Johnstown Corp.

National Labor Relations Board - Board Decisions

Nov 23, 1993

313 N.L.R.B. 170 (N.L.R.B. 1993)

170
313 NLRB No. 19
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 In adopting the judge’s finding that the Respondents are alter
egos we find it unnecessary to rely on the judge’s citations to
Esmark, Inc. v. NLRB, 887 F.2d 739 (7th Cir. 1989), and Hendricks-
Miller Typographic Co., 240 NLRB 1082 (1979), which are stock
transfer cases.
2 The record reveals that Sheehan’s percentage interest apparently
fluctuated somewhat from slightly under to slightly over 50 percent
for the period in question. The judge found, and we agree, that
Sheehan had effective ownership of Johnstown.
3 We do not agree with our concurring colleague that this is an
appropriate case in which to engage in extended dicta on theoretical
differences between alter ego and single employer concepts. We also
disagree with our colleague’s contention that our decision here ‘‘is
directly inconsistent with Gartner-Harf, 308 NLRB 531, 533 fn. 8
(1992).’’ The allegedly inconsistent sentence our colleague quotes
from that opinion was followed by the observation that there was no
evidence in that case of a ‘‘disguised continuance.’’ It is thus appar-
ent that the Board in Gartner-Harf did not purport to address situa-
tions like the one here, in which an operation ceases and then re-
sumes under another name.
Johnstown Corporation and/or Stardyne, Inc. and
United Steelworkers of America, AFL–CIO–
CLC. Case 6–CA–22363
November 23, 1993
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND RAUDABAUGH
On January 28, 1992, Administrative Law Judge
George F. McInerny issued the attached decision. Each
of the Respondents filed exceptions and a supporting
brief, and the General Counsel and the Charging Party
each filed an answering brief, cross-exceptions, and a
brief in support of their cross-exceptions. The Re-
spondents each filed an answering brief to the General
Counsel’s and the Charging Party’s cross-exceptions,
and the Charging Party filed a reply brief to the Re-
spondents’ answering briefs.
The National Labor Relations Board has considered
the decision and the record in light of the exceptions
and briefs and has decided to affirm the judge’s rul-
ings, findings, and conclusions1 as modified and to
adopt the recommended Order.
Respondent Johnstown manufactures and processes
steel products. John E. (Jack) Sheehan is the founder
of Johnstown, and is Johnstown’s principal, if not ma-
jority, stockholder,2 chairman of the board of directors,
and, until spring 1988, was Johnstown’s chief execu-
tive officer.
In February 1988, Johnstown agreed with Penn State
University (acting through its applied research labora-
tory) to establish a facility at Johnstown’s mill to use
lasers in metal working. Ten bargaining unit employ-
ees were assigned to the laser operation and these em-
ployees continued to be covered by Johnstown’s col-
lective-bargaining agreement with the Union.
Around February 1989, it was decided that the laser
facility would become a separate corporation,
Stardyne. Johnstown’s board of directors were in-
formed of this decision on August 11, 1989. Stardyne
was incorporated on September 22, 1989. By letter
dated January 12, 1990, Johnstown’s stockholders were
informed that the ‘‘laser metal working operations’’
had been sold to Stardyne effective December 29,
1989.
In December 1989, employment applications for
Stardyne were distributed to Johnstown’s employees
who were working in the laser operation. On Decem-
ber 18, 1989, management held a meeting with those
laser room employees who had completed employment
applications. At that meeting, changes in benefits were
discussed and the employees were told to meet pri-
vately with management to discuss their pay rates. All
but one of the laser room employees were offered and
accepted jobs with Stardyne.
The complaint alleges that the Respondents are a
single employer, and are also alter egos, and, in the al-
ternative, that Respondent Stardyne is a successor to
Respondent Johnstown. The judge found that the Re-
spondents are not a single employer, but that Stardyne
is an alter ego of Johnstown, and, in the alternative,
that Stardyne is a successor to Johnstown’s laser oper-
ations. The judge went on to find that the Respondents
had violated Section 8(a)(5) and (1) of the Act by bar-
gaining individually with employees, by imposing new
working conditions, and by repudiating its collective-
bargaining agreement with the Union. Because we
agree with the judge’s finding that Stardyne is a dis-
guised continuance, and therefore an alter ego, of
Johnstown’s laser operations, it is immaterial whether
the Respondents might also constitute a single em-
ployer. The remedy requested by the General Counsel
is warranted by the alter ego finding.3
In determining alter ego status, the Board has stated
that:
Clearly each case must turn on its own facts, but
generally we have found alter ego status where
the two enterprises have ‘‘substantially identical’’
management, business purpose, operation, equip-
ment, customers, and supervision, as well as own-
ership.
Crawford Door Sales Co., 226 NLRB 1144 (1976);
see Denzil S. Alkire, 259 NLRB 1323 (1982), enf. de-
nied 716 F.2d 1014 (4th Cir. 1983); and Advance Elec-
tric, 268 NLRB 1001 (1984); Airport Bus Service, 273
NLRB 561 (1984).
Initially, we note that Stardyne shares Johnstown’s
laser operations’ business purpose of using laser tech-
nology in metal production for commercial purposes.
Although Stardyne and Johnstown agreed that existing
customers’ contracts would be assigned to Stardyne,
for various reasons the assignments did not come
171JOHNSTOWN CORP.
4 The fitter/welders were the bargaining unit employees at Johns-
town Corporation who were transferred to the laser operation.
5 The Respondents contend that Jack Sheehan does not control
Johnstown’s 40-percent interest in Stardyne, but that Johnstown’s in-
terest is represented by its president and CEO, Charles Slater, who
sits on the Stardyne board of directors. Respondent acknowledges,
however, that Slater occupies his seat not as an independent board
member, but by virtue of Johnstown’s interest in Stardyne. As
Johnstown’s president and CEO, Slater perforce must be responsible
to Johnstown’s controlling shareholder, Jack Sheehan. Indeed, there
is no evidence that Slater acts independently of Jack Sheehan. On
the contrary, the judge found that when Slater became CEO, Jack
Sheehan informed the shareholders that he had hired Slater and he
could fire Slater.
6 See Haley & Haley, Inc., 289 NLRB 649, 652 (1988), enfd. 880
F.2d 1147 (9th Cir. 1989) (substantially identical ownership found
where one company was the wholly owned subsidiary of the other
company and the stock of the latter company was concentrated in
members of the same family). We find it unnecessary to rely on the
judge’s statement in fn. 29 that he was ‘‘sure that Jack Sheehan
could count on the support of the additional 20 percent of Stardyne
stock owned by his brother, Ed Sheehan, Sr.’’ The Board does not
automatically assume common ownership because members of the
same family have an ownership interest in both companies. Each
case is examined in light of all the surrounding circumstances, but
the Board places particular emphasis on whether the owners of one
company retained financial control over the operations of the other.
See First Class Maintenance, 289 NLRB 484, 485 (1988). We do
note here, however, that Jack Sheehan has substantial ownership in-
terest in both Respondents and, in addition, that Edward Sheehan Sr.
testified that he was on the board of directors of Johnstown, in es-
sence, to give Jack Sheehan someone he could trust, and with whom
he could discuss ideas.
through. There is no evidence that Stardyne had new
customers that it had independently obtained at the
moment operations were transferred from Johnstown.
Nevertheless, although it has expanded its customer
base Stardyne does serve several of Johnstown’s laser
customers in the same specialized laser field. Addition-
ally, most of the equipment used by Stardyne is the
same as that used at Johnstown’s laser facility, and
Stardyne is located in the same place, bay 9 of
Johnstown’s mill, as was the laser operation under
Johnstown.
Several managers, including Stardyne’s president,
Nurminen, and a Stardyne supervisor also managed the
laser operations at Johnstown. Ed Sheehan Sr.,
Stardyne’s chief executive officer and a physicist with
extensive experience in the military application of la-
sers, was instrumental in establishing Johnstown’s laser
operation. He was first consulted in 1987 by his broth-
er, Jack Sheehan, about the possibility of bringing the
laser metal working technology to Johnstown. Ed
Sheehan Sr. advised Jack Sheehan that this was a good
idea. Although Ed Sheehan Sr. testified that he was not
directly involved in the laser operations until 1989, his
testimony revealed that he had an important hand in
the decision-making that led to Stardyne’s establish-
ment. Thus, he testified that ‘‘we’’ made a mistake in
bringing over the fitter/welders to the laser operations
and that ‘‘we’’ immediately brought down a laser after
Penn State decided that Johnstown Corporation was
going to be the partner in the laser operation.4 In early
1989, Jack Sheehan asked Edward Sheehan Sr. to de-
termine whether continuing the laser operations was
feasible. Ed Sheehan Sr. investigated the background
of personnel from Penn State who were involved in the
laser’s operation, decided that there was a market for
the laser technology, and determined the capital needed
to penetrate the market. He then met with Jack
Sheehan, and Johnstown’s chief executive officer,
Slater, and Johnstown’s vice president of finance, War-
ner, regarding the information he had obtained. Thus,
Edward Sheehan Sr., who is the chief executive officer
of Stardyne, had been acting as Johnstown’s principal
adviser, whether or not in an official capacity, concern-
ing the laser operation from the time Jack Sheehan
began to consider bringing the laser operation to
Johnstown Corporation. Based on the above, we find
substantial identical management and supervision of
the laser operation as it existed at Johnstown prior to
December 1989 and as it existed at Stardyne imme-
diately after Stardyne was established.
We also find that Johnstown and Stardyne have sub-
stantially identical ownership. Johnstown has a 40-per-
cent ownership interest in Stardyne and Jack Sheehan,
Johnstown’s principal stockholder,5 also personally has
a 20-percent interest in Stardyne.6
We agree with the judge that there is not sufficient
evidence to establish that Stardyne was created so that
Johnstown could ‘‘evade responsibilities under the
Act.’’ Advance Electric, supra, 268 NLRB 1001, 1002,
citing Fugazy Continental Corp., 265 NLRB 1301
(1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984). The
Board does not require, however, that an illegal motive
be established in order to find alter ego status. Allcoast
Transfer, 271 NLRB 1374, 1378–1379 (1984), enfd.
780 F.2d 576 (6th Cir. 1986). See Goodman Piping
Products Co. v. NLRB, 741 F.2d 10 (2d Cir. 1984),
affg. sub nom. E. G. Sprinkler Corp., 268 NLRB 1241
(1984). We have found that Johnstown’s laser oper-
ation and Stardyne shared substantially identical man-
agement, business purposes, operation, equipment, cus-
tomers, supervision, and ownership. We therefore find
that Respondent Stardyne is a disguised continuance,
and therefore an alter ego of Johnstown’s laser oper-
ation.
AMENDED REMEDY
We agree with the judge that Stardyne is a successor
to Johnstown Corporation as well as an alter ego. Al-
though such a finding is unnecessary in finding the
8(a)(5) violations, we note that a finding of
successorship, without a finding of alter ego status,
would require a different remedy. Spruce Up Corp.,
209 NLRB 194 (1974).
172 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 My colleagues seek to explain away the Board’s statement in
Gartner-Harf. I disagree with them. The fact is that the Board clear-
ly made the statement and then applied it in that case. That is, the
Board, after making the statement and after finding no single em-
ployer status, concluded ‘‘a fortiori’’ that there was no alter ego sta-
tus. My colleagues seize on a subsequent sentence in which the
Board ‘‘note[d] also’’ that there was no showing of a ‘‘disguised
continuance.’’ It is clear, in context, that this thought was separate
and independent from the previously stated principle and conclusion.
This separate ‘‘notation’’ by the Board cannot, and does not, detract
from the broadly stated principle and its application in that case.
2 South Prairie Construction Co. v. Operating Engineers Local
627, 425 U.S. 800 (1976).
3 Gilroy Sheet Metal, 280 NLRB 1075 fn. 1 (1986) (emphasis
added). In that case, the Board did not apply a ‘‘single employer’’
analysis because the first company no longer existed.
Having found that the Respondent alter egos, Johns-
town and Stardyne, have violated Section 8(a)(1) and
(5) of the Act, we shall order them to cease and desist
and to take certain affirmative action designed to effec-
tuate the policies of the Act. Respondent shall imme-
diately recognize and, upon request, bargain with
United Steelworkers of America, AFL–CIO–CLC con-
cerning the terms and conditions of employment of
employees currently employed in the laser operations
located in bay 9 of the Respondent’s mill in Johns-
town, Pennsylvania. The Respondent, having on or
about January 1, 1990, unilaterally implemented wage
rates and other terms and conditions of employment ef-
fecting its laser operation, without bargaining with the
Union, shall restore the status quo ante as it existed
prior to its unilateral changes in terms and conditions
of employment, and shall make whole any bargaining
unit employees adversely affected by the terms and
conditions of employment unilaterally implemented by
the Respondent for any such loss of earnings or bene-
fits in accordance with Ogle Protection Services, 183
NLRB 682 (1970), with interest as set forth in New
Horizon for the Retarded, 283 NLRB 1173 (1987). In
addition, the Respondent shall reimburse bargaining
unit employees for any expenses ensuing from the Re-
spondent’s unlawful failure to make such required pay-
ments and interest or other sums as provided in Kraft
Plumbing & Heating, 252 NLRB 891 fn. 1 (1980),
enfd. mem. 661 F.2d 940 (9th Cir. 1981), and
Merryweather Optical Co., 240 NLRB 1213, 1216 fn.
7 (1979).
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that Respondent Johnstown Corporation and its
alter ego, Stardyne, Inc., Johnstown, Pennsylvania,
their officers, agents, successors, and assigns, shall
take the action set forth in the Order.
MEMBER RAUDABAUGH, concurring.
I concur with my colleagues’ conclusion that
Stardyne is an alter ego of Johnstown’s laser oper-
ations. However, in my view, the judge’s decision, af-
firmed by my colleagues, continues the confusion be-
tween the concepts of alter ego status and single em-
ployer status. In order to eliminate that confusion, I
write this separate concurrence.
As noted above, the judge and my colleagues found
that Stardyne and Johnstown are alter egos. They ex-
pressly declined to find that the two entities constitute
a single employer. Thus, my colleagues treat dif-
ferently the ‘‘alter ego’’ and ‘‘single employer’’ con-
tentions. However, they refuse to say what these dif-
ferences are.
Further, my colleagues’ decision is directly incon-
sistent with Gartner-Harf, 308 NLRB 531, 533 fn. 8
(1992). In that case, the Board said that ‘‘alter ego is
in effect a subset of the single employer concept (i.e.,
not all single employers are alter egos, but all alter
egos by definition meet the criteria for single employer
status).’’ Under this statement, the conclusion in this
case (that Johnstown and Stardyne are alter egos)
would lead, by necessary logic, to the conclusion that
these entities also constitute a single employer. Not-
withstanding this, my colleagues, without overruling
Gartner-Harf, find alter ego status but refuse to pass
on the single employer question.1
It would be tempting to say, with my colleagues,
that the difference between alter ego status and single
employer status is inconsequential in this case. Con-
cededly, a ‘‘single employer’’ conclusion would add
nothing to the remedy here. However, I believe that
the Board has an obligation to clarify the law. The ob-
ligation is particularly strong where, as here, the
Board’s decision continues the confusion in the law
and is inconsistent with at least one Board declaration
on the subject.
The differences between ‘‘alter ego’’ and ‘‘single
employer’’ are of more than academic interest. If two
entities are found to be alter egos, the contract cover-
ing the one entity will be deemed to cover the other
one. By contrast, if two entities are deemed to con-
stitute a single employer, the contract covering the one
will not necessarily be deemed to cover the other one.
The proponent of contract coverage must go on to
show that the employees of the one entity and the em-
ployees of the other constitute a single appropriate
unit.2
Based on all the above, I would clarify the law. I
would draw a clear distinction between those facts
which will result in an alter ego finding and those
which will result in a single employer finding.
In my view, the single employer analysis should be
used when two companies concurrently perform the
same function, and one of them recognizes the union
although the other does not. That is, the term applies
‘‘to situations in which ongoing, nominally distinct
businesses’’ are alleged to be the same.3 If the two
173JOHNSTOWN CORP.
4 The Board examines four factors in determining single employer
status. They are: interrelation of operations, common management,
common ownership or financial control, and centralized control of
labor relations.
5 Consistent with this analysis, after the Board declined to apply
a single employer analysis in Gilroy, supra, it proceeded to apply an
alter ego analysis as to the second company which took the place
of the first one.
6 The Board examines seven factors in determining alter ego sta-
tus. They are ownership, management, business purposes, operations,
equipment, customers, and supervision.
7 Unlike the single employer situation, there is no need to ascertain
whether two groups of employees constitute one unit. See Walter N.
Yoder & Son, 270 NLRB 652 fn. 2 (1984). For, in alter ego situa-
tions, there is only one group left.
8 For the sake of completeness, I note the concept of Burns
successorship. Unlike the single employer and alter ego concepts, the
successor is a new and different employer who takes over the busi-
ness. If Burns tests are met, the new employer must recognize the
union. However, because it is a different employer, it is not obli-
gated to honor the contract of the predecessor.
9 Although Johnstown remains in existence, the significant point is
that the unionized laser function at Johnstown ceased and Stardyne
took over the function.
1 The General Counsel has filed a motion to correct the transcript
of this hearing in 13 instances. There was no objection to this mo-
tion, and the proposed corrections comport with my memory of what
transpired at the hearing. The General Counsel’s motion is allowed.
companies are a single employer,4 and if the two
groups of employees are a single appropriate unit, then
the bargaining and contractual obligations of the one
company will be deemed to also apply to the second
company.
By contrast, the alter ego concept should apply to
situations where the first company goes out of exist-
ence (or at least the unionized function goes out of ex-
istence), and a second company starts to perform the
work on a nonunion basis.5 If the new company is the
alter ego of the prior one,6 the bargaining and contrac-
tual obligations of the prior company will be deemed
to apply to the second one.7
I would not require a finding of antiunion motive in
order to establish alter ego status. For example, a com-
pany may wish to dissolve one corporation and form
another for reasons of tax or corporate law. Assuming
that everything remains substantially the same (under
the alter ego factors), I would find alter ego status,
notwithstanding the absence of antiunion motive. In
sum, if the second company is in reality the same as
the prior one, the corporate shell game should not op-
erate to change labor law obligations.8
In the instant case, Johnstown performed the laser
work on a unionized basis. It then ceased performing
that work, and a new company (Stardyne) began per-
forming it. Thus, the alter ego analysis applies and the
single employer analysis does not apply.9 I agree with
the conclusion that the alter ego factors have been es-
tablished. As discussed above, I would not regard as
fatal the absence of antiunion motivation. Thus, I
would find that Stardyne is an alter ego and that it
must recognize the Union and honor the contract.
However, because this is not a situation where two
companies are concurrently performing the laser oper-
ation, I would not apply ‘‘single employer’’ concepts
and I would find no ‘‘single employer’’ relationship.
Leone P. Paradise, Esq., for the General Counsel.
Mr. Edward R. Johnson, of Johnstown, Pennsylvania, for Re-
spondent Johnstown Corporation.
Mark E. Scott, Esq., of Coraopalis, Pennsylvania, for Re-
spondent Stardyne, Inc.
David I. Goldman, Esq., of Pittsburgh, Pennsylvania, for the
Charging Party.
DECISION
GEORGE F. MCINERNY, Administrative Law Judge. Based
on a charge filed by the United Steelworkers of America,
AFL–CIO–CLC (Union), on January 5, 1990, the Regional
Director for Region 6 of the National Labor Relations Board
(the Regional Director and the Board), issued a complaint on
March 2, 1990, alleging that Respondent Johnstown Corpora-
tion (Johnstown) and Stardyne, Inc. (Stardyne), are alter egos
and a single employer within the meaning of the National
Labor Relations Act, 29 U.S.C. § 151 et seq. (the Act). In
addition, the complaint alleges that these Respondents en-
gaged in unilateral dealing with their employees; changed
terms and conditions of employment for certain of their em-
ployees; repudiated a currently existing collective-bargaining
agreement as it applied to certain employees; and withdrew
recognition of the Union as the exclusive bargaining rep-
resentative of certain of its employees.
After several postponements this matter came on to be
heard before me at Johnstown, Pennsylvania, on December
11 and 12, 1990, at which time all parties were represented
and had the opportunity to introduce testimony and docu-
mentary evidence, to examine and cross-examine witnesses,
to make requests and motions, and to argue orally.1 After the
close of the hearing, all parties filed briefs, which have been
carefully considered.
On the entire record in this case, including my observa-
tions of the witnesses and their demeanor while testifying, I
make the following
FINDINGS OF FACT
I. JURISDICTION
The complaint alleges, the answers of Respondents Johns-
town and Stardyne admit, and I find that both Respondents
are employers engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
The complaint alleges, the answers of Respondents Johns-
town and Stardyne admit, and I find that the Union is a labor
organization within the meaning of Section 2(5) of the Act.
174 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 This is the occasion when Jack Sheehan announced, according to
the undenied and credible testimony of Local 9089 President John
P. Cassidy, that he had complete faith in the ability of Chuck Slater
to perform this job, that if it was not performed to his liking, he
had hired Chuck Slater and he would have the ability to fire Chuck
Slater.
3 The International Union was the organization recognized by
Johnstown, and the Union describes itself in the agreement as acting
‘‘on behalf of’’ its Local 9089.
4 This material comes from the undenied and candid testimony of
Dr. John I. Nurminen, who was the president of Stardyne at the time
of this hearing.
5 John Nurminen had been employed at Westinghouse for some 15
years in the Metals Joining Research Department, ending up as man-
ager of that department.
6 And also led Nurminen and several of his associates at Westing-
house to leave to become associated, Nurminen as a research profes-
sor, with ARL and Penn State.
7 See Agreement dated November 23, 1988, between Johnstown
and Penn State, p. 2.
8 Out of a total of 23 bays.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background
The Johnstown Corporation was founded in 1984 in prem-
ises formerly used by another steel company, on 545 Central
Avenue in Johnstown, Pennsylvania. It has been engaged
since that time in the manufacture and fabrication of steel
products. At the time of this hearing there were 390 produc-
tion and maintenance employees on the payroll at Johnstown.
John E. (Jack) Sheehan was a founder of Johnstown and
was chairman of its board of directors from 1984 at least up
to the date of this hearing. Jack Sheehan also served as chief
executive officer up to the spring of 1988 at a shareholders
meeting when he notified the shareholders that he had ap-
pointed Charles E. Slater, Johnstown’s president, to be chief
executive officer.2
There were some questions as to how much of
Johnstown’s stock Jack Sheehan owned at various times in
the 1988–1990 period. The parties were unable to agree on
any amount. The figures in evidence ranged from between 49
to 54 percent in August 1988, to 52.7 percent in August
1990, to 49.54 percent in October 1990. The stock is not
publicly traded, but there was an employee stock purchasing
plan in existence at Johnstown, and these variations in Jack
Sheehan’s percentage of ownership in Johnstown’s equity
could vary slightly depending on sales or redemptions in the
amounts in the stock puchasing plan.
In any event, the amount of stock owned by Jack Sheehan
at any particular time, and the percentage of that position rel-
ative to the total outstanding shares would be a matter within
the sole knowledge of Johnstown’s financial officers. Jack
Sheehan did not testify, nor did Johnstown produce any evi-
dence on percentage of stock Jack Sheehan owned. An ex-
hibit dated January 1, 1990, shows that he owned 50.31 per-
cent of the outstanding shares at that time. I find that Jack
Sheehan held an absolute majority of shares at that time, and,
allowing for slight variations before and after January 1,
1990, I infer and find that he had effective ownership and
control over the affairs of the Johnstown Corporation through
all times material here.
At the time it was organized, Johnstown recognized the
Union as the bargaining representative for its production and
maintenance employees.3 A collective-bargaining agreement
running from June 27, 1984, to June 26, 1989, was executed
by Johnstown and the Union, and covering ‘‘all manufactur-
ing and maintenance employees engaged at work at the plant
in Johnstown, PA, excluding all office clerical employees,
professional employees, quality control technicians, guards
and supervisors.’’ This contract contained union-shop and
dues-checkoff provisions.
Sometime in 1987 John E. Sheehan (Jack Sheehan), the
board chairman and, at that time, chief executive officer of
Johnstown, became interested in a type of metalworking
technology utilizing lasers. Jack Sheehan discussed the sub-
ject with his brother Edward J. Sheehan Sr. (Ed Sheehan
Sr.), a physicist whose background included over 30 years in
the management of, primarily, military applications of lasers.
Ed Sheehan Sr. agreed that laser metalworking technology
was a good idea for Johnstown. He testified that he did not
become further involved until sometime later.
The particular technology involved here is based on the
use of highly complex systems of computers and high-volt-
age laser beams to weld metals by actually fusing the mol-
ecules of different parts, or different metals, into a single
bond. The systems described in this case are also used in
plating or ‘‘cladding’’ of manufactured products.
The techniques used were originally developed in research
laboratories operated by the United States Navy.4 The Navy
people were also involved in grants to the Applied Research
Laboratory (ARL) at the Pennsylvania State University (Penn
State), and, at some point, some of the Navy researchers
transferred themselves and their work, together with pro-
gramming and manufacturing technology, to the ARL. In ad-
dition, contracts, probably funded by the Navy, were entered
into between ARL and the Westinghouse Corporation which
provided for Westinghouse to develop practical applications
for industrial use of processes which had been worked out,
theoretically, in the laboratories.5
For reasons not material here, Westinghouse decided to get
out of this arrangement sometime in 1987. This led ARL to
look for a new industrial partner,6 and led also to the interest
expressed by Jack Sheehan to his brother in late 1987. Jack
Sheehan followed up on the matter, and, on February 5,
1988, Johnstown entered into an agreement with Penn State
(acting through its ARL and under the direction of the Navy)
to establish a Laser Metalworking (LM) Technology Transfer
Facility on Johnstown’s property. The purposes of the agree-
ment were, ‘‘(1) to advance the state-of-art of LM tech-
nology through further research and development; (2) to ac-
commodate the Navy technology at the Facility; and (3) to
transfer the LM Technology to commercial (non federal gov-
ernment) markets.’’7
After the decision was made to bring the LM technology
to Johnstown, preparations had to be made to provide a facil-
ity which would meet requirements for cleanliness and con-
trolled temperatures required in the laser operation.
Johnstown’s plant was described as a typical steel mill, with
machines, dirt, dust and scraps all over. So the Company
chose one section of the mill’s upper shop, bay 9,8 a red
brick extension or bay, about 45 feet by 150 feet, to house
the laser operation. Bay 9 had been used as a storage area
for patterns and all that material was cleaned out and stored
175JOHNSTOWN CORP.
9 This description of the building, and of the remodeling work, was
taken from the testimony of Local 9089 President John P. Cassidy,
whose concluding remark on the remodeling was that you could ‘‘al-
most eat off the floors’’ in bay 9.
10 The parties stipulated that Nurminen and Smith were agents of
Johnstown and supervisors within the meaning of Sec. 2(11) of the
Act. Nurminen and Smith, along with John T. Barnes, a salesman,
were paid by Penn State until December 1989. Also stipulated was
the supervisory status of Paul F. McMullen, production supervisor
assigned by Johnstown to the laser operation, Barnes, and Thomas
Rentchko, an engineering specialist who performed quality control
and research and development for the laser operation.
11 The record indicates that only two grievances were filed by the
Union in June and July 1989 over displacement of two employees
in the FWB category by ‘‘less senior’’ employees. There is no sub-
stantive evidence of frequent movement into or out of the laser room
because of requirements in the union contract.
12 This category was used in other parts of the plant, as was the
FWB 4 classification. Apparently some employees in the laser oper-
ation were in the caster roll processor category, and the progression
and regression chart prepared by Johnstown, dated ‘‘7/20/89,’’
shows their status, as well as the lines of progression and regression
in the laser operation, and in the rest of the fabrication department.
13 I appreciate the facts that Jack Sheehan did not appear or testify
in this proceeding, and that Ed Sheehan Sr.’s knowledge of, and tes-
timony about these events are, at best, self-serving. I found Ed
Sheehan Sr. to be a candid and forthright witness, however, and his
testimony about the establishment of Stardyne is both logical and in
accord with what documents there are in the record concerning that
event. I therefore rely on Ed Sheehan Sr.’s testimony, as supple-
mented by that of John Nurminen, on the reasons for the establish-
ment of Stardyne. I note also that there were no objections to the
hearsay aspects of Sheehan’s and Nurminen’s testimony on this sub-
ject.
somewhere else.9 Work then proceeded with an outside con-
tractor together with Johnstown maintenance employees to
transfer this dirty old section of a steel mill into ‘‘some kind
of a glamorous room with a drop ceiling, insulated walls, en-
closed windows, and painted walls and floor.’’ Unlike other
parts of the mill, bay 9 was heated and air conditioned to
maintain a constant temperature of 72. Some facilities, such
as a shower room outside of bay 9 and a gantry crane at-
tached to the building inside bay 9, remained under the con-
trol of Johnstown and were supplied and serviced by Johns-
town throughout the period of time involved here.
The equipment and machinery installed in bay 9 included
some leased, some from Penn State’s ARL, and some pur-
chased for the facility. The facility began operations in June
1988, and a formal dedication of ‘‘The Technology Transfer
Facility for Laser Metalworking’’ was formally dedicated in
June 24. A brochure put out by Johnstown announcing the
dedication described its growth from 35 employees on July
5, 1984, to 560 employees by June 1988, and stated, hope-
fully, that ‘‘The implementation of laser technology will en-
able the Johnstown Corporation to produce higher quality
products and to increase employment.’’
The staff employed in the laser operation was headed by
John I. Nurminen and James E. Smith, who had came from
the Westinghouse location.10 According to Cassidy’s undis-
puted testimony, 10 rank-and-file employees were assigned
to the laser operation by Lawrence (Larry) Lear, manager of
fabrication for Johnstown. Lear assigned the employees on
the basis of their expressed interest in learning the laser oper-
ation, and according to seniority, in labor class 4,
filter/welder/burner (FWB), class 2, FWB utility, and class 1,
laborer. The employees so assigned continued to be paid at
contractual rates, but Johnstown was compensated for this
expense by ARL (presumably using grants from the Navy).
Union dues continued to be deducted, and the jobs held by
these employees were subject to seniority and bumping re-
quirements of the collective-bargaining agreement. This last
resulted in employees in the laser room being bumped out
by senior employees from other areas of the plant.11
Thus, by mid-June 1988, the ‘‘Technology Transfer Facil-
ity for Laser Metal Working’’ was installed in the refur-
bished bay 9 at the Johnstown Company; equipment with
new and transferred equipment, with supervisory staff from
ARL and workers from the Johnstown workforce.
B. The 1989 Negotiations
Negotiations for a new collective-bargaining agreement to
succeed the agreement due to expire at midnight on June 26,
1989, commenced in January 1989. These negotiations were
apparently difficult, requiring, according to Local Union
President John P. Cassidy, 17 sessions, finally culminating in
an agreement near to the expiration date of June 26, 1989.
We are not concerned with most of the contract, affecting all
of Johnstown’s 390 union employees, but only with those
provisions applicable to employees in the laser operation. It
was the position of the Union during the negotiations that the
FWB class 4 positions should be upgraded. This was coun-
tered by the Company with the argument that the job was
a welding job, and no more difficult than what an FWB
would ordinarily do. The Union eventually conceded on this
point, and the classifications remained as they were.
This did not, however, settle the questions of bumping or
‘‘regression’’ rights whereby unit employees in other parts of
the plant could bump down or across, by seniority, into the
laser operation. Discussions on these issues continued after
the rest of the contract had been agreed to, ending with a
session on July 20 when the parties finally came to an agree-
ment. A new classification of laser tech 3 was established,
together with a ladder of progression within the laser oper-
ation, whereby individuals coming into the operation as FWB
utility class 2 employees could, by serving 500 hours and
passing a test, advance to the new laser tech class 3 category.
Employees in the laser tech 3 or caster roll processor, class
3,12 could, after 750 hours and 500 hours respectively, and
passing a test, advance to the FWB class 4 position. In re-
gressions, or layoffs, the people in the FWB 4 category could
bump down into the laser tech 3 positions. With the settle-
ment of these issues the contract was complete, effective by
its terms until midnight, June 26, 1994.
C. The Formation of Stardyne
After its heralded and optimistic beginning in June 1988,
and despite the fact that most, if not all, of its salary costs
were underwritten by Penn State’s ARL, the laser operation
was encountering financial problems by the end of the year.
In December, Ed Sheehan Sr. testified that his brother Jack
informed him of ‘‘problems’’ with the laser program.13 The
program was losing a lot of money, and both Penn State and
176 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
14 There is no explanation in the record about why these basic
questions were not explored before the laser operation was under-
taken in 1987 and early 1988.
15 The ‘‘project,’’ the establishment of Stardyne, was apparently
approved at this time, steps were taken to obtain financing, and ne-
gotiations took place between Johnston and someone, probably Ed
Sheehan Sr. for transfers, leases and purchases, but Johnstown’s
board of directors did not approve of the transfer until August 11,
1989, and the shareholders were not notified about it until they re-
ceived a letter from Jack Sheehan dated January 12, 1990.
16 The minutes of this board meeting verify the claim that Johns-
town had serious financial problems aside and apart from the laser
operation.
the Navy needed to be shown that this laser technology had
profitable industrial application, as well as academic interest.
So, in the beginning of 1989, Jack Sheehan asked his
brother to come up to Johnstown from Washington, D.C.,
where the latter had a consulting business, after years of
working for the United States Army, to check into, first, the
people (Nurminen, Smith, Barnes, et al.) who were in charge
of the laser operation; second, to determine if there was a
real market out there for this (somewhat exotic) process; and,
third, how much money it would take to ‘‘attack the market
place effectively.’’14
Ed Sheehan Sr. agreed to do this and he came up to
Johnstown in January and February 1989. He first checked
on Nurminen, finding him qualified, capable, and well re-
spected in the field. Sheehan then proceeded to develop a
business plan, determining that it would require $4 million
to ‘‘go after the market’’ effectively.
Johnstown, however, was not prepared to spend any more
money on the laser operation. Indeed, according to Ed
Sheehan Sr., Johnstown had borrowed up to its debt limit,
and needed capital for its fabricating, casting, and normal
steel production.
In February, Ed Sheehan Sr. reported the results of his
study to Jack Sheehan, Charles E. (Chuck) Slater, president
and chief executive officer, and Caryl Warner Jr., vice presi-
dent of finance. Ed Sheehan Sr. expressed his confidence in
the future of this laser technology, as well as his confidence
the Penn State group (Nurminen, et al) in the process. The
Johnstown group was not convinced, but after what Ed
Sheehan Sr. described as ‘‘meetings’’ it was decided to go
ahead with the ‘‘project.’’15
Ed Sheehan Sr. indicated that he had hoped that the new
entity, to be named Stardyne, would be able to open up in
April, but there were, inevitably, delays. The lender for the
purchase was to be Principal Financial Group of Des Moines,
Iowa, but they did not reply to the financing application until
July. A person brought in to run the new company had a
heart attack, was out 6 to 8 weeks, and then decided that he
did not want to spend his declining years in Johnstown,
Pennsylvania. So Ed Sheehan Sr. gave up his consulting
business in Washington and, perforce, took the helm of the
new entity.
Along with financing delays, and the replacement of a pro-
spective chief executive, there were concerns on the part of
the scientific people which needed to considered. According
to John Nurminen, he and the other people who were work-
ing on the laser operation at Johnston were faced with a ca-
reer choice by the summer of 1989. Apparently the Navy had
problems with a contractor who was responsible for LM
cladding of trough cover assemblies for use with sea-borne
missiles. This resulted in a chain of events which, first,
prompted the Navy to ask Johnstown to get into production
immediately and before it had planned to do so; and second,
led officials at Penn State to express concern that its ARL
people at Johnstown were getting more deeply involved in
production than was permitted under Penn State’s charter.
The ARL Scientists at Johnstown were, therefore given a
choice to return to Penn State or to leave the ARL program;
and, third, as Nurminen testified, led him and his associates
to demand something more than just an employment contract
with Johnstown if they were to give up untenured, but still
secure, positions at Penn State. What they wanted was a
share in the enterprise. They went out and hired a lawyer,
eventually coming to an agreement with the new Stardyne
corporation for shares in the enterprise. Of the five original
ARL people at Johnstown, three, Nurminen, Smith and
Barnes, stayed with Stardyne, and two, Paul Denny and Dave
Farston, returned to Penn State.
At a Johnstown board of directors’ meeting on August 11,
1989, Chairman Jack Sheehan discussed this matter with the
Board. He referred to financial losses and the involvement of
Ed Sheehan Sr. in the desire to ‘‘create a more business like
approach.’’ He then went on to say, ‘‘We decided in order
to retain the technology, preserve our investment, get a return
on our capital and not continue the losses, we needed to
form a split group and individually finance it. The split
group will put cash in and borrow $3 million from Principal
Financial Group. The losses will never show up on the Com-
pany’s books, they will be absorbed by the new enterprise.
The new enterprise will lease the buildings and improve-
ments from the Company and will generate a significant
amount of income to the Company. Expect to close some-
time around the first of November.’’16
Much the same justification was contained in a January
12, 1990 letter from Slater to Johnstown’s shareholders in-
forming them of the
sale of our laser metal working operation to Stardyne,
effective 12/29/89, for a total of about $2,550,000 in
cash and notes. The final price will be determined as
a result of profit or losses incurred by the laser oper-
ation in December, 1989. Included in this price is ap-
proximately $550,000 of development expense incurred
in 1989 but not taken as a loss by the Johnstown Cor-
poration (JC). This sale cancels the requirement that
these losses be taken by our own Company. In addition,
the sale generates about $200,000 in profit for the
month of December, 1989, which come about because
of recapture of interest and depreciation.
The major reasons behind the sales were to allow the
laser operation to satisfy its additional cash needs for
expansion that were beyond the capacity of the JC to
support and to provide a vehicle such that the key tech-
nical people could have significant equity participation
in order to hold their interest in the operation. The
ownership of Stardyne, Inc. will be as follows:
Johnstown Corporation—40%
Edward J. Sheehan—20%
John E. Sheehan—20%
177JOHNSTOWN CORP.
17 As far as I can determine, the other Stardyne offices, John
Nurminen, president, James Smith, secretary-treasurer, and J. T.
Barnes, vice president, were actually authorized a total of 1200
shares between them, or 13 percent of the outstanding shares of
Stardyne.
18 Slater was president and chief executive officer of Johnstown.
The parties stipulated that Slater’s position on the board of Stardyne
was to represent Johnstown’s position in Stardyne’s equity.
19 Jack Sheehan owned 20 percent of Stardyne’s outstanding
shares.
20 Brody was a professor at the University of Pittsburgh who was
elected as a director to watch out for the interests of Stardyne’s sci-
entific and technical staff.
21 As of December 28, the board named Edward J. Sheehan Jr. as
executive vice president, changed Smith to vice president for manu-
facturing and operations, and Barnes to vice president for sales and
marketing.
22 This price was subject to adjustment after the transfer depending
on revised figures showing costs to Johnstown which would be
added to the selling price. This may reflect the disparity between the
$2,405,962 authorized by the Stardyne Board on December 1 and
the $2.6 million specified as the selling price by the Johnstown
board on December 18. See agreement between Stardyne, Johns-
town, and the Sheehan, dated December 1, 1989, where the sale
price is given as $2,552,962.
Other Stardyne officers—20%17
Stardyne’s initial equity of $1,000,000 was provided by
JC’s paying $500,000 for 40 percent ownership, Ed-
ward J. Sheehan’s buying 20 percent ownership for
$250,000, and John E. Sheehan’s buying 20 percent
ownership for $250.000. In addition to the cash and
notes mentioned above, JC will receive rent of about
$1,168,000 over the ten year lease period which in-
cludes the base rent and leasehold improvements with
interest. If Stardyne is very successful, with our owner-
ship of 40 percent, JC stockholders will benefit substan-
tially from our equity investment while our liability is
limited to that of investor, creditor and landlord.
Stardyne was incorporated on September 22, 1989. On De-
cember 28, 1989, its first shareholders’ meeting was held, at
which a board of directors was named, as follows:
John I. Nurminen
Charles E. Slater18
John E. Sheehan19
Edward J. Sheehan, Sr.
Harold D. Brody20
Once elected, the directors proceeded to select a slate of
officers, as follows:
Edward J. Sheehan, Sr., chairman and chief execu-
tive officer
John I. Nurminen, president
J. T. Barnes, vice president
J. E. Smith, secretary and treasurer.21
The board also authorized the distribution of stock to
Nurminen, 500 shares; Smith, 400 shares; and Barnes, 300
shares. These were in addition to the 4000 shares owned by
the Johnstown Corporation, representing $500,000 invested;
and 2000 shares a piece to the Sheehan brothers, who each
contributed $250,000. The total of 9200 outstanding shares
remained current through the time of this hearing on Decem-
ber 12, 1990.
The purchase of 4000 shares of Stardyne by Johnstown
was authorized at a meeting of Johnstown’s board of direc-
tors on December 18, 1989, together with further authoriza-
tion for the sale of the laser operation to Stardyne for $2.6
million; an agreement between Johnstown, Stardyne and the
Sheehan brothers effectuating the transfer; and the lease of
bay 9 to Stardyne.
Stardyne’s board, meeting on December 1, 1989, author-
ized its officers to agree with Johnstown to buy lasers, sup-
plies, and other equipment for a total price of $2,405,962,22
and to enter into a $3 million loan from Principal Mutual
Life Insurance Company at 13-percent interest.
Having come to terms with the scientists, having agreed
on the selling price and rental for bay 9, and having arranged
financing for the new business, one detail remained, and that
was to obtain a work force. Of course, there was a staff of
workers already in place. These were the employees from the
Johnstown bargaining unit who had expressed an interest in
working with lasers, who had been assigned to the laser op-
eration by Fabrication Department Manager Larry Lear, and
who had been trained with the help of Penn State subsidies
for up to a year and a half by December 1989, and who were
currently operating the equipment in the laser room, doing
preparation work, cleaning, messenger work, and whatever
functions were required.
Stardyne could have done several things in this hiring
process. It could have merely retained the current employees.
They had been there for the whole time the laser operation
had been in existence, from June 1988. There was no indica-
tion in this record that their work was in any way wanting.
Indeed, the only problem voiced by Ed Sheehan Sr. and John
Nurminen was that, under the union contract from time to
time, one or more of these employees would be bumped out
of the laser room and replaced by another worker with more
seniority, but less laser experience.
Alternatively Stardyne could have laid off the Johnstown
laser crew and gone outside to hire people. In this case it
would have been necessary to train the new employees. A
variant on this could have been a testing process for current
and new employees to select the most capable people.
What Stardyne did was none of the above. In December
1989 they prepared employment applications. There is some
question whether the applications were handed out by Fore-
men Paul McMullen or someone else from management or
were merely laid on a desk or table in the office. It really
makes no difference how the applications were distributed
because, as the record shows, the distribution was limited
solely to the current employees of the laser room.
After the applications were distributed, a meeting was held
on December 18 for all of those employees who had filled
out applications, together with Ed Sheehan Sr., Ed Sheehan
Jr., Nurminen, Smith, McMullen, and Tom Renchko, an en-
gineering specialist and quality control inspector. Ed Sheehan
Sr. led off the meeting with a description of his background,
the physical properties of the lasers, and the absence of per-
sonal danger to employees. He went on to discuss Stardyne,
what it was and what they hoped to accomplish with it. The
new officers were introduced. Ed Sheehan Jr. talked about an
employee benefits package to be offered, and the employees
178 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
23 According to testimony of Ed Sheehan Jr.
24 See stipulation of the parties as to members of Local 9089 em-
ployed at Johnstown until December 31, 1989, then at Stardyne
through December 10, 1990. One employee, Allen Novotny, was a
temporary employee, who may or may not have actually been paid
by Johnstown, assigned to the laser operation. Robert Carbaugh, as
noted above, was assigned to the laser room from September to De-
cember 31, 1989.
25 The Respondents argue that the fact of voluntary recognition of
the Union by Johnstown at a time when a majority of employees
may not have indicated their preference for the Union, renders the
Union’s claim, now, to be the exclusive representative, is not bind-
ing on them, the Respondents. This argument is wholly without
merit, Clarion Hotel—Marin, 279 NLRB 481 (1986). See also NLRB
v. Gissel Packing Co., 395 U.S. 575 (1969); Eklund’s Sweden House
Inn, 203 NLRB 413 (1973).
present were urged to meet privately with management peo-
ple, after the meeting ended, to discuss their own rates of
pay.
Robert Carbaugh, a FWB who had worked in the laser
room since September 1989 testified that he asked at the
meeting whether this new operation would be union. Ed
Sheehan Sr. replied23 that it was up to the employees, but
that he felt, in view of the new management approach and
‘‘everything else,’’ that they could ‘‘work together as a
team.’’
After the meeting Carbaugh met with Smith, McMullen,
and Ed Sheehan Jr. They discussed the fringe package and
offered Carbaugh a rate of $9.50 per hour. Carbaugh was not
happy, and after he was assured by Larry Lear that he could
come back to Johnstown, he worked at the laser room until
the end of December, then returned to Johnstown.
So far as the record indicates, Carbaugh was the only em-
ployee then employed in the laser room who did not accept
Stardyne’s offer. All of the others were offered and accepted
jobs with Stardyne, and none were rejected. Those employ-
ees were:24
Thomas R. Burgan William F. Killinger
Chistopher R. Driggs Richard D. Manges
John G. Edwards Roland Miljenovich
David A. Fenchak William J. Urbassik
Norman F. Funyak
Up to December 10, 1990, there was one additional em-
ployee hired. None had left or been terminated as of the time
of this hearing.
These employees continued to work through December
under the terms of the union contract, had dues checked off
from their wages, and had filed at least two grievances which
were processed under the contract to a negotiated solution.
Their wages and progression and regression rights were the
subject of the negotiations described above.
At no time during the lengthy and arduous process, which
culminated in the establishment of Stardyne, was the Union
notified of the depending changes in the laser room, and the
Union was not invited either to participate in the decision nor
on its effects.
D. The Single Employer–Alter Ego Issues
1. Single employer
It has been said that:
A ‘‘single employer’’ relationship exists where two
nominally separate entities are actually part of a single
integrated enterprise so that, for all purposes, there is
in fact only a ‘‘single employer.’’ The question in the
‘‘single employer’’ situation, then, is whether the two
nominally independent enterprises, in reality, constitute
only one integrated enterprise. [NLRB v. Browning-
Ferris Industries 691 F.2d 1117, 1122 (3d Cir. 1982).]
Over the years the Board has established criteria to be used
in determining whether a single employer relationship exists.
As affirmed by the Supreme Court in Electrical Workers
IBEW Local 1264 v. Broadcast Service of Mobile, 380 U.S.
255 (1965), the criteria are interrelations of operations, com-
mon management, centralized control of labor relations, and
common ownership.
In determining the relative weight to accord each of these
areas, I will consider all of the circumstances appearing in
the record, Overton Markets, 142 NLRB 615, 619 (1963).
Under the particular circumstances of this case I think it
is important to consider the facts surrounding the establish-
ment of Stardyne before approaching the Board’s criteria for
measuring the existence or nonexistence of a single employer
relationship. I am at something of a disadvantage in this task
because we have no testimony in the record from the one
person who knows more about the situation than any other.
Jack Sheehan’s silence, however, can be compensated for by
the testimony of others, Ed Sheehan Sr. and John Nurminen,
and, more importantly, by documents such as the minutes of
Johnstown’s board of directors and a communication to the
stockholders of Johnstown.
Jack Sheehan started the Johnstown Company in 1984, an
act both visionary and daring, in view of the condition of
heavy industry in what was described as the ‘‘rust belt’’ of
America. That he was sensitive to working people as well as
to the industrial relations realities of this Western Pennsyl-
vania area, is shown by his recognition of the Steelworkers
Union as the collective-bargaining representative for
Johnstown’s employees.25
Ed Sheehan Sr.’s testimony on Johnstown’s adoption of
the Technology Transfer Facility for Laser Metalworking, or-
phaned by a shift in corporate policy at the Westinghouse
Corporation, shows that Jack Sheehan continued to have the
vision to attract jobs and a new and promising technology,
to Western Pennsylvania. In this case, that vision may have
been aided by the fact that Penn State, through its ARL,
would provide considerable support, including materials and
equipment, salaries for the scientists, and paid training for
rank-and-file employees in the formative stages of the enter-
prise.
After less than a year in operation, however, Jack Sheehan
grew troubled by what he described to his brother Ed as
‘‘losses.’’ These most likely stemmed from the expenses in-
volved in the transformation of a dingy corner of a dingy old
steel mill into a sanitized capsule suitable for delicate, high-
technology laser operations. Then, too, as Nurminen stated,
the Navy forced Johnstown’s laser operation into production
before the Company was ready for it, undoubtedly resulting
in added costs.
179JOHNSTOWN CORP.
26 The fact that Johnstown had borrowed up to its limit with its
lenders probably influenced the decision to go with a new enterprise.
27 I have some questions about this loan. Ed Sheehan Sr. testified
that neither he nor his brother assumed any personal liability on the
loan. I believed Ed when he testified that his $250,000 cash con-
tribution represented most of his personal worth. I am not so sure
about his testimony that his brother Jack was not required to guaran-
tee any of the loan. Lending institutions ordinarily demand security,
including personal guarantees, and I do not see how a laser costing,
initially, $1.2 million and a leasehold interest in bay 9 at
Johnstown’s plant would be a whole lot of security for a $3 million
loan. But there is not enough on the record for me to make any in-
ferences in the matter.
28 I note also that Caryl Warner Jr., Johnstown’s vice president for
finance, at this same meeting, announced the formation of a foreign
sales corporation ‘‘to show that we are in the export business and
we hope to receive an 8 percent tax savings on international ship-
ments.’’
29 I am sure that Jack Sheehan could count on the support of the
additional 20 percent of Stardyne stock owned by his brother, Ed
Sheehan Sr.
30 As I have noted, Cassidy testified that Jack Sheehan stated, at
another meeting, that he had appointed Slater, but if he did not do
the job, then he could dismiss him.
31 Terminated as of November 1990 by vote of the board of direc-
tors.
Jack Sheehan did not, like Westinghouse, just walk away
from the laser operation. He commissioned his brother to
study the people, the products, equipment, and the market,
and to come up with a business plan to penetrate the market
for this new technology. This was done by Ed Sheehan Sr.
in January and February 1989 and resulted in his conviction
that there was a future in this technology. He then brought
his plan to Jack Sheehan, Chuck Slater, and Caryl Warner
Jr. There were discussions and some resistance on the part
of the Johnstown people. The record shows that these dif-
ferences were resolved, but not how they were resolved. I
think the record warrants an inference, and I infer and find
that Jack Sheehan made the decision to go ahead and, fur-
ther, that he determined how it was to go ahead, by the spin-
off of the laser operation into a new corporation which
would then borrow the money necessary to implement Ed
Sheehan Sr.’s business plan.26
The borrowing took more time than Ed Sheehan Sr. had
anticipated. Apparently an application and proposal was sub-
mitted sometime February or in March 1989, but there was
no response from the Principal Financial Group of Des
Moines until July. On August 11, Jack Sheehan informed his
board that it had been decided to go ahead with the establish-
ment of Stardyne. There was some murmuring among the di-
rectors, and no recorded vote, but the plan went ahead. As
Jack Sheehan described it, they would ‘‘form a split group,’’
put in financing (the individual contributions of the Sheehan
brothers, together with $500,000 in some form or other from
Johnstown), then borrow $3 million from Principal Financial
Group.27 Jack Sheehan went on to say that ‘‘the losses’’ (not
explaining what losses) would never show up on the Compa-
ny’s books and would be absorbed by the new enterprise.
The new enterprise was to lease buildings and improvement
from the Company, and will ‘‘generate a significant amount
of income to the Company.’’ Chuck Slater added a postscript
at this meeting stating that the new enterprise expected to
turn a profit by August or September, but that it would
‘‘compensate the Company for any losses.’’28
Johnstown’s shareholders, at least those who were not in-
volved in management or serving on the board of directors,
were informed of his transaction, after the transaction was
completed, by letter from Chuck Slater dated January 12,
1990, which is quoted at length above. In summary, the rea-
sons for the ‘‘sale’’ were to allow the new Company to bor-
row money which Johnstown could not supply and to allow
for equity participation by the scientists involved with the
laser operation. As in Jack Sheehan’s message to the direc-
tors the previous August, it was emphasized to the sharehold-
ers that there was a minimum risk, and the possibility of sub-
stantial gain if the new enterprise was successful.
All of this shows that the intent of the managers of Johns-
town was to establish a new enterprise, which would receive
capital and borrow additional money in order to free Johns-
town from any losses incurred in the fledgling laser oper-
ation; to absorb those losses at no cost to Johnstown; to pay
rent and reimburse costs of improvements made to bay 9 by
Johnstown; and, finally, to make profits for Johnstown, if
any there were, from the new enterprise.
The new enterprise began life, then, with common owner-
ship, in that Jack Sheehan, the majority and controlling
stockholder of Johnstown, controlled his own 20 percent and
Johnstown’s 40 percent29 of Stardyne’s stock.
As far as common management is concerned, at the top
Jack Sheehan, Chuck Slater (representing not his own owner-
ship of Stardyne stock, but representing the 40 percent of
Stardyne stock owned by Johnstown) and Ed Sheehan Sr.
constituted a majority of the five-person board. The minutes
of Stardyne board and shareholders’ meetings show that Jack
Sheehan and Slater were not merely spectators, but took vig-
orous and aggressive roles in the proceedings, moving and
seconding items concerning directors’ compensation; termi-
nation of Stardyne Vice President Barnes; changing bylaws;
electing officers; and retaining an accounting firm (the same
one used by Johnstown).
We do not know from the record here how much day-to-
day interest Jack Sheehan and Slater took, or were able to
take, in the operations of Stardyne. Stardyne had its own
slate of officers, duly elected on motion of Jack Sheehan,
seconded by Slater.30 Those officers were:
Ed Sheehan Sr., chairman and chief executive officer
John I. Nurminen, president
Edward J. Sheehan Jr., executive vice president
Paul McMullen, production supervisor
John T. Barnes, vice president, marketing and sales31
James E. Smith, vice president, manufacturing and
operations
The record shows that these people were not spectators ei-
ther. Barnes, for as long as he was there, was primary a
salesperson. There is no indication that he participated in
day-to-day operations. Smith and Nurminen were the sci-
entists who had performed the research and developed the
systems in use in bay 9. McMullen was a floor supervisor.
All three of these men were involved in the actual running
of the laser operation. Ed Sheehan Jr. brought in as executive
vice president, was a general manager, with overall super-
vision of operations, finance, and personnel. Ed Sheehan Sr.
represented the final authority between board meetings.
180 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
32 I would be naive if I did not feel that Jack Sheehan could have
influenced his brother and his nephew in their daily tasks, especially
in the formulation of management policy. He had the money, the
power, and the will to do so. But there is no direct evidence bearing
on this. Indeed, Jack Sheehan gave up the CEO position at Johns-
town because of other interests. It could be that he simply didn’t
have time to run the Stardyne operation, or the Johnstown plant, in
any detail.
33 In making this finding I did not consider important the perform-
ance of some maintenance work in the laser section by Johnstown
employees, or measurements taken by Johnstown employee Nick
Kolar, or use of electricity, or the same telephone number, or com-
mon shower facilities. These are insignificant in view of the total
interrelation of the work at Stardyne and the former laser operation
at Johnstown.
34 See, e.g., Sakrete of Northern California v. NLRB, 332 F.2d 902
(9th Cir. 1964); NLRB v. Lee’s Sewing Co., 571 F.2d 462 (9th Cir.
1978); Geo. V. Hamilton, Inc., 289 NLRB 1335 (1988).
There is nothing in the record to show that anyone else par-
ticipated in day-to-day operational or personnel decisions.32
The same analysis, I think, applies to control of labor rela-
tions at Stardyne. While we do not know who set the policy
which established the wages, hours, and working conditions
for the new Stardyne employees, the actual hiring of these
employees and the setting their working conditions were ac-
complished by Ed Sheehan Jr. together with McMullen and
Nurminen. At Johnstown, the working conditions were estab-
lished in the union contract negotiated by Ed Johnson, vice
president for human relations, and his committee, with the
union bargaining committee.
After Stardyne began operations the record does not show
what happened in day-to-day labor relations, but Ed Sheehan
Jr. apparently handled any problems which arose.
The question of interrelation of operations is easy to an-
swer. There was no interrelation of operations when the laser
operation was part of Johnstown. The Penn State people
were hired directly by Jack Sheehan, without reference to, or
approval in the normal course, by Ed Johnson’s office. The
nature of the laser operation was completely different from
the work performed in the rest of the Johnstown plant, and
the nature of the laser work even required that it be con-
ducted in a controlled, sanitized environment, cut off from
the rest of the plant. If by interrelation is meant the relations
between the work at Stardyne and the work at Johnstown,
then there is no interrelation between them. If, on the other
hand, the relationship is between the work at Stardyne, and
work in the laser operation at Johnstown, then the interrela-
tion is total. The new Company performed exactly the same
work by the same people, in the same place, and in the same
manner.33
In considering all the circumstances on the question of
whether Stardyne and Johnstown are a single employer, the
common ownership issue is not in doubt. The interrelations
has been established. However, the other two standards set
up by the Board are not so clear. In these circumstances, and
without more evidence on the participation by Johnstown
management particularly by Jack Sheehan in the day-to-day
operations, and the labor relations policies of Stardyne, I can-
not conclude that these two employers are a single em-
ployer.34
2. The alter ego issue
The Board’s criteria for finding that two entities are alter
egos are somewhat broader than its standards for finding a
single employer relationship. Factors to be considered in this
facet of the case are the factors considered above, together
with the factors of substantially identical business purposes,
operations, equipment, customers and supervision, as well as
ownership. Crawford Door Sales Co., 226 NLRB 1144
(1975); Denzil S. Alkire, 259 NLRB 1323 (1983); Advance
Electric, 268 NLRB 1001 (1984). A further consideration in
finding alter ego status is whether the new company was cre-
ated ‘‘to evade responsibilities under the Act.’’ Fugazy Con-
tinental Corp., 265 NLRB 1301 (1982).
The questions as to common management and common
control of labor relations are as unclear when considering
this issue as with the single employer issue.
As to the other criteria applied by the Board in alter ego
situations, the record is clearer. There is no dispute in this
case that the business purposes of the laser operation at
Johnstown, and at Stardyne were identical, to market the
metal working capacities of lasers, to use those processes to
perform welding and cladding of metal products for cus-
tomers, and to make a profit by so doing. The operations at
Johnstown and Stardyne were identical. They did buy a new,
more powerful laser at Stardyne, but this did not require any
change in operations. The work performed as Stardyne, as
the record shows, was exactly the same work that was per-
formed in the same place, by the same people, using the
same equipment, as at Johnstown. The equipment, other than
the new laser remained the same at Stardyne as it was at
Johnstown. The same customers who had been served by
Johnstown became, for the most part, customers of Stardyne,
even in one case, where the customer balked at the assign-
ment of its contract with Johnstown, the work was performed
by Stardyne and then shipped by Johnstown. Moreover,
Johnstown’s president and CEO, Chuck Slater, volunteered
to seek out business opportunities for Stardyne. Lastly, the
supervision at Stardyne remained substantially as it was at
Johnstown.
Nurminen, Smith, and McMullen continued as floor super-
visors and as well as day-to-day managers at Stardyne just
as they had at Johnstown. There is no evidence that Ed
Sheehan Sr. or Ed Sheehan Jr. were involved in supervision,
as contrasted with overall management and policy making
for Stardyne.
The General Counsel and the Union here argue that the es-
tablishment of Stardyne was motivated by a desire to cut off
the laser operation from the Union and the collective-bar-
gaining process. I do not agree.
In this case Johnstown has about 390 production and
maintenance employees covered by the union contract at the
time of the 1989 negotiations. When Stardyne went into op-
eration at the end of that year, 12 of those 390 employees
were employed by Stardyne. It seems illogical to me that
Johnstown would have staged such an elaborate charade, in-
volving the borrowing of $3 million; considerable investment
in time and money by the Ed Sheehans, father and son, who
became officers in Stardyne and by Jack Sheehan, who be-
came a director; what must have been substantial sums of
money paid to accountants, bankers, and lawyers to set up
the new corporation, arrange for loans and bank accounts, in-
corporate Stardyne and draft numerous documents such as
181JOHNSTOWN CORP.
35 Although, as I have mentioned, above, the record does not indi-
cate that this was a chronic or recurring problem.
36 In contrast to Stardyne’s position at the hearing and in its brief,
that these employees had to be technical employees, certified by the
Navy to run the lasers and subject to rigorous training and testing.
37 The decision to operate nonunion may or may not have been a
factor in this decision, but in the absence of any evidence on that
issue, I conclude that the decisions to proceed without notifying the
Union, and to hire a nonunion work force, were made after the deci-
sion to go ahead with the Stardyne operation.
38 See Esmark, supra, and Sterling Processing Corp., 291 NLRB
208 (1988).
39 The 10th employee apparently was a temporary employee from
an agency which supplied temporary employees.
agreements of purchase and sale, and, complex long-term
lease, where in the end, the object was to carve out a unit
of 12 or so people from the bargaining unit. Whatever long-
term goals Johnstown may have envisioned for Stardyne, or
may have now, it does not seem to me to have been a busi-
nesslike decision to incur all of these expenses for such a
meager result.
I can understand the Union’s concern about the position of
Johnstown during the 1989 negotiations. The Company and
the Union were both concerned with trained laser employees
being bumped under the contractual seniority progression and
regression terms.35 The Union wanted a reclassification and
a pay raise for its members who were working in the laser
room. The Company’s response to this was that these people
were just fitter-welder-burners (FWB), no matter where they
worked, and the work was no different in the laser room
from that which they had performed once in other sections
of the mill.36 Leaving aside for the moment Johnstown’s
concealment of the ongoing development of the Stardyne
transfer during the spring and early summer, I do not see in
these differences of opinion over the pay, seniority rights,
and job status of the Johnstown laser operation employees a
foreshadowing of the decision to establish Stardyne. Indeed,
that decision was made sometime in February or March
1989, well before the final stages of the negotiations in June
and July.
Further, I do not read any significance in Jack Sheehan’s
call to Cassidy after the contract was wrapped up, when
Sheehan told Cassidy that Ed Johnson had given the Union
‘‘more than he instructed him to give up.’’ This impresses
me as a postnegotiation attempt by Sheehan to convince
Cassidy that the Union had gotten a bargain at a bargain
price. Cassidy was not fooled, because he informed Sheehan
in this conversation that the Union had not gotten as much
as it was entitled to get. I do not believe that anything more
should be read into this exchange.
There was, in the testimony of Ed Sheehan Sr. and John
Nurminen, a kind of antiunion sentiment. Both of these wit-
nesses complained about the bumping of trained laser opera-
tors and helpers by untrained more senior employees. Ed
Sheehan Sr. also indulged in some complaining about the
FWB employees, indicating that good trade school graduates
with some interest in mathematics could, and would, do a
better job.
This evidence is not sufficient to convince me that the de-
cision to establish Stardyne was made for any reason other
than the fact that Johnstown was experiencing losses in the
laser operation, that they wanted to retain a proprietary inter-
est in the laser business, but in a way which would minimize
risk of loss and ensure a share in profits in the care of suc-
cess.37
On the basis of all of the factors I have considered here,
I find that the establishment of Stardyne is merely a technical
change in operation of one department of the Johnstown Cor-
poration, Howard Johnson Co. v. Detroit Local Joint Execu-
tive Board, 417 U.S. 249 (1974); Esmark, Inc. v. NLRB, 887
F.2d 739 (7th Cir. 1989); TKB International Corp., 240
NLRB 1082 (1979). This is evidenced by the fact that Johns-
town, through its stock ownership and the ownership interest
of Jack Sheehan,’’ continues to maintain a substantial degree
of control over the business claimed to have been sold to the
new entity.’’ NLRB v. Scott Printing Corp., 612 F.2d 783 (3d
Cir. 1979); McCallister Bros., 278 NLRB 601 (1986). The
two companies here have substantially identical ownership,
business purposes, operations, equipment, customers, and su-
pervision. Kenmore Contracting Co., 289 NLRB 336 (1988);
Crawford Door Sales Co., 226 NLRB 1144 (1976). The fact
that the laser operation was only a portion of Johnstown’s
operation is not controlling, Better Building Supply Corp.,
283 NLRB 93 (1987), nor is the fact that we cannot deter-
mine whether or not there is centralized control of labor rela-
tions, Blake Construction Co., 245 NLRB 630 (1979), or the
lack of demonstrated antiunion motivation for the establish-
ment of Stardyne, Gilroy Sheet Metal, 280 NLRB 1075,
1076 fn. 1 (1986); Goodman Piping Products v. NLRB, 741
F.2d 10 (2d Cir. 1984).
I find, therefore, that Stardyne was and is the alter ego of
Johnstown.
E. The Successorship Issue
While I do not agree, in the light of the above findings,
that this situation presents a successorship question,38 I do
believe that the findings I have made in deciding the single
employer and alter ego issues amply demonstrate that this
case satisfies the Board’s requirements for finding a
successorship under NLRB v. Burns Security Services, 406
U.S. 272 (1972), and Fall River Finishing Corp. v. NLRB,
482 U.S. 27 (1987).
Here, as I have found, the business of Stardyne is essen-
tially the same as Johnstown’s laser operation; the employees
of Stardyne are the same people, working on the same jobs
in the same area, turning out the same finished products,
under the same products, under the same supervisors, as they
were and did while working for Johnstown; and Stardyne
uses the same processes to produce the same finished prod-
ucts for basically the same group of customers as Johnstown.
So far as we can determine from the record, the same em-
ployees, with one or two additions or exceptions, who were
members of the bargaining unit represented by the Union in
December 1989, were still working in the same jobs at
Stardyne at the time of this hearing in December 1990.
When the Union made its demand for recognition on Janu-
ary 18, 1990, 9 out of the 10 employees then working for
Stardyne had been employed by Johnstown, and were mem-
bers of the Union.39 While the size of the unit was much
smaller, this did not relieve the successor employer of its
duty to bargain, NLRB v. Albert Armato & Wire Speciality
182 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
40 I wish people would stop citing this case. Compare Nova Serv-
ices Co., 213 NLRB 95 (1974).
41 That is, based on the finding that Stardyne is the alter ego of
Johnstown. In case of a finding that Stardyne is a successor to
Johnstown, then the same quoted unit description would apply to
each. See Bennington Iron Works, 267 NLRB 1285 (1983).
42 I note Ed Sheehan’s comments that Stardyne was forced to ac-
cept whatever terms on the lease, additional payments, and computa-
tion of losses by Johnstown, in order to commence operations. If this
was truly an arms’ length transaction, Stardyne could, and probably
should, have renegotiated, or just canceled the deal.
Co., 199 F.2d 800 (7th Cir. 1952); Boston-Needham Indus-
trial Cleaning Co., 216 NLRB 26 (1975).40
F. The Bargaining Unit
The Respondents Stardyne and Johnstown both denied the
paragraph in the complaint setting forth the alleged appro-
priate unit. It is possible that these denials were based on the
fact that the unit described in the complaint is different from
that in the June 27, 1989 collective-bargaining agreement, or
there may have been understandable confusion on the part of
the named Respondents as to who or what was described in
the complaint as ‘‘Respondent Alter Ego.’’ In any event, no
evidence was introduced by any party as to the composition
of this unit or that the Union did not enjoy majority status
in the unit. I cannot make a finding that the unit as described
in the complaint is appropriate, since there is a variance from
the unit described in the contract, so I shall find that the ap-
propriate unit here is that adopted by Respondent Johnstown
in that June 27, 1989 document, as follows:
All full-time and regular part-time manufacturing and
maintenance employees employed by the Company at
its plant, but excluding supervisors, assistant supervisor,
professional employees, technical consultants, clerical
employees, quality control technicians, guards and any
other supervisors as defined in the National Labor Rela-
tions Act.
Neither Respondent presented any evidence to contravene
this description in a document executed by Johnstown. It
may, therefore, be presumed that this unit is appropriate for
purposes of this case.41
G. The Refusal to Bargain
The complaint alleges that ‘‘since December 18, 1989 ‘Re-
spondent Alter Ego’ bypassed the Union and dealt directly
with unit employees engaged in laser metal working oper-
ations by soliciting said employees to enter into individual
employment contracts.’’
The facts as I have found show that during almost all of
the year 1989, Respondent Johnstown was engaged in first
investigating, then planning, then deciding, to spin off the
laser operation located in bay 9 of Johnstown’s mill in order
to cut its own corporate losses; to furnish both a source of
funds from rental income and ‘‘repayment’’ of money al-
ready expended to renovate bay 9, and, hopefully, to serve
as a reservoir of future profit for Johnstown. During all this
time Johnstown was negotiating with the Union for a collec-
tive-bargaining agreement to replace one which was due to
expire on June 26, which agreement covered the employees
then working in the laser operation in bay 9. There were sev-
eral issues which specifically concerned these employees, in-
cluding one on progression and regression which proved
tricky enough so that it did not settle until sometime after
the contract itself was agreed on. Yet during all the period
of planning for the new enterprise on the one hand, and ne-
gotiating with the Union, on the other, at no time did Johns-
town notify the Union of its intentions or its decision to go
ahead with the establishment of Stardyne. However, there are
no allegations in the cmplaint concerning this, so I make no
findings thereon.
The allegation which does appear in the complaint says,
as far as I can discern, that on or about December 18, 1989,
Respondent Johnstown bypassed the Union and dealt directly
with employees. It has to be Johnstown at this point because
the transfer of the bay 9 facility did not occur until Decem-
ber 29. Up to that point Stardyne, which had been incor-
porated on September 22, had no assets, no lease, and no
employees.
On December 18, as I have found, Ed Sheehan Sr., Ed
Sheehan Jr., Nurminen, Smith, and McMullen met with the
employees of the laser operation in bay 9 without notice to
the Union. The management people explained what Stardyne
was, what they were going to do, informed the employees
that there was going to be no union at Stardyne at present,
and had each employee interviewed individually with man-
agement. The employees were offered jobs with Stardyne at
different rates of pay and with different benefits and working
conditions from those which the employees were receiving at
that time under the new 1989 contract between Johnstown
and the Union.
All but one (Carbaugh) of the employees accepted the new
terms and began to work as employees of Stardyne at the be-
ginning of January 1990.
In view of the timing of this incident, in a period when
all the decisions had been made to establish Stardyne, but
before those decisions had been implemented, I think that
Johnstown alone must bear the responsibility, and I find that
by bypassing the Union and dealing directly with these em-
ployees and inducing the employees to enter into separate
employment agreements, in derogation of the Union’s posi-
tion as exclusive bargaining representative for the employees,
Johnstown has violated Section 8(a)(1) and (5) of the Act.
The Respondents, Johnstown and Stardyne, completed
their arrangements by the end of December42 and Stardyne
commenced operations on January 1, 1990. At this time the
terms and conditions of the unit employees working in bay
9 were changed to these imposed by Stardyne’s officers in
the individual employment agreements on December 18.
I find this unilateral change in working conditions by
Johnstown’s alter ego was a further violation of Section
8(a)(1) and (5) of the Act.
As further alleged in the complaint, these actions con-
stituted a repudiation by the alter ego, Stardyne, of its alter
ego’s collective-bargaining agreement, and I find a further
violation of Section 8(a)(1) and (5) of the Act.
IV. THE REMEDY
Having found that the Respondent alter egos, Johnstown
and Stardyne, have violated Section 8(a)(1) and (5) of the
Act, I shall order them to cease and desist therefrom and to
183JOHNSTOWN CORP.
43 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.
44 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.’’
take certain affirmative action designed to effectuate the poli-
cies of the Act. I recommend that the Respondents Johns-
town and Stardyne shall immediately recognize and, on re-
quest, bargain with the United Steelworkers of America con-
cerning the wages, hours, and working conditions of employ-
ees currently employed in the laser operations located in bay
9 of Respondents’ mill in Johnstown, Pennsylvania. Further,
I recommend that Respondents abide by the terms of a col-
lective-bargaining agreement dated July 27, 1989, between
Johnstown and the Union, making whole any employees em-
ployed in the said laser operation for any money to which
they would have been entitled but for Respondents’ failure
to observe such terms from and after January 1, 1990. I shall
also recommend that Respondents reimburse said employees
for any expenses resulting from the Respondents’ changing
of benefits, as set forth in Kraft Plumbing & Heating, 252
NLRB 891 fn. 2 (1980), with interest computed as set forth
in New Horizons for the Retarded, 283 NLRB 1173 (1987).
Finally, I shall recommend that the Respondents shall make
the Union whole for any moneys due to it under the terms
of the said collective-bargaining agreement.
CONCLUSIONS OF LAW
1. Respondent Johnstown Corporation is an employer en-
gaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act.
2. Respondent Stardyne, Inc. is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7)
of the Act.
3. The Respondents Johnstown Corporation and Stardyne
are alter egos of each other within the meaning of the Act.
4. The United Steelworkers of America and its Local 9089
are labor organizations within the meaning of Section 2(5) of
the Act.
5. The Respondents are and were bound by a collective
bargaining with the United Steelworkers of America dated
June 27, 1989.
6. By bargaining individually with its employees, by im-
posing new working conditions and by repudiating its collec-
tive-bargaining agreement as to certain of their employees,
the Respondents have violated Section 8(a)(1) and (5) of the
Act.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended43
ORDER
The Respondents, Johnstown Corporation and Stardyne,
Inc., Johnstown, Pennsylvania, alter egos, their officers,
agents, successors, and assigns, shall
1. Cease and desist from
(a) Dealing individually with their employees without no-
tice to or bargaining with the Union.
(b) Entering into individual arrangements with their em-
ployees and changing wages, hours, and working conditions
for those employees without notice to or bargaining with the
Union.
(c) Repudiating and refusing to honor their collective-bar-
gaining contract with the Union.
(d) In any like or related manner interfering with, restrain-
ing, or coercing their employees in the rights guaranteed then
under Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Pay to all employees affected by their unilateral and
unlawful actions, any sums due those employees by reason
of changed wages, hours and working conditions with inter-
est thereon as set forth in remedy section of this decision.
(b) Pay to the Union any dues or other moneys owed to
it by reason of their unilateral recession of their collective-
bargaining agreement with the Union.
(c) On request bargain collectively in good faith with the
Union concerning the employees affected by Respondents’
unilateral actions.
(d) 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.
(e) Post at its their facilities in Johnstown, Pennsylvania,
copies of the attached notice marked ‘‘Appendix.’’44 Copies
of the notice, on forms provided by the Regional Director for
Region 6, after being signed by the Respondent’s authorized
representative, shall be posted by the Respondent imme-
diately on receipt and maintained for 60 consecutive days in
conspicuous places including all places where notices to em-
ployees are customarily posted. Reasonable steps shall be
taken by the Respondent to ensure that the notices are not
altered, defaced, or covered by any other material.
(f) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
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.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives of
their own choice
To act together for other mutual aid or protection
To choose not to engage in any of these protected
concerted activities.
184 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
WE WILL NOT deal with our employees unilaterally and
without notice to the Union.
WE WILL NOT unilaterally and without notice to the Union
change wages, hours, and working conditions of our employ-
ees.
WE WILL NOT repudiate our collective-bargaining agree-
ment dated June 27, 1989, with the United Steelworkers of
America, by failing and refusing to bargain with the Union
as the collective-bargaining representative of our employees.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce our employees in the rights guaranteed
them by Section 7 of the Act.
WE WILL pay all losses in wages on other benefits due our
employees because of our charges in those wages and bene-
fits from January 1, 1990.
WE WILL pay to the Union any dues and other moneys
owed under our collective-bargaining agreement from Janu-
ary 1, 1990.
JOHNSTOWN CORP. AND STARDYNE, INC.