Acme Roofing Co. And Acme Roofing Of Eugene, Inc.

ACME ROOFING CO. 139 LDM Roofing, Inc. d/b/a Acme Roofing Company and Acme Roofing of Eugene, Inc. and United Union of Roofers, Waterproofers & Allied Workers, Local Union No. 156, AFL-CIO. Case 36-CA-4402 27 February 1987 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS STEPHENS AND CRACRAFT On 10 November 1986 Administrative Law Judge Timothy D. Nelson issued the attached deci- sion. The Respondent filed exceptions and a sup- porting brief The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and brief and has decided to affirm the judge' s rulings, findings, and conclusions' and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, Acme Roof- ing of Eugene, Inc., Eugene, Oregon, its officers, agents, successors, and assigns, shall take the action set forth in the Order. ' The judge concluded, and we agree, that the record clearly supports the finding that Respondent Acme Roofmg of Eugene, Inc is the alter ego of LDM. With respect to the judge's reference to certain factors as "heighten[ing] the presumption of alter ego status," we note that we base our agreement with his alter ego finding on the record evidence and not on any presumption. Chairman Dotson finds no need to rely on the judge's alternate succes- sorship finding as a basis for imposing backpay liability on Acme Roofing of Eugene, Inc. Eduardo Escamilla, Esq., for the General Counsel. E. Scott Lawler, Esq., of Eugene, Oregon, for the Re- spondents. Theodore R. Kulongoski, Esq., of Portland, Oregon, for Charging Party Local 156.' ' The caption page of the hearing transcript mistakenly identified Ku- longoski as the representative of Western Oregon Roofing Contractors Association (Association) The Association was a named party to the un- derlying proceedings described elsewhere below as a "party to the con- tract" and was also so named in the instant notice of hearing, although it did not appear here and it would not appear to have any standing in the instant proceeding For this reason I have omitted the Association's name from the case caption as it appears on the instant notice of hearing DECISION STATEMENT OF THE CASE TIMOTHY D. NELSON, Administrative Law Judge. This is a proceeding brought to determine whether Acme Roofing of Eugene, Inc. (Acme) is liable for reme- dying the unfair labor practices of LDM Roofing, Inc. d/b/a Acme Roofing Co. (LDM). This is pertinent procedural history: On 12 July 1984 an administrative law' judge found that LDM had committed unfair labor practices in viola- tion of Section 8(a)(5) and (1) of the Act when it refused to honor or be bound by certain terms in the 1982-1984 labor agreement negotiated between United Union of Roofers, Waterproofers, and Allied Workers, Local Union No. 156, AFL-CIO (Union) and Association.2 Having so found the judge recommended that the Board order LDM to cease and desist from such unfair prac- tices and to make whole its employees (and the benefit trusts established under the governing labor agreement) for losses they incurred as a result of LDM's unlawful acts. On 13 August 1984, after LDM had failed to take exceptions from the judge's decision, the Board adopted, pro forma, the judge's findings And recommendations in their entirety. On 26 November 1984 the United States Court of Ap- peals for the Ninth Circuit entered on an order enforcing the Board's Order. Thereafter, a controversy arose over the amounts of backpay that LDM must pay to certain employees pursu- ant to the Board's Order, as enforced by the Ninth Cir- cuit. On 20 November 1985 the Board issued a Supple- mental Decision and Order fixing those backpay amounts. On 18 April 1986 the Ninth Circuit enforced the Board's Supplemental Decision and Order. Thereafter, another controversy arose over the liability of Acme for the fixed backpay,amounts that the Board had ordered LDM to pay to certain employees. In order to place this controversy before the Board for resolution, the Regional Director for Region 19 subsequently issued a "Notice of Hearing Without Specification" on 30 July 1986.9 In that notice of hearing the Regional' Director averred in substance that, although LDM had formally ceased operations in "November and December 1984," its owners had formed Acme in November 1984 and thereafter had operated Acme as a "disguised , continu- ance" of LDM, that Acme was LDM's "alter ego," or, alternatively, was a "successor" 'to LDM and that, under either of those characterizations, Acme, was legally re- sponsible for remedying the unfair labor practices com- mitted by LDM. Pursuant to that notice of hearing, the parties appeared before me on 18 September 1986, in Eugene, Oregon, 2 LDM Roofing, Inc. d/b/a Acme Roofing Co., Case 36-CA-4402, JD(SF)-129-84. 3 Authority for this procedural device appears to stem from Sec. 102 54(d) as read together with Secs 102 52 and 102.53(b) of the Board's Rules and Regulations. { 283 NLRB No. 29 140 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD where they litigated fully all the issues raised by the Re- gional Director's averrals, as summarized above.4 On the whole record, including the parties' arguments as set forth in their posthearing briefs, I find and con- clude as follows FINDINGS OF, FACT Most of the relevant factual details are contained in the parties' stipulations. I summarize the most significant facts here. LDM, the corporate entity that was the-subject of the underlying unfair labor practice and backpay proceed- ings, is now an essentially defunct corporation that still retains nominal title, subject to liens, of certain trucks and equipment. It was engaged ' in mostly commercial roofing work. Its owners are-brothers, Michael X. Maher and Richard Maher, `respectively, LDM's corporate president and vice president. LDM did business under the name "Acme Roofing Company." The Maher broth- ers controlled the labor relations of that business oper- ation. The roofing_ business is generally conducted out- side the winter months. LDM essentially discontinued operations qua LDM in November or December 1984, when the winter lull set in. In January 1985 the Maher brothers formed a new corporation, Acme Roofing of Eugene, Inc. and thereaf- ter continued in the 'roofing business, this time focusing on smaller-scale residential work, operating initially out of the same office location on McDougal Avenue from which LDM had operated.5 It also continued to use- and still does use-the trucks, equipment, office supplies, and telephone number that LDM had used. Indeed its trucks are still registered under the LDM corporate name. When Acme began operation in 1985 its startup com- plement of roofing employees consisted of persons' who had been similarly employed under LDM's operation; so far as this record shows, those former LDM employees still constitute a majority in the full complement of em- ployees regularly used ' as roofers. The Maher brothers also hold the' same corporate offices for Acme as they did -for LDM and they still control Acme's labor rela- tions and personnel policies. The creation of corporate Acme had virtually nothing to do with independent business considerations. Rather, as Michael Maher admitted several times, echoed by Re- spondent's counsel on' brief, the formation of the new corporation stemmed from the Maher brothers' desire to operate "nonunion." This desire, they believed, could be effectuated by the simple device of a change in corporate identity, together with a declaration to the employees 4 The evidentiary record thus made consists of three elements: The written answers made on 22 May 1986 by Michael X Maher, a coowner of both LDM and Acme , to certain written interrogatories propounded by the General Counsel (G C Exh 2), a series of stipulations of fact adopted by all parties and read into the hearing record, and the testimony of Michael X. Maher. 5 In May 1985, Acme, moved a half-block down McDougal Avenue to a new office location whom they took on in 1985 that henceforth the Compa- ny would be nonunion.6 There is general agreement that Acme's operation now differs in scale and focus from LDM 's. It is clear, how- ever, that this is not so much related to the reasons for forming a new corporation than to the failure of the Maher brothers to stay afloat economically as roofers. Thus, in better times, the Mahers ' business - focussed on securing larger-scale commercial contracts, many of them from governmental bodies. This business focus al- lowed them to maintain a larger crew of roofers during the 9-month fair weather construction season, as well as a small cadre of intermediate supervisors . As long as this business was good, the Mahers were able to devote much of their time to pursuit of other, independent, busi- ness interests. - - Eventually, however, for reasons that were not the subject of litigation in this hearing, the business under corporate LDM fell into financial decline, leaving LDM with many creditors, bank lienholders, state and Federal tax authorities, the United States Department of Labor, and the Board itself, all pursuing to judgment various claims against it. Particularly as a result of its defaults on payments to the bank that held liens on its trucks and equipment, the Mahers faced certain loss of their ability to continue in the roofing business. To prevent truck and equipment foreclosure, the Mahers negotiated arrange- ments with the bank whereby the bank would exercise forbearance in exchange for the Mahers' pledging of their personal assets and credit. And although this ar- rangement allowed them to continue in business, LDM's financial situation was still bad enough to make it impos- sible for the Mahers to obtain performance bonds, insur- ance, and to meet other typical requirements for large- scale commercial and governmental contract work. It was this fact of life, rather than any independent desire on the part of the ' Mahers to start a"new" business, which accounts for the fact that they now focus on resi- dential work (operating under corporate Acme), using a substantially reduced complement of employees, and only occasionally perform commercial and governmental work-and then, only on a smaller scale. ANALYSIS; CONCLUSIONS OF LAW The General Counsel argues that Acme ' is merely a disguised continuance, or alter ego, of LDM; alternative- ly, the General Counsel would have the Board find Acme to be LDM's successor, with knowledge of LDM's liability under the Board's backpay order, and therefore liable itself for that backpay. 7 B It is not before me to judge or decide whether in doing so Acme committed unfair labor practices, nor whether Acme assumed the obliga- tion to continue recognizing the Union as the representative of its em- ployees So far as this record shows, neither the Union nor the General Counsel has pursued those questions, but seek merely to hold Acme liable, to the extent of its assets, for the liquidated backpay obligations incurred by LDM 4 Conspicuously lacking in the General Counsel's position at this stage is any attempt to have the Board perform an ultimate piercing of corpo- rate veils by seeking to hold the Mahers personally liable for the liquidat- ed backpay amounts . I, therefore, do not independently consider that question ACME ROOFING CO. It is easy to find merit in either theory. As to alter ego, see for example Fugazy Continental Corp., 265 NLRB 1301 (1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984). And compare the Board's recent decision in Gilroy Sheet Metal, 280 NLRB 1075 fn. 1 (1986), and authorities cited (finding no alter ego), stressing that "the evidence does not establish that hostility towards the Union was a motive for terminating Heating & Air or for founding Sheet Metal.." It is clear that the Maher brothers, under corporate Acme, are continuing to operate a roofing business with the same equipment that they used under corporate LDM and with a cadre of employees drawn from the former LDM complement. And nothing in this record explains why the Mahers formed corporate Acme except their desire to break away from "union" obliga- tions and, perhaps, to confuse creditors whose judgments ran only to LDM. Thus, but for those considerations- which heighten the presumption of_ alter ego status (Fugazy, supra; Gilroy Sheet Metal, supra)s-the Mahers could have and would have continued as corporate LDM, even though LDM's precarious financial condi- tion would have forced a change in their business focus and in their scale of operations of the same type as they now engage in under corporate Acme. Where there is a direct -basis for finding that Acme is no more than a disguised continuance, or alter ego, of LDM, it seems needlessly attenuated to reach the further conclusion that Acme also satisfies all pertinent tests for successorship, even though it operates on a smaller scale and with a different business focus than did LDM.9 Nev- s In Goodman Piping Products v. NLRB, 741 F.2d 10 (2d Cir 1984), enfg. E.G. Sprinkler Corp., 268 NLRB 1241 '(1984), the Second Circuit suggested that antiunion animus may be "sufficient" in itself to find alter ego status, 741 F.2d at 12, citing the Supreme Court's decision in South- port Petroleum Co. v. NLRB, 315 U.S. 100, 106 (1942). 9 See and compare, e.g, Stewart Granite Enterprises, 255 NLRB 569 (1981), also involving a successor who took over only a portion of a larger union-reptesented business and who thereafter operated in a nar- rower market than had its predecessor. 141 ertheless, where Acme satisfied those tests, and assumed the business with knowledge of LDM 's outstanding li- abilities under the Board's Order, Acme may be held liable for the liquidated backpay at issue even if it were not an alter ego of LDM. Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973); see also Perma-Vinyl Corp., 164 NLRB 968, 969 (1967), enfd. sub nom. United States Pipe & Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir. 1968); Bell Co., 243 NLRB 977 (1979). CONCLUSIONS OF LAW 1. Acme Roofing of Eugene, Inc. is a disguised con- tinuance, and the alter ego, of LDM Roofing, Inc. d/b/a Acme Roofing Company. 2. Acme Roofing of Eugene, Inc. is a successor to LDM Roofing, Inc., which continued LDM's operations with knowledge of-and therefore assumed-LDM's li- ability for backpay under the Board's, order, 3. Acme Roofing of Eugene, Inc. is liable for the liqui- dated backpay amounts that the Board found were owed to former employees of LDM. On these findings of fact and conclusions of law and on the entire record, I issue the following , recommend- ed1o ORDER To the extent LDM Roofing, Inc. d/b/a Acme Roof ing Company has not done so, Acme Roofing of Eugene, Inc. shall immediately pay to the employees named in the Board's liquidated backpay order in Case 315-CA- 6832 the amounts set forth in that order. 10 If no exceptions are filed as provided by Sec. 102.46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec. 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses.