Fire Tech Systems

National Labor Relations Board - Board Decisions

Oct 16, 1995

319 N.L.R.B. 302 (N.L.R.B. 1995)

302
319 NLRB No. 43
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 In affirming the judge’s remedy, we shall order that the make-
whole payments be computed in accordance with Merryweather Op-
tical Co., 240 NLRB 1213, 1216 fn. 7 (1979), Kraft Plumbing &
Heating, 252 NLRB 891 fn. 2 (1980), enfd. mem. 661 F.2d 940 (9th
Cir. 1981), Ogle Protection Service, 183 NLRB 682 (1970), enfd.
444 F.2d 502 (6th Cir. 1971), and New Horizons for the Retarded,
283 NLRB 1173 (1987). To the extent that an employee has made
personal contributions to a fund that are accepted by the fund during
the period of the delinquency, the Respondent will be required to re-
imburse the employee, but the amount of such reimbursement will
constitute a setoff to the amount that the Respondents owe to the
fund.
1 The General Counsel’s unopposed motion to correct record is
granted.
Fire Tech Systems, Inc. and Fire Shield Sprinkler
Systems, Inc. and Road Sprinkler Fitters Local
Union No. 669 of the United Association of
Journeymen and Apprentices of the Plumbing
and Pipefitting Industry of the United States
and Canada, AFL–CIO. Case 28–CA–12761
October 16, 1995
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS BROWNING
AND COHEN
On July 6, 1995, Administrative Law Judge Gerald
A. Wacknov issued the attached decision. The Re-
spondents filed exceptions, and the General Counsel
and the Charging Party filed briefs in response.
The National Labor Relations Board has delegated
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 de-
cided to affirm the judge’s rulings, findings,1 and con-
clusions and to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondents, Fire Tech Systems, Inc.
and Fire Shield Sprinkler Systems, Inc., Scottsdale, Ar-
izona, their officers, agents, successors, and assigns,
shall take the action set forth in the Order.
Michael J. Karlson, Esq. and Richard A. Smith, Esq., for the
General Counsel.
Ronald T. Pfeifer, Esq. (Godfry & Kahn, S.C), of Green Bay,
Wisconsin, for the Respondents.
Helene D. Lerner, Esq. (Beins, Axelrod, Osborne, Mooney &
Green, P.C.), of Washington, D.C., for the Charging Party.
DECISION
STATEMENT OF THE CASE
GERALD A. WACKNOV, Administrative Law Judge. Pursu-
ant to notice, a hearing in this matter was held before me
in Phoenix, Arizona, on March 30 and 31, 1995. The charge
was filed on September 27, 1994, by Road Sprinkler Fitters,
Local Union No. 669 of the United Association of Journey-
men and Apprentices of the Plumbing and Pipefitting Indus-
try of the United States and Canada, AFL–CIO (the Union).
On November 23, 1994, the Regional Director for Region 28
of the National Labor Relations Board (the Board) issued a
complaint and notice of hearing alleging violations by Fire
Tech Systems, Inc. and Fire Shield Sprinkler Systems, Inc.
(Fire Tech, Fire Shield, and/or the Respondents) of Section
8(a)(1) and (5) of the National Labor Relations Act (the
Act).
The parties were afforded a full opportunity to be heard,
to call, examine, and cross-examine witnesses, and to intro-
duce relevant evidence. Since the close of the hearing briefs
have been received from counsel for the General Counsel,
counsel for the Respondent, and counsel for the Union. On
the entire record,1 and based on my observation of the wit-
nesses and consideration of the briefs submitted, I make the
following
FINDINGS OF FACT
I. JURISDICTION
The Respondents are Delaware corporations engaged in
the business of selling and installing fire protection systems,
and at times material maintained offices and places of busi-
ness in Scottsdale, Arizona. In the course and conduct of
their business operations, each Respondent, during the 12-
month period ending September 27, 1994, purchased and re-
ceived goods, supplies, and materials valued in excess of
$50,000 directly from points outside the State of Arizona. It
is admitted, and I find, that each Respondent is an employer
engaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
It is admitted and I find that the Union is, and at all times
material has been, a labor organization within the meaning
of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Issues
The principal issue presented by the complaint is whether
the two Respondents are alter egos and a single employer
within the meaning of the Act, and, as a result of this rela-
tionship, whether the Respondents have violated Section
8(a)(1) and (5) of the Act by failing and refusing to apply
the terms and conditions of a collective bargaining between
the Union and Respondent Fire Tech to the employees of Re-
spondent Fire Shield..
B. The Facts
Fire Tech began its Arizona operations in 1986, and since
that time has been engaged in the sale and installation of
automatic sprinkler systems in the State of Arizona. Later, it
expanded its operations to the State of Illinois, where it con-
tinues to be engaged in the same business operations. At the
time of the hearing here it was winding down its Arizona
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303FIRE TECH SYSTEMS
business operations and, through a subcontractor, was com-
pleting one remaining job in Arizona. It initially began its
Arizona operations as a nonunion contractor, but on Septem-
ber 9, 1990, it entered into an assent and interim agreement
with the Union covering its sprinkler fitters and apprentices.
On April 12, 1994, during a time when Fire Tech was com-
pleting its remaining jobs, infra, it entered into a successor
assent and interim agreement which bound it to the National
Construction Agreement between the Union and the National
Fire Sprinkler Association, effective by its terms from April
1, 1994, through March 31, 1997.
Gregg Huennekens is president, treasurer, and chairman of
the board of Fire Tech and owns over 85 percent of that en-
tity. He resides in Illinois, and spends only from 7 to 30 days
per year in Arizona. Gregg is the uncle of Kevin
Huennekens. Kevin was vice president and Arizona branch
manager of Fire Tech from January 1992 through June 1994.
He owned 5 percent of Fire Tech until April 1, 1994, when
his shares were redeemed. Kevin was in charge of overseeing
and conducting the day-to-day Arizona operations of Fire
Tech, which maintained an office and place of business in
Scottsdale, Arizona, and employed from 2 to approximately
15 employees. The great majority of his communication with
Gregg was by phone.
The Arizona operation, despite the fact that it was profit-
able in 1993, had lost some $250,000 in the last 3 years of
its existence, and Gregg decided to shut it down. In about
December 1993, he advised Kevin that he was probably
going to shut the operation down during early 1994. Kevin,
who wanted to remain in Arizona rather than work at his un-
cle’s other fire protection businesses in Illinois or Wisconsin,
conceived the idea of starting his own fire protection busi-
ness, which, he told Gregg, would be operated on a nonunion
basis. He asked Gregg if he would be willing to invest in
this new business and Gregg agreed. Thereupon, in January
1994, Kevin incorporated Fire Shield, which was initially
capitalized with $2500 from Kevin and $7500 from Gregg.
Kevin became the president and chairman of the board of
Fire Shield, and Gregg, who does not hold any corporate of-
fices, is simply an ‘‘investor’’ who owns 75 percent of that
entity.
On February 11, 1994, Gregg sent a letter addressed to the
Arizona facility stating that effective March 1, 1994, Fire
Tech would no longer solicit any more business and would
close its offices. The letter states that the work in progress
would be completed by Fire Tech, and that the reason given
for the closure is that Fire Tech had suffered substantial
losses since January 1991.
In about mid-February 1994, Kevin held a meeting with
the field employees, namely, the journeymen and apprentice
sprinkler fitters. Some office personnel were also in attend-
ance. He told the employees that Gregg had decided to close
the operation because it was not making money. Initially,
Kevin testified that he did not mention the fact that he in-
tended to establish and operate a new fire protection com-
pany. During his subsequent testimony, however, after
former employees testified that Kevin did make such asser-
tions at the meeting, Kevin testified that he told the employ-
ees that he ‘‘had an option to start my own company. I had
an option to go back to Chicago. I had an option to work
for someone here locally, and that’s as simple as it was.’’
He denied that he told the employees that the new company
he had the option of starting would be operated as a non-
union company.
David Green was a sprinkler fitter for Fire Tech and was
employed from September 1993 through June 1994. Green
testified that at the February 1994 meeting, Kevin announced
that Fire Tech was going out of business and that it would
be shut down after several remaining jobs had been com-
pleted. Kevin also said, according to Green, that he was
going to open up another company and that it would be
called Fire Shield. He said that even though Fire Tech had
made some money in the past it wasn’t enough and that Fire
Tech could not function as a union company and make
money.
Berrin Mull is a journeyman sprinkler fitter and worked
for Fire Tech from about June 1993 until February 1994.
Mull attended the February 1994 meeting, and testified that
Kevin told the employees that the ‘‘mother company back
east’’ was closing the doors as the Arizona branch owed the
company around $200,000, and that although Fire Tech had
made a profit of some $40,000 in 1993, that was the first
year that they had made a profit. Kevin said, according to
Mull, that he was going to start his own company, that it
would be nonunion, and that the employees could stay with
him when he got going if they wanted to. He said he would
appreciate it if the employees would stay to help him com-
plete the work in progress.
The record evidence is clear that between March and the
end of June 1994, Kevin continued to be in charge of the
Fire Tech operations and also began soliciting business for
and performing work under the name of Fire Shield. During
this period of time Fire Shield had no office, materials,
equipment, or vehicles of its own, and Kevin operated Fire
Shield out of the Fire Tech facility, using Fire Tech’s mate-
rials, equipment, and vehicles. Further, the record is clear
that Gregg understood that Kevin was operating Fire Shield
in this fashion, and did not voice any objection. Although
Fire Shield’s first job commenced on March 28, 1994, it was
not until later when Kevin and Gregg entered into an infor-
mal agreement for the purchase of such items. Despite this
agreement, Fire Shield has never made any payments to Fire
Tech for the purchase or use of such items.
About the first of July 1994, Fire Shield obtained space
of its own which happened to be located only some 200 feet
from the offices and shop of Fire Tech. Thus, for a period
of about a month, until Fire Tech’s lease expired at the end
of July, the two entities were located virtually adjacent to
each other, but in different building complexes owned by dif-
ferent lessors. In order to obtain this space for Fire Shield,
Gregg (and his wife) were required to be signatories to the
lease. Thereafter, when the operations of Fire Tech were es-
sentially shut down except for the work that was contracted
out, Kevin continued using the majority of Fire Tech’s tools,
equipment, vehicles, and office equipment. None of Fire
Tech’s materials or equipment was shipped back to Fire Tech
in Illinois, or was disposed of in any other manner. To date,
however, as noted above, Fire Shield has paid no money to
Fire Tech for any of these items. Further, Gregg has contrib-
uted some $35,000 in additional funding to Fire Shield, none
of which had been paid back; Kevin has contributed about
$5000. Gregg testified that he became an investor in Fire
Shield for the purpose of hopefully making a profit. Kevin
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304 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 The record evidence contains an abundance of additional evi-
dence showing the close interrelationship between the interests of
Gregg and Kevin vis-a-vis Fire Shield. Thus, for example, Fire
Shield obtained two additional vehicles from another fire protection
company owned by Gregg, and has not paid any money for these
vehicles to date. Under the circumstances, it appears unnecessary to
detail this additional cumulative evidence.
3 I credit the testimony of employees Green and Mull, and find
that Kevin told the assembled employees in February 1994 that he
intended to start up a nonunion operation.
4 In addition to Illinois operations of Fire Tech, Gregg owns sev-
eral other fire protection businesses. Collectively, these businesses
employ some 140 employees. With the exception of Fire Shield, all
of Gregg’s businesses are union operations.
readily acknowledged that were it not for the financial assist-
ance of Gregg, Fire Shield would not be in existence.
The record is abundantly clear that Fire Shield is engaged
in the same business as Fire Tech and there is no difference
between the operations of the two entities in terms of the
work solicited, the prospective customer base, the tools and
materials utilized, the skills utilized by the journeymen and
apprentice sprinkler fitters, the nature of the work performed,
and the day-to-day management of the business. In addition
to the foregoing similarities, Fire Shield employs a number
of the same employees as did Fire Tech, including the office
manager. In particular, Fire Shield employs Kraig
Huennekens, who is Kevin’s brother. Kraig, who is job su-
perintendent for Fire Shield, was also job superintendent for
Fire Tech, and has exercised the same supervisory authority
for both entities, namely, the authority to hire, fire, and direct
the work of the field personnel. The two entities are similar
in size, although it appears that at times Fire Shield has had
a somewhat larger employee complement. While Fire Shield,
as nonunion operation, performs somewhat more non-
commercial work, the only real difference of any note is the
fact that the wages and benefits paid by Fire Shield to its
nonoffice personnel is about 50 percent less than the wages
and benefits required under the aforementioned collective-
bargaining agreement and, accordingly, Fire Shield employs
nonunion workers.
The Respondent maintains that the Union should have
known about the existence of Fire Shield no later than the
meeting in February 1994 when Kevin allegedly announced
to the employees that Fire Tech was discontinuing its oper-
ations and that he was in the process of beginning his own
nonunion operation. Record evidence shows that from about
March 21, 1994, to the date of the filing of the charge here,
the Union had attempted to acquire as much information as
possible about the interrelationships of all of Gregg’s fire
protection operations through correspondence and question-
naires sent by the Union’s attorneys to the attorneys of Fire
Shield. On September 29, 1994, 2 days after the charge here
was filed, the Union wrote to Gregg and Kevin stating that:
Based on the continuing investigation into the oper-
ations of both Firetech Systems, Inc. (‘‘Firetech’’) and
Fire Shield Sprinkler Systems, Inc. (‘‘Fire Shield’’), it
appears that Fire Shield is simply a disguised continu-
ance and/or alter ego of Firetech. Accordingly, we de-
mand that Firetech and Fire Shield both recognize and
adhere to their obligations to Local 669 under Federal
labor law, and our collective bargaining agreement.
C. Analysis and Conclusions
The facts are clear and are not in material dispute. It is
clear that Fire Tech was finding it difficult to compete in Ar-
izona under the provisions of the union contract, and that
Kevin decided that Fire Shield could be successful as a non-
union contractor. In this endeavor, Kevin relied nearly 100
percent on the assistance from Fire Tech and/or Uncle Gregg
for virtually every aspect of the new entity, including the fact
that Gregg became a signatory to Fire Shield’s lease. Further,
Gregg knowingly supported Kevin’s nonunion operation by,
in effect, simply donating, insofar as the evidence shows, the
aforementioned considerable assets of Fire Tech to Fire
Shield, as well as providing a substantial infusion of his own
money. The family ownership of the two entities is essen-
tially the same, and the nature of their operations, including
the day-to-day management of the two entities and the super-
vision of their employees, is identical, as Gregg was an ab-
sentee president of Fire Tech and took no part in its daily
operations. There was no hiatus between the closure of Fire
Tech and the commencement of Fire Shield, and the two en-
tities were simultaneously operated, on a union and nonunion
basis, respectively, out of Fire Tech’s facilities for a period
of 3 or 4 months, until Fire Tech’s lease expired and Fire
Shield obtained its own offices and shop. Accordingly, on
the basis of the foregoing and other record evidence,2 it is
abundantly clear and I find that Fire Shield is the disguised
continuance and/or alter ego of Fire Tech as alleged in the
complaint. Southport Petroleum Co. v. NLRB, 315 U.S. 100,
106 (1942); Advance Electric, 268 NLRB 1001, 1002 (1984);
Haley & Haley, Inc., 289 NLRB 649, 652 (1988), enfd. 880
F.2d 1147 (9th Cir. 1989); Barnard Engineering, 295 NLRB
226 (1989); Gilroy Sheet Metal, 280 NLRB 1075 (1986);
Consumers Asphalt Co., 295 NLRB 749 (1988); Continental
Radiator, 283 NLRB 234 (1987); Goldin-Feldman, Inc., 295
NLRB 359, 373 fn. 43 (1989); Precision Builders, 296
NLRB 105 (1989); and Milford Services, 294 NLRB 684
(1989).
The Respondents would characterize Gregg’s assistance to
Fire Shield as simply the attempt of a very generous uncle
to establish his nephews Kevin and Kraig in a business of
their own; further, it is argued that it was not Gregg’s intent
to attempt to circumvent the provisions of the collective-bar-
gaining agreement to which he, as the president of Fire Tech,
had agreed. The Respondents appear to maintain that even if
Fire Shield may technically, under applicable Board law, be
a continuance and/or the alter ego of Fire Tech, there was
no intent to evade the Act and therefore the Board should
not interfere with such altruistic intrafamily relationships.
In addition to the fact that the Respondents have cited no
authority in support of the above proposition, I find that the
Respondents’ premise is faulty. Thus, it is clear that Kevin’s
intent was precisely to establish a nonunion operation be-
cause Fire Tech, as a union contractor, was unable to suc-
cessfully compete in the Arizona market.3 Gregg whole-
heartedly supported Kevin in this endeavor, and set him up
in business. Gregg, who owns 75 percent of Fire Shield,4 has
permitted and encouraged it to operate on a nonunion basis,
and stands to profit from its success. Moreover, the business
operations of Fire Shield are commensurate in scope, indeed
even somewhat greater, than the operations of Fire Tech;
thus it appears that Gregg had something more in mind than
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305FIRE TECH SYSTEMS
5 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended 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 purposes.
6 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
merely providing a means of employment for his nephews.
Altruism aside, Gregg’s express intent is the same as
Kevin’s, namely, to own and hopefully profit from a non-
union entity which is essentially no different than the union
entity it replaced. See Advance Electric, supra at 1004.
The Respondent’s contention that the charge here was un-
timely filed is without merit. The charge was filed on Sep-
tember 27, 1994. Fire Shield did not commence any jobs
until March 28, 1994, a date within the 10(b) period, and the
mere fact that it was incorporated prior to that time or that
in February 1994 Kevin told the employees that he was in-
tending to establish a nonunion operation, without stating
how or when this entity would commence operations, is not
sufficient to provide the Union with the requisite ‘‘clear and
unequivocal notice of a violation of the Act.’’ See Leach
Corp., 312 NLRB 990, 991 (1993). Moreover, notice to the
employees does not constitute notice to the Union. See NLRB
v. Walker Construction Co., 928 F.2d 695, 696–697 (5th Cir.
1991) (and cases cited). The record is clear that from April
1994 until the date of the filing of the charge the Union dili-
gently and persistently attempted to ascertain the operative
relationships between the entities.
On the basis of the foregoing, I find that the Respondents
have violated Section 8(a)(1) and (5) of the Act, as alleged.
CONCLUSIONS OF LAW
1. The Respondents are employers engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
2. The Union is a labor organization within the meaning
of Section 2(5) of the Act.
3. Respondent Fire Shield Sprinkler Systems, Inc. is the
alter ego of Respondent Fire Tech Systems, Inc.
4. All journeymen, apprentice, and trainee sprinkler fitters
employed by Fire Shield Sprinkler Systems, Inc., excluding
office clerical employees, professional employees, guards,
and supervisors as defined in the Act constitute a unit appro-
priate for the purposes of collective bargaining within the
meaning of Section 9(b) of the Act.
5. At all times material the Union has been the exclusive
collective-bargaining representative of the employees in the
appropriate unit within the meaning of Section 9(a) of the
Act.
6. By refusing to honor and apply the collective-bargaining
agreement between Fire Tech Systems, Inc. and the Union,
the Respondents have violated Section 8(a)(1) and (5) of the
Act.
7. The unfair practices set forth above are unfair labor
practices within the meaning of Section 2(6) and (7) of the
Act.
THE REMEDY
Having found that the Respondents have violated Section
8(a)(1) and (5) of the Act, I recommend that they be ordered
to cease and desist therefrom and to take certain affirmative
action designed to effectuate the purposes of the Act, includ-
ing the posting of an appropriate notice attached as Appen-
dix.
The Respondents shall be required to honor the current
collective-bargaining agreement and apply it to their Arizona
employees, and to make the employees whole, with interest,
for any losses they may have suffered because of the Re-
spondents’ failure to honor and apply the collective-bargain-
ing agreement. In addition, the Respondents shall be required
to make whole their employees by making payments to the
various trust funds established by the collective-bargaining
agreement.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended5
ORDER
The Respondents, Fire Tech Systems, Inc. and Fire Shield
Sprinkler Systems, Inc., Scottsdale, Arizona, their officers,
agents, successors, and assigns, shall
1. Cease and desist from
(a) Establishing any entities in order to avoid their statu-
tory responsibility to adhere to the terms and conditions of
the current collective-bargaining agreement with the Union.
(b) Refusing to honor and apply the current collective-bar-
gaining agreement to the unit employees, as described above,
of Fire Shield Sprinkler Systems, Inc.
(c) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action which is nec-
essary to effectuate the policies of the Act.
(a) Honor and apply the collective-bargaining agreement
with the Union.
(b) Make whole the bargaining unit employees and reim-
burse the funds established by the collective-bargaining
agreement, with interest, for any losses suffered as a result
of the Respondents’ failure to honor and apply the collective-
bargaining agreement.
(c) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of backpay due under the terms of this Order.
(d) Post at the Respondents’ facility in Scottsdale, Ari-
zona, copies of the attached notice marked ‘‘Appendix.’’6
Copies of the notice, on forms provided by the Regional Di-
rector for Region 28, after being duly signed by the Re-
spondents’ representative, shall be posted immediately upon
receipt thereof, and be maintained by the Respondents for 60
consecutive days thereafter, in conspicuous places, including
all places where notices to employees are customarily posted.
Reasonable steps shall be taken by the Respondents to ensure
that the notices are not altered, defaced, or covered by any
other material.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondents have
taken to comply.
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306 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT establish any business entities in order to
avoid our statutory responsibility to adhere to our collective-
bargaining agreement with Road Sprinkler Fitters Local
Union No. 669.
WE WILL NOT refuse to honor and apply our collective-
bargaining agreement with the Union.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce you in the exercise of the rights guaran-
teed you by Section 7 of the Act.
WE WILL honor and apply our collective-bargaining agree-
ment with the Union as the exclusive collective-bargaining
representative of employees in the following unit:
All journeymen, apprentice, and trainee sprinkler fitters
employed by Fire Shield Sprinkler Systems, Inc., ex-
cluding office clerical employees, professional employ-
ees, guards, and supervisors as defined in the Act.
WE WILL, in the manner prescribed by the National Labor
Relations Board, make whole our bargaining unit employees
and reimburse the funds established by the collective-bar-
gaining agreement, with interest, for any losses suffered as
a result of our failure to honor and apply our collective-bar-
gaining agreement to the aforementioned unit employees.
FIRE TECH SYSTEMS, INC. AND FIRE SHIELD
SPRINKLER SYSTEMS, INC.
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