Djamshid Mahban

DA VINCI FASHIONS Da Vinci Fashions, Inc.; VIP Enterprises d/b/a Princess Isabella Da Vinci; Princess Vera Nocce; and Alexander Mahban a/k/a Djamshid Mahban and General Sales Drivers , Delivery Drivers and Helpers, Local #14, affiliated with International Brotherhood of Teamsters, Chauf- feurs, Warehousemen and Helpers of America. Case 31-CA-11733 5 November 1987 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND 13ABSON On 28 April 1987 Administrative Law Judge Clifford H. Anderson issued the attached supple- mental decision." The General Counsel filed excep- tions and a supporting brief, and counsel for Re- spondents Princess Vera Nocce and Alexander Mahban a/k/a Djamshid Mahban filed an answer- ing brief. The Respondents filed a motion to strike the General Counsel's brief and the General Coun- sel filed a response to the Respondents' motion.2 The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the supplemental deci- sion and the record in light of the exceptions and briefs and has decided to affirm the judge' s rulings, findings, and conclusions and to adopt the recom- mended Order.3 ORDER The recommended Order of the administrative law judge is adopted and the backpay specification to all parties is dismissed. ' On 16 December 1982 Administrative Law Judge Timothy D Nelson issued his decision in the underlying unfair labor practice case On 18 January 1983 the Board adopted that decision in an unpublished order The order was then enforced, without modification, by the United States Court of Appeals for the Ninth Circuit on 16 December 1983 2 The Respondent 's motion to strike the General Counsel's brief in sup- port of her exceptions because it exceeded the 50-page limit is denied Counsel for the General Counsel states in her response to the Respond- ents' motion that the total page length of the General Counsel 's brief is 46 pages, an actual count revealed the brief was 47 pages In either case the brief meets the requirements of Sec 102 46(j) of the Board 's Rules and Regulations 2 In adopting the judge's recommended Order we emphasize the par- ticular and highly unusual circumstances of this case Hope Singer, Esq., for the General Counsel. Lester A. Berman, Esq. (Gibbons & Berman), of Las Vegas, Nevada, for Respondents Princess Vera Nocce and Alexander Mahban. Scott Mahoney, Esq. (Rogers, Moore & Mahoney), of Las Vegas, Nevada, for Respondent VIP Enterprises. SUPPLEMENTAL DECISION STATEMENT OF THE CASE 809 CLIFFORD H. ANDERSON, Administrative Law Judge. On 18 January 1983 the Board in an unpublished order approved the 16 December 1982 decision of Administra- tive Law Judge Timothy D. Nelson in the matter of Da Vinci Fashions, Inc. and General Sales Drivers, Delivery Drivers and Helpers, Local #14, affiliated with Interna- tional Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America. That Order was en- forced without modification by the United States Court of Appeals for the Ninth Circuit on 16 December 1983. The Order directed Da Vinci Fashions, Inc., inter alia, to take the following affirmative action: (2)(a). Immediately reopen the manufacturing oper- ation formerly done under the business name "Da Vinci Fashions" and conduct it as it was operated immediately before November 20, 1981; and offer immediate, full and unconditional reinstatement to the persons named below to their former position within such reopened operation, without prejudice to their seniority or other rights and privileges; and make them whole, with interest, for losses they suf- fered as a result of its unlawful changes beginning on November 20, 1981 , including its termination of them on or about November 23, 1981 in connection with its unlawful closing of said manufacturing op- eration. The persons to whom such reinstatement must be offered and other make whole relief pro- vided are: Maria Lords Norte Aguirre Therese A. Cordasco Jenny L. Curcio Pauline Damelio Kathleen Ann Duffy Sandra Hovi Rosann Romano Following enforcement of the Order several disputes arose regarding its provisions and their consequences to the Respondents. As a consequence of these disputes, the Regional Director for Region 31 of the National Labor Relations Board issued a backpay specification and notice of hearing on 29 January 1986 and amended that specification on 3 March 1986. Timely answers were filed by Respondents Da Vinci Fashions, Inc., Princess Vera Nocce, and Alexander Mahban. Trial opened on 18 March 1986 and, following a lengthy continuance, was concluded in 17 days of trial spread over the months of August and September 1986. On the entire record, including able posthearing briefs submitted by the General Counsel, Respondents Princess Vera Nocce and Alexander Mahban, jointly, and Re- spondent VIP Enterprises, and from my observation of the witnesses and their demeanor, I make the following 286 NLRB No. 89 810 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD FINDINGS AND CONCLUSIONS I. ISSUES AND CONTENTIONS The instant backpay specification presents a variety of complex legal issues involving different parties with sub- stantially different stakes in the resolution of those issues. The original unfair labor practice litigation named as its single Respondent the Nevada corporation, Da Vinci Fashions. That corporation was obligated in the original order to reopen its facility and make certain individuals whole. The backpay specification named Da Vinci Fash- ions, Inc. and seeks an order making employees whole for the period 23 November 1981-31 December 1985 re- serving later periods for subsequent litigation as neces- sary. As will be discussed in detail, infra, Da Vinci Fash- ions while technically retaining a corporate life, is for all practical purposes defunct . The backpay specification names three other Respondents . It seeks to jointly and severally obligate two corporations, VIP Enterprises and Princess Vera Nocce, to the obligations of Da Vinci Fashions, including the reopening order. Further, the General Counsel seeks to pierce the corporate veil with respect to Da Vinci Fashions and jointly and severally obligate an individual, Alexander Mahban, to Da Vinci Fashions' obligations under the original order and the backpay specification. Da Vinci Fashions, the original Respondent, is a Nevada State corporation wholly owned by a British Columbia, Canada corporation, Vogue Fashions, Inc.' Vogue Fashions, the Canadian corporation, also appar- ently remains in corporate existence , but has been denied trading status under appropriate Canadian law and is un- disputably defunct . Service was effected on Da Vinci Fashions by service on the attorney who represented the entity in the original unfair labor practice proceeding.2 That counsel appeared at the hearing, accepted service on behalf of his former client, filed an answer, and, on 14 April 1986, formally withdrew from the case . Counsel's withdrawal letter contained the following statement: This [withdrawal] is based on the fact that there has been virtually no communication between [Da Vinci Fashions] and the undersigned or his office, that [Da Vinci Fashions] is defunct and its parent corporation's trading privileges on the Vancouver- British Columbia exchange have been suspended. There are no current officers or directors with whom the undersigned can communicate. Neither Da Vinci Fashions nor Vogue Fashions partici- pated further in the proceedings and it seems certain that any order directed against either would be without prac- tical significance or effect absent some mutual obligor. Respondents Princess Vera Nocce and Alexander Mahban each appeared and participated throughout the backpay specification hearing contending that the Gener- al Counsel's theories of derivative liability were without factual or legal merit. Respondent VIP Enterprises ap- 1 This corporate name may have been changed at a later date 2 See the Board's doctrine as set forth in Hopkins Hardware, 280 NLRB 1296 (1986) peared specially through counsel in the middle of the proceeding challenging service on it of the backpay specification. The issue of service was litigated separately by the General Counsel and Respondent VIP Enter- prises, with VIP Enterprises declining to otherwise par- ticipate or defend itself on the merits.9 The circumstances described above present separate issues that may be best addressed seriatim. H. THE OBLIGATIONS OF DA VINCI FASHIONS A. The Events Involving Da Vinci Fashions Alexander Mahban came to the United States in the early 1970s and became involved in various enterprises selling Persian and Oriental products , including rugs, in Las Vegas, Nevada. As part of his commercial enter- prises, he leased a facility at 1304 Las Vegas Boulevard South, Las Vegas, Nevada. Over time Alexander Mah- ban's family joined him in the Las Vegas area . Alexander Mahban's father, Safar Mahban, came to hold the right to use Butterick Fashion Magazine's trade name, "Vogue patterns," in the United States. These rights were later transferred to Alexander Mahban . Alexander Mahban de- termined it would be profitable to franchise retail fashion shops selling garments under the Vogue name pursuant to the trademark rights he acquired from his father. After consultation with others, a Nevada Corporation, Vogue, Inc., was established in 1977, with Alexander Mahban as president. Alexander Mahban and his family held the bulk of shares in the corporation . As part of the consideration for obtaining these holdings, Mahban's rights to use of the "Vogue" name were assigned to a Nevada corporation. As part of the ongoing plan for capitalizing the franchising venture , a Canadian corpora- tion, Vogue Fashion, Inc., of Canada, was formed. The Nevada corporation was wholly acquired by the Canadi- an corporation in exchange for stock. Alexander Mahban thereby acquired a substantial interest in the Canadian corporation. Prior to publicly trading shares of the Canadian corpo- ration and thereby raising needed capital, it was deter- mined that the corporation must be an operating busi- ness.4 Accordingly, the Nevada corporation acquired garment manufacturing equipment and a modest garment factory was established at the Las Vegas Boulevard facil- ity. Manufacturing actually started on a limited basis in 1979. In 1980 the Canadian corporation started publicly trading its stock and Alexander Mahban in late 1980 so- licited and advertised for individuals interested in obtain- ing Vogue brand retail garment franchises . Approximate- ly 2000 applications were received in a short time. It ap- peared that the venture was to be a brilliant success and a financial triumph. In early 1981, however , the right of the Nevada corporation to use the Vogue name was 3 If VIP Enterprises prevails in its argument that service of the back- pay specification was not effected until midway through the lengthy liti- gation, all parties agreed that due process would require that VIP Enter- prises be afforded a de novo hearing on the backpay allegations against it * Apparently securities regulations made this necessary DA VINCI FASHIONS 811 challenged by a separate corporation, Conde Nast, in a trademark infringement lawsuit.5 The settlement of this lawsuit in May 1981 resulted in a discontinuance by the Canadian and Nevada corpora- tions of the use of the Vogue name as well as an aban- donment by them of any claim of right to use the Vogue name either on garments or in retail store franchising. As part of the settlement the Nevada corporation's name was changed from Vogue, Inc. to Da Vinci Fashions, Inc. on 10 June 1981. The result of these actions was a total collapse of the franchising plan. While the new corporate name, Da Vinci, was initially held out as an alternative to the Vogue name, it proved unsuccessful. The Vogue name had been the critical drawing factor for potential franchi- sees. The Canadian corporation, faced with a loss of the use of the Vogue name and the end of any possibility of franchising, suspended trading in 19131. Alexander Mahban testified that the Canadian corporate officials re- signed and that bankruptcy was discussed. The Nevada corporate officers, however, determined to proceed under the new corporate name. In 1981 Da Vinci Fashions virtually exclusively mar- keted its manufactured garments through two retail fa- cilities in Las Vegas.6 One was operated by VIP Enter- prises. That entity was incorporated on 10 March 1980 and opened its store under the name Princess Isabella Da Vinci about February 1981. A separate corporation, Princess Vera Nocce, opened its retail facility in the same shopping mall on 19 June 1981. After the June 1981 corporate name change, Da Vinci Fashions suffered con- tinuing losses on a massive scale. The financial records in evidence reveal the manufacturing operation had no pos- sible prospect of becoming profitable, rather its relatively small and shrinking retail base and its ongoing operating losses pointed to a financial disaster. In November 1981 the events that underlay the unfair labor practice case in the instant matter occurred. As set forth in Judge Nelson's decision, the manufacturing em- ployees of Da Vinci Fashions selected a union to repre- sent them. About 23 November 1981, Da Vinci Fashions closed its manufacturing facility and discharged the seven individuals named above all in violation of Section 8(a)(1), (3), and (5) of the Act.7 On 5 December 1981 a previously scheduled stock- holders meeting of both the Canadian and Nevada cor- porations was held. By vote of the stockholders present the decision to close the manufacturing facility was rati- fied and it was decided that all corporate operations would be discontinued. Thereafter, the inventory of Da Vinci Fashions was sent to the retail outlets described above. Certain revenues were collected and certain liabil- 5 Conde Nast, publisher of the magazine "Vogue," argued that the Vogue name in association with garments belonged exclusively to it The rights, if any, that Vogue Fashions, Inc held, Conde Nast argued, were limited to dress patterns rather than garments Insofar as the record re- flects, the lawsuit was settled in a manner consistent with Conde Nast's theory of the case A few sales were also made to other shops A separate attempt to market garments through a wholesale mart in California was attempted, but was later abandoned ' These events and their consequences will be discussed in greater detail, infra ities were reduced. In essence the corporations were abandoned. The final result after the shutdown was that substantial corporate liabilities remained unsatisfied, a condition that existed at the time the instant hearing closed. B. The Board's Order Based on the original charge, the General Counsel issued a complaint against the Nevada corporation re- garding the November 1981 events. The matter came on to hearing before Judge Nelson on 2 November 1982, i.e., almost 1 year after the corporation had ceased busi- ness. At that hearing, Da Vinci Fashions , the Nevada corporation, appeared through counsel and, following unsatisfactory attempts to settle the case during off-the- record negotiations with the General Counsel and the Charging Party, entered into an agreement whereupon it withdrew its answer and admitted the allegations of the amended complaint. The then current financial state of Da Vinci Fashions was only indirectly discussed on the record. Judge Nelson's decision contains the following reference at ALJD p. 12: I note as well that Respondent has conceded through Counsel at trial that a re -opening remedy may appropriately be ordered as consistent with the undenied complaint allegations even though Coun- sel further argued that , if such a remedy were or- dered, "it would be a physical and/or financial im- practicality or impossibility to do so due to the fin- anical status of the corporation." But where the question of Respondent's financial health was not litigated, the "impracticality" issue must necessarily be deferred to the compliance stage , and may not be resolved in Respondent's favor at this point. C. The Arguments of the Parties Regarding the Liability of Da Vinci Fashions Under the Backpay Specification s The General Counsel assumes, with very little, if any, argument on brief, that Da Vinci Fashions was obligated to reopen its facility during the entire backpay period and that, consequently , its backpay obligation continued for the entire period . Thus, the General Counsel assumes any financial impracticality defense is without merit.9 Respondents Princess Vera Nocce and Alexander Mahban argue with force that Da Vinci Fashions bears no monetary liablity under the Board's order given the events subsequent to the closure . 10 Thus these Respond- 8 Respondents did not challenge the backpay specification either as to the gross income, interim earnings, or expenses of particular discnmina- tees 9 The backpay specification seeks backpay through calendar year 1985 with an explicit reservation that subsequent backpay specifications may become necessary to liquidate later backpay that, the General Counsel al- leges, will continue until the facility is reopened and the discrimmatees are offered reinstatement 10 These same Respondents also argued that the Board's original order should not be binding on them because the entire proceeding was in the nature of a default judgment against Da Vinci Fashions, undertaken at a time when Da Vinci Fashions had in essence no real stake in the litiga- Continued 812 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ents argue that Da Vinci Fashions was in such dire finan- cial straits at the time of the shutdown that "backpay for wrongfully discharged employees would have terminated upon the date of the shutdown." They further argue, in the alternative, that the liability for back pay terminated on Decem- ber 5, 1981, and that any back pay award rendered by this tribunal, if any, should only be predicated on wages which could have been earned by the dis- criminatees between the time of the adjudicated unfair labor practice about November 22, 1983 through December 5, 1981. Thus, Respondents Princess Vera Nocce and Alexander Mahban seek to establish that, at a date coterminous with the unfair labor practices, or at least as of 5 December 1983, the plant shutdown would have occurred in any event terminating all obligations of Respondent Da Vinci Fashions to make offers of reinstatement to the discri- minatees or to pay them backpay. Respondent VIP En- terprises, consistent with its position on the merits gener- ally, took no position with respect to the case against Da Vinci Fashions. D. Analysis and Conclusions Regarding the Obligations of Da Vinci Fashions The decision of Judge Nelson adopted by the Board and enforced by the circuit court of appeals specifically reserved to the compliance stage of this proceeding liti- gation of the financial inability defense to the reopening obligation imposed by the Order. Both the answer of Da Vinci Fashions, which was filed by counsel for Respond- ent immediately before his withdrawal from the case as described above, and the answers of Respondent Alexan- der Mahban and Respondent Princess Vera Nocce raise this defense. As noted, the General Counsel was essen- tially silent on this question on brief even though, in my concluding remarks from the bench, I solicited the posi- tion of the parties and argument on the issue. The Gov- ernment's position must be taken to be that no valid de- fense to a continuing reinstatement and reopening order was established. Before considering the financial circumstances operat- ing on Da Vinci Fashions' manufacturing facility in No- vember 1981, it is well to consider its history and pur- pose. Initially the garment assembly equipment located at the Las Vegas Avenue facility was installed by Alexan- der Mahban's father and was a noncommercial arrange- ment for the pleasure of Safar Mahban and not part of Alexander Mahban's enterprises. Thereafter the manufac- turing facility was created by Da Vinci Fashions not as an ongoing enterprise designed to be independently prof- itable, but rather as a model or show enterprise designed to satisfy certain perceived securities trading require- ments. As an artificial construct designed to meet legal requirements, the facility never was commercially viable tion being for all intents and purposes nothing but an insolvent shell The General Counsel opposed any attempt to relitigate the original unfair labor practice case under any theory arguing that, for the purposes of the backpay specification, the original Board order as enforced by the circuit court was res,ludicata as to all parties See further discussion, supra as an independent entity.'' When the franchise scheme died with the loss of the Vogue name, its reasons for being ended. It is true that in June 1981 the Nevada corporation name was changed to Da Vinci Fashions and an attempt was made to achieve marketing success under that trade name. The record is clear, however, that the Da Vinci name was not a successful substitute for the Vogue name and, without apparent exception evident on this record or suggested by the General Counsel, the manufacturing operation continued on a dismal spiral of increasing losses in the last half of 1981. Irrespective of the depth of capitalization that might have been available to support or subsidize the manufacturing operations, the financial records in evidence make it clear that at all times there were both significant operating losses and no reasonable prospect of a positive change in economic circumstances for the manufacturing operation. From all the above and the record as a whole, it is clear and I find that the manufacturing operation could not and would not have remained open through the backpay period alleged in the specification as contended by the General Counsel. Even had Da Vinci Fashions been endowed with unlimited funds, the economic reality of the continuing losses without any reasonable prospect of making the operation profitable would have mandated closure of the operation. This being so, it is unnecessary to determine if at any given time extra moneys could have been made available to Da Vinci Fashions, to main- tain the operation. It was not financial inability in the sense of lack of operating capital that doomed Da Vinci Fashions, although this is also advanced as a defense by Respondents and will be discussed in greater detail, infra. It was the simply unchallenged fact that the sole eco- nomic purpose of the manufacturing operation was de- stroyed with the settlement of the trademark litigation denying Respondent Da Vinci Fashions the use of the Vogue trademark on garments and in franchising retail facilities. Having found that Respondents' defense of financial inability, as discussed above, is an effective defense to the reopening order and operates to toll the backpay of Da Vinci Fashions, a second, critical question remains: On what date would the facility have been shut down as- suming the unfair labor practices found in the Board's original order had not occurred? That is, and as to this element of the case the burden is on Respondents; when would "financial necessity" have required the shutdown of the manufacturing operation and the termination of the employees involved had not the protected concerted union activities of the employees generated the illegal conduct undertaken by Da Vinci Fashions, as found by Judge Nelson? One day of significance to the British Columbia and Nevada corporations was 5 December 1981. On that date a corporate stockholders meeting was held' 2 and the 11 What the manufacturing operation might have become had a signifi- ciant number of franchises been created is immaterial inasmuch as such a situation never occurred. 12 It seems clear the corporate meetings were scheduled well before Da Vinci Fashions ' knowledge of employees' union activities and are hence not susceptible to attack as improperly scheduled DA VINCI FASHIONS closure of the manufacturing facility was ratified by stockholders present and voting. The uncontradicted evi- dence of the meeting makes clear that there was no addi- tional money forthcoming from stock sales and that the entire operation was overwhelmed with debt and entirely bleak of prospect. It was at this meeting that the further decision was made to, in essence, abandon all corporate operations. i 3 Based on an essentially uncontradicted record, I find that by 5 December 1981 the financial situ- ation of Da Vinci Fashions, had collapsed and that ac- quiescence in the closure was a necessary decision by the voting stockholders. There is no ev iaence that illegal motivations were involved in this decision. Accordingly, in agreement with Respondents, [ find that, at least by 5 December 1981, Da Vinci Fashions would have closed its manufacturing operations under any circumstances. Accordingly, I find that, at least by 5 December 1981,14 backpay for the discriminatees was tolled and the re- opening order obviated. Respondents Princess Isabella Da Vinci and Alexander Mahban argue further, however, that even before 5 De- cember 1981 Da Vinci Fashions' manufacturing facility would have been closed based entirely on financial and economic considerations independent of any motivations found by Judge Nelson to violate the Act in the original unfair labor practice proceeding. Thus, Respondents assert the unchallenged testimony of Alexander Mahban that on the day the manufacturing operation closed, he received a report from Ursala Gallagher that the corpo- ration was unable to pay its suppliers or its consulting professionals, and without additional funds from the Ca- nadian corporation, could not even meet its payroll. Mahban further testified that he told Gallagher if the em- ployees could not be paid they should be laid off and the facility closed. In response the shutdown occurred. It was this phone call, in Mahban's testimony, that caused him to contact his counsel about initiating a permanent closure. Counsel's advice to him was to delay submitting any permanent closure decision to the stockholders until the 5 December meeting, which had been previously scheduled. I have found the 5 December 1981 decision to perma- nently close the facility was made for financial reasons and was not based on improper considerations. Alexan- der Mahban's testimony regarding the closure decision itself was not challenged by the General Counsel and would seem to extend the timing of the benign motiva- tion for closure to the very day of the closure itself. It is on this evidence that Respondents argue that there should be no backpay obligation whatsoever in as much as, at the time of the closure, any reopening was made impossible by the economic circumstances extant at that time. 13 One of the issues litigated at length in the backpay specification was the transference of certain physical assets from Da Vinci Fashions to other corporate entities or to Mahban family enterprises Without resolv- ing those issues, it was at all times clear that the monetary value of the disputed items, while not trivial, was small The General Counsel seems to make no contention, nor would the evidence support a finding , that in any significant way the assets of Da Vinci Fashions, following its essen- tial abandonment, were diverted to other entities 14 5 December being a Saturday , the Friday before, 4 December 1981, would have been the last working day under this finding 813 Judge Nelson's Order, as approved by the Board and the court, is binding on Da Vinci Fashions in this pro- ceeding, which is a supplemental proceeding based on the original Board Order. It is res judicata as to the find- ing made. Judge Nelson's Order specifically found the closure decision to have been illegally motivated. Is not the evidence tendered by Respondents as discussed above inadmissible because its sole effect must be to challange Judge Nelson's decision regarding the closure motivation? Put another way, as the General Counsel im- plicitly argues, does the original decision by its terms preclude any claim of financial inability existing as of the date of closure? The General Counsel objected to evidence offered by Respondents to challenge the underlying unfair labor practice findings. I sustained that objection. 1 s I reaffirm my ruling that the original unfair labor practice case de- cided the issue of closure motivation. As noted above, however, the original decision explicitly reserved for later consideration the question of financial inability. I find that there is no chronological limitation or bar on Respondents offering evidence to show that, as of any given point in time, no reopening was possible because of financial inability. In this limited sense the closure events may be relitigated. This apparent mixing of issues be- tween the compliance stage and the unfair labor practice stage is not unusual . The Board has long held certain de- fenses must be reserved to the compliance stage and, fol- lowing an unfair labor practice decision and order, the litigation of such a defense at the compliance stage may result in a complete elimination of any backpay obliga- tion despite contrary findings in the original decision and order. See, for example, Trident Seafoods Corp., 244 NLRB 566 (1979), enfd. 642 F.2d 1148 (9th Cir. 1981), backpay specification dismissed 275 NLRB 25 (1985). Accordingly, I do not find Respondents precluded from offering evidence in support of their argument that eco- nomic factors would have rendered closing necessary under all circumstances on the date of the closure itself. Having considered the essentially unchallenged evi- dence that the manufacturing operations in the latter half of 1981 were in essence on an uncontrollable downward spiral and that, as found above, the November closure was confirmed at a 5 December 1981 stockholders meet- ing, I further find, in agreement with Respondents, and specifically noting that they have sustained their burden of proof in this regard, that economic factors independ- ent of the unfair labor practices enumerated in Judge Nelson's decision prevented the closed operations from reopening at any time. I find the financial inability ex- tended to the date of the closure and that, irrespective of the unfair labor practices found by Judge Nelson, the fa- cility would have closed on 23 November under any cir- cumstances. Thus, I find that Respondents have sustained their defense of financial inability as of the time of the closure. The consequences of this determination are that there are no obligations on the part of Da Vinci Fashions rs Even were that bench decision in error, it could not be easily reme- died here For to reverse the decision that the original unfair labor prac- tice litigation does not bind all parties would require that the hearing be reopened to allow the parties to offer evidence for that purpose 814 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD either to reopen the facility or to pay backpay to any of the backpay claimants. This is true because at no time was Respondent Da Vinci Fashions financially able to reopen or employ the discriminatees after the closure or after their illegal termination. Accordingly, there being no obligation under the backpay specification attaching to Da Vinci Fashions, I shall dismiss the backpay specifi- cation with respect to it. III. THE OBLIGATIONS OF RESPONDENTS PRINCESS VERA NOCCE AND ALEXANDER MAHBAN The General Counsel seeks to hold Princess Vera Nocce and Alexander Mahban liable to the obligations of Da Vinci Fashions under theories of alter ego, single em- ployer, joint employer and, as to Mahban, through a piercing of the corporate veil theory. The great bulk of the very substantial record on these issues consists of a close examination of the financial transactions between the Mahban family and the various individuals, enter- prises, and corporations in contest. The record was made somewhat obscure by: (1) thefts and burglaries of docu- ments, (2) the mysterious disappearance and reappear- ance of other documents, (3) the death under mysterious circumstances of the accountant for Da Vinci Fashions and, finally, (4) the complexity and informality of many of the transactions and recordation of transactions be- tween and among the parties to the litigation. Close and difficult questions of fact and law were ably argued by the parties both at hearing and on brief regarding these issues. In light of my findings, above, that Respondent Da Vinci Fashions has no liability under the backpay specification, it is unnecessary to resolve these complex issues. This is so because, irrespective of any outcome under the General Counsel's theories of derivative liabil- ity, the absence of any liability by Da Vinci Fashions creates no potential liability for the others. Accordingly, with respect to both Princess Vera Nocce and Alexander Mahban, I shall dismiss the backpay specification. IV. THE OBLIGATION OF RESPONDENT VIP ENTERPRISES Judge Nelson's decision in the original case specifically found that VIP Enterprises was a single enterprise and a single employer as well as, in the alternative, a joint em- ployer with Da Vinci Fashions until on or about January or February 1982. Judge Nelson's remedial Order, how- ever, does not name VIP Enterprises as a respondent or otherwise hold it liable. Further there is no evidence that VIP Enterprises was served with original charge or original complaint in this case, or that it appeared at the original hearing or was served with copies of the deci- sion of the Board or court. Respondent VIP Enterprises did not appear until midway through the trial of the backpay proceeding. Counsel for VIP Enterprises then appeared specially and argued that VIP had never been served with the back- pay specification or the amendment to the backpay speci- fication and that, accordingly, it could not be obligated to appear and participate in the hearing nor could the ab- sence of any answer filed by it be held against it. Fol- lowing lengthy discussions both on or off the record, all parties agreed that it would be impossible to allow VIP Enterprises to join in the litigation as of that time simply because of the length and complexity of the record then concluded. I ruled preliminarily that should VIP Enter- prises be found not to have been properly served the backpay specification as to it would be dismissed.' a I further ruled that if service was found against VIP it would be susceptible to a ruling on the merits based on the record before me even without VIP Enterprises' full participation on all issues. I thus suggested that VIP En- terprises might wish to fully participate in the hearing from that time forward to protect its record. Respondent VIP Enterprises, through counsel, heard these prelimi- nary rulings and elected to adduce evidence on and argue only the service issue. Accordingly, following the conclusion of the hearing with respect to all other Re- spondents, Respondent VIP Enterprises and the General Counsel adduced evidence bearing solely on the service question and both the General Counsel and VIP Enter- prises briefed the service issue to me. Substantively the General Counsel's theories of liabil- ity regarding VIP Enterprises are generally the same as those described, above, regarding Princess Vera Nocce. The General Counsel's case with regard to VIP Enter- prises, however, is somewhat different in light of the findings made in Judge Nelson's original order with re- spect to VIP Enterprises. Given my findings, above, regarding the liability of Da Vinci Fashions, my findings with respect to VIP Enter- prises must be either: (1) a finding that service was inad- equate with a concomitant dismissal of the backpay spec- ification or, alternatively, (2) a finding of sufficient serv- ice and a dismissal based on the lack of primary liability by Da Vinci Fashions, Inc. 17 Given that a dismissal will result under any resolution of the service issue, a ques- tion arises whether it is necessary to determine the serv- ice issue at all with respect to VIP. I find that it is not only appropriate but necessary to decide the service question simply because service is the predicate to any and all findings regarding VIP Enterprises' liability under the backpay specification. Accordingly, and de- spite the apparent mootness of the analysis, I shall ad- dress the arguments and evidence presented on the serv- ice issue and make findings and conclusions with respect thereto before making any further conclusions with re- spect to VIP Enterprises' liability under the backpay specification. At relevant times since 1982 VIP Enterprises has been in essence a shell corporation not engaged in any busi- ness other than maintaining its compliance with the regu- latory requirements of the State of Nevada. The corpora- tion is owned by Grady Sanders and his wife, Cherie Sanders, who are the sole corporate officials. There was no dispute that at relevant times the Sanders were the 16 Such a dismissal would not necessarily end the matter The backpay specification would be susceptible to renewal by subsequent service of the backpay specification and the holding of a hearing on proper notice. 17 In the unusual circumstances of this case, granting a default against VIP Enterprises based on its failure to file an answer would be inappro- priate No Motion for Summary Judgment against VIP Enterprises was ever made Nor, I believe, did the parties ever contemplate such a poten- tial ruling in the case DA VINCI FASHIONS 815 only individuals authorized to receive service on behalf of VIP Enterprises. Until June 1985, VIP Enterprises' corporate offices were located at 1850 East Flamingo Road, Las Vegas, Nevada. At that time its offices were moved to 2920 Maryland Parkway, Las Vegas, Nevada. Each location also served as the headquarters of other enterprises owned by the Sanders family . As part of the corporate relocation, change of address forms were filed with the U.S. Postal Service by VIP Enterprises as well as by other enterprises owned by the Sanders family. The change of address card requested that all mail addressed to the Flamingo Road location be forwarded to P.O. Box 19658. This single post office box was used by VIP Enterprises and the other Sanders ' enterprises as their of- ficial address. Insofar as the record reflects , only the Sanders' enterprises had use of, or access to, the post office box. Employed at all relevant times by Grady Sanders and certain of his enterprises other than VIP Enterprises was Bonnie D. Hannifin. Hannifin testified without dispute that she has no "official connection " with VIP Enter- prises. The General Counsel introduced documentary evi- dence supporting its contention that the General Counsel accomplished service on VIP Enterprises on two occa- sions. The first document was it large brown envelope containing the backpay specification addressed to Cherie Sanders, President, VIP Enterprises, 1850 East Flamingo Road, Suite 125, Las Vegas, NV 89109. The envelope bears a certified mail label and a penciled line across the address with the entry " 19658." The front of the enve- lope bears a claim check stub with the entry "first notice 2-1-86." Again in handwriting on the face of the enve- lope is the word "refused." The General Counsel also placed into evidence a certified mail return receipt post office form received by the General Counsel's office bearing the matching certified mail number on the enve- lope with the rubber stamp notation by the U.S. Post Office on the receipt that the letter had been "refused." The second series of exhibits offered were an affidavit of service and a return receipt certificate from the U.S. Post Office. The affidavit of service indicates the amend- ment to the backpay specification was mailed on 3 March 1986 to VIP Enterprises at 3200 Las Vegas Bou- levard South, Las Vegas, Nevada, by certified mail return receipt requested. The corresponding return re- ceipt bears the handwritten signature "Bonnie Hannifin" and a date of delivery of 3-11-86. Hannifin and the Sanders testified that they had absolutely no memory of receiving either the backpay specification or an amended backpay specification and equally had no memory of re- fusing receipt of such documents. Grady Sanders testi- fied that, as a man of some experience in business and litigation, he would under no circumstances put his busi- ness interests at potential risk by ignoring such legal doc- uments. Hannifin testified that, although she picks up mail at the post office box in question , she is not author- ized to and does not receive mail for VIP Enterprises. Furthermore, she testified that she did not have any recollection of signing a certified receipt for the docu- ment in issue. Shown the signed receipt and the signature thereon, she testified the signature did not seem to be hers. She also noted the signature did not include her middle initial, which initial she habitually includes when signing her name. Uncontested testimony was received from a knowl- edgeable U.S. Post Office official regarding U.S. Postal Service practices and procedures with respect to deliv- ery of certified mail, forwarding address procedures, and post office box procedures. The official testified that when a change of address form is supplied to the U.S. Post Office, letters and packages addressed to the previ- ous location are transferred to the new location and the forwarded packages are marked in pencil as was the en- velope described above. He further testified that U.S. Post Office boxes are provided with locks and are not accessible to the public generally but are rather accessi- ble only to those who have possession of a key or combi- nation to the particular box. He testified that with re- spect to certified mail, a post office slip indicating that a certified letter was at the postal desk would be left in the appropriate post office box. He testified that only when such a slip has been presented to the postal clerk would the package be turned over to the presenting individual for inspection and acceptance or refusal of the item. The official testified that the designation "refused" is different from a separate designation "unclaimed" in postal par- lance and that a "refusal" requires a specific affirmative refusal by the addressee to accept delivery of the item rather than a simple omission to claim the item . Thus, if a certified package is "refused," some individual had to present the certified mail notice slip, inspect the package, and then return it as refused. With respect to the certi- fied mail receipt entered into evidence , the postal official testified that a signature on such a receipt could be ob- tained only upon presentation of the Post Office notice of mailing form to the postal clerk and positive accept- ance of delivery of the item. Given all the above, I find that both the original back- pay specification and the amendment to backpay specifi- cation were forwarded pursuant to U.S. Post Office practice to the post office box used by VIP Enterprises. I further find that a person unknown had occasion to take the post office slips indicating that the backpay specification was available at the postal desk and that the person or persons unknown in fact went to the post office desk, was presented with the original backpay specification envelope, and affirmatively refused to accept service, thus causing the post office to physically mark the envelope "refused" and return it to the General Counsel's Regional Office. Likewise, I find that the amended backpay specification was forwarded to the new post office box address of VIP Enterprises and that a notice of delivery was placed in the VIP post office box. I further find that a person unknown, possessing access to the post office box, received the slip indicating that an item awaited delivery at the post office desk, went to the post office desk, took possession of the 816 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD amended backpay specification, and signed the return re- ceipt with the name Bonnie Hannifin.' 8 The General Counsel correctly argues that "refused" service is sufficient service under Board law citing Pasco Packing Co., 115 NLRB 437 (1956), and Garden Fashions, 231 NLRB 72 (1977). The General Counsel also argues that "any of Sanders' employees who picked up mail at the post office box inherently had the authority to also pick up or refuse VIP Enterprises' mail. Ann Arbor Press, 85 NLRB 58, 60 (1944)." In Ann Arbor Press, an individ- ual employer was served with a copy of the Board's charge by registered mail that was delivered to the cor- rect address and receipted for by the individual employ- er's son. The Board held that because mail was in fact regularly accepted by persons other than the individual employer, and, despite the employer's denial that anyone else was authorized to do so, that his son was authorized to act on his behalf, the charge was therefore properly served. It is thus the General Counsel's argument that, be it Hannifin or anyone else, despite the absence of any ex- plicit authority to do so, the person who had access to the post office box utilized that access to sign for and refuse the General Counsel's service documents and acted with the actual or apparent authority of VIP En- terprises. The Board cases cited by the Government are in point and, if somewhat old, appeared to be unmodified by subsequent decisional law. Relying on the cited cases, I find that VIP Enterprises, through the actions of Bonnie Hannifin or others not apparent on this record, but who in any event had unchallenged access to the post office box used by Sanders' enterprises including VIP Enterprises, received the amended backpay specifi- cation and refused the original backpay specification and notice of hearing. I find, therefore, that Respondent VIP Enterprises was properly served and had legal notice of the instant proceedings so that no dismissal of the back- pay specification is justified based on lack of service. As noted above, however, I shall not grant summary judgment against VIP Enterprises for failure to file an answer to the backpay specification. At no time did the General Counsel move for summary judgment against VIP Enterprises, nor in the extensive discussions regard- ing the procedures to be utilized in the litigation of the service issue, was there any argument that VIP Enter- prises should be found in default as a result of not filing an answer in the instant litigation. Rather, as I believe all parties understood and as I now rule, VIP Enterprises, having been properly served, is held to the record made by other Respondents and the General Counsel and I shall decide the case as to VIP Enterprises based on that record. As noted above, I have decided that the backpay spec- ification as to Da Vinci Fashions creates no backpay li- ability to discriminatees and creates no obligation to reopen the facility. Based on that analysis, I shall dismiss the backpay specification as to Da Vinci Fashions. I have further decided that it is unnecessary to decide whether Princess Vera Nocce or Alexander Mahban have derivative liability for the obligations of Da Vinci Fashions because, simply put, Da Vinci Fashions has no liability to share with those entities. Accordingly, I shall dismiss the backpay specification as to Princess Vera Nocce and Alexander Mahban. VIP Enterprises, having been found to have been properly served, stands in the same position as those entities. Therefore, it is unneces- sary to decide if VIP Enterprises, either as a result of the original order or under the derivative liability theories advanced by the General Counsel and litigated in the in- stant case, is liable for the obligations of Da Vinci Fash- ions. This is so because, once again, Da Vinci Fashions has no obligation to be shared. Accordingly, I find VIP Enterprises has no obligation under the backpay specifi- cation. Accordingly, and despite my having found that VIP Enterprises was properly served with the backpay specification and the amended backpay specification, I shall dismiss the backpay specification as to VIP Enter- prises. On the basis of the foregoing and pursuant to Section 10(c) of the Act, I recommend that the Board issue the following ORDER") IT IS RECOMMENDED that the backpay specification shall be dismissed with respect to Da Vinci Fashions, Inc., VIP Enterprises d/b/a Princess Isabella Da Vinci, Princess Vera Nocce, and Alexander Mahban a/k/a Djamshid Mahban. 18 Were it necessary to decide, based on the demeanor of the witnesses 19 If no exceptions are filed as provided by Sec 102 46 of the Board's and an inspection of the signature on the return receipt as well as the Rules and Regulations, the findings, conclusions , and recommended exemplars submitted by Respondent VIP Enterprises and the General Order shall , as provided in Sec 102 48 of the Rules, be adopted by the Counsel, I would find that the certified mail receipt was in fact signed by Board and all objections to them shall be deemed waived for all pur- Hannifin poses