First Class Maintenance Service, Inc. And Its Alter Ego, Clean Sweep Janitorial Services, Inc.

484 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD First Class Maintenance Service, Inc. and its Alter Ego, Clean Sweep Janitorial Services, Inc. and Local 200, Service Employees International Union, AFL-CIO. Case 3-CA-13279 June 30, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS BABSON AND CRACRAFT On January 28, 1987, Administrative Law Judge George L. Mclnerny issued the attached decision. The General Counsel filed exceptions and a sup- porting brief, and Respondent First Class filed an answering brief. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. This case presents an extremely close question regarding application of the Board's alter ego doc- trine. The General Counsel has alleged in substance that First Class Maintenance Service, Inc. (First Class) and Clean Sweep Janitorial Services, Inc. (Clean Sweep) are alter ego corporations and vio- lated Section 8(a)(1) and (5) of the Act by refusing to apply First Class' collective-bargaining agree- ment with Local 200, Service Employees Interna- tional Union, AFL-CIO (the Union) to employees of Clean Sweep. The General Counsel also alleges that the Respondents violated Section 8(a)(1) and (3) of the Act by causing the loss of employment of First Class employees who worked at the Arcata Graphics Building. For the reasons stated below, we hold that no alter ego relationship exists herein and we affirm the judge's dismissal of the 8(a)(5) allegations of the complaint. For the reasons stated by the judge, we also agree that Respond- ents did not violate Section 8(a)(1) or (3) of the Act. Accordingly, we shall dismiss the complaint in its entirety.' An alter ego relationship may be found when two nominally separate entities share substantially identical management, business purpose, operation, equipment, customers, supervision, and ownership. Advance Electric, 268 NLRB 1001, 1002 (1984); Crawford Door Sales Co., 226 NLRB 1144 (1976). Unlawful motivation is an additional factor fre- quently considered in determining whether alter ego status exists. See Gilroy Sheet Metal, 280 NLRB 1075 fn. 1 (1986), enfd. 816 F.2d 685 (9th Cir. 1987); Fugazy Continental Corp., 265 NLRB 1301, 1302 (1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984). The facts are largely undisputed and indicate that there is substantially identical business pur- pose, operation, equipment, and customers between First Class and Clean Sweep. Thus our analysis fo- cuses on the remaining indicia of alter ego status: substantial identity of management, supervision, and ownership as well as the presence or absence of evidence of unlawful motivation. In approximately 1971, William T. Held Sr. and his wife Carolynn began a commercial cleaning service that they eventually incorporated as Held Janitorial Services (Helds).2 In December 1985 W. and C. Held were awarded a contract with Arcata Graphics and were told they would "have to join this local [union]." W. and C. Held complied, formed a new corporation, First Class, hired all the former cleaning service employees at Arcata Graphics and executed the union contract. William T. Held Jr., the elder son of W. -and C. Held, worked as a supervisor for First Class at the Arcata Graphics Building. After submitting a bid for calendar year 1986 based on the union contractual rates, First Class was notified in January 1986 that its contract with Arcata was not being renewed for another year but, rather, would be extended on a month-to- month basis. Shortly thereafter, W. and C. Held were told by Greg Fodero, Arcata Graphics' buyer, that Arcata would accept only nonunion bids for calendar year 1986. Although C. Held sub- mitted a "nonunion" bid on behalf of Helds,3 W. Held withdrew the bid in May 1986 on advice of counsel. Word of the tentative nature of the First Class contract with Arcata Graphics was well known by the employees. William Jr. had heard of First Class' problems with the Arcata contract both at work and at home where he lived with his parents. William Jr. approached his parents about forming his own corporation and bidding on the Arcata ' The General Counsel has excepted to some of the judge's credibility findings The Board's established policy is not to overrule an admmistra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for re- versing the findings In so holding, we find it unnecessary to rely on the judge's comments in fn 11 of his decision 2 The General Counsel has excepted to the judge's refusal to include in the record a newspaper article provided to him by counsel for Respond- ent First Class Apparently discussion regarding this newspaper article occurred off the record However, the judge acknowledged in fn. 3 of his decision that he reviewed the article for purposes of background informa- tion Because of this acknowledgement , the General Counsel's motion to include the newspaper article in the record is granted 3 The General Counsel correctly notes that the judge mistakenly stated that First Class, not Helds, submitted the bid based on nonunion rates 289 NLRB No. 60 FIRST CLASS MAINTENANCE 485 contract. W. Held spoke with Greg Fodero about his son's proposal. Greg Fodero said Arcata would look at any responsible bid. The judge credited W. Held Sr.'s testimony that he did not guarantee his son's work or promise to oversee it in any way. On May 27, 1986, William Jr. submitted a bid for the Arcata Graphics work. Although the amount he bid, $10,270 per month, was identical to the "nonunion" bid submitted by Helds, the judge credited William Jr.'s testimony that his calcula- tions were independently performed based on a percentage of the labor cost in the First Class oper- ation, with which he was familiar. Two "nonunion" bids were received by Arcata. Although William Jr.'s was slightly higher, he was awarded the work due to his familiarity with the building and the specifications for the cleaning re- quired. By letter dated May 30, 1986, the First Class em- ployees were notified that Arcata Graphics had hired a new cleaning contractor. Employees were advised they could apply for another position by calling the First Class office. Employees who called the First Class office to apply for positions were told about possible jobs for Helds on a nonunion basis or other jobs with First Class under union contract. Calls regarding the Arcata work were referred to William Jr. who recruited for Clean Sweep by advertisements and hiring some of the laid-off First Class employees. The credited evidence indicates that William Jr. made the hiring decisions without assistance from his parents except in two instances occurring during the first week of Clean Sweep's operation in which C. Held was involved.4 Thus, William Jr. set the terms and conditions of employment, effect- ed his own hiring and firing decisions, and sched- uled and trained employees. The evidence further indicates, the judge found, and we agree that Wil- liam Jr. managed Clean Sweep independently. He hired a lawyer to set up the corporation, hired an accountant for tax purposes, hired a payroll serv- ice, opened accounts at suppliers, and in all other manner of operations maintained entirely separate management. Aside from performing these management func- tions, William Jr. was present to oversee all three 4 The General Counsel has excepted to the judge's refusal to allow certain rebuttal testimony which, if credited, would have shown an addi- tional instance of involvement by W. or C. Held in Clean Sweep's hiring during the first week of its operation. The General Counsel seeks reopen- ing of the record in order to place this additional testimony before us. The motion is denied. Not only would such evidence have been cumula- tive, but also denial of the request was an appropriate exercise of the judge's discretion where, as here , counsel for the General Counsel was on notice 9 days prior to seeking to call this "rebuttal " witness that he might desire the testimony but he did not have the witness available at the time he sought to introduce the testimony. shifts of the operation and filled in for employees as needed. Two supervisors performed the day-to- day supervisory duties. One of these supervisors, Fran Urbanczyk, had previously worked for First Class at the Arcata Graphics Building while the other supervisor, David Nightingale, came from a nonsupervisory position at Helds' United- Parcel Service operation. There is no evidence that W. or C. Held participated in supervision of the Clean Sweep operation. We thus adopt the judge's con- clusion that First Class and Clean Sweep did not have substantially identical supervision. Clean Sweep is a State of New York corpora- tion. William Jr. owns 100 percent of the outstand- ing shares of stock in the corporation. Initially Wil- liam Jr. financed his operation with his lifetime savings of about $3200. Additionally his parents gave him a gift of used commercial cleaning equip- ment valued at approximately $2500. The Board has held that a fording of substantial- ly identical ownership is not compelled merely be- cause a close familial relationship is present be- tween the owners of two companies. Victor Valley Heating & Air Conditioning, 267 NLRB 1292, 1296- 1297 (1983); Shellmaker, 265 NLRB 749, 754-755 (1982); Friederich Truck Service, 259 NLRB 1294, 1300 (1982). Rather, each case must be examined in light of all the surrounding circumstances. In par- ticular, the Board focuses on whether the owners of one company retained financial control over the operations of the other. Id. In this case, First Class is owned by W. and C. Held, while Clean Sweep is owned by their 20- year-old son, William Jr. who utilized his life sav- ings as well as a gift of used equipment from his parents to start up the operation. The gift of used equipment is insufficient evidence on which to con- clude that substantially identical ownership exists. We have found that William Jr. managed Clean Sweep independently, and there is no evidence that W. and C. Held retained financial control over its operations as a result of the gift of used equipment. In so holding, we distinguish Kenmore Contract- ing Co., 289 NLRB 336 (1988). In Kenmore the children of Jacqueline and Hugh Hanley Jr. formed a nonunion steel erection and equipment rental company. Their parents were the sole owners of an identical unionized operation. The two corpora- tions shared the same premises, office equipment, and customers. Further, the parents were integrally involved in the day-to-day operation of the chil- dren's corporation and were vested with decision- making authority. Indeed, the evidence indicated that the children were unfamiliar with the oper- ation of their own corporation. For capitalization of their corporation, the Hanley children used the 486 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD proceeds from the sale of one of their cars which had been a gift from the parents and a student loan which became unnecessary for school expenses when the parents paid for these items. Thus the Hanley children were able to provide capitalization for their corporation only through aid from their parents: the gift of a car, the subsequent sham lease of another car, and the payment of college fees. In sum, the Board characterized the relationship be- tween the children's company and the parent's company as one of near total dependence. William Jr.'s capitalization was not due solely to his parents' assistance. The record reflects that he had been working in the cleaning industry for 6 years, that he had routinely estimated and prepared bids for jobs on his own, and that his savings were from these years in the industry. Furthermore, Clean Sweep is not dependent on or subject to the control of First Class. Rather, as the judge found, William Jr. "is in fact running his own business." Finally, we adopt the judge's determination that unlawful motivation was not a factor. First Class knew that it was losing the contract with Arcata Graphics due to an internal decision within that or- ganization and outside the control of W. and C. Held. Given this state of affairs, the senior Helds' decision to assist their son in going into business does not indicate an unlawful motivation. Although the record reflects that there are sub- stantially identical customers, operation, equipment, and business purpose, we have also found that there is not substantially identical ownership, man- agement, or supervision. Nor is there sufficient evi- dence to establish unlawful motivation on the part of William Jr. or his parents. Based on these find- ings, we conclude on the record as a whole that the General Counsel has failed to prove by a pre- ponderance of the credible evidence that First Class and Clean Sweep are alter ego corporations. See Victor Valley Heating & Air Conditioning, supra. DECISION GEORGE L. MCINERNY, Administrative Law Judge. Based on a charge filed on 2 June and 4 September 19861 the Regional Director for Region 3 of the Nation- al Labor Relations Board (the Board) on 17 July issued a complaint alleging that First Class Maintenance Service, Inc. (First Class or Respondent First Class) and its alter ego, Clean Sweep Janitorial Services, Inc. (Clean Sweep or Respondent Clean Sweep) had withdrawn recognition from and refused to recognize Local 200, Service Em- ployees International Union, AFL-CIO (the Union), all in violation of Section 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. § 151 et seq. (the Act). On 21 July First Class filed an answer denying the com- mission of any unfair labor practices. Pursuant to notice contained in the complaint, a hear- ing was held before me at Buffalo, New York, on 8, 9, and 18 September,2 at which time Respondent First Class was represented by counsel, the Union by its busi- ness representatives, and Clean Sweep by its president and sole stockholder. At the hearing all parties had the opportunity to present testimony and documentary evi- dence, to examine and cross-examine witnesses, to make objections and file motions, and to argue orally. After the close of the hearing, the General Counsel and coun- sel for First Class filed briefs, which have been carefully considered. Based on the entire record in this case, 3 including my observation of the witnesses and their demeanor, I make the following FINDINGS OF FACT I. JURISDICTION The complaint alleges, the answer admits, and I find that First Class is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED Local 200, Service Employees International Union, AFL-CIO is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. Michael Cooperman, Esq., for the General Counsel. Thomas S. Gill, Esq. (Saperston, Day, Lustig, Gallick, Kirschner & Gaglione, P.C.), of Buffalo, New York, for Respondent First Class Maintenance Service, Inc. William T. Held Jr, of West Seneca, New York, for Clean Sweep Janitorial Services, Inc. John Borton and Paul McQuillen, of Buffalo, New York, for the Charging Party. A. The Alter Ego Issue First Class is a New York corporation that is wholly owned by Willam T. Held Sr. (W. Held) and his wife, Carolynn (C. Held). C. Held is the president and W. All dates are in 1986 unless otherwise specified z The complaint was amended at the hearing to include an allegation that Respondent First Class had also violated Sec 8(aX3) of the Act This was also denied by the Respondent S As a part of his brief, the General Counsel submitted a copy of a newspaper article concerning the history of Helds and Respondent First Class A copy of the article had previously been given to me by counsel for First Class. I note that I have read the article but I have used it only for background material because it does not pertain to the issues of this case The General Counsel's request that the article be made a part of this record is denied FIRST CLASS MAINTENANCE 487 Held the vice president. The Helds own another corpo- ration, Held Janitorial Services (Held's). W. and C. Held began the business that eventually became Held Janitori- al Services some time in the late 1960s. C. Held handled the office, did bookkeeping, and handled the financial end of the business, and W. Held did the sales and mar- keting, estimated jobs, and supervised employees at the locations where the work was to be performed. Both W. and C. Held began by doing the actual cleaning work themselves and they continued to do so until the business grew so large that they hired others to do the actual work. Around 1980, the Helds obtained a contract to clean at a company called Arcata Graphics. This job had been performed by a union contractor and after being award- ed the job, the Helds hired the prior contractor's em- ployees and signed a contract with the Union for the work. In order to seperate this new union business from other nonunion operations, the Helds formed a new cor- poration called First Class Maintenance, to bid on and perform cleaning and janitorial services with union em- ployees. After obtaining the Arcata Graphics contract, First Class entered into cleaning contracts with the Buf- falo Evening News, and with the management of a downtown building called the Brisbane Building. Arcata Graphics occupies a large plant containing over 7 acres and First Class was responsible for cleaning all offices, the cafeteria, and toilets throughout the main building and a distribution center some distance away from the main plant. The cleaning contracts were award- ed on the basis of competitive bids, with some discretion on the part of Arcata's buyer, Gregory Fodero. Late in 1985 the management of Arcata became concerned with the costs of cleaning services and, after having received bids from First Class for the calendar year 1986, manage- ment instructed Fodero to find out what they could save if "non-union work was brought in." Fodero then re- quested various cleaning services to submit either non- union or union bids.4 As a result of Fodero's request, First Class submitted a bid that was based on nonunion rates, as well as the bid based on its current (January 1, 1984, to December 31, 1986) contract with the Union. However, the Helds were advised by counsel that they could have legal problems under article II of the union agreement. Similar problems would exist even if the job was awarded to the Helds in- stead of First Class. Faced with the almost certain loss of the Arcata ac- count, the Helds were very concerned. The situation dragged on into 1986, with the Helds hanging on to the account on a month-to-month basis. During this time the matter must have been discussed at their home in the presence of their -son, William Held Jr. (Bill). Bill lived at the Held home and was at that time 20 years old, a graduate of a local community college, and a veteran of over 6 years' experience in the Held family cleaning 4 While the record here confirms that the words "union" and "non- union" were used in connection with the bids on the cleaning work, I do not believe that these were inspired by antiunion motivations either by Arcata or First Class. Rather, these words were understood by the par- ties involved to refer to the relative costs of the work if done under union scale or not. business. He had started as a sweeper and worked up to stripping of floors, supervising other employees, and even using a computer in connection with business ac- counts. For a year and a half before the end of 1985 Bill had been a supervisor for First Class, working at the Arcata Graphics location. At some point, and in some fashion, the idea occurred to the Held family to have Bill set himself up in the cleaning business and, from that position, submit his own bid on the Arcata work. According to Fodero, W. Held asked him if he would allow Bill to put a bid in on the Arcata work. Fodero asked W. Held if he thought Bill was capable of doing the work. The answer being affirmative, Fodero told W. Held that he would be glad to look at a bid from Bill. Shortly after that, in May 1986, Fodero received two bids. Bill's was a little higher than the other, but Fodero testified that he took into account his experience with the Helds over the years and the experience Bill had had in the Arcata plant, in awarding the contract to Bill. The evidence shows that the bid that Bill submitted to Arcata Graphics was identical with the bid previously prepared by C. Held and submitted as a nonunion bid on behalf of Helds Janitorial Services.5 On receiving the award, Bill proceeded to get himself into business. He first approached his parents' attorney, Thomas Gill. Gill referred him to another attorney in his firm, Timothy C. Cashmore, who proceeded in June to secure the incorporation of Clean Sweep Janitorial Serv- ices, Inc., under the laws of the State of New York. Bill is the only officer, the only director, and the only share- holder of Clean Sweep. Bill also secured the services of Joseph Muffaletto, a member of his parents' accounting firm, to act as his own accountant; selected Barber Insur- ance, also used by the family, to purchase his business in- surance; arranged with Marine Midland Bank to provide a payroll service, exactly the same service used by First Class; and chose, as his suppliers of cleaning materials and supplies, the same firms used by the Helds. These factors show that in the fundamentals of estab- lishing and operating this small business, preparing and submitting the bid, arranging for incorporation (for tax and accounting) services, for insurance, supplies, and payroll, Bill followed his parents in their corporate prac- tices. The evidence further shows that the Helds donated to Bill, at no cost, equipment that they valued at $2500, to allow Bill to start up his operation at Arcata without making a substantial capital outlay.6 There is no question but that Bill continued to live at his parents' house during times material, using their facilities and telephone not only for his personal convenience, but also to run his business. There is no indication that Bill paid any rent, any share of telephone or utility bills, or other household expenses up to the time of this hearing. 5 According to Fodero he relied heavily on Arcata' s experience with W. Held, although the latter did not guarantee the son's work and gave no indication that he was going to keep an eye on the work. In any event, according to Fodero, the contract had a 30-day cancellation provi- sion, and could be terminated if the services were less than satisfactory to Arcata. 8 Bill testified that if he had purchased all new equipment for the Arcata operation it would have cost him much more than $2500. 488 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD The General Counsel maintains that the senior Helds regarded Clean Sweep as an addition to their other two corporations, Helds and First Class. I have some ques- tions about this theory. In the initial stages of Clean Sweep's assumption of the Arcata contract, there is evi- dence that C. Held and Pam Zugger, at that time sort of an office manager and dispatcher for Helds and First Class, discussed wages and assignments with employees who were being laid off by First Class. Indeed the testi- mony of former First Class employees Anni Wrobel and Lynn McGuane shows that C. Held was influential in determining wage rates at the beginning of the Clean Sweep operation. Pam Zugger's function seemed to be more in the nature of an informant to the newly laid-off employees regarding other positions available either at union rates with First Class, or nonunion rates with Helds or Clean Sweep. At the same time, however, Bill also seemed to be making employment decisions. He did inform former First Class employee Lynn McGuane that she could have a vacation that year, and he was also re- ferred to by Pam Zugger in her discussions with employ- ees as the new owner and the person responsible for wages and other benefits. In the 3-month period between the assumption of the Arcata contract by Clean Sweep and the time of this hearing there are no clear indications of participation by the senior Helds in the management of Clean Sweep. A former employee named Bruno Stra testified that Bill told him that W. Held was still in charge, but Bill denied this and I credit the latter's testimony. Stra had a poor memory and a confused recollection of several incidents during his employment. Anni Wrobel, who did impress me as a credible witness testified that she heard Bill dis- cussing the discharge of another employee with W. Held on the telephone, but her testimony is not clear whether Bill was asking for a decision to be made on the dis- charge, or was, as Bill indicated in his testimony, merely seeking his father's advice on a decision that Bill had al- ready made. Two employees of Helds testified that, at various times, they went to Arcata after Clean Sweep had taken over the contract and took equipment out of Clean Sweep's storeroom on Arcata's premises. Paul Eaton, one of these employees, testified that he thought the equipment still belonged to Helds.7 Apart from the single instance related by Lynn McGuane concerning her conversation with C. Held, there is no direct evidence that either W. or C. Held par- ticipated in any way in the operation or management of Clean Sweep after the end of May 1986. Further, both W. and C. Held testified credibly that Bill was on his own in this business, and that they would not share in his profits, nor underwrite any losses. Insofar as those views reflected the then-current situation, I accept them as ac- curate. However, we do not have much to go on when deter- mining whether Clean Sweep is a legitmate, independent operation, or whether it is merely an extension of the family-owned Held enterprises. The only financial data in this record are Bill's checkstubs for the period 17 June ° At Held's and First Class it was common for employees to take equipment from one location to service another to 3 September 1986 from the Clean Sweep account on which he had scrabbled figures showing deposits and ex- penditures into and out of this account.8 The figures show a deposit of $3000 early in June, which Bill testi- fied represented his savings used for captilization of the business. Arcata Graphics made two payments that were then deposited in Clean Sweep's account, in mid-June for $11,710.17 and another for $11,977.60 early in August. The stubs show payment of bills for payroll and payroll services, tax and unemployment deposits, supplies, and payments on a truck. As of 3 September the balance shown was $6,149.64, with another payment from Arcata Graphic due shortly. My own rough calculations from these sketchy figures show that the business should show a profit of about $1000 per month, a little over 10 per- cent of the Arcata contract. There were no deposits or indications that the senior Helds were contributing any money to the enterprise. Receiving no outside assistance, Bill would realize around $12,000 annual profit from the Arcata contract. Adding to this his own $7 per hour wage for what his payrolls show as a 50-hour week, or a total of some $18,000, Bill would gross about $30,000 per year. This appears to be a respectable and a legitimate sum, warranting the inference that Clean Sweep is a viable enterprise, capable of functioning on its own out- side of the Helds home. In determining whether one entity is the alter ego of another, the Board looks at a number of factors. One of these factors is the purpose behind the creation of the al- leged alter ego. The Board is concerned whether the creation of the alter ego was a legitmate act, or whether it was taken to evade responsibilities under the Act; Fugazy Continental Corp., 265 NLRB 1301 (1982). A finding of unlawful motivation is not essential to a find- ing of alter ego status, but it is one factor that the Board considers in each case; Gilroy Sheet Metal, 280 NLRB 1075 (1986). The question of motive here is not clear. If there were any antiunion motive, it would have been the result of the decision of the management of Arcata Graphics to reduce the costs of cleaning and maintenance of its facili- ty. From the testimony of Greg Fodero it really appears that the Company's motive was not so much to hurt the Union as to reduce costs. First Class, which had con- tracts both with Arcata and the Union, was then caught in a dilemma. If they stuck with their bid based on the Union's wage scales and benefits, the Helds knew that First Class would lose the Arcata contract. If they low- ered their bid to obtain the Arcata contract, they would, presumably, have lost money.9 So they lost their con- tract and laid off the employees. At the same time they encouraged and assisted Bill to set up Clean Sweep, to bid on and to receive the Arcata contract. 8 I appreciate the fact that this kind of evidence is self-serving, but be- tween the state of the document and the testimony of Bill Held, I am convinced that the figures reflect Bill's financial condition accurately for the short period covered 9 Noting that Bill's percentage of profit is not high, I cannot envisage the Helds making a profit on the same contract at union rates I am not aware of anything in the Act that would require the Helds to make and accept a money-losing bid on this kind of rob FIRST CLASS MAINTENANCE I do not believe these facts show that the Helds set up First Class in order to avoid dealing with the Union. As the situation developed during the first 6 months of 1986, First Class, as a union employer, was out at Arcata, and someone, a nonunion contractor, was going to be in. The question of retaining the Arcata contract by First Class was settled. The fact that the Helds decided to assist Bill in setting up his own company does not, in my opinion, affect the First Class-Union relationship that had existed before 1986. Thus, I find that there was no intention on the part of Bill, or his parents, to evade union responsi- bilities in the setting up of Clean Sweep. Other factors considered by the Board in determining the existence of an alter ego situation are "substantially identical management, business purpose, operation, equipment, customers and supervision, as well as owner- ship"; Advance Electric, 268 NLRB 1001 (1984). Here we have a substantially identical business purpose, the supply of cleaning and janitorial services; essentially the same kind of operation, the use of part-time cleaners under a contract with building owners; the same equip- ment, in this case the equipment donated to Bill by his parents; and identical customers, Clean Sweep's only cus- tomer was a customer of First Class. The differences in this case are in ownership, manage- ment, and supervision. There is no question that Bill owned no stock in First Class, and while he had been a supervisor for that company, he had not participated in management decisions. There is, further, no question that either. W. or C. Held have any equity position in Clean Sweep, and, as I have found, they exercise no manage- ment function at Clean Sweep. In regard to supervision, one of the supervisors who worked at Arcata for First Class remained as an employee of Clean Sweep. Bill Held, who had been a supervisor for First Class at Arcata moved up to management and another supervisor was hired from Helds.10 There are, in this situation, indicators that point to an alter ego situation if one considers the identity in busi- ness purpose, supply of services, customers equipment, and methods of operation; and those that point in the op- posite direction, considering ownership, management, and supervision. Based on all these factors, and considering my obser- vation of the witnesses, particularly my observation of Bill Held as he testified under extended and vigorous cross-examination, I do not fmd that the establishment and operation of Clean Sweep is merely a technical change in structure or identity of First Class, the prede- cessor employer. Bill showed in his testimony that he had experience in this business, learning all aspects of the business for over 5 years prior to starting up Clean Sweep. He showed me that he is an intelligent, mature young man with a grasp of the economics and practice of the cleaning business and the strength and determina- tion to make a go of it. Despite his continuing physical dependence on his parents, I find that he is fully capable, 10 This move of an individual from a nonsupervisory position at Held's United Parcel Service location to a supervisory position at Clean Sweep - is the only reported transfer to Clean Sweep from either First Class or Helds after 1 June. 489 and is in fact running his own business independent of, and not the alter ego of, either of his parents' two corpo- rations. Advance, supra; Gilroy, supra; Howard Johnson Co. v. Detroit National Joint Executive Board, 417 U.S. 249 (1974); Crawford Door Sales Co., 226 NLRB 1144 (1976). B. The Alleged Refusal to Bargain The complaint alleges that the Respondent, First Class, repudiated its collective-bargaining contract with the Union on or about 1 June 1986 and thereafter refused to recognize or bargain with the Union. However, the un- denied testimony of W. Held shows that he was aware that First Class was going to lose the contract, and that he communicated the fact to the Union before 1 June, but received no response or request from the Union to discuss the matter further. When the contract between Arcata and First Class finally ran out, Business Repre- sentative Paul McQuillen testified that he called C. Held. They discussed pay and vacations due employees, and C. Held told McQuillen that they were going to try to place the Arcata employees at other First Class loca- tions, continuing them under the Union's contract. McQuillen made no further attempt to contact the Helds, and so far as I can determine no other union representa- tive did so. In these circumstances, I can fmd no violation of the law. Both W. and C. Held tried to do what they could to serve the Arcata contract. When they could not, the evidence shows that they notified the Union, that they responded to union telephone calls, were willing to dis- cuss any matters concerning the loss of the Arcata con- tract with the Union, and that they attempted to place employees who wished at their other union locations at the Buffalo News and the Brisbane Building. C. The Alleged Discrimination Against Employees The complaint contains two separate allegations of dis- crimination against employees. The first of these states that "Respondent" told unit employees that they would have to work nonunion to remain at Arcata. The facts show that after First Class lost the Arcata contract the company addressed letters to its employees informing them of that fact and suggesting that if they wanted to continue working for First Class they could apply through the First Class office. C. Held and Pam Zugger testified that employees did call the office, and sugges- tions were made for alternative positions under the union contract. Employees like Lynn McGuane corroborated this testimony, but she and other employees did not care for the hours or the locations of the proffered positions. The employees were then referred to Bill Held. Either C. Held or Bill told them that they would have to accept rates that were lower than those called for by the union contract. This evidence does not, in my opinion, establish a violation of Section 8(a)(1) or (3) of the Act. Debra Kemp testified that she was notified on 29 or 30 May that First Class no longer had a contract with Arcata. She continued to do her job at the request of Bill Held, who also told her to call "the office" in the morn- ing. The next day Kemp called the Held office and 490 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD talked to Pam. Pam told Kemp that she should not worry, that "we will find all you people jobs." Kemp was also told that Bill was in charge at Arcata. Kemp returned to work at Arcata , but on the following Tues- day morning, 3 June, Pam called her and said that she would not be working at Aracata anymore because, as Kemp quoted Pam, "We have too many ex-union mem- bers working at Arcata Graphics for us ." Pam did ar- range a job for Kemp at another of the Helds locations, Sierra Research. Kemp refused this job. Bill Held told a different version of the Kemp situa- tion, testifying that he actually hired Kemp as the result of a telephone call. He stated that he had had trouble with Kemp doing one of her assignments and he had spoken to her about it while First Class was still on the Arcata contract. He said that they had a problem about assignments early in the first week of June and he dis- charged her." Bill's version of this situation was more detailed, more logical, i 2 and more credible than that related by Kemp. Based on this, and on my observation of both while they were testifying, I credit Bill's story and do not credit Kemp. I therefore do not find any violation in Kemp's separa- tion from First Class or from Clean Sweep. " There is not much logic in Kemp 's story that Pam told her she was being fired because she was a supernumerary exumon employee at Clean Sweep, but immediately arranged for her to obtain a job at another Held operation. 12 Pam Zugger had no specific recollection as to her conversations with Kemp, only that she had had one or more conversations in the late May-early June period CONCLUSIONS OF LAW 1. First Class Maintenence Service, Inc. and Clean Sweep Janitorial Services , Inc. are New York corpora- tions engaged in commerce within the meaning of Sec- tion 2(2), (6), and (7) of the Act. 2. Local 200, Service Employees International Union, AFL-CIO is a labor organization within the meaning of Section 2(5) of the Act. 3. Clean Sweep Janitorial Services, Inc. is not an alter ego of First Class Maintenance Service, Inc. 4. Neither Clean Sweep nor First Class has caused em- ployees to suffer loss of employment because of their ac- tivities on behalf of the Union. 5. Neither Clean Sweep nor First Class discharged Debra Kemp or refused to employ her because of her ac- tivities on behalf of the Union. 6. First Class has not failed or refused to bargain with the Union. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed" ORDER The complaint is dismissed in its entirety. 19 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.