John Fender Electric Co.

National Labor Relations Board - Board Decisions

Sep 11, 1979

244 N.L.R.B. 957 (N.L.R.B. 1979)

JOHN FENDER ELECTRIC COMPANY
John Fender Electric Company and its alter ego or
joint employer Fender-Mason Electric Company
and International Brotherhood of Electric Workers,
Local No. 545. Case 17-CA 8573
September 11, 1979
DECISION AND ORDER
BY CHAIRMAN FANNING AND MIEMBERS PENIIl.I.O
ANI) TRUESDALL
On June 1. 1979, Administrative Law Judge David
G. Heilbrun issued the attached Decision in this pro-
ceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions and supporting briefs.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings, and
conclusions' of the Administrative Law Judge and to
adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended Or-
der of the Administrative Law Judge and hereby or-
ders that the complaint be, and it hereby is, dismissed
in its entirety.
I In affirming the Administrative Law Judge's conclusion that Fender-
Mason Electric Company is not an alter ego of John Fender Electric Com-
pany, we emphasize, apart from the substantially different ownership of the
two companies and other factors, their markedly divergent labor relations
and operational structures.
The organization of John Fender Electric placed complete authority for
all labor relations and operational matters in the hands of John Fender.
president, and, with his wife, co-owner of the Company. Thus, Fender per-
formed the "inside" or office work of preparing cost estimates and bids for
electrical subcontracting jobs, and also supervised the "outside" or field op-
erations of the Company at the jobsite. Fender also had sole responsibility
for hiring, firing, and disciplining both office and field employees.
Fender-Mason Electric, however, is set up along entirelv different lines.
Fender's co-owner in the new concern. Clinton Mason. does essentially all
the inside work of estimating costs and placing bids for contracts. Mason
also does all hiring, both of office and field employees, shares joint responsi-
bility with Fender for firing employees, and has the power to discipline
employees on the jobsite in Fender's absence. Fender's role in Fender-Ma-
son is confined almost exclusively to supervising the Company's onsite field
operations.
For these reasons. along with all the others given by the Administrative
Law Judge, we find that Fender-Mason is an independent business and not
simply an alter ego of John Fender Electric.
DECISION
STAtEMENT OF TIlE CASE
DAVID G. HEILBRUN, Administrative Law Judge: This
case was heard in Savannah. Missouri, on March 7. 1979,
based on a complaint alleging. as amended at hearing, that
John Fender Electric Company, called Respondent Fender.
and Fender-Mason Electric Compan). as its alter ego or
joint employer. and called Respondent Fender-Mason. vio-
lated Section 8(a)( 1). (3). and I5) of the Act hy failing and
refusing to reemploy Jim Lucas because of his membership
in, support for, or activities on behalf of International
Brotherhood of Electrical Workers. L.ocal No. 545. called
the Union, while contemporaneously repudiating a certain
collective-bargaining agreement and withdrawing previ-
ously accorded recognition of the Union.
Upon the entire record, my observation of the witnesses.
and consideration of post-hearing hriets, I make the follow-
ing:
FINDINGS 01 FACT ANI) REstI IAN I ('N( I t S()N ()l- 1A.x
John Fender incorporated John Fender Electric Com-
pany in 1971 and operated it ats an electrical contracting
business until liquidation in June 1978.1 During this period
he was a corporate director, sole managing official, and oc-
cupied the position of president and treasurer. His wife.
Geraldine Fender, was corporate vice president and secre-
tary, as well as the other director. Over at least this same
period of time the National Electrical Contractors Associ-
ation (NECA) existed as a multiemplo'er bargaining asso-
ciation for the vicinity. It was party to a series of collective-
bargaining agreements with the Union. the most recent of'
which is now in effect from June I, 1978. to June 1. 1980.
Respondent Fender was originally a NECA member (as
was John Fender individually prior to that time), and re-
mained so until 1973. During these years of NECA mem-
bership Respondent Fender executed certain letters of as-
sent. The most recent, dated June 5. 1974, reads:
In signing this letter of assent, the undersigned firm
does hereby authorize St. Joseph Division Kansas
City Chapter NECA as its collective bargaining repre-
sentative for all matters contained in or pertaining to
the current approved Inside labor agreement between
the St. Joseph Division Kansas City Chapter NECA
and Local Union 545, IBEW. This authorization. in
compliance with the current approved labor agree-
ment. shall become effective on the Ist day of June.
1974. It shall remain in effect until terminated b the
undersigned employer giving written notice to the St.
Joseph Division-Kansas City Chapter NECA and to
the Local Union at least one hundred fifty (150) days
prior to the then current anniversary date of the atire-
mentioned approved labor agreement. [Footnotes
omitted.]
After withdrawal from NECA membership Respondent
Fender operated uneventfully under successive labor con-
During calendar ear 1977 Respondent Fender maintained an office and
facility at St. Joseph. Missouri. where it engaged in the electrical contracting
business, annually purchasing goods and materials valued in excess of
$50,000 from sources within Missouri. which sources, in turn, purchased
such goods and materials directls from outside Missoun I find that Respon-
dent Fender is therefore an employer within the meaning of Sec 261 and 7)
of the Act. and that the Union is a labor organizaion w ithin the meaning of
Sec. 215).
244 NLRB No. 153
957
I) [(ISI()NS OF NAT IONAL I.ABOR RELATIONS BOARD
tracts, employing electricians through a hiring hall, paying
applicable wage scales, making required trust fund contri-
hutions. and tiling monthly payroll reports with the Union.
Although formerl: having as many as 10 personnel, by
spring 1978 Respondent Fender was employing only two
journeyman electricians.' On April 24 Respondent Fender
laid off John Robinson as it phased down from available
work. On May 10 its only remaining electrician, Jim Lucas
a veteran of I I years employment with Respondent Fender
and the earlier John Fender proprietorship, was also laid
off. As this transpired John Fender engaged in several con-
versations with Clinton Mason. looking with increasing se-
riousness to their going into business together. Mason has
over 20 years experience in electrical supply sales and dis-
tribution, most recently working as manager of a supplier to
Respondent Fender. These discussions had coalesced out of
John Fender's expressed intention to cease operations on
the basis (unspoken to Mason) of chronic unprofitahility
and the latter's interest at the time in finding a going busi-
ness investment in which he might also be actively em-
ployed. Mason felt his expertise lay in materials procure-
ment and job estimating, which he believed would
effectively complement John Fender's field ability. What
evolved was incorporation of Respondent Fender-Mason
on May 22. with John Fender subscribing by property and
Mason subscribing by cash.' Respondent Fender-Mason
then commenced operations with the anticipated division of'
inside and outside responsibilities assumed by Mason and
John Fender, respectively. A certain Queen City job, then
underway by Respondent Fender, was continued by Re-
spondent Fender-Mason after the customer consented to
such change in a letter dated May 29 written by an official
to John Fender which reads:
We received your letter dated May 25. 1978. We are
sorry that John Fender Electric is going out of business
but we have a lot of confidence in you personally. We
will change our records to show your contract in the
name of Fender-Mason Electric.
This letter becomes a part of your contract.
Hoping the new company is successful, I remain,
Sincerely,
At about this time John Fender offered employment on the
Queen City job to Lucas at $10.30 per hour.4 He declined.
and Respondent Fender-Mason thereafter employed sev-
eral electricians for acquired jobs, none of whom was re-
ferred by the tUnion or paid at wage rates of the Union's
NECA contract.'
2 All dates and named months hereafter are in 1978, unless shown other-
wise.
Four vehicles. other equipment, and business accounts receivable were
formally transferred by John Fender (as his own personal assets upon con-
current liquidation of Respondent Fender). while Mason paid Geraldine
Fender $25.778 for her personal share of liquidation proceeds Ideeming this
a partial discharge of his subscription obligation to Respondent Fender-
Mason). and deposited a second $20,000 portion in cash to the new corpora-
tion. These transactions were what vitalized Respondent Fender-Mason as
to equipment and start-up capital.
'The Queen C(iy job was one on which a statutory prevailing wage deter-
mination was applied. This rate was equal or near to the actual scale of the
Union's sister local for that vicinity of Hannibal. Missouri.
Although Lucas declined regular reemployment. he did in fact work a
Lucas credibly testified that prior to his layoff in May
John Fender had ruminated aloud about going nonunion
because of increasing competition. He also verified that the
Queen City job was offered to him at a rate he recalled
being around $10 per hour. Robert McAndrews union
business manager and financial secretary, testified that in
early June he telephoned John Fender to ask his intentions
under the then new contract. Fender assertedl answered
that he was not "making it" as a union contractor and so
was "thinking of going" the alternate way. John Fender
denied having such a conversation, recalling only speaking
casually to McAndrews around June I as the latter made a
site visit at an APCO station.
The General Counsel contends that Respondent Fender-
Mason is an lter ego enterprise, which must accept the
same recognitional and contractual obligations as imposed
on Respondent Fender. Beyond the chronology of its for-
mation, the General Counsel points to showings that janito-
rial. insurance, and bonding services have continued with-
out change, that John Fender's own compensation is
identical to what he and his wife collectively received be-
fore, and that the previous company name remains on the
building (although truck identification and telephone book
listings have changed). I do not believe that principles of
alter ego cases permit such a holding. Ordinarily substantial
identity of ownership along with other factors must be pre-
sent for a newly formed employer to be considered the mere
oiller ego of another. Crawbibrd Door Sles (ompaniv Inc.,
and Cordes Door Compantv Ine., 226 NLRB 1144 (1976).
Here the ownership of Respondent Fender-Mason is radi-
cally different both in essence and intent. Even assuming
some commonality of purpose in the former husband and
wife ownership of Respondent Fender, this duality has not
only been dissolved but John Fender now owns merely a
noncontrolling half interest. Mason's cash investment
achieved his desired 50-percent interest (one which neither
attained nor relinquished corporate control), without per-
sonal assumption of prospective corporate liabilities. See
Clinton Foods, Inc. d/h/a Morton's I. G.A. Foodliner and its
alter ego or Joint Employer Satn & Ed's In(. d/b/la Sam &
Ed's I.G.A. and SamI Morton n agent, 240 NLRB 1246
(1979). The evident moving force in continuation of the
business was Mason, and as to him there is no proof of a
"fraudulent or illusory" objective. Cf: Davis an & Storage:
Great Western Van & Storage Co., 218 NLRB 1339 (1975).
For John Fender's part, while he was credibly shown to
have voiced exasperation over high business costs traceable
to wages and fringe benefits of the NECA contract,' his
actual phasing out (diverted only by randomly spurred ar-
rangements with Mason) was unfolding as permissible Dar-
/ington-type7 action. Additionally, this case does not reveal
couple of days on the job straightening up the construction trailer. For this
John Fender paid him "the St. Joe rate." presumably $11.54 per hour
I credit McAndrews concerning his testimony of a telephone conversa-
Iion with John Fender in early Julle. On this point McAndrews was persua-
sively clear and forthright. while Fender gave the appearance of cnve-
niently overlooking this exchange. I am satisfied that John Fender voiced the
prospect of nonunion operations to both McAndrews and Lucas., because
this would be a natural outgrowth of his contemporaneous negotiations with
Mason.
7 Textile Workers Union v. Darlingon Manufacturing Co. 380 U.S. 263
(1965)
958
JOHN FNDER ELECTRIC COMPANY
ans degree of animus as is Ifund in aler ego situations that
are exposed to be mere "disguised continuance" of a prede-
cessor. Cft: The Bell Companv. Inc.. and its agen,. Richard
Balistreiri; Paul .M )sko i: as rcceiver ir The Bell Com-
panv, Inc.; and Richard Balistreiri. dlh/a Endurall Products,
225 NLRB 474 (1976). Nelson Electric, Gar C. Nelson Inc.
and Gary C. Nelson Electric 241 NLRB 545 (1979). As field
manager of Respondent Fender-Mason. one of John Fend-
er's early determinations was to offer employment to known
union member Lucas. while Mason was equanimicably
neutral on the notion of union versus nonunion style of
operation, as he focused mainly on strengthening other
business practices. The assumption by Respondent Fender-
Mason of warranty work on a senior citizens project has no
real significance beyond its good will characteristic. and the
North American Savings and Loan job. about which John
Fender was questioned, has not been shown to be more
than routine new work of Respondent Fender-Mason as he
described. The Board has taught in Crawford Door Sales.
supra, that respecting an alter ego issue. "each case must
turn on its own facts." Overall. evidence here is insufficient
to show Respondent Fender-Mason an alter ego (or in this
instance as a comparably stNled "joint emploxer"). and be-
cause General Counsel has expressly limited this case to
such allegations. it is inappropriate to go beyond that and
treat principles applying to the theory of continuity as to an
employing industry. Cf. lnternalional Offett (Corp., 2 10
NLRB 854 (1974): (agle. Ine.. 218 NLRB 603 (1975):
H. S. Brooks Electric. Inc., K. & F. Electric Co.. Inc. aid/
aldelmanlr ikolati, their agent, 233 NLRB 889 1977): Sos-
.5xtllon Electric Co., and Sassco Building Sstel.s Inc. 241
NLRB 324 (1979). Accordingly. I render a conclusion of
law that neither Respondent Fender nor Respondent
Fender-Mason have violated the Act, as alleged. and issue
the following recommended:
ORDER"
The Complaint is dismissed in its entirety.
In the event 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
ot the Rules and Regulations, he adopted hb the Board and become its
findings, conclusions, and Order. and all objections thereto shall he deemed
waived r all purposes.
959