Marsco, Inc.

National Labor Relations Board - Board Decisions

Jun 24, 1986

280 N.L.R.B. 696 (N.L.R.B. 1986)

696 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Martin Arsham Sewing Co ., a/k/a Marsco, Inc. and
International Ladies Garment Workers Union
Local 29. Case 8-CA-11894
24 June 1986
ORDER REMANDING PROCEEDING TO
REGIONAL DIRECTOR
BY CHAIRMAN DOTSON AND MEMBERS
DENNIS, JOHANSEN, BABSON , AND STEPHENS
On 7 September 1979 the National Labor Rela-
tions Board issued a Decision and Order' in the
above-entitled proceeding finding, inter alia, that
the Respondent had discriminatorily discharged
certain employees and ordering that the Respond-
ent offer reinstatement to and make whole the dis-
criminatees for losses resulting from the Respond-
ent's unlawful conduct. On 30 March 1982 the
Board issued a Supplemental Decision and Order2
granting the General Counsel's unopposed Motion
for Summary Judgment and ordering the Respond-
ent, "its officers, agents , successors, and assigns,"
to pay backpay to various employees in amounts
which totaled approximately $30,000.
On 3 December 1984 the General Counsel filed
with the Board a Motion for Determination of Per-
sonal Liability alleging that Martin Arsham
(Arsham), as president and plant manager of the
Respondent corporation, wrongfully converted
company assets to his personal use and intermin-
gled his personal and corporate financial affairs
with the intention of frustrating the Board's back-
pay order by rendering the Respondent bankrupt
and insolvent. On 31 May 1985 the Board denied
the motion, finding that the General Counsel failed
to demonstrate that Arsham committed any act
which would justify "piercing the corporate veil"
to reach Arsham as an individual.3
On 15 November 1985 the General Counsel filed
a Supplemental Motion for Determination of Per-
sonal Liability, providing the Board with additional
information regarding Arsham's actions in late
1981, particularly in December 1981, with respect
to the commencement of corporate bankruptcy
proceedings and the repossession of company assets
secured by a cognovit promissory note and securi-
ty agreement of early 1979.4
1 244 NLRB 918 (1979)
2 260 NLRB 1309 (1982)
a 275 NLRB 633 (1985) (Member Dennis dissenting) Member Dennis
adheres to the view set forth in her dissent that "[t]he General Counsel's
motion on its face alleges facts sufficient to find Arsham personally
liable " Id at 635 For the purpose of forming a majority, however, she
joins Members Babson and Stephens in directing a hearing
4 The Respondent's motion to strike the General Counsel's supplemen-
tal Motion for Determination of Personal Liability, filed with the Board
25 November 1985, is denied The Respondent and our dissenting col-
league contend the General Counsel's supplemental motion is untimely
The Board, having duly considered the matter,
finds that the General Counsel has raised substan-
tial issues of fact and law material to the question
of whether the Board should impose personal li-
ability upon Arsham and concludes that the dispo-
sition of the issues presented here requires further
findings by an administrative law judge. Accord-
ingly,5
IT IS ORDERED that a hearing be held before an
administrative law judge to be designated by the
Chief, Division of Judges, for consideration of the
issues raised by the General Counsel's Motion for
Determination of Personal Liability.
IT IS FURTHER ORDERED that this proceeding is
remanded to the Regional Director for Region 8
for the purpose of arranging such hearing, and that
the Regional Director is authorized to issue notice
thereof.
IT IS FURTHER ORDERED that, on the conclusion
of such hearing, the administrative law judge shall
prepare and serve on the parties a decision contain-
ing findings of fact based on the evidence received,
conclusions of law, and recommendations; and that
following service of the decision on the parties the
provisions of Section 102.46 of the Board's Rules
and Regulations shall apply.
CHAIRMAN DOTSON, dissenting.
I would deny the General Counsel's Supplemen-
tal Motion for Determination of Personal Liability
on the basis of the analysis set forth in the Board's
denial of the General Counsel's original motion on
31 May 1985.1 As the Board stated in that decision,
the General Counsel failed to demonstrate that
Martin Arsham, as president and plant manager of
the Respondent, committed any act which would
justify piercing the corporate veil to find Arsham
personally liable. The Board noted the lack of in-
formation critical to the relief requested by the
General Counsel. Specifically, we cited the absence
of any information regarding such bankruptcy mat-
ters as the precise amount of a secured claim filed
by Arsham, the relative priorities of certain unse-
cured claims, the status in the bankruptcy proceed-
ing of Arsham's state court judgment, and whether
filed In fn 8 of the Board's 1985 Order, however , the Board stated that
its "ruling does not preclude the General Counsel from re-filing a motion
with the appropriate evidential support " We find that the General
Counsel's supplemental motion constitutes a "re-filing " of the original
motion within the meaning of the Board's Order and is therefore timely
5 In directing further proceedings in this case , we note Chairman Dot-
son's dissent based on the General Counsel's failure to submit information
on all items detailed in the Board's original Order Denying Motion In
our view, the material submitted is adequate to raise issues appropriately
resolved through a hearing, even without regard to the omitted items
However, additional information on the items not addressed in the Gen-
eral Counsel's supplemental motion, or the lack thereof, may be consid-
ered in the context of the further proceedings
1 275 NLRB 633 (1985)
280 NLRB No. 81
MARSCO, INC.
the bankruptcy court considered Arsham's secured
claim and the sale of corporate assets personally re-
possessed from the Respondent. I find that, despite
being provided with ample notice and opportunity
to furnish the Board with the indicated critical in-
formation, the General Counsel has again failed to
submit this information or explain why Arsham's
alleged fraudulent conveyance is not a matter more
appropriately resolved by the bankruptcy court
rather than by the Board. I further find that once a
trustee in bankruptcy disposes of a bankrupt's
assets and closes an estate, the Board, without spe-
cific information regarding actions taken by the
bankruptcy court, should not grant motions or
issue orders which in essence may result in a redis-
tribution of a bankrupt estate's assets. Such activity
could result in an undue preference to the Board
and fails to give the necessary primacy to policies
underlying Chapter 11 bankruptcy proceedings. It
appears that the General Counsel may have failed
to pursue this matter at the appropriate time in the
697
appropriate forum and now seeks to utilize Board
processes to remedy the error. Should the matters
raised before us now not have been presented to
the bankruptcy court, the General Counsel may
find it appropriate to file a motion to reopen the
bankruptcy proceedings to obtain a ruling whether
Arsham's alleged fraudulent conveyance should be
set aside and the proceeds of that conveyance, or
the repossessed assets, claimed by the bankruptcy
court as part of the bankrupt estate.
In short, I find that the General Counsel's sup-
plemental motion is as precedurally and substan-
tively defective as the original motion and should
be denied.
MEMBER JOHANSEN, dissenting.
I would dismiss the General Counsel's motion as
untimely filed.1
1 I did not participate in the earlier decision and I take no position on
its merits