Signman, Inc.

354 NLRB No. 96 NOTICE: This opinion is subject to formal revision before publication in the bound volumes of NLRB decisions. Readers are requested to notify the Ex- ecutive Secretary, National Labor Relations Board, Washington, D.C. 20570, of any typographical or other formal errors so that corrections can be included in the bound volumes. Signman, Inc., and its alter ego Jay’s Sign Company, Inc., d/b/a Jay’s Sign Services and Jay’s Sign Company Inc. d/b/a Jay’s Sign Services and Jay Jolley and Local Union No. 481, International Brotherhood Of Electrical Workers, AFL–CIO. Case 25–CA–28650 October 29, 2009 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN LIEBMAN AND MEMBER SCHAUMBER The General Counsel seeks a default judgment in this case on the ground that the Respondents Signman, Inc. (Signman) and Jay Jolley (Jolley) have failed to file an- swers to the amended compliance specification. The General Counsel also seeks summary judgment against Respondent Jay’s Sign Company, Inc., d/b/a Jay’s Sign Services (Jay’s Sign) on the ground that admissions made by Jay’s Sign in bankruptcy proceedings establish that there are no material issues of fact warranting a hear- ing on its liability for backpay owed according to the amended compliance specification. On October 15, 2003, the Board issued an unpublished Order1 that, among other things, directed Respondent Signman, to make whole employee Donald Lupfer for any loss of earnings and other benefits suffered as a re- sult of his unlawful discharge in violation of Section 8(a)(1) and (3) of the Act. On April 8, 2004, the United States Court of Appeals for the Seventh Circuit entered an unpublished judgment enforcing the Board’s Order.2 A controversy having arisen over the amount of back- pay due Donald Lupfer, on September 27, 2005, the Re- gional Director for Region 25 issued a compliance speci- fication and notice of hearing alleging the amount due under the Board’s Order. Although not a party to the original unfair labor practice litigation, Respondent Jay’s Sign was added to the compliance specification and was alleged to have derivative liability for Respondent Sign- man’s unfair labor practices as an alter ego, a single em- ployer, and/or a Golden State3 successor. Prior to issu- ance of the compliance specification, Signman filed a voluntary Chapter 7 bankruptcy petition. Respondent Signman failed to file an answer to the compliance specification. By letter dated November 1, 1 In the absence of exceptions, the Order automatically adopted the underlying decision of Administrative Law Judge John T. Clark (JD– 91–03). 2 Case No. 04-1301. 3 Golden State Bottling Co. v. NLRB, 414 U.S.168 (1973). 2005, the Region advised Signman and the bankruptcy trustee that no answer to the compliance specification had been received and unless an answer was filed by November 8, 2005, a motion for default judgment would be filed. By letter dated November 3, 2005, Signman informed the Region that it would “not be filing a re- sponse to the Board’s Compliance Specification and No- tice of Hearing issued on September 27, 2005.” Signman further stated that it had “no objection to the Board’s claim.” On October 18, 2005, Respondent Jay’s Sign filed an answer to the compliance specification. The answer ad- mitted some allegations, but denied others including al- legations of its derivative liability for Respondent Sign- man’s unfair labor practices. For the remainder of the allegations, Jay’s Sign claimed that it lacked information sufficient to provide an answer. Jay’s Sign filed a volun- tary Chapter 11 bankruptcy petition in 2006.4 On May 29, 2009, the Regional Director issued an amended compliance specification and notice of hearing, again naming Signman and Jay’s Sign as Respondents and adding Respondent Jolley as an individual, alleging that all Respondents are jointly and severally liable for the backpay owed Donald Lupfer and for contributions owed to certain benefit funds. As to Respondent Jay’s Sign, the allegations of the amended compliance specifi- cation adds that, on January 24, 2007, the U.S. Bank- ruptcy Court for the Southern District of Indiana ap- proved an agreed entry on claim in which Jay’s Sign ad- mitted that it was the alter ego of, and Golden State suc- cessor to, Respondent Signman, and liable for remedying the unfair labor practices adjudicated against Signman.5 As to Respondent Jolley, the allegations of the amended compliance specification state that: he has been president, owner, supervisor, and agent of Respondent Jay’s Sign at all material times, and as such has con- trolled all of its daily operations and financial resources; he used his personal assets in the operation of Respon- dent Jay’s Sign; and, since the commencement of opera- tions, he has diverted assets of Jay’s Sign to render it 4 Although Respondents Signman and Jay’s Sign are in bankruptcy, it is well established that the institution of bankruptcy proceedings does not deprive the Board of jurisdiction or authority to entertain and proc- ess an unfair labor practice case to its final disposition. See, e.g., Car- dinal Services, 295 NLRB 933 fn. 2 (1989), and cases cited there. Board proceedings fall within the exception to the automatic stay provi- sions for proceedings by a governmental unit to enforce its police or regulatory powers. See id., and cases cited therein; NLRB v. 15th Ave- nue Iron Works, Inc., 964 F.2d 1336, 1337 (2d Cir. 1992). 5 Case No. 06-01113-AJM-11. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 2 insolvent and make it incapable of fulfilling its obliga- tions. Based on this conduct, the amended compliance specification alleges that Respondent Jolley is individu- ally liable, as an alter ego of Respondent Jay’s Sign, to remedy the unfair labor practices of Respondent Sign- man. The amended compliance specification notified the Respondents that they should file an answer within 21 days from the date of the specification, pursuant to the Board’s Rules and Regulations. None of the Respon- dents filed answers. By letters dated June 26, 2009, the Region advised the Respondents that no answers to the amended compliance specification had been received and unless answers were filed by July 10, 2009, a motion for default judgment would be filed. To date, the Respon- dents have failed to file answers.6 On July 17, 2009, the General Counsel filed with the Board a Motion for Default Judgment and Motion for Summary Judgment, with exhibits attached. On July 22, 2009, the Board issued an order transferring the proceed- ing to the Board and a Notice to Show Cause why the motions should not be granted. The Respondents did not file responses. The allegations in the motions and in the amended compliance specification are therefore undis- puted. 6 The copies of the amended compliance specification were served by certified mail on Respondents Jay’s Sign and Jolley at their last known addresses in Indianapolis, Indiana, but were returned and marked “RETURN TO SENDER, MOVED LEFT NO ADDRESS, UNABLE TO FORWARD, RETURN TO SENDER.” The Region subsequently determined that Respondent Jolley had likely moved to Ormond Beach, Florida, and attempted service on him by leaving a copy of the amended compliance specification at his new place of em- ployment (Dave’s Pest Control), his mother’s house, and his mother-in- law’s house. The Region was able to confirm that Jolley was, in fact, employed at Dave’s Pest Control and living at his mother’s address. The Region’s followup letters of June 26, 2009, were again sent to the Respondents’ last known addresses in Indianapolis, Indiana, but were returned, and they were sent to Respondent Jolley’s Florida addresses and were not returned. The Region has satisfied the Board’s Rules for service. See Environmental Construction, Inc., 333 NLRB No. 10 fn. 1 (2001) (not reported in Board volumes) (a respondent’s failure to pro- vide for receiving appropriate service of documents cannot serve to defeat the purposes of the Act). The Region did not attempt to serve Respondent Signman because it had ceased operations in 2008. See Signman Consulting, Inc., Case No. 04-17663-BHL-7A. In any event, as found herein, Respondent Jay’s Sign is an alter ego of Respondent Signman. It is well established that where two companies are alter egos, service on one is sufficient to constitute service on the other. E.g., Somerville Construction Co., 338 NLRB 1178, 1178 fn. 2 (2003). Ruling on Motions for Default Judgment and Summary Judgment7 Section 102.56(a) of the Board’s Rules and Regula- tions provides that the Respondent shall file an answer within 21 days of service of a compliance specification. Section 102.56(c) provides that if the respondent fails to file an answer to the specification within the time pre- scribed by this section, the Board may, either with or without taking evidence in support of the allegations of the specification and without further notice to the re- spondent, find the specification to be true and enter such order as may be appropriate. According to the uncontroverted allegations of the mo- tion for default judgment, Respondents Signman and Jolley, despite having been advised of the filing require- ments, have failed to file answers to the amended com- pliance specification. In the absence of good cause for Respondent Signman’s failure to file an answer, we deem the allegations in the amended compliance specifi- cation to be admitted as true, and we therefore grant the General Counsel’s Motion for Default Judgment as to Respondent Signman. However, we deny the Motion for Default Judgment as to Respondent Jolley. As stated, the amended compli- ance specification seeks to impose personal liability on Jolley, as an alter ego of Jay’s Sign, for the unfair labor practices of Respondent Signman. The General Counsel essentially seeks to pierce the corporate veil to impose personal liability on a corporate owner/officer as a result of his alter ego status. The test for imposing personal liability, however, is set forth in White Oak Coal, 318 NLRB 732 (1995), enfd. mem. 81 F.3d 150 (4th Cir. 1996). Pursuant to White Oak Coal, the Board will 7 Effective midnight December 28, 2007, Members Liebman, Schaumber, Kirsanow, and Walsh delegated to Members Liebman, Schaumber, and Kirsanow, as a three-member group, all of the Board’s powers in anticipation of the expiration of the terms of Members Kir- sanow and Walsh on December 31, 2007. Pursuant to this delegation, Chairman Liebman and Member Schaumber constitute a quorum of the three-member group. As a quorum, they have the authority to issue decisions and orders in unfair labor practice and representation cases. See Sec. 3(b) of the Act. See Snell Island SNF LLC v. NLRB, 568 F.3d 410 (2d Cir. 2009), petition for cert. filed 78 U.S.L.W. 3130 (U.S. September 11, 2009) (No. 09-328); New Process Steel v. NLRB, 564 F.3d 840 (7th Cir. 2009), petition for cert. filed 77 U.S.L.W.3670 (U.S. May 22, 2009)(No. 08-1457); Northeastern Land Services v. NLRB, 560 F.3d 36 (1st Cir. 2009), petition for cert. filed 78 U.S.L.W. 3098 (U.S. august 18, 2009) (No. 09-213). But see Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, 564 F.3d 469 (D.C. Cir. 2009), petition for cert. filed sub nom. NLRB v. Laurel Baye Healthcare of Lake Lanier, Inc., __U.S.L.W.__ (U.S. September 29, 2009) (No. 09-377). SIGNMAN, INC. 3 pierce the corporate veil when: (1) there is such unity of interest, and lack of respect given to the separate identity of the corporation by its shareholders, that the personali- ties and assets of the corporation and the individuals are indistinct; and (2) adherence to the corporate form would sanction a fraud, promote injustice, or lead to an evasion of legal obligations. Here, we find that the allegations of the amended compliance specification do not set forth a sufficiently clear or specific factual basis to support a finding of personal liability under a veil-piercing theory.8 Accordingly, we will remand these allegations and the issue of personal liability to the Regional Director for further amendment of the compliance specification9 or a hearing. Although Respondent Jay’s Sign denied having any derivative backpay liability in its answer to the original compliance specification, the amended compliance speci- fication alleges that Jay’s Sign admitted in its bankruptcy case that it is the alter ego of, and Golden State successor to, Respondent Signman and liable to remedy the unfair labor practices adjudicated against Signman. Jay’s Sign did not file an answer to the amended compliance speci- fication.10 In the absence of good cause for its failure to file an answer, we deem the allegations in the amended compliance specification to be admitted as true. There- fore, there are no factual issues warranting a hearing in this matter and we grant the General Counsel’s Motion for Summary Judgment as to Respondent Jay’s Sign. 8 Chairman Liebman does not interpret the compliance specification as seeking to impose liability on Jolley directly for unfair labor prac- tices he committed as an agent for the other Respondents. See Flat Dog Productions, Inc., 347 NLRB 1180, 1189 (2006) (dissent of then—Member Liebman). 9 See, e.g., Spencer Group, Inc., 345 NLRB No. 58 (2005) (not re- ported in Board volumes) (granting default judgment and imposing personal liabiltiy based on allegations that individual respondent Rob- inson commingled funds with corporate respondent Spencer and par- ticipated in the creation of a new corporate entity to avoid respondent Spencer’s backpay liability). 10 Respondent Jay’s Sign’s denial of derivative backpay liability in its answer to the original compliance specification would have been sufficient to warrant a hearing on this issue. See, e.g., Pallazola Elec- tric, 312 NLRB 569, 571 fn. 6 (1993) (citing Best Roofing Co., 304 NLRB 727, 728 (1991)) ( a general denial of alter ego status is suffi- cient to warrant a hearing). However, Jay’s Sign’s denial in the original compliance specification is insufficient because this allegation regard- ing derivative liability has substantively changed in the amended com- pliance specification based on Jay Sign’s admissions in the bankruptcy case. Cf. Kolin Plumbing Corp., 337 NLRB 234, 235 (2001) (Board will not grant default judgment on an allegation denied in a timely-filed answer to a compliance specification, even though the respondent later fails to timely answer an amended specification repeating the allega- tion, provided that the repeated allegation is not substantively changed from the original). Based on the foregoing, we conclude that the amount of backpay due to the discriminatee Donald Lupfer and the contributions due to the specified fringe benefit funds are as stated in the amended compliance specification and we will order Respondents Signman and Jay’s Sign to pay those amounts, plus interest accrued to the date of payment as prescribed in the Order. We will remand the issue of Respondent Jay Jolley’s personal liability to the Regional Director to take further appropriate action con- sistent with this Decison. ORDER The National Labor Relations Board orders that Re- spondent Signman, Inc., and its alter ego Jay’s Sign Company, Inc., d/b/a Jay’s Sign Services, and Respon- dent Jay’s Sign Company, Inc., d/b/a Jay’s Sign Services, Indianapolis, Indiana, their officers, agents, successors, and assigns, shall jointly and severally make whole Don- ald Lupfer by paying him the amount following his name, plus interest accrued to the date of payment, as prescribed in New Horizons for the Retarded, 283 NLRB 1173 (1987), minus tax withholdings required by Federal and State laws, and by making the payments due the benefit funds named below in the amounts set forth, plus interest accrued to the date of payment as prescribed in Merryweather Optical Co., 240 NLRB 1213, 1216 fn. 7 (1979): Donald Lupfer $31,769 Electrical Workers Pension Fund 1,089 National Electric Benefit Fund 817 Money Purchase Trust Fund 1,362 Total $35,037 IT IS FURTHER ORDERED that the issue of Respondent Jay Jolley’s individual liability is remanded to the Re- gional Director for further appropriate action consistent with this decision. Dated, Washington, D.C. October 29, 2009 Wilma B. Liebman, Chairman Peter C. Schaumber, Member (SEAL) NATIONAL LABOR RELATIONS BOARD