R-B Rentals, A Sole Proprietorship

554 DECISIONS .OF THE NATIONAL LABOR RELATIONS BOARD JMC Transport, Inc. and Russell Broaddus III d/b/a R-B Rentals, a Sole proprietorship and Lemuel Marina. Case -9-CA-17694 31 March 1987 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND CRACRAFT On 25 November 1986 Administrative Law Judge Thomas E. Bracken issued the attached sup- plemental decision. Only the Respondent filed ex- ceptions. 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 has decided to affirm the judge's rulings, findings,' and conclu- sions 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, JMC Trans- port, Inc. and Russell Broaddus III d/b/a R-B Rentals, a sole proprietorship, Jeffersonville, Indi- ana, their officers, agents, successors, and assigns, shall jointly and severally take the action set forth in the Order. ' In finding that Russell Broaddus III d/b/a R-B Rentals is jointly and severally liable with JMC Transport, we rely on our holdings in South- eastern Envelope Co., 246 NLRB 423 (1979), and Commissary of the Great Race pizza Shoppes, 277 NLRB 1175 ( 1985). Deborah R. Grayson, Esq., for the General Counsel. Russell Broaddus III, of Louisville, Kentucky, for the Respondents. SUPPLEMENTAL DECISION STATEMENT OF THE CASE THOMAS E. BRACKEN, Administrative Law Judge. On 28 September 1984, the National Labor Relations Board issued its Decision and Order in this case, concluding, inter alia, that Respondent JMC Transport, Inc. (JMC) had violated Section 8(a)(1) of the Act, by discharging Lemuel Marina on 5 November 1981. (272 NLRB 545.) In its decision, the Board ordered JMC, inter alia, to offer employee Lemuel Marina immediate and full rein- statement to his former job or, if that job no longer exists, to a substantially equal position, and make him whole for any loss of earnigns he may have suffered by reason of the Respondent JMC's unfair labor practices against him. On 12 November 1985, the Court of Ap- peals for the Sixth circuit entered its judgment granting enforcement of the Board's decision, 776 F.2d 612 in- eluding the backpay provisions of the Board's Order. Re- spondent JMC's request for a hearing, en bane was denied and, on 8 January 1986, _ the cou_ rt of appeals issued a mandate to enforce its judgment. On 6 JUne 1986, the Regional Director for Region,9 issued an amended backpay specification and order re- scheduling hearing, alleging that Marina was -due a cer- tain sum as backpay and also alleging the premises which resulted in the calculation of such sum.. Answers were duly filed by JMC and 'Russell Broaddus III d/b/a R-B Rentals, a Sole Proprietorship in (R-B Rentals) denying the specifications' accuracy in various respects. Although admitting that backpay began 5 November 1981, Re- spondent JMC denied that it owes any backpay beyond 1 February 1982, alleging that it converted to a system of independent contractors at this time. JMC also admitted that the computations of the specification concerning av- erage weely earnings, interim earnings, expenses, and totals are mathematically correct. JMC denied that R-B Rentals is a single employer with, and/or alter ego, and/or successor employer to JMC. The answer filed by R-B Rentals denied each and every allegation of the specification, inlcuidng a denial that R-B Rentals is a single employer with, and/or alter ego, and/or successor employer to JMC. A hearing was held before me on 31 July 1986 in Lou- isville, Kentucky. All parties appeared and were afforded full opportunity to be heard, to examine and cross-exam- ine the witness,' and to present evidence. On the entire record2 in this case, from my observa- tion of the witness and his demeanor, and after due con- sideration of the brief filed by the General counsel and the brief filed by Respondent, I make the following find- ings 1. THE ISSUES The main issue to be determined in this proceeding is whether R-B Rentals is a single employer with, and/or alter ego, and/or successor employer to JMC so as to impose liability jointly on JMC and R-B Rentals for the backpay obligation incurred by JMC as a result of JMC's unflar labor practices. Respondents contend, as previous- ly stated, that there is no relationship between JMC and R-B Rentals, whether it be termed single employer, alter ego, or successor. The other primary issue is whether the gross backpay period extends to the date of closure of JMC on 30 No- vember 1985. The amended backpay specification pro- vides that Marina be compensated as if he had worked ' Russell Broaddus III was called by the General Counsel as her wit- ness, and was the sole witness to testify . Broaddus, a layman, entered his appearance at the commencement of the case, for both JMC and R-B Rentals. I Broaddus filed a brief on behalf of both Respondents. Subsequently, on 19 September 1986, the General Counsel filed a motion to disregard portions of Respondents' brief, with a memorandum in support of motion to disregard portions of Respondents' brief. No opposition has been sub- mitted to the motion. On consideration of the matter and the lack of op- position, I find the General Counsel's motion to be meritorious, and it is granted The motion is marked as G.C. Exh. 41, and the memorandum in support thereof is marked as G.C. Exh. 42, and are received into evi- dence. 283 NLRB No. 83 JMC TRANSPORT continuously for JMC and/or R-B Rentals from the time of his illegal discharge on 8 November 1981 throughout 1981, 1982, 1983, 1984, and until 30 November 1985, when JMC went out of business. According to the back- pay specification,- the General Counsel asserts that the total amount of backpay due Marina from the Respond- ents after deduction of interim earnings is $47,516.98. Respondent JMC further contends that in any event its liability for backpay terminated on , 1 February 1982, when it converted its operation to a system of using in- dependent contractors to haul its freights Pursuant to JMC's contention it would owe Marina $4,055.92.4 IL, BACKGROUNDS In December 1978 or- 1979 Broaddus first purchased a tractor and, within several months thereafter, purchased a trailer,-which he leased to other parties to carry their freight. His first customers were the House of Nelson and Kentucky Liquor and Wine. Thereafter, sometime prior to June 1980 Broaddus secured another customer, Willett Distilling Company. The House of Nelson used up to two tractors and two trailers for 6 months or a year. Broaddus testified that sometime in 1980 the name R-B Rentals first came into use, to designate the business entity that Broaddus used in the renting of tractors and/or trailers. R-B Rentals was a sole proprietorship, and was owned and operated by Broaddus who was its only officer. Its only other office employee for its 5-year life was a part-time bookkeeper. In about 1981, Broaddus hired a mechanic to perform maintenance work on his tractors and trailers. In 1984, he had from two to four mechanics who performed re- pairs on R-B Rentals equipment as well as on the equip- ment of other truck owners. On 1 July 19806 JMC was incorporated to engage in the business of transporting freight and commodities under a certificate , from the Interstate Commerce Com- mission, within the 48 States of the continental United States. Broaddus was the incorporator of JMC, its presi- dent, and a member of the board of directors. He initially contributed $5000 to $10,000 to its operating capital. Stewart Koch contributed $20,000 and John David Wil- lett contributed- a smaller amount. The stock was initially divided as follows: Broaddus 80 percent, Koch 10 per- cent, and Willet 10 percent. In 1982 Broaddus owned 90 percent of JMC stock and Koch owned 10 percent. For the fiscal years endings 30 June 1983 and 1984, owner- 3 During the course of the hearing, the term independent contractors was seldom used to describe a class of drivers who drove for JMC. In its place, the witness and the General Counsel constantly used the term owner-operators. As the evidence will show, these drivers did not own, and were not buying, a tractor, but were in fact lessees who paid a rent to Broaddus for the tractor at so much per mile. 4 The net backpay for the last quarter of 1981 is $2,693.13, and the net backpay for January 1982 would be one-third of the $4,088.34 shown on the specification, resulting in the amount of $4,055.92. 5 Broaddus' testimony as to facts was often preceded by the statement "I believe." Sometimes he relied on "I don't believe." He frequently gave events took place some 6 or 7 years prior to his testimony in this case. In the main I have credited his testimony concerning events, but not his conclusionary statements. 6 Broaddus asserted in his opening statement that the date of incorpo- ration was about 1 June 1980. However, JMC's Small Business Corpora- tion Tax Returns for 1982,1983, and 1984 reports the date as 1 July 1980. 555 ship was as follows: Broaddus 66.67 percent, Koch 19.05 percent, George Hughes 9.52 percent, and DeAnna Owens 4.76 percent. The other officers of the corporation at its inception were Kenneth Schweitzer, vice president, and Koch, sec•• retary-treasurer. Schweitzer also served as general man- ager until the summer of 1981 when he was replaced by DeAnna Owens. According to Broaddus, JMC had major customers, including General Electric, Reynolds Metals, Kroger, and many distilleries. It also had several customers that it serviced throughout its entire existence, including the distilleries. III. FINDINGS AND CONCLUSIONS A. Single Employer The legal principles to be applied in determining whether two separate employers constitute a single em- ployer are well settled. The controlling criteria are: (1) interrelation of operations; (2) common management; (3) centralized control of labor relations ; and (4) common ownership. Bacchus Wine Cooperative, 251 NLRB 1552 (1980); B & P Trucking, 279 NLRB 1193 (1986). The Board has stressed the first three of these factors, in par- ticular the presence of control of labor relations,, because these factors tend to show operational integration. How- ever, no one of these factors is controlling, nor need all of the "controlling criteria" be present. Single-employer status, for purpose of the Act, depends on all the circum- stances of the case and is characterized as an absence of an "arm's length relationship found among unintegrated companies." Blumenfeld Theatres Circuit, 240 NLRB 206, 215 (1979), enfd. 626 F.2d 865 (9th Cir. 1980). 1. Interrelation of operations Throughout the 5-year existence of JiMC it operated out of of a leased flat, concrete building at 1719 Potter's Lane, Jeffersonville, Indiana. This building consisted of offices on the westside and a 1-1/2 bay garage on the eastside. JMC had six offices with one of these occupied by President Broaddus. The general manager occupied one office,' and the bookkeepers occupied a third office. The dispatcher and permit clerks each occupied an office, and apparently several clericals occupied the sixth office. Its mail was received at P.O. Box 2163, listed on some of the exhibits as being in Jeffersonville, and in other exhibits as being in Clarksville, Indiana.9 The only office of R-B Rentals consisted of one rented room ' in the same building' that housed JMC's offices at 1719 Potter's Lane. Broaddus testified that "the room wasn't very large" and described it as the bookkeeper's office.10 When Broaddus was asked if there were only 7 Kenneth Schweitzer was the original general manager but left in April 1981. He was succeeded by DeAnna Owens, who left in 1984, at which point Broaddus assumed the duties of general manager. s' Ann Douglas was the original bookkeeper, followed by Wanda Hayelup, and then Mildred Kindeman at unknown intervals. 9 Jeffersonville and Clarksville are two small towns located directly across the river from Louisville, Kentucky, and are contiguous to each other, Rand McNally Road Atlas 1985. 10 There was one other tenant of the building, a trailer sales firm. 556 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD signs that indicated that this bookkeeper's office was an office for R-B Rentals, the owner replied that he did not think so. Broaddus originally kept its books and later they were kept by an outside bookkeeping firm. Subse- quently, Norma' Veron'became its bookkeeper in a part- time capacity and was R-B Rentals' only office employ- ees. R-B Rentals' mail was also received at P.O. Box 2163, the same one used by JMC. R-B Rentals and JMC letter- heads each used this box as its address. JMC also used it as its address in its 1982, 1983, and 1984 Indiana tax re- turns. (G.C-. Exhs: 5, 6, 7.), After a mechanic was hired in 1981, and R-B Rentals commenced to repair and main- tain tractors and trailers, it used as its garage the one and one-half bay in the same building that contained JMC's six offices. a. The tractor-trailers used to haul JMC's freight After its incorporation in July 1980, as soon as it start- ed to operate, JMC immediately leased equipment' Al from Broaddus. The record does not show how much `equipment 'was leased in 1980 by Broaddus to JMC or anyone else. Broaddus did provide, under subpoena, a lease dated 24 June 1981, from. Russell Broaddus III to JMC that covered five tractors. However, the date 'of the leases did not begin on 24' June, but began on the "Commencement Date" shown on schedule A of Gener- al Counsel's Exhibit 12. The terms for - the first tractor listed on this schedule, a Kenworth (7), and the second listed tractor, a Mack, began on 20 January 1981. The third tractor on the list had a term beginning 2 May 1981, with the final two tractors having a commence- ment date of 22 July 1981. All were for a period of 3 years. On 3 January 1984 Broaddus apparently entered into a long-term lease with JMC for nine tractors.12 Threee of the tractors leased under this 1984 agreement, the 1979 model Peterbilts, 9, 11, and 12, had also been leased in the 1981 lease agreement. The remaining six tractors, unit numbers 13-18 were all 1981 Peterbilts. General Counsel's Exhibit 11, a list of JMC's equipment, shows as of January 1985 that Broaddus tractors 7, 9, 13, 14, 15, 16, 17, and 18 were still leased to JMC. Also leases to JMC at this time were six tractors owned by owner-op- erators. The record does not indicate if the periods of lease for these tractors of the owner-operators were for a trip, a month, or any other period. In response to the General Counsel's same subpoena for copies of all lease agreements between JMC and R-B Rentals for trailers, Broaddus produced none for 1980, 1981, 1982, and for the first 10 months of 1983. He did produce a one-page "Lease Agreement" dated 1 Novem- ber 1983, effective until cancellation, that was signed by Owens as JMC' representative, and by Broaddus as lessor. (G.C. Exh. 10.) This agreement covered the leas- ix When Broaddus used the term "equipment" he was referring to tractors and trailers jointly or tractors only. 12 G.C. Exhs 13A thru I are one-page documents , on letterheads of JMC, and are captioned, "Appendix A, Long Term Equipment Lease." However, no 'such lease was offered into evidence . These nine documents are signed under the caption "JMC Transport Inc. Carrier," by DeAnna Owens, and under the caption "contractor" by Broaddus. ing of five 1982 Utility refrigerated trailers, and five 1983 Fruehauf dry" trailers. JMC's equipment list-of January 1985 shows that JMC continued to lease the, same five Fruehauf -trailers, and one of the refrigerated trailers. The other four reefers had been sold by Broaddus in the intervening years. The 1985 list of equipment also showed that JMC had leased 10 trailers from Evans Leasing, 5 from Koch,- and 6 from Rentco. There is ,nothing in this record- to show whether these trailers leases with Evans Leasing, 'Koch, and Rentco were for, a trip, a month, or any other period of time. Outside of JMC, the only customer that 'Broaddus rented trailers to, over a substantial period of time, was Willett Distillery. This was for the storage of goods, not the transportation of goods,'as.is shown by ' the-following questions and answers: - - - Q. What was-following June of 1980, in -what form did you do business with Willett and House of Nelson? 7 - A. Willett used quite a few of my, trailers for storage. Q. How long after 1980 did they do so? A. I guess several years because we had a con- tinuing relationship with them. We,hauled whiskey, full barrels of whiskey for them, empty barrels, fin- ished product,. case goods,- whatever you want to call it. And they used the equipment for storage.13 Thus in 1984 and early 1985, JMC was the primary, if not the sole, lessee of Broaddus' - tractors and trailers. Broaddus admitted that from - August 1985 until JMC's closing, R-B Rentals leased equipment only to JMC. b. The truckdrivers used by JMC to deliver its freight In the '5 years that JMC hauled freight for customers, the drivers of the tractor-trailers were placed in the -seat of those tractors through five different processes. After JMC's incorpotation in,1980, it hired drivers who. then became standard, regular employees on the payroll of JMC. In response to the' General Counsel's subpoena JMC was, unable to produce payroll records to show the names and dates of employment of any of these initial drivers. 14 However, in 1982, JMC decided to use owner- operators to deliver its freight, although the record does not disclose who made this decision or why. Broaddus testified that he met one-on-one with JMC's drivers and explained to them how they cold become "owner-opera- tors." He explained that they were leasing equipment from him as the- owner, and that they would in turn pay him under the terms of a lease agreement, so such per mile for rental of the truck. 15 is Broaddus' answers in the above colloquy point up the interrelation- ship of the two entities . His statement- that Willett used "quite a few of my trailers" obviously refers to his sole proprietorship , R-B Rentals. In his very next answer, when he stated "We haul whiskey," he is obviously referring to the corporation he controls, JMC. 14 Broaddus testified that there was about 10 or 12 drivers at the time of Manna's discharge' in November '1981. - 15 Two lease agreements between Broaddus and Terry Cathay were received into evidence G.C. Exh. 21 was for a` 45-day lease, with'Cathay payng a rental of 10 cents per mile. The other lease agreement was for 1 year, with Cathay paying as rental 13 cents per mile. JMC TRANSPORT 557 Broaddus denied that he told these drivers how they would be paid by JMC stating that they had to deal with JMC about that. The record does not indicate who ex- plained to these drivers how they would be paid by JMC after they became owner-operators, or if such an expla- nation took place. The drivers did sign lease agreements with JMC, for which they were to be compensated by receiving either 68 percent of the, base gross revenue, plus 14 cents per mile, or 75 percent, depending on the type commodities they were hauling.1 6 Broaddus testi- fied that a majority of the drivers who leased his tractors and drove for , JMC were former employee drivers for JMC. This system by which JMC used owner-operators to deliver JMC's freight lasted from I February 1982 to 8 September 1983. Broaddus testified that JMC's experience with owner- operators was not financially successful for JMC because of the tremendous turnover among drivers . 17 General Counsel's Exhibit 18 readily illustrates this turnover. Thirty-five individual drivers' names are set forth therein as having driven nine different tractors for JMC as owner-operators during this 19-month period . Not one single tractor was driven by only one owner-operator during this period as Broaddus testified is the usual prac- tice. Tractor 11 had eight different drivers, 16 had six, and tractors 10, 12, and 17 had five different drivers each. One driver, Terry Cathay, drove three different tractors during this period. At this point in time, JMC adopted its third arrange- ment for securing drivers to deliver its freight , through the medium of leased truckdrivers from Transport Con- tractors Inc. (Transport). Broaddus denies that when JMC became dissatisfied with its use of owner-operators, that JMC talked to Transport about the furnishing of drivers, but testified that R-B Rentals had done 'so. I do not credit Broaddus' testimony regarding this issue, based on the following correspondence between Trans- port and JMC. By letter dated 29 August 1983, Trans- port wrote to Broaddus, as follows: Mr. Russell Broaddus III, (President) J.M.C. Transport Incorporated 1719 Potters Lane Jeffersonville, IN 47130 The first sentence read as follows: To follow up on our conversation last 'Thursday and after consultation with Mr. Bill Tatter, we have agreed the drivers can be provided by our firm at 29.6 cents/mile. The final sentence concluded: Thank you for your consideration and we hope to be doing business with your firm within the near future. G.C. Exh. 30A. Attached to the letter was a typed four-page proposed agreement, the first paragraph of which read as follows: THIS AGREEMENT made and entered into by and between TRANSPORT CONTRACTORS, INCORPORATED, hereinafter referred to as "Lessor," and JMC TRANSPORT,, INCORPO- RATED, hereinafter referred to as "Lessee "' on this 6th day of September, 1983. The signatory parties to the agreement were typed on page 4 as follows: Transport Contractors, Incorporated By Position President JMC Transport, Incorporated By Significantly, the firm name JMC "Transport was marked out on both page 1 and page 4 of the proposed agreement, and in both places was inserted in its stead "R-B Rentals." The final signature on this executed agreement - was that of Russell Broaddus , stating as his position, "Owner." No contract was produced by Re- spondents to show that R-B Rentals was going to pro- vide JMC with these drivers that Transport was leasing to R-B Rentals, and I draw the reasonable inference that there was none. I also do not credit Broaddus' testimony that JMC did not talk to Transport about , the furnishing of drivers, based on the agreement as prepared and un- derstood by Transport, which plainly shows that Trans- port understood it was dealing with JMC, when it talked to Broaddus. From 21 September 1983 until 12 March 1984, R-B Rentals supplied drivers to JMC that had been supplied to it by Transport . I have prepared below a list of the leased that Transport provided R-B Rentals who were in turn provided to JMC. 18 I have also inserted thereon the periods for which five of these referred drivers formerly drove as owner-operators for JMC. 19 Two of these driv- ers, Arnold and McCoy, made the transfer of their em- ployment status on the very day they ceased to be owner-operators. Williams had an interval of 2 days and Carter 7 days. Three of the Transport drivers, Ashly, Lloyd, and Williams drove less than 2 months, when they were placed on the extra board. Thus during this 5- month period, basically eight drivers, five of whom had previously been owner-operator drivers, delivered the freight of JMC to the same customers as they had for- merly delivered to, and used the same tractors they pre- viously drove. 16 G C. Exh. 23 has attached thereto apps. A and B which are equip- ment lease forms between terry Cathay as "contractor" and JMC as "car- rier." They were signed, on behalf of JMC, by DeAnna H -Owens, vice president, on 12 March and 13 April 1982 respectively. 17 Broaddus made no comment as to whether it was successful for R-B Rentals. '8 This data was taken from G.C. Exh. 33. 19 Thus data was taken from G.C. Exh. 18. 558 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Names of Drivers Transport Furnished to R-B Rentals Previously Drove for JMC as Owner-Operator Drove for JMC thru Transport Referral to R-B Rentals Joe B. Arnold ......................................................................................................... 8/30/83-10/11/83 10/11/83-3/12/84 A. L. Ashby ............................................................................................................ 9/23/83-11/2/83 Willie L. Carter ...................................................................................................... 3/10/83-11/7/83 11/10/83-3/12/84 Terry Cathay .......................................................................................................... 2/10/82-12/2/82 5/14/82-5/21/82 11/17/83-3/12/84 ............................................................................................................................ 12/2/82-8/23/83 Thomas L. Lloyd ................................................................................................... 9/28/83-11/9/83 Joe McCoy .............................................................................................................. 2/ 1 /82-7/ 11 /83 9/8/83-10/17/83 10/17/83-3/12/84 James M. McDowell .............................................................................................. 12/12/83-3/12/84 Walter Nelson ......................................................................................................... 9/21/83-3/12/84 Michael A. Schlise ................................................................................................. 9/26/83-3/12/84 Alford R. Williams ................................................................................................. 11/1/83-1/19/84 Clayton Williams .................................................................................................... 5/12/83-10/3/83 10/5/83-1/15/84 In March 1984 Broaddus decided that the expense to noted that Kenneth McMichael was placed on JMC's R-B Rentals for securing drivers from Transport was too payroll at this time. McMichael had an, extensive em- great, so he terminated that agreement. He then decided ployment record with R-B Rentals as its mechanic. "to hire drivers and lease them on as owner-operators," and place them on the R-B Rentals payroll. Broaddus did not have to launch an extensive search for drivers. Five of the seven persons who had driven R-B Rentals tractors pulling trailers loaded with JMC freight-in Feb- ruary 1984, drove from Broaddus in the following month of March.20 Broaddus also identified three other drivers from the same file, and all eight of these named drivers are set forth in column 1 below. Broaddus did supply R-B Rentals payroll journal for the months of August through December 1984, so that the names of the R-B Rentals persons who drove JMC trucks for this period are known. They are set forth in column 2 below. This column shows that five of the men supplied by Transport were now driving JMC tractors as leased drivers from R-B Rentals. The column also shows the names of five other drivers who Broaddus testified also drove tractors during this period. Column 3 sets forth the drivers on R-B Rentals' payroll who drove for JMC in the period of 15 March 1985 through 9 August 1985.21 ° It shows that three drivers employed by R-B Rentals in 1984, Carter, McCoy, and Nelson, also drove for it during this time period. Five additional drivers were hired by R-B Rentals during this period. In August 1985, the employer of the drivers changed again, this time to once more become employees of JMC as they had been in 1980. Broaddus testified that R-B Rentals had a change of operation at this time. When asked what circumstances led to this change of oper- ations, he replied, "I laid off a bookkeeper and since I had no bookkeeper, I decided to let JMC take over the drivers." Column 4 below shows that all seven of the drivers employed by R-B Rentals in the previous 5 months were now on the JMC payroll driving the same equipment as they previously drove. It is also to be 20 These names were located in a cash disbursement journal for March, as payroll records were not provided in response to the General Counsel's subpoena. 21 This data was secured from checkstubs from R-B Rentals check- books G.C. Exhs. 36(a)-(u). Drivers on R-B Rentals Rentals Payroll 8/84-12/84 3/15-8/9/85 Drivers on JMC Payroll 8/16-12/12/85 Mar. 1984 Broadus put Former Trans- port Drivers on R-B Rentals Payroll: Arnold Arnold Carter Carter Carter Carter Cathay Cathay (disch 5/84) McCoy McCoy McCoy McDowell Nelson Nelson Nelson (off 6/85) Broadus also hired for R-B Rentals Payroll: T. W. Tichener Bogard D. J. Buress Dorsey W. J. Drury Ti- chener F. Drury J. Gambrill C. Griffin M. Murphy R. Smith J. Schliescher J. White F. Drury J. Gambrill C. Griffin R. Smith J. White Thus the record is clear that there was a substantial continuity of the men who drove tractor-trailers for JMC TRANSPORT JMC and delivered its freight throughout JMC's 5-1/2- year ' existence. Nine of the 10 to 12 JMC employee driv- ers of 1980, leased R-B Rentals trucks as alleged owner- operators in 1982-1983. Five of the six JMC owner-oper- ators became employees of Transport in 1983-1984, who referred them to R-B Rentals, who, in turn provided them to JMC as drivers. From March 1984 to August 1985, six of the eight former Transport drivers continued to drive from R-B Rentals after it severed its agreement with Transport, and in the last 4 months of its existence JMC retained and employed all the drivers who had just previously been on the payroll of R-B Rentals. That the men who drove its trucks were of the utmost impor- tance, indispensable to JMC, need not be argued, for without these drivers, JMC could not carry out its basic mission, to deliver freight for its customers. The record is crystal clear that there was an interrela- tion of operations between JMC and R-B Rentals. Both entities used the same office building,and the same busi- ness address. Although JMC's business was the-transpor- tation of miscellaneous freight over long distances, it started in business, and ended in business, without ever owning a single tractor or trailer. Nor did it need to own any equipment. R-B Rentals garage and parking lot were immediately adjacent to JMC's office and dispatcher, and its tractors and trailers were at the instant call of JMC, R-B Rentals furnished almost exclusively the tractors and trailers that JMC used to haul its freight, and supplied the -leased drivers except for the first and last year when JMC employed its own employee drivers. JMC and R-B Rentals operated in tandem, with each dependent on the other for its survival. 2. Common management Broaddus started JMC as its president, chief financier, chairman of the board of directors, and its driving force in its short-range and long-range management. Although JMC had a position titled general manager, this general manager reported to Broaddus at least once a day, on any subject that was pertinent to the running of the busi- ness. Such subjects included personnel, safety, and equip- ment. Broaddus and the general manager had the power to hire and fire. However, before the general manager, could hire an employee, he would discuss with the presi- dent whether a new employee was needed. If the dis- charge of an employee involved a difficult decision, Broaddus also would be consulted prior to the final deci- sion.22 The general manager supervised the office staff, which consisted of the permit clerk, bookkeeper, and secretary, but did not supervise the larger part of its staff, the truckdrivers. Schweitzer was the general manager from 1 July 1980 to about September 1981, when he was re- placed by DeAnne Owens, the bookkeeper. Owens served as general manager until February 1984, when she also left the employ of the Company. Broaddus testified he then took over the duties of the general manager, and served as such until JMC'ceased doing business. 22 Broaddus' discharge of Manna In 1981 is an example of this proce- dure. 559 Outside of Broaddus' dominating .management of JMC and R-B Rentals, the major link of common management was the dispatcher. The dispatcher was an employee of JMC, but he supervised all truckdrivers, whether they were employees of JMC, Transport, R-B Rentals„ owner- operators. As Broaddus testified the dispatcher was con- sidered as part of management and had the authority to take a driver of a truck when out on-the road, and re- place him with a relief driver. His duties, consisted of dis- patching the drivers to deliver their loads, directing them to pick up freight, securing, loads for drivers when they were back hauling, and sending advances to drivers when they were out on the road. Every driver when out on the road had to call, in to the dispatcher every day between 8 and 10 a.m., as well as when he was unloaded, or had an equipment failure. Dispatchers came and went at varying intervals of time. Kenneth Schweitzer first handled the duties of a dispatcher, and was replaced by DeAnna Owens. After Owens came Thomas Demean, Tom Hayes, "Betty," and George Epperson. Epperson served as the dispatcher until the termination of JMC's business. As the sole management official, and sole , full-time office employee of R-B Rentals, Broaddus clearly direct- ed and managed the entire operation of this sole propri- etorship. As president of JMC, Broaddus made the bid decisions as to where to secure its equipment , the type tractors and trailers to use, as well as from what source it would secure drivers for its equipment. It was Broaddus who decided that JMC, in its initial operations, would hire its own employees to drive the tractor-trailers that delivered its freight. It was Broaddus who decided in February 1982 that JMC would,, use owner-operators to haul its freight. When JMC decided to, secure drivers from Transport, it was, ]Broaddus who discussed the, details of the agreement with the general operations manager of Transport. It was also.Broaddus who decided to sever his contract with Transport and to put drivers on the payroll of R-B Rentals. Finally, it was Broaddus who made the decision, in August _1985, to take the drivers off, the R-B Rentals ' payroll, and let them once again be employees of JMC, and be carried on its payroll. Broaddus' activities, as' well as those of the dispatchers and general managers, ensured that there was an effec- tive common management of two companies, and I so find. 3. Centralized control of labor relations The record is also clear °and consistent that Broaddus controlled the labor relations at JMC by his overseeing of its operations and personnel, and by his direct involve- ment in personnel decisions . As previously stated, Broad- us was consulted by the general manager before anew employee would be hired, and he made the decision to discharge Marina. The day-to-day supervision of the drivers remained the same whether they were carried on JMC's payroll, R-B Rentals' payroll, or Transport's payroll, or were called owner-operators. The JMC dispatcher had identical au- thority to send the drivers out to deliver freight to what- 560 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ever consignee- or destination the dispatcher chose. Like- wise he - had the authority to order them to 'pick up freight when returning to the terminal instead of dead- heading back. The same company policy pamphlet that had been issued in 1981 as work rules to company em- ployees, was issued to each succeeding driver, no matter what payroll he was on,23 and he was bound by these rules. Also, each driver who hauled JMC's freight, no matter on whose payroll, received a copy of the Inter- state Truck Drivers handbooks with its many work regu- lations, and was told its contents were a part of company policy. As the sole owner and manager of R-B Rentals, with only one part-time office' employee, it is evident that Broaddus controlled the labor relations of R-B Rentals. However, R-B Rentals had very few employees to be covered by its labor relations policies. The truckdrivers it supplied to JMC, whether as owner-operators or leased employees, were under the direct supervision of JMC's dispatcher and bound by the rules and regulations contained in JMC?s manual and its interstate handbook. Outside of its part-time bookkeeper, the only other em ployees it had, were mechanics. For most of its exist- ence, R-B REntals only-had one mechanic, with the ex- ception being in 1984 when it had four mechanics. I find that the evidence is overwhelming that there was centralized control in the labor relations of JMC and R-B Rentals. 4. Common ownership The evidence is clear that there was substantial common ownership of JMC and R-B Rentals by Broad- dus. Broaddus was the incorporator of JMC and its dom- inant stockholder during the 5 years of its existence. As an indicia of his control no check could be issued with- out his signature. Although over the life of the corpora- tion he drew only $3000 in salary, his individual tax return for 1983 shows that he received $34,186.40 in in- terest income from JMC. This interest was earned on money loaned by Broaddus to JMC.24 However, JMC was obviously not in sound financial condition as early as 1983, when Broaddus came person- ally to its aid. Broaddus pledged his house as security for a loan, and in return the Liberty National Bank granted JMC a loan in the amount of $121,000 payable on demand. Broaddus also personally pledged $20,000 to the Westfield Company, a bonding company, so that it would be guaranteed payment of up to $20,000 for ad- vances made to'drivers while they were out on the road. There is nothing in the record to indicate that any of the minority stockholders made any personal contributions to.JMC's survival, and I infer there were none. 23 On 3 September 1981 JMC issued to each of its employee drivers a 3-page single-spaced document on JMC stationery that was captioned "Company Policy, Instructions to Drivers." This document contained 33 rules that the drivers had to abide by in order to drive for JMC. G.C. Exh 14. 24 The record does not disclose the basis for Broaddus' receipt of the $34,186.40. He did testify that he contributed $400,000 to $500,000 to JMC over the life of the Company. The record does not indicate if he received interest on this contribution or if he was ever repaid in part or in full. - The ownership of R -B Rentals is uncontradicted, as Broaddus was its sole owner. As to the signing of checks, the same policy was followed as that at JMC, with Broaddus being the only person authorized to sign checks on behalf of R-B Rentals. The record does not in- dicate what compensation Broaddus was to receive, whether on a weekly or yearly basis, from his leasing of tractors and trailers to JMC or anyone else. His 1983 in- dividual tax return reports that he received $152,056 in rent income for that calendar year. The same tax returns for 1984 and 1985 do not show any rental income but do show that Broaddus used depreciation of the assets of R- B Rentals to lower his individual tax liability. (G.C. Exhs. 16 and 17). From the above it is evident that substantial common ownership resided in Broaddus as the majority owner of JMC and the sole owner of R-B Rentals. It is readily evident that there was an absence of an arm's-length relationship between JMC and R-B Rentals. The two companies had adjacent offices with no distin- guishing sign to let the public know-that there were two different companies. They used the same post office box and address. They transferred drivers backs and forth from JMC's payroll to R-B Rentals' payroll at the com- mand of Broaddus. Broaddus leased his tractors and trail- ers to JMC, signing the leases as owner of R-B Rentals, while the person he dealt with for JMC, Owens, was an employee hired by Broaddus, and subsequently- dis- charged by him. When Broaddus dealt with the general managers or dispatchers of JMC it is obvious that they, as employees, were not able to deal with him as equal bargainers. Under all the facts and circumstances of this case, I find therefore that because there was a closely knit inter- relation of operations between JMC and R-B Rentals, that there was common management, a centralized con- trol of labor relations, and common ownership, that JMC and R-B Rentals constitute a single employer within the meaning of the Act. Carson Cable TV, 275 NLRB No. 201 (Aug. 20, 1985) (unpublished), enfd. 795 F.2d 879 (9th Cir. 1986); Soule Glass & Glazing Co., 246 NLRB 792 (1979), enfd. in relevant part 652 F.2d 1055 (1st Cir. 1981); Midlands Express, 236 NLRB 619 (1978). I further find that R-B Rentals is jointly and 'severally liable with JMC for the unfair labor practice of JMC. Since R-B Rentals constitutes a single employer with JMC, R-B Rentals was properly named in the backpay specification even though it was not named in the underlying proce- dure. NLRB v. Deena 4rtware, 361 U.S. 398, 402 (1960). B. Alter Ego In determining whether R-B Rentals is the alter ego of JMC as contended by the General Counsel, a number of factors must be considered, although no one of which, taken alone, is determinative. Crawford Door Sales Co.,_ 226 NLRB 1144• (1976k Alpine Construction Corp., 276 NLRB 415 (1985). These factors include: common man- agement and ownership, common business purpose, nature of operation, supervision, common premises and equipment, and common customers. JMC TRANSPORT As set forth in sections III,A,2 and III,A,4 above, the first two factors of common management and ownership clearly exist, and need not be reviewed here. However, I do not find the third factor, common busi- ness purpose, to be present in this case. JMC's business purpose was to pick up goods and commodities of cus- tomers with its trucks and deliver that freight to consign- ees throughout the 48 States as a common carrier. R -B Rentals' purpose was to lease its tractors and/or trailers to customers, and to maintain and repair this equipment so as to be in good operating condition for leasing. The next factor, nature of operation, is a troublesome one. It is true that the operation of the two companies was coordinated, but I do not find that this sufficiently bridges the different natures of their respective business- es. JMC was an interstate common carrier of miscellane- ous freight operating under the authority of the ICC. R- B Rentals was an owner of tractors and trailers any one of which could be leased by any carrier, company, or in- dividual who wanted to lease such equipment. I there- fore do not fmd that the nature of operations of the two companies was the same., However, I do fmd that there was common supervi- sion at the two companies as set forth, in detail in sec- tions III.,A,2, and III,A,3 above. The overriding domina- tion of Broaddus for both R-B Rentals and JMC was present on a daily basis. In addition, the dispatcher of JMC supervised the drivers furnished by R-B Rentals with the same ' degree of power and authority as he exer- cised over clearly JMC employees. I also find that common premises and, equipment were used by the two companies. JMC and R-B Rentals used the same building- for their adjacent offices. R-B Rentals used the garage bays situated in the same building as JMC's offices to perform repairs and maintenance on its tractors and trailers. The equipment used by JMC for the great majority of the 5-1/2 years of its existence came almost solely from R-B Rentals. Concerning the last factor, common customers, I do not fmd that the General Counsel has produced sufficient evidence to meet her burden of proof. Broaddus testified that JMC had 16 major customers.25 However, the record only discloses two customers who were served by both JMC and R-B Rentals, and they were Willett Dis- tributing Company and the House of Nelson. I therefore do not find that JMC and R-B Rentals shared common customers. Inasmuch as there was no common business purpose between JMC and R-B Rentals, the nature of operations was different, and the customers were vastly different; I do not find that there were sufficient common factors be- tween JMC and R-B Rentals that would require that R-B Rentals be considered an alter ego of JMC. `I conclude therefore that R-B Rentals was not an alter ego of JMC. C. Successorship The General Counsel also contends in her brief that R- B Rentals should be held jointly liable with JMC on the basis that it is a successor to JMC. The General Coun- 25 I draw the inference that JMC also had a number of minor custom- ers. 561 sel's opening explanatory words concerning this theory are as follows: The Board has held that one who acquires and op- erates the business of any employer found guilty of unfair labor practices in basically unchanged form under circumstances which charge him with notice of unfair practice charges against his predecessor should be held responsible for remedying his prede- cessor's unlawful conduct. The brief then goes on to cite the case of Perma Vinyl Corp., 164 NLRB 968 (1967), enfd. sub nom. United States Pipe & Foundry Co. v. NLRB, 398 F.2d 554 (5th Cir. 1986). I agree, with the General Counsel's legal theory but find it inapposite to this case. In the case cited above, U.S. Pipe did purchase Perma 'Vinyl's facilities and business. The General Counsel does not allege that R -B Rentals purchased JMC, nor could she, but vaguely contends that R-B Rentals "acquired"26 JMC. I do not find that R-B Rentals acquired JMC in any matmer, at anytime. The General Counsel apparently contends that R-B Rentals acquired a portion of JMC's business in Oc- tober 1983, when R-B Rentals provided JMC with six drivers who had formerly driven for JMC, as owner-op- erators, and also provided the tractor-trailers for them to drive. The General Counsel goes on to elucidate this theory as follows: Thus, R-B Rentals was a successor to that portion of the JMC business which had employed company drivers and had utilized the equipment of Russell Broaddus until August 1985 when the driver's were again placed on the JMC payroll, In support of this proposition the General Counsel cites two cases, the first being Fab Steel Co., 231 NLRB 372, 378 (1977), enfd. 587 F.2d 689, 695 (5th Cir. 1979). How- ever, in that case Fab Steel, the succes'sor, 'was a clearcut purchaser of one of the seven plants of the seller, Mosher "Steel Company, including the purchase of the plant's machinery, equipment, and inventory. The second case cited, Saks Fifth Avenue, 247 NLRB 1047 (1980), enfd. in relevant part 634 F.2d 681 (2d Cir. 1980), is also inapposite. That case involved a unit of employees em- ployed by Gimbels to perform alterations on women's clothing owned by Saks. At this worksite they were rep- resented! by a union. The work was done for Saks in Gimbels" building pursuant to a subcontract with Gim- bels. Saks subsequently secured its own building and ter- minated its alteration contract with Gimbels. Gimbels then discharged all 18 employees, and Saks hired 16 of the 18 employees and set up its own alteration depart- ment in its own building. When the former bargaining agent requested Saks to bargain, Saks refused to do so. The Board found that Saks was a successor employer 26 According to Black's Law Dictionary, 5th Edition, the meaning of acquire is: "To gain by any means, usually by one's own exertions; to get as one's own, to obtain by search, endeavor, investment, practice, or pur- chase; receive or,gam in whatever manner; come to have. In law of con- tracts and, descents, to become owner of property; to make property one's own." 562 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD and therefore must recognize and bargain with the Union. It is obvious in the instant case that R-B Rentals in no way compares with Saks, or JMC with Gimbels. When Saks commenced performing alterations in its new build- ing with' its own eniployees, ' Gimbels was ' completely di- vorced from any relationship with Saks. But when R-B Rentals provided six drivers is October 1983, JMC in no way disappeared from the scene, or altered its operation in any manner, but continued to pick up and, deliver freight for its customers exactly as it had from its incep- tion in 1980. ' In Saks the Board stated: "the Board has held that in determining successorship, the keystone is whether there is substantial continuity of the employing industry." Clearly, there was no continuity of the work formerly done by JMC; by R-B Rentals after R-B Rentals supplied the six drivers in 1983. JMC's general manager and its six office employees continued to perform their office -duties in behalf of JMC's role as- a common carrier in the truck- ing industry, without any control by R-B Rentals. The dispatcher continued to dispatch the drivers to pick up and deliver freight all in the name of JMC not R-B Rent- als. Broaddus continued to solicit business for JMC and remained in overall control of its operation. I find and conclude that R-B Rentals had never taken over the control of JMC's business, that it was not a suc- cessor of JMC and that it is not under the, successor theory, responsible for remedying JMC's unlawful dis- charge of Marina. Premium Foods, 260 NLRB 708 (1982); Contract Carrier, 258 NLRB 353 (1981). D. Gross Backpay Period An administrative law judge considering conflicting backpay formula, arguments must determine the most ac- curate method of determining backpay amounts. East Wind Enterprises, 268 NLRB 655 (1984); J S Alberici Construction Co.,,249 NLRB 751 (1980). Coupled with this obligation, however, is the longstanding and funda- mental principle that uncertainties will be assessed against the wrongdoer. NLRB Y. Miami Coca-Cola Bot- tling Co., 360 F.2d 569 (5th Cir. 1966). The General Counsel contends that the backpay period terminated on 30 November 1985, the date JMC ceased doing business. Respondent JMC in its answer agrees that the backpay period began 5 November 1981, the date of Marina's dis- charge, but, insists that it ended 1 February 1982, the date JMC converted to a system of independent contrac- tor, drivers. It is true that in February 1982, JMC did change its method of providing drivers for the tractors it leased, by switching from employee drivers to a modi- fied type of owner-operators, a procedure JMC used for the next 19 months. But this was only the second of five procedures used by JMC to provide drivers for its trac- tors. It in turn was followed by two different methods of using leased drivers, with the fifth and final procedure being a return to the original 1980 procedure of JMC, having its own employees drive the tractor-trailers. Assuming arguendo, that the so-called owner-operators were independent contractors excluded from protection under the act, Respondents are still liable for backpay, under the holding of the Supreme Court in Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973). In Golden State the respondent contended that the discriminatee, a discharged driver salesman, -was not entitled to any back- pay from the time it converted its delivery system from driver-salesman to distributors, who were independent contractors. The' Supreme Court noted with `approval that the court of appeals27 had rejected this contention as follows: However, it is undisputed that when Baker was dis- criminatorily discharged he was an ordinary em- ployee. The Act's remedies are not thwarted by-the fact that an -employee who is within the Act's pro- tection when the discriminationoccurs would have been promoted or transferred to a position not cov- ered by the Act if he had not been discriminated against. NLRB v. Bell Aircraft Corp., 206 F.2d 235 (2d Cir. 1953). Marina's status with JMC is clearly analogous with that of the driver-salesman in Golden State. In February 1982, when JMC commenced using owner-operators, all but one of these had been JMC employee drivers. JMC presented no objective evidence that would show that Marina would not have been,offered the same opportuni- ty to lease a tractor as these former JMC employee driv- ers. Admittedly, it is ambiguous whether Marina, absent his unlawful discharge, would have continued to -drive for JMC and R-B Rentals. But -other drivers, similarly situated, did continue to drive for JMC, until its clos- ing.28 Driver Joe McCoy, originally a driver employee of JMC, continued to drive JMC's tractors for the next 5 years until,JMC ceased doing business. Willie Carter, first employed as anowner driver in March 1983, also continued to drive the tractors used by _ JMC until the date JMC closed its doors. Respondent has failed to establish its Affirmative de- fense_ that-it,would not have employed Marina but for, his unlaful discharge. That Marina was a competent,over- the-road driver is reflected in the two previous trips JMC had assigned to him, just prior to .his discharge. Both trips were obviously very long hauls, from Ken- tucky to California and back, and were made successful- ly by Marina. I find that because other similarly situated drivers were retained to operate the tractors used by JMC to pull its trailers throughout the backpay period, the ambi- guity of,whether Marina would have also, been retained must be construed in his favor. Boilermakers Local 27 (Daniel Construction), 271 NLRB 1038 1984); Kansas Re- fined Helium Co., 25.2 NLRB 1156,1157 (1980). In light of the foregoing findings and conclusions, and on the entire record considered as a whole, I make the following recommended29 27 467 F.2d 164, 166,(9th Cir. 1972). 2s Cathay, his driving partner, was signed to two .leases by R-B Rent- als, the last one being for a period of 1 year. 29, 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. JMC TRANSPORT 563 ORDER The Respondent, JMC Transport, Inc., its successors or assigns, and Russell Broaddus III, d/b/a R-B Rentals, a sole proprietorship, shall jointly and severally, pay to Lemuel Marina $47,516.98, plus interest to be computed in the manner set forth in Florida Steel Corp., 231 NLRB 651 (1977), and Olympic Medical Corp., 250 NLRB 146 (1980),30 with appropriate deductions for taxes required to be withheld under Federal and state laws. 11 See generally Isis Plumbing Co., 138 NLRB 716 (1962).