued by stating that for "every union man hired back he would have to hire a non- union man," so that the Company didn't "go over 51 per cent" with union men. Macy recalled the conversation as only being an inquiry about employment, to which he told Case there was no work available then nor necessarily in the future. On these facts, General Counsel argues that an alter ego, or in the alternative "successor," situation has been shown. Alter ego status is generally found where two enterprises under examination have "substantially identical" owner- ship, business purpose, management, operations, equip- ment, customers, and supervision. Crawford Door Sales Company, Inc. and Cordes Door Company. Inc., 226 NLRB 1144 (1976). The doctrine arises most frequently in the con- text of intercorporate dealings which are alleged to have been undertaken as a sham or subterfuge to achieve ulterior purposes relating to contractual or legal obligations with a union. Analysis frequently focuses on whether particular transactions between two employing entities have resulted in one being a mere "disguised continuance" of the other as opposed to what would flow from bona fide, "arms-length" transactions. The Bell Companv, Inc., et al., 225 NLRB 474 (1976), enforcement denied in part 561 F.2d 1264 (7th Cir. 1977). It is clear in this case that West Hawaii Concrete consti- tutes the mere alter ego of Shield-Pacific. Although the ownership of West Hawaii differs somewhat from that of Shield-Pacific, the fact remains that McClean family mem- bers own a substantial majority of the stock in both compa- nies. Through Shield American, Robert and James McClean control approximately 60 percent of Shield-Pa- cific's stock, while together they own 80 percent of West Hawaii. This represents little meaningful change in com- parative ownership, and sameness in this respect is not pre- requisite to an alter ego finding. Cf. Crawford Door Sales Company, supra, H.S. Brooks Electric, Inc., 233 NLRB 889 (1977). The business purpose of West Hawaii, engaging for profit in the sale of ready-mix concrete, block, aggregate, and related products, from its Kailua-Kona and Waimea facilities, to commercial and residential customers located on the western side of the Island of Hawaii, approximately 80 percent of whom were former customers of Shield-Pa- cific, is precisely the same as was Shield-Pacific's. Further, the basic equipment used by West Hawaii is identical (with minimal exception) to that formerly used by Shield-Pacific. Creation of West Hawaii Concrete did not result in any change with respect to supervision. As before, the three principal supervisors are Lincoln, in charge of the Kailua- Kona plant, Macy, in charge of the Waimea plant, and Ventura, in charge of the quarries. The management of both Respondents is still largely controlled by Robert McClean. Aside from his capacity as stockholder and direc- tor, with continued occupancy of an office adjacent to West Hawaii's own, Robert McClean dictated terms of West Ha- waii's creation and its acquisition of assets,' was held out publicly as a coequal member of West Hawaii's manage- ment, initiated the policy of having West Hawaii Concrete employees perform driving functions for Volcanite, obli- gated West Hawaii on the $850,000 Aetna loan after con- ferring only with James McClean and Sakamoto, and dealt with Crozier in regard to the Union's undifferentiated de- mand for recognition. James McClean, ostensibly West Ha- waii's chief executive, was tellingly vague in his testimony I3 Many dubious circumstances surrounded the November sale transac- tion. indicating it was anything but "arms-length" in nature. The negotia- tions leading up to execution of the agreement were extraordinanly brief, consisting of one short conversation between Robert and James McClean on November 5 and a I-hour meeting on November 10 There was a total absence of "negotiation" in the normal sense of the word. James McClean and other buyers simply accepting meekly the terms set down by Robert McClean These buyers did not seek outside legal advice or appraisals, but instead relied heavily on Robert McClean who himself arranged for the sales agreement to be reviewed by the same attorney who was simultaneously incorporating West Hawaii Concrete 415 DECISIONS OF NATIONAL LABOR RELATIONS BOARD about details of the November sale transactions, payroll matters, the lease of office space and premises, duties of office staff and truckdrivers, and the manner in which his own and other rates of compensation were established.', Overall, and given some degree of change in management and ownership configurations, the composite of all relevant factors demonstrates that West Hawaii Concrete continues with similar operations as the disguised alter ego of Shield- Pacific.' Cf. Big Bear Supermarkets 3, 239 NLRB 179 (1978); Tricor Products, Inc., 239 NLRB 65 (1978); Watson Meat Co., 234 NLRB 1115 (1978); H.S. Brooks Electric, Inc., supra, Parklane Hosiery Co., 203 NLRB 597 (1973): Rushton & Mercier Woodworking Co., 203 NLRB 123 (1973). The circumstances validate General Counsel's alle- gation of refusal to bargain, both intrinsically and as later overtly declared in a written withdrawal of recognition from the Union, thus establishing a violation of Section 8(a)(5). Further, I find that Respondent has violated Section 8(a)(1) by several coercive utterances, each of which bears the forseeable effect of inhibiting protected activities. Re- specting paragraph 9(a) of the amended complaint, I credit the testimony of Case, attributing to Macy the statement that West Hawaii Concrete was hiring at least one "non- union man" for every "union man." with an express objec- tive of circumventing the Union's rights. Case was a believ- able witness, whose flights of intensity and emotion did not detract from an essentially truthful recollection. Macy's perfunctory denial of the offending statements is rejected, as based on little more than coached and evident self-inter- est. Respecting paragraph 9(b), I credit Claude Caravalho as to statements by James McClean in their conversation at the Kailua-Kona plant around late November. Here, McClean coercively induced a renunciation of Caravalho's settled preference for representation by the Union. Cara- valho's memory of essentials was adequate, and his diffi- culty with surrounding details was effectively cured by spot corroboration of the observant and forthright Sandra Cara- valho. James McClean's contradicting denial is totally re- jected.'6 Similarly, Lincoln's credited statement to Lewi that "he would have to hire more nonunion than union men" was in violation of Section 8(a)(1) as alleged in paragraph 9(c). Lincoln's admitted version of details concerning this con- versation is but further evidence of the fixed, unlawful per- 4 James McClean testified to a number of operational "changes" that have occurred since West Hawaii's formation. Most of these changes are miniscule, such as installing a motor guard, moving a generator, repairing trucks, and seeking a new credit policy from suppliers. James McClean con- ceded that when formerly manager of operations for Shield-Pacific. he had made or sought to make several of these same changes. 15 Alter ego relationships were found to exist, despite father-to-son trans- fers of managerial authority, in Flirte Chief Inc., et at., 220 NLRB 1112 (1975); Crawford Door Sales Conmpany, supra; Herman Brothers Pet Supply, Inc., et al., 138 NLRB 1087 (1962), enfd. 325 F.2d 68 (6th Cir. 1963). 1' In this and most significant aspects of his testimony, I confidently dis- credit James McClean. He presented evasively and with blithe effrontery that gave every appearance of deceit and falseness. This emphatic credibility resolution fully permeates his description of roles in West Hawaii Concrete, and is an integral part of the alter ego branch of the case. To this extent I find Robert McClean equally unworthy of belief, although superficially more unctuous in delivery. ception he and Macy'. both minor investors, had of the sig- nificance attaching to newly formed West Hawaii Concrete. Lincoln's denial of critical remarks is particularly suspect because of his demeanor and his transparent efforts to slant all testimony supportively toward Respondent's various frivolous defenses. General Counsel has alleged that James McClean's "no- solicitation" statements in his February 17 letter are in- dependently violative of Section 8(a)(1), premising this the- ory on Essex International, Inc., 211 NLRB 749 (1974). 1 decline to find a violation in this regard, on grounds that the communication was neither intended for, nor so far as known transmitted to, employees.' 7 Finally. I hold that Respondent's conduct constitutes a violation of Section 8(a)(3) with respect to all Shield-Pacific employees laid off November I, and with special limited regard to Harvard Kaneshiro. Direct and inferential evi- dence establishes that West Hawaii Concrete was artifi- cially vitalized for no other real purpose than to evade Shield-Pacific's collective-bargaining relationship with the Union and the 1977-80 contract. Since this contract ex- pressly provided for a right of recall in order of seniority (Sec. 07.02.00),. the failure to recall these employees was motivated by the same discriminatory considerations as the underlying alter ego phenomenon. See Helrose Bindery, Inc., and Graphic Arts Finishing, Inc., 204 NLRB 499 (1973); Circle T Corporation, 238 NLRB 245 (1978). Finding, too, that the Union's rather ethereal strike was prolonged by Respondent's unfair labor practices (includ- ing deliberate refusal to communicate with Crozier during the early November-late January period), Harvard Kane- shiro's situation is characterized as at least that of an unfair labor practice striker with rights attendent thereto. Should he be deemed not to have made an unconditional return to work offer subsequent to November 4, there would be no commencement of backpay in this individual case. I believe such a result would be arbitrary and unrealistic. James McClean was on notice as early as January 5 that the Union disclaimed any continuing intent that its members withhold services. If this were not enough, by March I both other originally absenting employees (Ralph and Howard Alapai) had been re-employed with West Hawaii Concrete. Under these circumstances a fair and prudent disposition, which I make, requires that Respondents be held to have waived a direct, express unconditional return to work offer from Harvard Kaneshiro as of March 1. Accordingly, I ren- der conclusions of law that Respondents, by refusing to continue recognizing the Union in an established and con- tractually defined appropriate unit; by unilaterally chang- ing wages, fringe benefits, and other terms and conditions of employment: by discriminatorily laying off employees named in paragraph 7 of the complaint and by failing and refusing to reinstate or rehire certain of the laid-off employ- ees as named in paragraph 8 of the complaint (in both in- stances as modified by amendments proposed and allowed at transcript pages 6 and 63); and by telling employees that "IGeneral Counsel introduced a posted no-solicitation rule as Exh. 42 (received in evidence at transcript page 878). It is not facially impermissible, and I adhere to rulings that without an allegation of unlawful promulgation the significance of G.C. Exh. 42 was not a fully litigated matter, nor does it otherwise warrant further treatment (General Counsel did not allude to this evidence in the post-hearing brief). 416 SHIELD-PACIFIC. ITI). continued membership in the Union would limit their op- portunity to return to work, has engaged in unfair labor practices within the meaning of Section 8(a)(1), (3). and (5) of the Act. Upon the foregoing findings of fact, conclusions of law. and the entire record, and pursuant to Section I(c) of the Act, I hereby issue the following recommended: ORDER"S Respondents, Shield-Pacific. Ltd.. and West Hawaii Con- crete, Ltd., their officers, agents, successors and assigns. shall: I. Cease and desist from: (a) Refusing to recognize the Union and to honor and apply the current collective-bargaining agreement with the Union, which is effective to February 29, 1980, and covers the following unit for which the Union is exclusive repre- sentative: All employees employed on the Island of Hawaii in the State of Hawaii, excluding office clerical employees, professional employees, watchmen, and supervisors as defined in the Act. (b) Laying off or in any other manner discriminating against employees to discourage their membership in the Union, or in any other labor organization. (c) Telling employees that continued membership in the Union will limit their opportunity for return to work. (d) In any manner interfering with, restraining, or coerc- ing employees in the exercise of their rights under Section 7 of the Act. 2. Take the following affirmative action to effectuate the policies of the Act: (a) Offer Charles Aiu. Anthony Aki, Claude Caravalho, 1 In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall. as provided in Sec. 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order. and all objections thereto shall be deemed waived for all purposes. Lloyd Case. Clifiord Denis. Melvin Fujihara, Perfecto (janancial. Alvin Hao. Francis lao. Abraham Keanaaina, David Lewi, Takita Okubo, Joseph ()ntiveros, and James Santos reinstatement to their lormer positions of employ- ment without prejudice to seniority or other rights and privileges, and make them whole, along with Herbert Ala- pat. Raymond Branco. Berklex Kala. Ramond Kaluau. David Kauhi, Virgil Mac5. Albert Mitchell. Charles Mitch- ell. Fred Solomon, and Kenneth Wersing, lfr losses in pa! incurred as a result of being laid off on November 1. 1977. and along with Harvard Kaneshiro for his loss in pa! in- curred as a result of failure and refusal to reinstate or rehire him on or after March 1, 1978. all as provided in 1' W4oolworth (ompan,v. 90 NLRB 289 (1950). and Florida Steel Corporation, 231 NLRB 651 (1977). (b) Preserve and, upon request, make available to the Board or its agents for examination and copy ing, all payroll records, social security payment records, timecards. person- nel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. )c) Post the attached notice marked "Appendix" at their Hawaii places of business. Copies of this notice, on forms to be provided by the Regional Director for Region 20, after being duly signed by Respondents or their autho- rized representative, shall be conspicuously posted immedi- ately upon receipt and be maintained for 60 consecutive days thereafter in all places where notices to employees are customarily posted. Reasonable steps shall be taken by Re- spondents to insure that such notices are not altered. de- faced, or covered by any other material. (d) Notify the Regional Director, in writing, within 20 days from the date of this Order. what steps have been taken to comply herewith. " I decline to recommend a remedial interest rate ,1' 9 percent on backpay because it is inappropriate to do so in light of the recency and thoroughness in and by which the Board examined this subject and chose the "adjusted pnme rate" principle of Florida Steel :0 In the event that this Order is enforced by a Judgment of the United States Court of Appeals, the words in the notice reading "Posted b) Order of the National Labor Relations Board" shall read "Posted Pursuant to a Judg- ment of the United States Court of Appeals Enforcing an Order of the Na- tional Labor Relations Board'" 417