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

National Labor Relations Board - Board Decisions

Feb 27, 1987

283 N.L.R.B. 139 (N.L.R.B. 1987)

ACME ROOFING CO. 139
LDM Roofing, Inc. d/b/a Acme Roofing Company
and Acme Roofing of Eugene, Inc. and United
Union of Roofers, Waterproofers & Allied
Workers, Local Union No. 156, AFL-CIO.
Case 36-CA-4402
27 February 1987
SUPPLEMENTAL DECISION AND
ORDER
BY CHAIRMAN DOTSON AND MEMBERS
STEPHENS AND CRACRAFT
On 10 November 1986 Administrative Law
Judge Timothy D. Nelson issued the attached deci-
sion. The Respondent filed exceptions and a sup-
porting brief
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and brief and has
decided to affirm the judge' s rulings, findings, and
conclusions' and to adopt the recommended
Order.
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Respondent, Acme Roof-
ing of Eugene, Inc., Eugene, Oregon, its officers,
agents, successors, and assigns, shall take the action
set forth in the Order.
' The judge concluded, and we agree, that the record clearly supports
the finding that Respondent Acme Roofmg of Eugene, Inc is the alter
ego of LDM. With respect to the judge's reference to certain factors as
"heighten[ing] the presumption of alter ego status," we note that we base
our agreement with his alter ego finding on the record evidence and not
on any presumption.
Chairman Dotson finds no need to rely on the judge's alternate succes-
sorship finding as a basis for imposing backpay liability on Acme Roofing
of Eugene, Inc.
Eduardo Escamilla, Esq., for the General Counsel.
E. Scott Lawler, Esq., of Eugene, Oregon, for the Re-
spondents.
Theodore R. Kulongoski, Esq., of Portland, Oregon, for
Charging Party Local 156.'
' The caption page of the hearing transcript mistakenly identified Ku-
longoski as the representative of Western Oregon Roofing Contractors
Association (Association) The Association was a named party to the un-
derlying proceedings described elsewhere below as a "party to the con-
tract" and was also so named in the instant notice of hearing, although it
did not appear here and it would not appear to have any standing in the
instant proceeding For this reason I have omitted the Association's name
from the case caption as it appears on the instant notice of hearing
DECISION
STATEMENT OF THE CASE
TIMOTHY D. NELSON, Administrative Law Judge.
This is a proceeding brought to determine whether
Acme Roofing of Eugene, Inc. (Acme) is liable for reme-
dying the unfair labor practices of LDM Roofing, Inc.
d/b/a Acme Roofing Co. (LDM).
This is pertinent procedural history:
On 12 July 1984 an administrative law' judge found
that LDM had committed unfair labor practices in viola-
tion of Section 8(a)(5) and (1) of the Act when it refused
to honor or be bound by certain terms in the 1982-1984
labor agreement negotiated between United Union of
Roofers, Waterproofers, and Allied Workers, Local
Union No. 156, AFL-CIO (Union) and Association.2
Having so found the judge recommended that the Board
order LDM to cease and desist from such unfair prac-
tices and to make whole its employees (and the benefit
trusts established under the governing labor agreement)
for losses they incurred as a result of LDM's unlawful
acts. On 13 August 1984, after LDM had failed to take
exceptions from the judge's decision, the Board adopted,
pro forma, the judge's findings And recommendations in
their entirety.
On 26 November 1984 the United States Court of Ap-
peals for the Ninth Circuit entered on an order enforcing
the Board's Order.
Thereafter, a controversy arose over the amounts of
backpay that LDM must pay to certain employees pursu-
ant to the Board's Order, as enforced by the Ninth Cir-
cuit. On 20 November 1985 the Board issued a Supple-
mental Decision and Order fixing those backpay
amounts. On 18 April 1986 the Ninth Circuit enforced
the Board's Supplemental Decision and Order.
Thereafter, another controversy arose over the liability
of Acme for the fixed backpay,amounts that the Board
had ordered LDM to pay to certain employees. In order
to place this controversy before the Board for resolution,
the Regional Director for Region 19 subsequently issued
a "Notice of Hearing Without Specification" on 30 July
1986.9 In that notice of hearing the Regional' Director
averred in substance that, although LDM had formally
ceased operations in "November and December 1984,"
its owners had formed Acme in November 1984 and
thereafter had operated Acme as a "disguised , continu-
ance" of LDM, that Acme was LDM's "alter ego," or,
alternatively, was a "successor" 'to LDM and that, under
either of those characterizations, Acme, was legally re-
sponsible for remedying the unfair labor practices com-
mitted by LDM.
Pursuant to that notice of hearing, the parties appeared
before me on 18 September 1986, in Eugene, Oregon,
2 LDM Roofing, Inc. d/b/a Acme Roofing Co., Case 36-CA-4402,
JD(SF)-129-84.
3 Authority for this procedural device appears to stem from Sec.
102 54(d) as read together with Secs 102 52 and 102 .53(b) of the Board's
Rules and Regulations.
{
283 NLRB No. 29
140 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
where they litigated fully all the issues raised by the Re-
gional Director 's averrals , as summarized above.4
On the whole record , including the parties ' arguments
as set forth in their posthearing briefs, I find and con-
clude as follows
FINDINGS OF, FACT
Most of the relevant factual details are contained in
the parties ' stipulations . I summarize the most significant
facts here.
LDM, the corporate entity that was the-subject of the
underlying unfair labor practice and backpay proceed-
ings, is now an essentially defunct corporation that still
retains nominal title , subject to liens, of certain trucks
and equipment . It was engaged ' in mostly commercial
roofing work . Its owners are-brothers, Michael X. Maher
and Richard Maher, `respectively, LDM's corporate
president and vice president . LDM did business under
the name "Acme Roofing Company ." The Maher broth-
ers controlled the labor relations of that business oper-
ation . The roofing_ business is generally conducted out-
side the winter months. LDM essentially discontinued
operations qua LDM in November or December 1984,
when the winter lull set in.
In January 1985 the Maher brothers formed a new
corporation , Acme Roofing of Eugene , Inc. and thereaf-
ter continued in the 'roofing business , this time focusing
on smaller-scale residential work , operating initially out
of the same office location on McDougal Avenue from
which LDM had operated .5 It also continued to use-
and still does use-the trucks, equipment, office supplies,
and telephone number that LDM had used. Indeed its
trucks are still registered under the LDM corporate
name.
When Acme began operation in 1985 its startup com-
plement of roofing employees consisted of persons' who
had been similarly employed under LDM 's operation; so
far as this record shows, those former LDM employees
still constitute a majority in the full complement of em-
ployees regularly used ' as roofers . The Maher brothers
also hold the' same corporate offices for Acme as they
did -for LDM and they still control Acme's labor rela-
tions and personnel policies.
The creation of corporate Acme had virtually nothing
to do with independent business considerations. Rather,
as Michael Maher admitted several times, echoed by Re-
spondent 's counsel on' brief, the formation of the new
corporation stemmed from the Maher brothers' desire to
operate "nonunion." This desire, they believed, could be
effectuated by the simple device of a change in corporate
identity, together with a declaration to the employees
4 The evidentiary record thus made consists of three elements: The
written answers made on 22 May 1986 by Michael X Maher, a coowner
of both LDM and Acme , to certain written interrogatories propounded
by the General Counsel (G C Exh 2), a series of stipulations of fact
adopted by all parties and read into the hearing record, and the testimony
of Michael X. Maher.
5 In May 1985, Acme , moved a half-block down McDougal Avenue to
a new office location
whom they took on in 1985 that henceforth the Compa-
ny would be nonunion.6
There is general agreement that Acme 's operation now
differs in scale and focus from LDM 's. It is clear, how-
ever, that this is not so much related to the reasons for
forming a new corporation than to the failure of the
Maher brothers to stay afloat economically as roofers.
Thus, in better times, the Mahers ' business - focussed on
securing larger-scale commercial contracts, many of
them from governmental bodies. This business focus al-
lowed them to maintain a larger crew of roofers during
the 9-month fair weather construction season, as well as
a small cadre of intermediate supervisors . As long as this
business was good, the Mahers were able to devote
much of their time to pursuit of other, independent, busi-
ness interests. - -
Eventually, however, for reasons that were not the
subject of litigation in this hearing, the business under
corporate LDM fell into financial decline, leaving LDM
with many creditors , bank lienholders , state and Federal
tax authorities , the United States Department of Labor,
and the Board itself, all pursuing to judgment various
claims against it . Particularly as a result of its defaults on
payments to the bank that held liens on its trucks and
equipment, the Mahers faced certain loss of their ability
to continue in the roofing business . To prevent truck and
equipment foreclosure, the Mahers negotiated arrange-
ments with the bank whereby the bank would exercise
forbearance in exchange for the Mahers' pledging of
their personal assets and credit. And although this ar-
rangement allowed them to continue in business, LDM's
financial situation was still bad enough to make it impos-
sible for the Mahers to obtain performance bonds, insur-
ance, and to meet other typical requirements for large-
scale commercial and governmental contract work. It
was this fact of life, rather than any independent desire
on the part of the ' Mahers to start a"new" business,
which accounts for the fact that they now focus on resi-
dential work (operating under corporate Acme), using a
substantially reduced complement of employees, and
only occasionally perform commercial and governmental
work-and then, only on a smaller scale.
ANALYSIS; CONCLUSIONS OF LAW
The General Counsel argues that Acme ' is merely a
disguised continuance , or alter ego , of LDM ; alternative-
ly, the General Counsel would have the Board find
Acme to be LDM's successor, with knowledge of
LDM's liability under the Board's backpay order, and
therefore liable itself for that backpay. 7
B It is not before me to judge or decide whether in doing so Acme
committed unfair labor practices, nor whether Acme assumed the obliga-
tion to continue recognizing the Union as the representative of its em-
ployees So far as this record shows , neither the Union nor the General
Counsel has pursued those questions, but seek merely to hold Acme
liable, to the extent of its assets, for the liquidated backpay obligations
incurred by LDM
4 Conspicuously lacking in the General Counsel's position at this stage
is any attempt to have the Board perform an ultimate piercing of corpo-
rate veils by seeking to hold the Mahers personally liable for the liquidat-
ed backpay amounts . I, therefore , do not independently consider that
question
ACME ROOFING CO.
It is easy to find merit in either theory. As to alter
ego, see for example Fugazy Continental Corp., 265
NLRB 1301 (1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984).
And compare the Board 's recent decision in Gilroy Sheet
Metal, 280 NLRB 1075 fn. 1 (1986), and authorities cited
(finding no alter ego), stressing that "the evidence does
not establish that hostility towards the Union was a
motive for terminating Heating & Air or for founding
Sheet Metal.." It is clear that the Maher brothers, under
corporate Acme, are continuing to operate a roofing
business with the same equipment that they used under
corporate LDM and with a cadre of employees drawn
from the former LDM complement. And nothing in this
record explains why the Mahers formed corporate Acme
except their desire to break away from "union" obliga-
tions and, perhaps, to confuse creditors whose judgments
ran only to LDM. Thus, but for those considerations-
which heighten the presumption of_ alter ego status
(Fugazy, supra; Gilroy Sheet Metal, supra)s-the Mahers
could have and would have continued as corporate
LDM, even though LDM's precarious financial condi-
tion would have forced a change in their business focus
and in their scale of operations of the same type as they
now engage in under corporate Acme.
Where there is a direct -basis for finding that Acme is
no more than a disguised continuance, or alter ego, of
LDM, it seems needlessly attenuated to reach the further
conclusion that Acme also satisfies all pertinent tests for
successorship , even though it operates on a smaller scale
and with a different business focus than did LDM.9 Nev-
s In Goodman Piping Products v. NLRB, 741 F.2d 10 (2d Cir 1984),
enfg . E.G. Sprinkler Corp., 268 NLRB 1241 '(1984), the Second Circuit
suggested that antiunion animus may be "sufficient" in itself to find alter
ego status , 741 F.2d at 12, citing the Supreme Court's decision in South-
port Petroleum Co. v. NLRB, 315 U.S. 100, 106 (1942).
9 See and compare, e .g, Stewart Granite Enterprises , 255 NLRB 569
(1981), also involving a successor who took over only a portion of a
larger union-reptesented business and who thereafter operated in a nar-
rower market than had its predecessor.
141
ertheless, where Acme satisfied those tests, and assumed
the business with knowledge of LDM 's outstanding li-
abilities under the Board 's Order, Acme may be held
liable for the liquidated backpay at issue even if it were
not an alter ego of LDM. Golden State Bottling Co. v.
NLRB, 414 U.S. 168 (1973); see also Perma-Vinyl Corp.,
164 NLRB 968, 969 (1967), enfd. sub nom. United States
Pipe & Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir.
1968); Bell Co., 243 NLRB 977 (1979).
CONCLUSIONS OF LAW
1. Acme Roofing of Eugene , Inc. is a disguised con-
tinuance, and the alter ego, of LDM Roofing, Inc. d/b/a
Acme Roofing Company.
2. Acme Roofing of Eugene, Inc. is a successor to
LDM Roofing, Inc., which continued LDM's operations
with knowledge of-and therefore assumed-LDM's li-
ability for backpay under the Board's, order,
3. Acme Roofing of Eugene , Inc. is liable for the liqui-
dated backpay amounts that the Board found were owed
to former employees of LDM.
On these findings of fact and conclusions of law and
on the entire record, I issue the following , recommend-
ed1o
ORDER
To the extent LDM Roofing , Inc. d/b/a Acme Roof
ing Company has not done so, Acme Roofing of Eugene,
Inc. shall immediately pay to the employees named in
the Board's liquidated backpay order in Case 315-CA-
6832 the amounts set forth in that order.
10 If no exceptions are filed as provided by Sec. 102.46 of the Board's
Rules and Regulations , the findings, conclusions, and recommended
Order shall, as provided in Sec . 102 48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.