Honeycomb Plastics Corp.

National Labor Relations Board - Board Decisions

Aug 27, 1991

304 N.L.R.B. 570 (N.L.R.B. 1991)

570
304 NLRB No. 72
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The underlying unfair labor practice case is reported at 288 NLRB 413
(1988). Tony L. Sheng was added as an additional Respondent during subse-
quent backpay proceedings reported at 296 NLRB No. 17 (Aug. 17, 1989).
2 The request for oral argument made by Respondent Tony L. Sheng is de-
nied because the record, exceptions, and briefs adequately present the issues
and the positions of the parties.
3 In affirming the judge’s decision, we note that Respondent Sheng’s excep-
tions are limited to the issue of his personal liability for backpay.
4 In accordance with the General Counsel’s exceptions, we modify the Sup-
plemental Order to correct the amount of backpay due Maria De Carvahlo and
the spelling of names of certain of the discriminatees.
5 283 NLRB 1173 (1987).
Honeycomb Plastics Corporation, Honeyware Prod-
ucts, Inc., Laminray Corporation, Hangerplast,
Inc., Honeyware International, Inc., Honeyware
Manufacturing, Inc., Tony L. Sheng, Individ-
ually, P. Gerard Megaro, as Trustee in Bank-
ruptcy for Honeycomb Plastics Corporation,
and Robert A. Drexel, as Interim Trustee in
Bankruptcy for Honeyware Products, Inc.1 and
Local 867, Warehousemen, Plastic Processing,
Electrical Components, Production and Main-
tenance Employees a/w International Brother-
hood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America, AFL–CIO. Case 22–
CA–14455
August 27, 1991
SECOND SUPPLEMENTAL DECISION AND
ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND OVIATT
On March 12, 1991, Administrative Law Judge
Howard Edelman issued the attached decision. Re-
spondent Tony L. Sheng and the General Counsel each
filed exceptions and a supporting brief.2
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, and con-
clusions3 and to adopt the recommended Supplemental
Order as modified.4
ORDER
The National Labor Relations Board adopts the rec-
ommended Supplemental Order of the administrative
law judge and orders that the Respondent, Honeycomb
Plastics Corporation, Honeyware Products, Inc.,
Laminray Corporation, Hangerplast, Inc., Honeyware
International, Inc., Honeyware Manufacturing, Inc.,
Kearny, New Jersey, P. Gerard Megaro, as Trustee in
Bankruptcy for Honeycomb Plastics Corporation, Rob-
ert A. Drexel, as Interim Trustee in Bankruptcy for
Honeyware Products, Inc., and Tony L. Sheng, an In-
dividual, its officers, agents, successors, and assigns,
shall pay individually and collectively to the
discriminatees set forth below the amounts set forth
opposite their names, with interest to be computed in
the manner prescribed in New Horizon for the Re-
tarded:5
Maureen Alday $3,095.80
Nohimy Ayalo 2,594.88
Maria Casas 1,372.68
Maria De Carvahlo 1,037.67
Ana Deluca 0.00
Victor Febus 13,424.15
Raul Gonzalez 5,239.48
Luz Guaman 2,457.21
Edith Gurerrero 1,894.68
Nieves Hernandez 2,374.84
Lana Kennedy 8,945.60
Elena Lamela 9,287.50
Donna Lennox 4,283.17
Charles Lutkus 2,736.48
Maria Mejia 1,545.02
Cecilia Narvaez 2,295.66
Luis Perez 13,049.59
Ana Santos 446.88
Carmen Silva 145.27
Maria Soto 2,436.81
Luis Valderrama 2,564.62
Nilda Vilca 2,421.89
Olivia Garcia Bouldt, Esq., for the General Counsel.
John A. Craner, Esq. (Craner, Nelson, Satkin & Scheer), for
the Respondent and Tony L. Sheng.
DECISION
STATEMENT OF THE CASE
HOWARD EDELMAN, Administrative Law Judge. On Octo-
ber 30, 1989, and August 6, 1990, a trial was conducted in
the above-captioned matter in Newark, New Jersey.
On April 8, 1988, the National Labor Relations Board
issued a Decision and Order in the above-captioned case, di-
recting Honeycomb Plastics Corporation, Honeyware Prod-
ucts, Inc., Laminray Corporation and Hangerplast, Inc. (Re-
spondent), to make whole various employees employed by
Respondent for their losses resulting from Respondent’s un-
fair labor practices in violation of Section 8(a)(1) and (3) of
the Act. On November 10, 1988, the Court of Appeals for
the Third Circuit entered its judgment enforcing in full the
backpay provisions of the Board’s Order. Thereafter, a con-
troversy arose over the amount of backpay due under the
terms of the Board’s Order. On March 31, 1989, the Re-
gional Director for Region 22, pursuant to authority duly
conferred upon him by the Board, issued a compliance speci-
fication and notice of hearing, alleging the backpay due
under the Board’s Order as enforced by the Court of Appeals
for the Third Circuit. Thereafter, Respondent filed an answer.
On May 11, 1989, the Acting General Counsel, filed with the
Board a Motion for Partial Summary Judgment and memo-
randum in support, contending that portions of the Respond-
ent’s answer to the compliance specification were not in
571HONEYCOMB PLASTICS CORP.
compliance with Section 102.54(b) and (c) of the Board’s
Rules and Regulations. On August 17, 1989, the Board
issued a Supplemental Decision and Order granting the Mo-
tion for Partial Summary Judgment and directing a hearing
limited to issues concerning interim earnings, and the indi-
vidual liability of Tony L. Sheng. The Board found that Re-
spondent’s general denials as to other allegations in the spec-
ification were insufficient under Section 102.54(b) and (c) of
the Board’s Rules and Regulations and deemed the Respond-
ent to have admitted them to be true. On August 24, 1989,
pursuant to the Board’s Order, the Regional Director issued
an order rescheduling hearing. On May 18, 1990, counsel for
the Board filed a motion on behalf of the National Labor Re-
lations Board to amend compliance specification and notice
of hearing. On October 30, 1989, following the opening of
the trial in this matter, the administrative law judge granted
counsel for the Board’s motion to amend the specification to
allege Honeyware International, Inc. and Honeyware Manu-
facturing, Inc., as alter egos, joint employers, and successors
of Respondent. The administrative law judge also granted
counsel for the Board’s motion to amend the specification to
reflect that the interim earnings of Maria DeCarvahlo total
$1,037.67 rather $900.55. The trial was thereafter adjourned
for an indefinite period. The trial resumed and concluded on
August 6, 1990.
The following facts were elicited at the trial based on the
testimony of Tony Sheng, the president and sole owner at all
relevant periods of time, of all the corporations set forth in
the above-captioned case.
On April 8, 1988, the Board found that Honeycomb Plas-
tics Corporation (Honeycomb), a manufacturer of plastic
products, Laminray Corporation (Laminray), and import/-ex-
port company, and Honeyware Products, Inc. (Honeyware
Products), and Hangerplast, Inc. (Hangerplast), constituted a
single employer under the Act. At the time of the instant trial
Honeycomb and Honeyware Products were involved in bank-
ruptcy proceedings; and Laminray and Hangerplast had long
since ceased operations.
Sheng, the president and owner of these corporations is
also the president and sole owner of Honeyware Manufactur-
ing (Honeyware Mfg.) which was engaged in the manufac-
turing of plastic products from April 1989 to December
1989, and Honeyware International, Inc. (Honeyware Inter-
national), initially engaged in sales and later in manufactur-
ing of plastic products. All six corporations shared the same
offices and facilities at 244 Dukes Street, Kearny, New Jer-
sey.
Sheng began his maze of corporations and business oper-
ations in 1977 when he formed Honeycomb. It was at that
time located in Union, New Jersey. In 1979 it was moved
to the Kearny location. At that time, Sheng and his wife
were leasing the property and it was not until 1981 that they
purchased it. The Shengs, as landlords entered into a lease
with Honeycomb, which provided that Honeycomb would
pay a rental fee and carrying charges such as taxes and utili-
ties. From 1977 until 1984 or 1985 Honeycomb was engaged
in subcontracting work. It manufactured plastic products for
other companies who supplied it with their custom molds.
Honeycomb manufactured the product and shipped it to the
contracting customer.
Laminray was the next corporation set up by Sheng.
Laminray imported electrical line cord from Taiwan and
stayed in existence for a long time but did little business.
According to Sheng, Laminray never made any money.
In 1984 or 1985 Sheng formed Honeyware Products. It be-
came a customer of Honeycomb and as with other customers,
it provided the molds for Honeycomb to manufacture speci-
fied plastic products. Sheng invested over $200,000 in molds
for Honeyware Products. In the beginning Honeyware Prod-
ucts sold mostly bathroom and tableware accessories.
Honeyware Products’ customers were department, chain, and
discount stores. Its sole employee was a salesman. Honey-
comb handled the bookkeeping for both corporations.
Sometime in 1988, the sales manager for Honeyware Prod-
ucts sued and obtained a judgment against the corporation for
over $60,000. As a result the bank with whom Honeyware
Products did business levied on the corporation’s bank ac-
count and demanded payment of a $250,000 loan, which the
corporation was unable to pay. Accordingly, the bank gave
the molds to Honeycomb and asked it to assume the liability.
Sheng, who was personally liable on the note, he had no
other choice but to accept. Sheng was not sure whether it
was the bank or Honeycomb who took Honeyware Products’
account receivable. It is clear, however, that the assets and
debts of Honeyware Products were turned over to Honey-
comb.
Another corporation formed by Sheng was Hangerplast. It
was formed sometime after 1985 and was in operation for 2
or 3 years. Hangerplast was formed for the purpose of selling
a hanger manufactured by Honeycomb. Hangerplast stopped
doing business on or about July 1989 when Sheng filed a
chapter 11 bankruptcy petition on behalf of Honeycomb.
Hangerplast was a customer of Honeycomb and in 1988
Honeycomb manufactured a hanger for it. At the time of the
trial, Hangerplast was not in operation.
Honeyware Products ceased operating in 1988. Sheng
thereafter formed another corporation, Honeyware Inter-
national. Like Honeyware Products, it became a customer of
Honeycomb and contracted the same line of products to Hon-
eycomb as Honeyware Products had done prior to its closing
down.
Honeyware International expanded its sales operations and
an arrangement was made by Sheng whereby Honeycomb
would receive 85 percent of the profits and the remaining
would go to Honeyware International for expenses. Like all
of Sheng’s business transactions, this arrangement was not
reduced to writing. Sheng testified in this connection that
there was no need for paper. All he needed was a purchase
order signed by him.
On or about 1989 Sheng formed Honeyware Mfg., to take
the place of Honeycomb which was having financial difficul-
ties. Honeyware Mfg. took over the entire Honeycomb oper-
ation. Respondent stipulated that Honeyware Mfg. was the
alter ego of Honeycomb.
On July 14 Sheng filed a chapter 11 reorganization peti-
tion for Honeycomb and a chapter 7 liquidation for
Honeyware Products.
On or about the end of 1989, Sheng ceased operations of
Honeyware Mfg. Sheng testified that it owed money and
there was no need for it to continue. He testified it had no
more credit and was not able to pay its bills.
In January 1990 Honeyware International, which was al-
ready in existence doing sales and marketing, took over the
manufacturing operations of Honeyware Mfg. Respondent
572 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
contends that Honeyware International was an independent
operation and that it was not a continuation of the old oper-
ations. Sheng testified, however, that Honeyware Inter-
national was engaged in the same plastic business as Honey-
comb and later, Honeyware Mfg. The record reveals the op-
erations continued at the same location and that most of the
employees of Honeyware Mfg. were retained by Honeyware
International. Honeyware International also continued using
the same equipment which continued under Honeycomb
ownership. In exchange for use of the equipment Honeyware
International agreed to pay Honeycomb’s obligations, such as
interest on bank, car, and computer loans. The agreement in-
volved no exchange of money.
At the time of the hearing in August 1990, Honeyware
International employed 80 employees. Honeyware Mfg., dur-
ing its existence had 100 to 110 employees and Honeycomb
had 100 to 120 employees in April 1989. In April 1990
Honeyware International was manufacturing basically the
same type of plastic products that had been manufactured in
April 1988. In essence, Honeyware International was making
the same kind of plastic household products that both Honey-
comb and Honeyware Mfg. had manufactured.
Honeyware International not only continued the same
basic manufacturing operations of its predecessors but also
paid off $70,000 in payroll taxes owed by Honeycomb. This
was done after the chapter 11, described above, petition was
filed. Sheng testified that he didn’t know that he wasn’t sup-
posed to pay those taxes, however, he admits that he, in fact,
paid them. Honeyware International also continued making
payments for the Honeycomb equipment that it continued to
use. As set forth above, Honeyware Mfg. had made the same
arrangement with Honeycomb. Company vehicles owned by
Honeycomb were being utilized by Honeyware International
who finished paying off a loan on one of the vehicles.
Sheng’s Personal Involvement with the Corporation
Sheng admitted that with regard to Honeycomb,
Honeyware Products, Hangerplast and Laminray he formu-
lated, implemented, and administered all labor relations pol-
icy affecting all the employees of these corporations. He also
admitted that he was responsible for all financial, business,
and other affairs of these corporations. The record establishes
that the same is also true for Honeyware Mfg. and
Honeyware International.
Sheng, at all times material, has always been the sole
owner and sole officer of the above six corporations. It is
clear that in reality Sheng was the corporations and they
were merely paper arrangements for his financial manipula-
tions.
Sheng testified that starting from day one he lent money
to Honeycomb many times. Initially he reduced the loans to
writing, but later grew tired of it and stopped. Instead, he
would make a notation on his deposit tickets. According to
Sheng, it made no sense to make formal documents or to in-
volve lawyers. The loans to Honeycomb were in the form of
a personal check from Sheng. Sheng admitted that most of
the time he was never repaid and when he was, he would
not require interest on the loans. On the occasional times that
he was repaid, the repayment would take the form of a check
from Honeycomb to Sheng and a notation would be made on
the checkbook that an officer loan had been repaid.
The record includes only two documents reflecting
Sheng’s personal loans to the above corporations, both of
which exemplify the lax manner in which he conducted his
personal transactions with these corporations. One of these
documents consists of one sentence on Honeycomb station-
ary which appears to state that Honeycomb will assume the
payment of a $170,000 personal loan Sheng got from a bank
and loaned to Honeycomb. The other document is a personal
notebook in which Sheng made notations of moneys coming
into the business, including his loans. Sheng admitted that
his personal notebook was not 100 percent accurate. Sheng
testified that usually his bookkeeper would tell him when a
loan was repaid to him but Respondent produced no other
bookkeeping records as to repaid loans to corporations by
Sheng.
The record established that on the Honeyware Products,
chapter 7 petition, Sheng listed himself as an unsecured cred-
itor for $350,000 and Honeycomb as an unsecured creditor
for $668,138.15. On the Honeycomb chapter 11 petition he
listed himself as an unsecured creditor for $951.878. Sheng
admitted that, in addition to making these unsecured personal
loans to the corporations, he also personally secured the ap-
proximately $2.1 million owed by Honeycomb to Howard
Savings Bank. The money owed to Howard Bank is secured
by all of Honeycomb’s assets, including accounts receivable.
Sheng also used his personal credit cards for business pur-
poses. He testified that he used his own personal credit cards
for company purposes all the time, because his company
credit cards did not have a good credit line. As a practical
matter, Sheng’s personal American Express card was his
business card. His company would repay his card payments
to him with a company check and he would subtract from
that check any personal charges he made on the card. Sheng
had two purchases for Honeycomb and later for Honeyware
International. He would cash the company check and made
a personal check to American Express.
Although Sheng, had business credit cards, as set forth
above, he rarely used them. However, the record reveals that
on occasion when he used such business credit cards, he
made as personal purchases, such as a raincoat, $478 for
men’s neckwear, $350 for pants and suits, and $744.20 for
other menswear.
Sheng’s personal recordbook for all the corporation’s
transactions was haphazardly kept. It shows money coming
in for Honeycomb and Honeyware International but makes
no distinction as to who received such moneys. It also has
entries from Laminray and Hangerplast. Apparently the book
is a record of Sheng’s personal loans, and receivables for all
of the corporations lumped together. Sheng admitted that he
made no separation as he only wanted to know what money
was coming in. The book also shows no distinction in cus-
tomers. Sheng’s method of recordkeeping follows his pattern
of conducting business. There were no clear lines between he
and his corporations or between the corporations themselves.
Sheng, admittedly, transferred money from Laminray and
Hangerplast to Honeycomb when it was in trouble. His per-
sonal notebook shows that in January 1988, Honeycomb re-
ceived $28,000 from Laminray. Sheng approved the transfers
and the procedure he used was not formal or well docu-
mented and would expect or be required in a corporate set-
ting. Sheng’s accountant would simply inform him that Hon-
eycomb didn’t have any money, ask him whether they could
573HONEYCOMB PLASTICS CORP.
take some from Hangerplast or Laminray, and Sheng would
approve the transfer. Sheng also transferred money from
Honeyware International to Honeyware Mfg. and Honey-
comb in the same manner.
Sheng’s recordbook showed that on August 12, 1988, he
had made two personal loans of $10,000 each to Honeycomb
for it to meet its payroll. The book also shows for September
2, 1988, an entry for a loan, presumably for Honeycomb, of
$10,000 from Sheng for payroll purposes. Below that entry
is another entry showing ‘‘Honeyware, Int., $4,000, Pay-
roll.’’ Sheng couldn’t explain what the latter entry meant. He
stated that he couldn’t remember what happened. As
Honeyware International did not take over the payroll until
January 1990, Sheng thought it could be an advance of
money for payroll. These entries really establish that there
were no lines between corporations.
At the time of the hearing in August 1990, Honeyware
International was operating at the facility on 244 Dukes St.
under the old Honeycomb lease, and Sheng had received no
rent for his property since before July 14, 1989. The record
establishes that the original lease between Sheng as the land-
lord and Honeycomb was automatically renewed year to year
without complying with the 33d section of the addendum to
the lease which requires that written notice to be given to the
landlord. Sheng testified that he didn’t want to go through
the trouble and expense of renewing in writing. Unlike nor-
mal leasing, transactions between a landlord and a corpora-
tion, this lease had no specified amount to be paid as rent.
The rent paid by Honeycomb depended on Sheng’s expenses,
such as real estate taxes, and the mortgage. The amount var-
ied from year to year and he never made a profit. Like his
other transactions, this transaction was not made at arm’s
length.
The record establishes a pattern of manipulation of the
corporations by Sheng and intermingling of his personal
funds with his corporations. When Honeyware needed money
he took some from Laminray and Hangerplast. When
Honeyware Products ceased operations he and his banker
signed papers turning the assets of Honeyware Products over
to Honeycomb. When Honeycomb could no longer continue
manufacturing because it was out of money, he formed a
new corporation, Honeyware Mfg., to get the credit and con-
tinue the manufacturing operations. When the credit and
money ran out for Honeyware Mfg. Sheng simply turned the
operations over to Honeyware International. When any cor-
poration needed money they had unlimited access to Sheng’s
personal funds and credit cards.
Analysis and Conclusion
Counsel for the Board contends that Honeyware Mfg. and
Honeyware International are alter egos of Honeycomb,
Honeyware Products, Laminray, and Hangerplast. Counsel
for Respondent contends Honeyware International is an inde-
pendent corporation, and not an alter ego or joint employer
with Honeyware Mfg.
Factors considered by the Board in determining whether
an enterprise is the alter ego of another enterprise include:
(1) common management and ownership; (2) common busi-
ness purpose, nature of operation, and supervision; (3) com-
mon premises and equipment; (4) common customers, i.e.,
whether the employers constitute the same business in the
same market; (5) the nature and extent of the negotiations
and formalities surrounding the transactions; and (6) whether
the purpose behind the creation of the alleged alter ego was
legitimate or whether, instead, its purpose was to evade re-
sponsibilities under the Act. Watt Electric Co., 273 NLRB
655, 658 (1984); Fugazy Continental Corp., 265 NLRB 1301
(1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984); Advance Elec-
tric, 268 NLRB 1001 (1984). In Watt Electric, supra, the
Board held that each case must turn on its own facts and no
one factor is controlling.
In the instant case, Respondent admitted that Honeyware
Mfg. is the alter ego of Honeycomb. In view of the stipula-
tion, the record evidence and the Board’s previous finding
that Honeycomb, Honeyware Products, Hangerplast, and
Laminray constitute a single employer, I conclude that
Honeyware Mfg. is the alter ego of all these corporations.
Regarding Honeyware International, the evidence estab-
lishes that there is common management, ownership, busi-
ness purpose, nature of operation and supervision, common
premises, use of equipment, and customers. Thus, the record
establishes that Honeyware International and the five other
corporations utilized the same building and the same equip-
ment. Honeycomb, Honeyware Mfg., and Honeyware Inter-
national employed the same complement of employees and
supervisors, who worked under the centralized labor relations
policies determined by owner and sole officer Tony L.
Sheng. The evidence establishes that Honeycomb,
Honeyware Mfg., and Honeyware International were all en-
gaged in the same business, in the same market. Further-
more, Hangerplast, Honeyware Products, and Honeyware
International were at one time or another, all customers of
Honeycomb.
Concerning the nature and extent of the negotiations in the
instant case, the evidence establishes a lack of formalities
surrounding Sheng’s corporate transactions. The evidence es-
tablishes that Sheng ignored corporate formalities and treated
all of his corporations as one entity rather than separate cor-
porations. Thus, he freely and informally transferred moneys
from one to another and conducted the same manufacturing
operation under different corporate names.
As set forth above, the Board in determining alter ego sta-
tus, considers ‘‘whether the purpose behind the creation of
the alleged alter ego was legitimate or whether, instead, its
purpose was to evade responsibilities under the Act. Another
way of describing an alter ego is by the term ‘‘disguise con-
tinuance.’’ Weldment Corp., 275 NLRB 1432, 1433 (1985).
The Supreme Court in Howard Johnson Co. v. Detroit Joint
Board, 417 U.S. 249, 259 fn. 5 (1974), described an alter
ego disguise continuance case as one involving a mere tech-
nical change in the structure or identity of the employer and
entity, frequently to avoid the effect of labor laws, with no
substantial change in its ownership or management.
It is clear that Sheng manipulated the corporations, form-
ing new ones to continue the business of the old ones and
his transactions between the corporations were not at arm’s
length. The operations of Honeyware Manufacturing are
clearly a continuance of the predecessor corporations. It is
clear to me that Honeyware International was formed to
evade the backpay liability of other aforementioned corpora-
tions.
I also conclude that the evidence supports the conclusion
that Honeyware Mfg., Inc. and Honeyware International are
alter egos of the other corporations. In Crawford Door Sales
574 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Co., 226 NLRB 1144 (1976), the Board found alter ego sta-
tus where the two enterprises had substantially identical man-
agement, business purpose, operations, equipment, customers,
and supervision. The Board did not address the issue of un-
lawful intent and, therefore, did not consider it as a necessary
element to a finding of alter ego status. Market King, Inc.,
282 NLRB 876 (1987); Leslie Oldsmobile, 276 NLRB 1314
(1985); Best Roofing Co., 298 NLRB 754 (1990). Accord-
ingly, I conclude that Honeyware Mfg. and Honeyware Inter-
national constitute alter egos of, and are a joint employer
with, Honeycomb, Honeyware, Laminray, and Hangerplast. I
further conclude they are jointly and severally responsible for
remedying the unfair labor practices of Respondent.
As set forth above, Respondent contends that Honeyware
International did not take over the business operations of
Honeycomb as an alter ego but rather, that it is an independ-
ent entity which is being pressured by the bank to assume
Honeycomb’s debts to the bank and to purchase its assets.
The Supreme Court, in Golden State Bottling Co. v.
NLRB, 414 U.S. 168, 174–185 (1975), approved the Board’s
policy requiring that successor employers remedy the unfair
labor practices committed by their predecessors where the
successor through a sale acquires and operates a business of
an employer found guilty of unfair labor practices in basi-
cally unchanged form, under circumstances which charge
him with notice of unfair labor practice charges against his
predecessor. The factors which must be present to show a
Golden State successor are that there must be a substantial
continuity of the employing enterprise after the sale and it
must be clear that the successor had knowledge of the prede-
cessor’s unfair labor practice liability at the time of the sale.
In the instant case both factors are present. The evidence
clearly establishes a continuity of the employing enterprise.
Honeyware International is engaged in the manufacture of
plastic products, using the same building, employees, and
equipment as Honeycomb and Honeyware Mfg. In view of
common ownership by Sheng, I conclude that Honeyware
International and Honeyware Mfg. had knowledge of the Re-
spondent’s unfair labor practice liability. I further conclude
that the Golden State successor analysis can be applied to the
instant case. Accordingly, I conclude that Honeyware Mfg.
and Honeyware International can be required to remedy the
unfair labor practices of the Respondent as Golden State suc-
cessors.
A trustee in bankruptcy is an alter ego of the employer in
bankruptcy. Jersey Juniors, Inc., 230 NLRB 329 (1977);
Cagle’s Inc., 218 NLRB 603 (1975). In the instant case the
Board’s first amended compliance specification and notice of
hearing which includes Robert A. Drexel, interim trustee in
bankruptcy of Honeyware Products, Inc. and P. Gerard
Megaro, trustee in bankruptcy of Honeycomb Plastics, as Re-
spondent. I therefore conclude that as a matter of law they
are successors in bankruptcy and alter egos of the corpora-
tions within the meaning of the Act.
An individual respondent, along with business entity re-
spondents will be held personally liable for remedying unfair
labor practices, particularly the make-whole remedies, be-
cause of the individuals’ actual and/or ownership interest in
the integrated enterprises. Weldment Corp., supra; Campo
Slacks, Inc., 266 NLRB 492 (1983); Bryan Construction Co.,
240 NLRB 102 (1979); Ogle Protection Service, 149 NLRB
545, 546 (1947).
In the instant case, Sheng operated the six corporations in
an interrelated manner. As sole owner and officer he exer-
cised full authority and discretion in all decisions affecting
the corporations. By his own admission he determined all
labor relations policies and was responsible for all affairs of
the corporations.
The Board in Riley Aeronautics Corp., 178 NLRB 495,
501 (1969), summarized the relevant law regarding piercing
of the corporate veil as follows:
[T]he corporate veil will be pierced whenever it is em-
ployed to perpetrate fraud, evade existing obligations,
or circumvent a statute. Isaac Schieber, et al., individ-
ually and Allen Hat Co., 26 NLRB 937, 964 enfd. 116
F.12d (C.A. 8). Thus, in the field of labor relations, the
courts and Board have looked beyond organizaitonal
form where an individual or corporate employer was no
more than an alter ego or a ‘‘disguised continuance of
the old employer’’ (Southport Petroleum Co. v. NLRB,
315 U.S. 100, 106); or was in active concert or partici-
pation in a scheme or plan or evasion (NLRB v. Hop-
wood Retinning Co., 104 F.2d 302, 304 (C.A. 2)); or
siphoned off assets for the purpose of rendering insol-
vent and frustrating a monetary obligation such as
backpay (NLRB v. Deena Artware, Inc., supra, 361 U.S.
398); or so integrated or intermingled his assets and af-
fairs that ‘‘no distinct corporate lines are maintained.’’
Id. at 403).
The evidence clearly established that Sheng integrated and
intermingled his assets and affairs with those of the six cor-
porations to the extent that no distinct corporate lines exist.
In Campo Slacks, Inc., supra, the Board found an individ-
ual to be the alter ego of three corporate entities based on
the fact that he had personally guaranteed corporate debts,
made loans to the corporations without seeking repayment,
and personally decided whether to continue operating or
cease doing business. In the instant case, Sheng personally
guaranteed millions of dollars in corporate debts, and loaned
the corporations over a million dollars with no security for
such loans. Sheng admitted that most of the time he was nor
repaid for those loans and charged no interest. Moreover, the
evidence establishes that Sheng manipulated the corporations
and at his whim, formed and discarded corporations to meet
his needs.
The Board has imposed individual liability where the indi-
vidual dominated the corporate entities which were found to
be largely paper arrangements that did not reflect the busi-
ness realities and where the individual’s affairs and those of
the corporations were so intermingled that no distinct cor-
porate boundaries existed. O’Neill, Ltd., 288 NLRB 1354
(1988).
In the instant case, the evidence established that Sheng
dominated all of the corporations to the extent that in reality
he was the corporations and the corporations were merely
paper arrangements. Sheng ignored all corporate formalities.
His transactions were informal and mostly undocumented.
His affairs and those of the corporations were so inter-
mingled that there was no distinction between the two.
Sheng’s personal transactions with the corporations such as
the business use of his personal credit cards, the nature of
the lease of his property to Honeycomb, lack of lease with
575HONEYCOMB PLASTICS CORP.
1 As set forth above, Respondent did not litigate the issue of backpay.
2 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 objec-
tions to them shall be deemed waived for all purposes.
Honeyware International, and his informal personal loans to
the corporations clearly show an absence of arm’s-length
dealings.
In view of Sheng’s dominance over the corporations, ma-
nipulation and intermingling of his affairs with those of the
corporations, I conclude that he is the alter ego of the six
corporations. I further conclude that he is personally liable
for remedying the unfair labor practices of Respondent.
CONCLUSIONS OF LAW
1. Honeyware Manufacturing, Inc. and Honeyware Inter-
national, Inc. are alter egos of Honeycomb Plastics Corp.,
Honeyware Products, Inc., Laminray Corporation, and
Hangerplast, Inc.
2. Honeyware International and Honeyware Mfg. are
Golden State successors of Respondent.
3. The interim trustee in Bankruptcy of Honeyware Prod-
ucts, Inc. and the Trustee in Bankruptcy of Honeycomb Plas-
tics Corporation, are successors in bankruptcy and alter egos.
4. Tony L. Sheng is the alter ego of the Respondent cor-
porations and therefore is personally liable for the backpay
due the discriminatees.
5. The total net backpay excluding interest, for the
discriminatees is set forth as follows.1
Maureen Alday $3,095.80
Nohimy Ayalo 2,594.88
Maria Casas 1,372.68
Maria DeCarvahlo 995.67
Ana Deluca 0.00
Vicotr Febus 13,424.15
Raul Gonzalez 5,239.48
Buz Guaman 2,457.21
Edith Gurerrero 1,894.68
Nieves Hernandez 2,374.84
Dana Kennedy 8,945.60
Diana Lamela 9,287.50
Donna Lennon 4,283.17
Charles Lubens 2,736.48
Maria Mejia 1,545.02
Cecilia Narvez 2,295.66
Ames Perez 13,049.59
Ana Santos 446.88
Carmen Silva 145.27
Maria Soto 2,436.81
Luis Valderrama 2,564.62
Nilda Vilca 2,421.89
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended2
ORDER
The Respondent, Honeycomb Plastics Corporation,
Honeyware Products, Inc., Laminray Corporation,
Hangerplast, Inc., Honeyware International, Inc., Honeyware
Manufacturing, Inc., P. Gerard Megaro, as Trustee in Bank-
ruptcy for Honeycomb Corporation, Robert A. Drexel, as In-
terim Trustee in Bankruptcy for Honeyware Products, Inc.
and Tony L. Sheng, an individual, their officers, agents, suc-
cessors, and assigns, shall pay individually and collectively
to the discriminatees set forth below the amounts set forth
opposite their name together with interest as set forth in Isis
Plumbing & Heating Co., 138 NLRB 716 (1962), and Flor-
ida Steel Corp., 231 NLRB 651 (1977).
Maureen Alday $3,095.80
Nohimy Ayalo 2,594.88
Maria Casas 1,372.68
Maria DeCarvahlo 995.67
Ana Deluca 0.00
Vicotr Febus 13,424.15
Raul Gonzalez 5,239.48
Buz Guaman $2,457.21
Edith Gurerrero 1,894.68
Nieves Hernandez 2,374.84
Dana Kennedy 8,945.60
Elana Lamela 9,287.50
Donna Lennon 4,283.17
Charles Lubens 2,736.48
Maria Mejia 1,545.02
Cecilia Narvez 2,295.66
Ames Perez 13,049.59
Ana Santos 446.88
Carmen Silva 145.27
Maria Soto 2,436.81
Luis Valderrama 2,564.62
Nilda Vilca 2,421.89