A.N. Electric Corp.

National Labor Relations Board - Board Decisions

Aug 21, 1989

296 N.L.R.B. 190 (N.L.R.B. 1989)

190 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
A.N. Electric Corp . and its successor or alter ego,
Ozone Electric Corp . and Jose Gonzalez, Ray
Edwin Coffie, and Ismael De Jesus. Cases 2-
CA-19011, 2-CA-19227, 2-CA-19387, and 2-
CA-19429
computed in the manner prescribed in New Hori-
zons for the Retarded, 283 NLRB 1173 (1987), and
accrued to the date of payment, minus the tax
withholdings required by Federal, state, and city
laws:
August 21, 1989 Jose Gonzalez $274,383
SECOND SUPPLEMENTAL DECISION John Gonzalez 255,947
AND ORDER Ray Coffie 196,997
Rupert Allen 273,887
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
Ismael De Jesus 197,377
On January 5, 1989, Administrative Law Judge
Eleanor MacDonald issued the attached decision.
The Respondent filed exceptions and a supporting
brief, and the General Counsel filed a brief answer-
ing the Respondent's exceptions.
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,2
and conclusions3 and to adopt the recommended
Order as modified.4
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge as modified and set out in full here. It is or-
dered that the Respondent, Ozone Electric Corpo-
ration, New York, New York, found herein to be
the alter ego of the Respondent A.N. Electric Cor-
poration, its officers, agents, successors, and as-
signs, shall make whole each of the employees
named below by payment to them of the amounts
set forth opposite their names, plus interest to be
i The Respondent has requested oral argument The request is denied
as the record , exceptions, and briefs adequately present the issues and the
positions of the parties
2 The Respondent has excepted to some of the judge 's credibility find-
ings The Board's established policy is not to overrule an administrative
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 reversing
the findings
In addition , some of the Respondent 's exceptions assert that the judge's
rulings , findings, and conclusions demonstrate bias and prejudice On
careful examination of the judge 's decision and the entire record, we are
satisfied that such contentions are without merit
8 We note the February 23, 1988 judgment of the United States Court
of Appeals for the Second Circuit, No. 88-4018, enforcing the Board's
previous backpay Order against Respondent A N Electric Corp, and the
court 's remand of the proceeding to the Board for litigation of the status
and liability of Respondent Ozone Electric Corp as an alter ego or suc-
cessor and further backpay matters in the administrative law judge 's deci-
sion See 285 NLRB 297 (1987) Our decision herein is consistent with
the court 's remand , which re-established the Board 's jurisdiction in this
proceeding.
4 We will substitute a more appropriate Order, specifically setting forth
the backpay amounts owed , for that of the administrative law judge
The net backpay figures above reflect backpay
computations only up to February 21, 1988. The
Respondent remains responsible for complying
with the Board's reinstatement Order, 276 NLRB
887 (1985); the' rights of all the discriminatees are
thus reserved in futuro.
Polly Chill, Esq., for the General Counsel.
Bruce H. Beckmann, Esq., of New York, New York, for
Respondent Ozone Electric Corp.
Ismael De Jesus, for the Charging Party.
Jose Gonzalez, for the Charging Party.
SECOND SUPPLEMENTAL DECISION
ELEANOR MACDONALD, Administrative Law Judge.
On September 30, 1985, the National Labor Relations
Board issued its Decision and Order at 276 NLRB 887,
finding that Respondent A.N. Electric had unlawfully
discharged Jose Gonzalez, John Gonzalez, Ray Coffie,
Jose Robles, Rupert Allen, and Ismael De Jesus, and or-
dering Respondent to reinstate its employees and make
them whole for any loss of earnings . On May 16, 1986,
the United States Court of Appeals for the Second Cir-
cuit enforced the order of the Board based on a consent
judgment . On August 29, 1986, the Acting Regional Di-
rector for Region 2 issued a backpay specification and
notice of hearing alleging various amounts of backpay
due for the six employees named above, specifying that
the backpay continued to accrue from certain dates in
1982 and 1983 until a valid offer of reinstatement was
made to the six employees and alleging that since De-
cember 1982, a new Respondent, Ozone Electric Corp.,
was the alter ego or successor with knowledge of its un-
remedied unfair labor practices of Respondent A.N.
Electric. The specification alleged that Ozone is liable to
remedy the unfair labor practices of A.N. Electric, in-
cluding the obligation to reinstate the employees and to
make them whole.
Ozone Electric filed an answer generally denying the
allegations of the specification. The General Counsel
moved the Board to grant summary judgment as to A.N.
Electric and to strike the answer of Ozone Electric.
On August 10, 1987, the National Labor Relations
Board issued its Supplemental Decision and Order at 285
NLRB 297, granting summary judgment as to A.N.
Electric and concluding that A.N.'s liability was as
stated in the Specification calculated through June 30,
1986. With respect to Ozone, the Board ordered that a
296 NLRB No. 30
OZONE ELECTRIC CORP.
hearing be held to determine the alter ego or successor
status and liability of Ozone. The Board ordered that the
hearing "also address any other matters concerning the
backpay specification which the administrative law judge
deems appropriate in light of a determination of Re-
spondent Ozone's status." On February 23, 1988, the
United States Court of Appeals for the Second Circuit
issued its supplemental judgment enforcing the supple-
mental Order of the National Labor Relations Board.
On November 30, 1987, the Regional Director for
Region 2 issued a supplemental backpay specification and
notice of hearing alleging the backpay liability through
November 30, 1987, and noting that backpay continued
to accrue because the employees had not received valid
offers of reinstatement . Ozone filed an answer on Janu-
ary 5, 1988. On February 22, 1988 , the Regional Direc-
tor issued an amended supplemental specification which
was further amended on March 10, 1988. Ozone amend-
ed its answer on February 25 and again on March 17,
1988.
This matter was heard by me in New York, New
York , on 8 days between February 22 and May 6, 1988.
On March 2, 1988, Respondent Ozone called Thomas J.
Carlough to testify concerning the wage rates used to
compute gross backpay for employees subject to the
Davis-Bacon Act and related Acts. Before Carlough's
testimony was concluded, he was excused with the un-
derstanding that he would return to complete his testi-
mony at a later date . A reason for his need to return at a
later date was that he did not have all the technical data
with him that were necessary for his testimony in sup-
port of Ozone's contentions concerning the proper gross
backpay. On March 2, as the hearing was being ad-
journed , agreed on the record that Carlough would
return to testify on April 5, 1988 . Due to delays in en-
forcement proceedings related to a subpoena served by
counsel for Ozone, the hearing did not resume until May
6, 1988 . On that day, Carlough did not appear . Counsel
for Ozone advised that Carlough had called him the
night before and stated that he could not appear for
"personal reasons." No showing having been made why
Carlough, who had ample notice of the date of hearing,
could not appear as scheduled , and no further witnesses
being called, the hearing was closed . I gave notice to
counsel that I intended to strike Carlough's testimony
since General Counsel had had no opportunity to cross-
examine the witness . I hereby strike the testimony of
Carlough.
Upon the entire record, including my observations of
the witnesses, and due consideration of the briefs filed by
General Counsel and Respondent Ozone Electric in July
1988, 1 make the following'
FINDINGS OF FACT
A. The Alter Ego and Successor Issues
The criteria used to determine whether an alter eqo re-
lationship exists between two entities include:
I The transcript was corrected in accordance with the stipulation of
counsel on May 6, 1988. Additional corrections were noted and made to
the record.
191
(1) Common ownership and control
(2) Substantially identical management
(3) Common business purpose
(4) Nature of operations
(5) Common customers or similar business and
market
(6) Common premises and equipment
(7) Common supervision
(8) Nature and extent of dealings between the
two entities
(9) Formation of alter eqo to evade the Act
See Fugazy Continental Corp., 265 NLRB 1301 ( 1982),
enfd . 725 F.2d 1416 (D.C. Cir. 1984), where the court
held that "common ownership is not an absolute prereq-
uisite to a finding of alter ego status" (emphasis in origi-
nal) 725 F .2d at 1420; Crawford Door Sales Co., 226
NLRB 1144 (1976).
In the instant case, the facts relevant to a finding that
Ozone is an alter ego of A.N. Electric are as follows:
Richard M . Lipsman , Esq., was the attorney for both
A.N. and Ozone.2 Lipsman testified that sometime in
1981, Louis Squillante came to him and Lipsman pre-
pared a stock certificate and certain other documents for
A.N.; Squillante told Lipsman that he would hire his
son-in-law Nicole Argano as a licensed electrician be-
cause Argano "did not have a job." Squillante , who held
all the stock in AN., died in 1987.
Argano testified that he was employed by A.N. and
managed the day-to-day operations of the business. In
A.N. Electric, Argano was the only employee with an
electrician 's license . He helped his father-in-law Squil-
lante estimate jobs and he checked the jobs to make sure
they were being done right . According to Argano, he at-
tended all the meetings where A.N. needed to appear be-
cause he knew all the men and all the jobs. Squillante
did not know anybody and he did not know what was
going on .3 No one else was ever in charge of the jobsites
for A.N., according to Argano . On occasion he brought
materials to the jobsites and he brought the pay for the
employees . Although General Counsel sought A.N.'s
records, for the most part these could not be found, ac-
cording to Lipsman . Thus, only some correspondence
and some canceled checks were able to be introduced
into evidence.
As more fully set forth in Judge Green's decision in
the underlying case, in the summer of 1982 , the employ-
ees of A.N. became aware that as a subcontractor on a
federally funded rehabilitation job their employer was
liable to pay them certain wages and benefits . They con-
fronted Argano and the violations of the Act soon began
to occur . The first charges in the underlying case were
filed in July 1982, and the case before Judge Green was
tried between February and May 1983.
2 A N is apparently no longer in existence , and Lipsman no longer
represents A.N Lipsman represents Ozone for matters other than the in-
stant backpay proceeding
8 According to Argano the same obtains for meetings relating to
Ozone ; its president , Cathy Cataraso, does not attend them because
Argano knows all the men and all the jobs
192 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
In the summer of 1982, Lipsman received a telephone
call from Cathy Cataraso or her father Paul Argano.4
Lipsman was told that Cataraso would be starting an
electrical contracting business and that her father was
going to give her money to start the business. Lipsman
thought that this was a strange development, but Catar-
aso told him that her father and brother were behind
her. According to Lipsman, Cataraso said that "she was
aware of the problems that A.N. Electric had." Lipsman
testified that he incorporated Ozone and that he repre-
sented Ozone "with the understanding with Mr. Squil-
lante who at that point was terminating his business be-
cause of these problems that had occurred with these in-
dividuals, these discriminates. He was not financially able
to continue in business and for awhile represented them
[A.N. and Ozone] concurrently." Lipsman testified that
Cataraso was aware that Squillante was going out of
business due to problems with the Department of Labor.
Cataraso, on the other hand, testified that she had no in-
formation about A.N. and that she was not told about
A.N.'s problems.
According to Cataraso, she has no background in elec-
tricity and she is not a licensed electrician. As a young
woman just out of school, she worked as a teller and
then stayed home with her child. After a while, her mar-
riage ended and she asked her father if she should go
into business. Her father agreed to back her and she
hired her brother because he was out of a job. Her father
sent her to see Lipsman and he gave her $10,000 and
then $20,000. Ozone was incorporated on October 15,
1982, with Cataraso as the president and sole sharehold-
er. Cataraso is also the treasurer and secretary of Ozone;
Argano is the assistant treasurer and assistant secretary,
apparently because he holds an electrician's license and
one of the officers of an electrical contractor must be li-
censed. Similarly, Argano was an officer of A.N.
Both Lipsman and Cataraso testified that for a period
of months Ozone and A.N. occupied the same office
space in a building owned by Flushing Bank and then by
the Bank of New York. In 1984, Palerna Realty, a corpo-
ration owned by Cataraso, bought the building from the
bank. Cataraso paid the rent, but Ozone did not take
over any lease from A.N. According to Cataraso, she
brought a desk from home and Squillante continued to
use his desk . She and Squillante were sometimes in the
office together. They answered each other's phone calls.
The record does not disclose when Squillante stopped
coming to the office.
According to Lipsman, Cataraso had very little experi-
ence and Argano hired the employees for Ozone when
the company was set up. Argano hired some men who
had worked for A.N. because he knew that they were
capable.
Cataraso testified that she works in the Ozone office a
couple of hours a day and that she has always worked
part-time at Ozone. She does the bookkeeping and takes
care of things in the office. She and Argano look at the
bulletin listing jobs Ozone might want to bid on and they
look at blueprints together. Argano does all the estimat-
ing and puts in bids for the jobs. Cataraso never visits
the jobsites and Argano hires all the employees of
Ozone. Cataraso testified that Argano is the superintend-
ent of Ozone Electric. He handles the correspondence
with contractors and with insurance companies. Argano
also testified that on occasion he brings materials and the
paychecks to jobsites.
Cataraso did not receive any compensation from
Ozone until 1986. At the present time, Cataraso is paid
$500 per week by Ozone and Argano is paid $600.
According to Cataraso, she did not pay any money to
Squillante and he did not pay her any money. However,
General Counsel introduced into evidence a check from
A.N. Electric dated December 23, 1982, for $20,000.
This check was made out to cash and was endorsed by
Ozone Electric on the back. Cataraso explained this
check by stating that Squillante had borrowed money
from her father and that he repaid it to Cataraso so that
she could start her business . Although none of the wit-
nesses identified the handwriting on the check, I am con-
fident that the check was written on behalf of A.N. by
Argano and endorsed by Argano in the name of Ozone
Electric.5
The record shows that until March 1983 Ozone's bank
statements were sent to Argano's home address. That ad-
dress is the same as that of Louis Squillante; Argano tes-
tified that at the time in question he shared a two-family
house with his father-in-law. The record shows that bank
statements for A.N. Electric had been sent to the same
address while A.N. was in business. When Argano was
asked why Ozone bank statements were sent to the
house he shared with Louis Squillante, Argano gave an
unresponsive answer.
Cataraso was not forthcoming on the subject of
Ozone's finances. She claimed not to know who wrote
various checks to suppliers of Ozone, an incredible posi-
tion in view of the fact that she and Argano run the busi-
ness and that she did not name any office employee of
Ozone who might have written the checks. The claim is
also incredible in view of the fact that some of the
checks were in a very distinctive handwriting which I
have no trouble at all ascribing to Argano. Cataraso's
name appears at the bottom of all the checks. One of the
checks in evidence was written by Ozone to Kennedy
Electric Supply, a supplier used by both A.N. and
Ozone; the check bears a notation at the top "AN
ELEC." Although the witnesses could not say who
wrote the matter at the top, I find that it is in Argano's
handwriting.
I find Cataraso's lack of candor troubling. She contra-
dicted Lipsman about her knowledge of A.N.'s problems.
She failed to identify handwriting on checks for large
sums of money paid out by the company she owns. After
sharing an office with Louis Squillante for months or
even years, she contended that she did not know about
the troubles A.N. was experiencing. In addition, her
brother and her father knew about A.N.'s problems, but
she would have us believe that she knew nothing about
them. I do not find that Cataraso was a credible witness
S The record is full of documents written in the handwriting of
4 Cathy Cataraso and Nicolo Argano are brother and sister. Argano
OZONE ELECTRIC CORP.
and I shall not credit her testimony where it is contra-
dicted by other more credible evidence.
Argano testified in large part in response to leading
questions put to him by counsel for Ozone . I cautioned
counsel for Ozone that he should not use leading ques-
tions because the answers would not be given any
weight, but Argano seemed incapable of testifying with-
out leading questions . In addition , Argano gave much
contradictory testimony . Further, he was very uncoop-
erative in responding to questions posed by General
Counsel and he professed not to know many things such
as the price of tools . Since Argano has been in the elec-
trical business, by his own admission , since his teen
years, I cannot believe that he did not have the informa-
tion requested . I believe that Argano tried hard not to
tell General Counsel anything that might be of use.6 I
shall not credit the testimony of Argano where it is con-
tradicted by other more reliable evidence.
Argano testified that he began to work for Ozone in
October 1982 . He also testified that in the fall of 1982 he
was checking A.N.'s jobs at 139th St . and Lenox Avenue
in Manhattan and at Mohican Avenue in the Bronx
almost everyday . According to Argano, he received no
pay from A.N. from August 1982, but he continued to
help Squillante finish off the jobs.
Both Cataraso and Argano testified that A .N. did not
lend nor give large tools to Ozone.' Argano stated that
the tools used by A.N. belonged to Sal Coico, a man
who was involved in A.N. in a capacity that has never
been fully explained on the record. Coico also owned a
white truck that was used by A.N. According to Argano
and Cataraso , Ozone rented large tools when it first went
into business and then bought tools when it could afford
to do so. Neither Cataraso nor Argano could recall
when this was. An orange truck was apparently owned
by Argano; he claimed that it was never used by A.N.
nor by Ozone . Argano testified that Ozone never had a
truck and never used a truck ; however , he also testified
that the tools used at the Beck Street job by Ozone were
stored in "his truck."
Argano testified that 25 to 30 percent of Ozone's jobs
are private and not federally funded . He did not specify
the names of any private jobs and no contracts or other
documents relating to those jobs were introduced into
evidence . I do not credit this testimony . The evidence
shows that Ozone worked on the same type of federally
subsidized rehabilitation jobs that A.N. had done, in the
five boroughs of New York City.
The documentary evidence shows that both A.N.
Electric and Ozone Electric used Kennedy Electric Co.
as a major supplier of equipment . The testimony of
Charles Roslonowski, vice president and sales manager
of Kennedy , shows that Kennedy is one of the large sup-
pliers in the New York City area and has about 1500 ac-
6 1 note that in testifying before Judge Green in the underlying case,
Argano stated that he could not recall when or under what circum-
stances he ceased being employed by A.N., and he testified that he could
not recall the last name of the person he reported to; her name was
"Cathy." This is Cataraso , Argano's sister.
r A contractor uses certain large and expensive tools on a job. These
are to be distinguished from the hand tools which are owned by the indi-
vidual employees and which are brought to the job by them
193
counts . Roslonowski has known Argano 14 or 15 years.
His testimony tended to show that A.N. and Ozone had
different files and credit applications with Kennedy. Al-
though he testified that he had consulted his files in
preparation for his testimony , these were not introduced
by Respondent Ozone. I find Roslonowski 's testimony of
little help.
It was established by the many documents introduced
into evidence that Argano wrote most of the checks on
A.N.'s account to suppliers, to Government agencies,
and for large sums of cash . I have no difficulty at all in
identifying his handwriting on these checks . In addition,
many of the business records of Ozone Electric were in-
troduced into evidence . These documents show that
Argano corresponded with suppliers, with governmental
agencies, with prime contractors , and with other organi-
zations. Much correspondence was addressed to him per-
sonally . An overview of the documents introduced into
evidence discloses that Argano controlled every aspect
of Ozone's affairs and that the outside world considered
him the sole representative of Ozone. None of the mate-
rial in evidence is addressed to Cataraso . Indeed, as
shown above, Ozone's bank statements were sent to
Argano for the first 6 months of its existence.
Rafael Gonzalez was employed by A.N. beginning in
mid-February 1982. He was made a foreman by Argano
when Sal Coico left A.N. in August 1982 . According to
Gonzalez , A.N. worked on federally subsidized jobs such
as Lenox Avenue and 139th Street and Mohican Avenue
in the Bronx . Gonzalez stated that in August 1982, the
men went over to Beck Street to put temporary lights on
the jobsite . Then, in October or a bit later in 1982, the
men began work on the Beck Street job in the Bronx.8
This was also a federally subsidized residential rehabilita-
tion job.9 Apparently, the Beck Street job ended around
April or May 1983. According to Gonzalez, before
Christmas 1982, Argano met with the men and told them
that he was changing the name of the company because
of the charges that were made against A .N. to the effect
that the men were being underpaid . Sometime after this,
the men began receiving their pay by check rather than
in cash as had been the custom; the checks were from
"Ozone Electric" and were signed by Cataraso.
Gonzalez testified that both A.N. and Ozone used an
orange truck ; the men used the same large employer-sup-
plied tools as they had used with A.N. and the same 17
men still worked under Gonzalez ' supervision . Gonzalez
denied that Ozone rented any large equipment except for
one machine used to drill through cement . Gonzalez, as
foreman from April 1982, was responsible for calling in
the men 's hours to the office so that their pay could be
calculated and he also called in his need for materials on
the job. Gonzalez stated that he called in this informa-
tion to Squillante when the employer was A.N. and that
he continued to do the same when it was changed to
Ozone. Sometimes, Gonzalez made these calls to Ar-
gano's house at night ; he would speak to either Argano
6 The men had been working for A N. and they included, besides Gon-
zalez , Coffee, De Jesus Jr., Jimmy , and Robles.
9 It is possible to know when jobs are federally subsidized because of
the mandatory signs posted in front of the worksite.
194 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
or Squillante on these occasions . As far as the direction
of the work, Gonzalez testified that only Argano gave
him orders ; neither Squillante nor Cataraso ever gave
him an order. After the Beck Street job, Ozone did fed-
erally subsidized work at the Ramirez Apartments, at
Boynton Avenue , at Belmont Avenue, and at Kelly
Street in the Bronx . Gonzalez stated that all but one
A.N. job had been federally funded and that all the
Ozone jobs he knew of were federally funded. Gonzalez
testified that on the Ramirez Apartment job, the Belmont
Avenue job, and the Boynton Avenue job, there was
overtime work on Saturdays and sometimes in the after-
noons after normal quitting time . On the Boynton
Avenue job , the men worked some Sundays . 1° Argano
fired Gonzalez in 1985 . Gonzalez was an impressive wit-
ness who recalled dates well and was cooperative on
cross-examination . I shall rely on his testimony.
Gonzalez' testimony was supported by that of former
employees of A.N. and Ozone . Jose Antonio Robles was
employed by A.N. from June 1982 until mid-January
1983. He worked at the 139th Street jobsite, and while
he was there he was moved to the Beck Street job to
help out on various occasions . Robles stated that before
Christmas 1982 Argano told the men that the name of
the Company would be changed and for that reason the
men would not work for a few weeks. He was laid off
for a few weeks from Christmas until the second week of
January 1983. When he went back to work the name of
the Company was changed to Ozone . Employee Rupert
Allen also testified that he worked for A.N. at 139th
Street and Lenox Avenue. He was occasionally pulled
off the 139th Street job, and sent to the Beck Street job
at 4 p.m.
The Board found herein that the employees confronted
Argano beginning in late July 1982, with the fact that
the job at Mohican Avenue was federally funded and
that the employees were entitled to higher wages than
they were receiving. The Department of Labor investi-
gation began at the 139th Street location in early August.
The threats to discharge employees and the actual dis-
charges began in the summer of 1982 . Later, Respondent
A.N. obtained employee signatures on certain alleged
settlement documents which the Board has found to be
invalid under the Act. These documents apparently con-
stituted an attempt to secure a release of liability from
the employees at sums much lower than the sums which
might be owing for violations of the Davis -Bacon Act.
Thus, A.N. was aware that it might be liable to pay sub-
stantial sums to its employees and it took action begin-
ning in summer 1982, to avoid having to pay money to
its employees . It is clear that A.N. has been shown to
take actions motivated by a desire to evade its responsi-
bilities under the Act. l1 The first charges were filed here
10 1 do not credit the denials of Cataraso and Argano relating to over-
time work
11 Indeed , the underlying decision by Judge Green states that A.N
ceased operating as A.N. Electric in December 1982 and changed its
name to Ozone Electric . This finding was not disturbed by the Board and
is binding as against A .N. Moreover, I am bound by the finding of the
Board that the discharges of Robles , Coffie, Allen, and De Jesus took
place in January 1983, a time when A N. was purportedly out of business
and only Ozone was in business.
beginning in July 1982, so that A.N. knew from that time
that it might be liable to its employees both under the
Davis-Bacon Act and the National Labor Relations Act.
The evidence that Ozone was established in order to
evade A.N.'s responsibilities is overwhelming . A.N. did
some preliminary work at the Beck Street jobsite in the
second half of 1982 but by the time work on the job
began in earnest, the company performing the work was
called Ozone. Gonzalez, the foreman, testified that the
same employees were working for Ozone at Beck Street
as had worked for A.N. Electric. The only reason given
on the record for the decision by A.N. to go out of busi-
ness was that there were problems with the employees.
The only reason given on the record for the establish-
ment of Ozone was that Cataraso needed a business to go
into . It is more than mere coincidence that she formed
Ozone to carry on the work begun by A.N., with the
same employees , using the same tools, the same truck,
the same premises, and the same supervisors . Further-
more, she used some of the capital of A.N. as evidenced
by the check for $20,000 that A.N. gave to Ozone. The
transfer of the $20,000 was not an arm 's-length transac-
tion ; indeed , no documents have been introduced to
show that any debt actually existed from Louis Squil-
lante to Cataraso 's father and no principal to the transac-
tion testified about it. Most of A.N.'s corporate records
seem to have disappeared , an unusual situation since the
same attorney represents Ozone as represented A.N. and
since the same family members are involved in both
companies . From what appears on the record, A.N. gave
Ozone $20,000. Although the lack of explanation by Re-
spondent concerning the true interests behind A.N. and
Ozone precludes any exact finding about the financial re-
lationship among the persons concerned in the business-
es, it is clear that a family group has used A.N. and
Ozone to engage in the electrical contracting business
and that the businesses differ only in the corporate name
and structure . Cataraso, her father, Argano, and his
father-in-law Squillante have all been involved, have all
lent their names and efforts to these two businesses and
have used the corporate structures to gain income and to
transfer capital, tools, and employees to their advantage.
A major advantage in the setting up of Ozone was to
avoid potential liability to the discriminatees as a result
of the charges filed against A.N. Electric.
The constant figure in this corporate rearrangement is
Argano . He has, according to his testimony, run the busi-
ness for both A.N. and Ozone. 12 He performed the bid-
ding and estimating . He supervised the employees and
jobsites . He hired and fired employees . He dealt with the
prime contractors, and the various governmental agen-
cies . As Argano testified, he did these things because he
was the one who knew all about the business . Cataraso,
by her own admission , knew nothing about the electrical
contracting business and has never worked at Ozone
more than on a part-time basis . It is also clear that
Argano handled the financial affairs of both A.N. and
181 note that Judge Green referred to Argano Electric Corp, 248
NLRB 352 (1980), where Argano was found to be the president of the
corporation and his brother-in-law Louis Squillante was found to be the
superintendent and supervisor
OZONE ELECTRIC CORP.
Ozone; the bank statements for both corporations went
to his home address until March 1983, and the docu-
ments introduced into evidence show that Argano wrote
checks in his own hand on the accounts of both corpora-
tions.
I conclude that the evidence here is sufficient to meet
the criteria for an alter ego set forth above. As discussed
here, A.N. and Ozone were controlled by the same
family . Both were managed by Argano . Both operated as
electrical contractors on federally funded residential re-
habilitation projects in New York City. Both worked on
the Beck Street job in 1982 . Both used the same premises
and large tools and trucks . Both bought great quantities
from the same supplier . Rafael Gonzalez was a foreman
for A.N. and was the foreman for Ozone until 1985. A
large sum of money was transferred from A.N. to
Ozone. Finally, the evidence is overwhelming that
Ozone was formed to evade the Act.
Chippewa Motor Freight, 261 NLRB 455 (1982), cited
by Respondent Ozone, is not apposite . In that case, the
alleged alter ego was found not to be a disguised con-
tinuance of the previous employer formed to avoid re-
sponsibilities under the Act, and there were also found
great dissimilarities in the method of operation , equip-
ment, customers , and supervision of the two employers.
In reaching this conclusion , I have relied on Mar-Kay
Cartage, 277 NLRB 1335 (1985), where the Board found
that an inexperienced family member took over as nomi-
nal head of a family owned business in order to evade
responsibilities under the Act. 277 NLRB at 1341.
Even if Ozone were not found to be the alter ego of
A.N. Electric, I would find that Ozone is the successor
of A.N. with knowledge of its unfair labor practices. See
Perma Vinyl, 164 NLRB 968 (1967), enfd. sub nom. U.S.
Pipe & Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir.
1968); Golden State Bottling Co. v. NLRB, 414 U.S. 168
(1973).
In Perma Vinyl, the Board found that the successor
had acquired the predecessor 's business with knowledge
of the unfair labor practice proceeding against the prede-
cessor, that the successor had continued to operate the
former facility without substantial change, that the oper-
ation was continued at the same location , that essentially
the same personnel were employed and that they worked
under the same supervisors who had been on the prede-
cessor's payroll. In the instant case, Ozone is operating
essentially the same business without substantial change,
at the same location , with the same personnel and the
same supervisors , namely, Argano and Ralph Gonzalez. I
note that Gonzalez was not fired until 1985. As to
whether Ozone "acquired" the Company from A.N., the
available evidence shows that the answer is in the affirm-
ative. I repeat that the lack of candor of Cataraso and
Argano and the disappearance of most of the financial
records sought by General Counsel have made it difficult
to determine exactly what happened in the fall and
winter of 1982-1983. However, the check from A.N. to
Ozone in the amount of $20,000 and the use by Ozone of
A.N.'s tools shows that Ozone acquired capital and ex-
pensive tools from A.N. I have found above that Lips-
man testified that Cataraso knew of the problems of A.N.
and that charges had been filed against A.N. Further,
195
Argano was the superintendent of both A.N. and Ozone;
he was the son-in-law of the owner of A.N. and the
brother of the owner of Ozone . He was the one who
represented both businesses to the outside world. In
these circumstances , it is fair to infer that Argano in-
formed Cataraso of the status of the charges against A.N.
Thus, I find that Ozone had knowledge of the unfair
labor practices pending against A.N. at the time Ozone
was incorporated in October 1982 and acquired the cap-
ital and tools of A . N. Electric . See Golden State, supra.
B. The Backpay Issues
General Counsel presented two witnesses from the
U.S. Department of Labor who testified as to the
method of calculating pay due to employees subject to
the Davis-Bacon Act and related Acts on federally subsi-
dized rehabilitation projects . The record contains no evi-
dence contradicting the testimony of these two expert
witnesses . Louis Graciano was a compliance specialist
and field investigator with the Wage and Hour Division
of the U. S. Department of Labor responsible for audits
under the Davis-Bacon Act. He investigated A.N. and
found violations of the Davis-Bacon Act and of related
Acts. A.N. eventually entered into a consent order. Gra-
ciano also investigated the Beck Street job and he found
that many of the employees of Ozone at Beck Street
were the same men who had worked on various jobs for
A.N. He found that the Beck Street job was going on
simultaneously with the A.N. job at 139th Street and
Lenox Avenue. On the Beck Street job, Graciano found
that Ozone's payroll records were not accurate and that
employee interviews were more reliable than the compa-
ny records . Graciano calculated the gross backpay due
for violations of Davis-Bacon Act and related Acts for
the Beck Street job. Edmund Vargas is a compliance of-
ficer with the Wage and Hour Division of the U.S. De-
partment of Labor . He also investigated the A.N. jobsites
and found violations. Vargas testified at length about the
method of calculating the proper wages of electricians
on the type of jobs conducted by Ozone Electric and
A.N. Electric and about the applicable wage determina-
tions issued by the Department of Labor. I find that the
method of calculation used by General Counsel in the
backpay specification is reasonable.
Respondent questioned the discriminatees at length
about their efforts to find work after their discharges and
about their interim earnings . The results of these exami-
nations are as follows
Rupert Allen testified that after he was fired by Ozone
in January 1983 he got various jobs in the electrical in-
dustry . He had to drop out of his apprentice program in
order to take nonunion jobs and drive a taxi . Allen kept
no records of his earnings and his memory of events
which took place a few years ago was not good. Al-
though the backpay specification here, as amended,
shows long periods of time when Allen had no interim
earnings and was apparently unemployed, Allen testified
that he was sure he was not unemployed for 9 months at
a time . Allen stated , "I know I wasn't sitting down that
long period of time ." From his testimony, I conclude
that for some of the time when General Counsel shows
196 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
no interim earnings, Allen was in fact driving a cab and
earning $250 per week. Thus, I find that for the first
three quarters of 1984 Allen was driving a cab and
earned $3250 per quarter. Further, I find, based on his
testimony, that in 1986 he drove a cab for 3 months and
earned $3250; I shall assign this to the first quarter of
1986. Allen testified that in the third quarter of 1987 he
took a 1 -month visit to Jamaica and that he did not go
there to seek work; further, he took a 1-week vacation in
the second quarter of 1985. There should be a reduction
in his net backpay for these amounts since vacation was
computed as a fringe benefit in the gross backpay. The
burden of proving interim earnings is on Respondent,
and Respondent has not shown any except those dis-
cussed here and detailed in the specification. Further, it
has not been shown that Allen failed to seek work. Allen
credibly testified that whenever he was out of a job, he
tried to get a new one through the Union, that he went
around to construction sites asking for work, and that
when all else failed he drove a cab. Allen should be
awarded backpay in accord with the following computa-
tions, which, it is noted , are current only to February 21,
1988, and are reserved in futuro.
Gross Backpay Interim Earnings Net Backpay
1983
1st qtr . $9,798 $2,488 $7,310
2d qtr . 12,584 4,043 8,541
3d qtr . 14,633 944 13,689
4th qtr . 15,119 2,016 13,103
1984
1st qtr . 15,119 3,250 11,869
2d qtr. 15,119 3,250 11,869
3d qtr . 15,119 3,250 11,869
4th qtr . 15,275 1,568 13,707
1985
1st qtr. 15,275 0 15,275
2d qtr . 14,100 2,420 11,680
3d qtr . 15,505 3,250 12,255
4th qtr . 16,224 3,250 12,974
1986
1st qtr . 17,394 3,250 14,144
2d qtr . 17,394 2,253 15,141
3d qtr . 17,394 0 17,394
4th qtr . 17,394 2,236 15,158
1987
1st qtr . 18,707 4,160 14,547
2d qtr. 18,707 2,520 16,187
3d qtr. 12,955 1,200 11,755
4th qtr. 18,707 2,400 16,307
1988
1st qtr . 10,073 960 9,113
Total $273,887
Ray Comae testified that after he was discharged by
Ozone on January 21, 1983, he tried to get jobs through
the Union and then through Local 3. He stopped looking
for work through the unions when he started his own
business in 1985 . Coffie testified about his interim earn-
ings which are shown on the specification as amended.
Coffie should be awarded the sum of $196 ,997 as calcu-
lated in the specification as amended , General Counsel's
Exhibit 60 , to which I fmd that no change is necessary.
See Arduini Mfg. Corp., 162 NLRB 972 (1967). These
calculations are current only to February 21, 1988, and
Coffie's rights are reserved in futuro.
Ismael De Jesus was discharged by Ozone on January
25, 1983 . He tried to fmd a job through the Union unsuc-
cessfully and he was finally assisted by Local 3. The
specification as amended shows De Jesus' interim earn-
ings for 1983 . In 1984, De Jesus went to Puerto Rico to
be with his ailing mother . After 4 weeks, he got a job
and was employed in Puerto Rico through 1985. Al-
though De Jesus stated that in 1984 he was out of work
for a while and performed "side jobs" to pay his bills,
the amounts earned on these side jobs are not indicated
on the specification which shows no interim earnings for
the last two quarters of 1984. However, I am mindful of
the rule which states that it is Respondent's burden to
show interim earnings ; it is clear that Respondent did not
make any record sufficient to allow me to find any inter-
im earnings for De Jesus for the last half of 1984. I note
also that De Jesus provided paystubs in his possession to
show his interim earnings throughout this period. In the
first quarter of 1986, De Jesus was involved in an acci-
dent and for the next 8 or 9 months he could not work.
After he recovered a bit, he earned about $2500 doing
odd jobs but he was not well enough to perform his
usual work. In the first half of 1987, he only attempted
to work enough to pay certain bills because he was still
concerned about his physical condition . During this
period, De Jesus was not seeking employment compara-
ble to his employment with Ozone . I note that the speci-
fication does not show any interim earnings for the first
two quarters of 1987 and no explanation was offered for
this omission . In the summer of 1987, De Jesus moved to
Miami and his earnings thereafter are shown on the spec-
ification as amended . General Counsel urges that De
Jesus' move to Puerto Rico did not constitute a failure to
seek comparable employment and thus a failure to miti-
gate damages. Respondent has not offered any proof that
Puerto Rico does not offer comparable job opportunities.
I find that the move to Puerto Rico did not constitute a
willful loss of earnings . Rainbow Coaches , 280 NLRB 166
(1986). General Counsel also argues that had De Jesus
suffered his accident while in the employment of Ozone,
"he would have received any sick pay customarily paid
by Ozone in accordance with its collective bargaining
agreement with Local 363. Therefore his net backpay
should not be reduced as a result of his accident, since
the loss of pay was not willful and he would in all likeli-
hood have received pay during the period of his disabil-
ity." It is the burden of General Counsel to prove back-
pay owing to the discriminatees. It is clear that while he
could not work at his regular employment De Jesus was
not available for work and is therefore not entitled to
backpay . General Counsel has not claimed that De Jesus'
accident was related to his interim employment and has
not shown what provision , if any, would have been
made for sick pay or disability pay for De Jesus had he
remained in Ozone 's employ . See American Mfg. Ca of
OZONE ELECTRIC CORP.
Texas, 167 NLRB 520, 522-523 (1967); Big Three Indus-
trial Gas Co., 263 NLRB 1189, 1200-1202 (1982). There-
fore, I cannot award backpay to De Jesus for the period
of time he could not work due to his accident in 1986
and for the first two quarters of 1987.
Backpay should be awarded to De Jesus in accordance
with the amounts claimed by General Counsel in the
specification, as amended, General Counsel's Exhibit 60,
except that no backpay is due for the year 1986 and for
the first two quarters of 1987. Deducting the proper
amounts from the specification results in a total amount
due to De Jesus of $197,377. I note that De Jesus' quip
has been calculated only up to February 21, 1988, and
his rights are reserved in futuro.
John Gonzalez was discharged from A.N. on July 22,
1982. He testified credibly and in some detail about his
efforts to find work after his discharge. He sought jobs
and kept a list of the places he contacted. At various
times he was unemployed because he could not find
work, but he made efforts to be employed. It has not
been shown that he did not reasonably seek employment.
Some corrections should be made to the specification as
drawn by General Counsel. John Gonzalez testified that
in the first quarter of 1983 he worked for Rex Manage-
ment for about 2-1/2 months at $300 per week. Thus, he
had interim earnings of $3000. Further, he stated that
from mid-May 1986 he worked at Inter City Communi-
cations at $700 per week. Thus, he had interim earnings
in the second quarter of 1986 of $3500. Finally, he testi-
fied that he was involved in a car accident in the fall of
1987 and could not work for about 10 weeks. It is not
claimed that this accident related to his interim employ-
ment and there has been no proof submitted concerning
any sick leave or other benefits to which employees of
Ozone might be entitled. Thus, he is not entitled to back-
pay for 10 weeks in the last quarter of 1987. See Ameri-
can Mfg Co. of Texas, supra, and Big Three Industrial
Gas Co., supra. In 1988, John Gonzalez started his own
business which consists of performing electrical work, re-
modeling and installing kitchens. Starting one's own busi-
ness is an acceptable method of mitigating the loss of
pay. See Arduini Mfg. Corp., supra . I find that John Gon-
zalez should be awarded backpay in accordance with the
following figures which were calculated up to February
21, 1988, and are reserved in futuro:
Gross Backpay Interim Earnings Net Backpay
1982
3d qtr. $12,045 $0 $12,045,
4th qtr. 13,351 2,035 11,316
1983
1st qtr. 13,351 3,000 10,351
2d qtr. 13,351 1,726 11,625
3d qtr. 13,419 4,485 8,866
4th qtr. 15,873 6,224 9,649
1984
1st qtr. 15,873 4,108 11,765
2d qtr. 15,873 4,108 11,765
3d qtr. 15,873 4,108 11,765
4th qtr. 15,873 4,108 11,765
197
Gross Backpay Interim Earnings Net Backpay
1985
1st qtr. 15,873 6,910 8,963
2d qtr. 15,873 6,910 8,963
3d qtr. 15,873 6,909 8,964
4th qtr. 16,224 1,000 15,224
1986
1st qtr. 17,394 0 17,394
2d qtr. 17,394 3,000 14,394
3d qtr. 17,394 7,800 9,594
4th qtr. 17,394 7,950 9,444
1987
1st qtr . 18,707 2,800 15,907
2d qtr. 18,707 5,760 12,947
3d qtr. 18,707 720 17,987
4th qtr. 4,317 480 3,837
1988
1st qtr. 10,073 8,155 1,918
Total $255,947
Jose Gonzalez was discharged from A.N. on July 22,
1982. He described in some detail his search for work
from that time forward. Gonzalez always looked for
work, but he was not always successful and he often
went for weeks between jobs. On these occasions, he did
small side jobs for various people. I am satisfied from the
testimony that Jose Gonzalez was reasonably diligent in
looking for work and that he asked people he knew
about work and went around to various construction
sites inquiring if there was work available for him. In
March 1983, Jose Gonzalez signed a purported "Re-
lease," which by its terms sought to settle all claims he
might have under the NLRA and the Davis-Bacon Act,
to provide for withdrawal of all charges filed with the
NLRB and the U.S. Department of Labor, and to indem-
nity A.N. Electric Corporation, Argano Electric Corpo-
ration, Nicolo Argano, and Louis Squillante. The docu-
ment, on its face, recites various facts which are untrue;
the date of signing is not set out correctly, the purported
release was not discussed with counsel for the General
Counsel nor with the administrative law judge who
heard the underlying case and the document was not
signed at the Regional Office. Nor was any representa-
tion made by counsel for Respondent that the document
was discussed with any official of the U.S. Department
of Labor. It seems that this document differs from the re-
lease found invalid by Judge Green and the Board in the
underlying case. In any event, the document is not bind-
ing on me since the issue of Jose Gonzalez' illegal dis-
charge and A.N.'s liability to make him whole and offer
him reinstatement were decided in the underlying case.
However, Jose Gonzalez did testify before me that in
March 1983 he received $6000 from Lipsman, who, at
that time, represented both A.N. and Ozone Electric. It
would seem unjust, therefore, not to offset the sum of
$6000 and I shall add this amount to Jose Gonzalez' in-
terim earnings for the first quarter of 1983. Therefore,
Jose Gonzalez should be made whole in the amount of
$274,383 based on the specification, General Counsel's
198 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Exhibit 60. This amount was calculated up to February
21, 1988 , and Gonzalez ' rights are reserved in futuro.
Jose Robles was discharged by Ozone on January 21,
1983. When he found that Local 363 was of no help to
him in securing employment , he joined Local 3 and ob-
tained employment in the winter of 1983. However, he
was subpoenaed several times , apparently in connection
with the underlying case here, and he was eventually
laid off because his attendance was not steady . Robles'
testimony was inconsistent; at first he stated that he
stopped looking for further employment in the beginning
of 1983, then he testified at length that after his layoff
from the Local 3 shop he registered for unemployment
and went to look for work pursuant to instructions from
the unemployment service . He stated that he applied for
several civil service jobs and he looked for jobs as an
electrician through the newspapers . Later, Robles testi-
fied that at some point , which he did not specify but per-
haps in 1984 , he refused work from Local 3 because he
had registered to enter college in September 1984. Still
later , Robles testified that he looked for work everyday
and that for the balance of 1983 and most of 1984 he was
supported by his mother and his various girlfriends. At
the time of the hearing on the specification, Robles testi-
fied that he was "a professional student" and that he had
begun to attend school in September 1984. The specifica-
tion lists no interim earnings for Robles after the first
quarter of 1983 . My impression of Robles was that he
was not candid and that he took no care with his testi-
mony, answering anything that came into his mind at the
moment without regard for whether it was accurate.
Based on Robles' contradictory testimony it is impossible
for me to find that Robles made a reasonable search for
work . Respondent has thus met its burden of showing
that Robles incurred a willful loss of earnings . I conclude
that Robles is not entitled to any backpay pursuant to
the specification.
On these finding of fact and conclusions of law, and
on the entire record , I issue the following recommend-
ed'a
ORDER
The Respondent, Ozone Electric Corp., New York,
New York, its officers, agents, successors , and assigns,
shall pay to John Gonzalez, Jose Gonzalez, Ray Coffie,
Rupert Allen , and Ismael De Jesus the sums indicated in
the discussion above, plus interest . 14 Further , Respond-
ent Ozone is responsible for complying with the rein-
statement order , and the discriminatees ' rights for peri-
ods after the dates covered in this Order are reserved.
" If no exceptions are filed as provided by Sec 102 .46 of the Rules
and Regulations of the National Labor Relations Board , the findings,
conclusions , and recommended Order herein shall, as provided in Sec
102 48 of the Rules and Regulations, be adopted by the Board and
become it findings , conclusions , and Order , and all objections shall be
deemed waived for all purposes
i4 In accordance with New Horizons for the Retarded , 283 NLRB 1173
(1987), interest on and after January 1 , 1987, shall be computed at the
"short -term Federal rate" for the underpayment of taxes as set out in the
1986 amendment to 26 U . S.C. § 6621 Interest on amounts accrued prior
to January 1, 1987 (the effective date of the 1986 amendment to 26
U S.C § 6621 ), shall be computed in accordance with Florida Steel Corp,
231 NLRB 651 (1977).