Metropolitan Bureau of Investigation

National Labor Relations Board - Board Decisions

Nov 21, 1979

246 N.L.R.B. 544 (N.L.R.B. 1979)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Metropolitan Bureau of Investigation Inc.; Metropoli-
tan International, Division of Avenir Investigative &
Security Services, Inc.; and George L. Herman and
Allied International Union of Security Guards and
Special Police. Cases 2-CA-14431-1 and 2-CA-
14431-2
November 21, 1979
DECISION AND ORDER
BY MEMBERS PENELLO, MURPHY, AND TRUESDALE
On August 13, 1979, Administrative Law Judge
Max Rosenberg issued the attached Supplemental
Decision in this proceeding. Thereafter, the General
Counsel filed limited exceptions and a supporting
brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding in a three-member panel.
The Board has considered the record and the at-
tached Supplemental Decision in light of the excep-
tions and brief and has decided to affirm the rulings,
findings, and conclusions' of the Administrative Law
Judge and to adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the Respondent, Metropolitan Interna-
tional, Division of Avenir Investigative & Security
Services, Inc., New York, New York, its officers,
agents, successors, and assigns, shall pay to each dis-
criminatee as net backpay the amounts set forth by
the Administrative Law Judge in his recommended
Order.
I We agree with the Administrative Law Judge that George L. Herman
should not be held individually liable herein. There has been no showing that
Herman has committed some act, such as dissipating corporate assets or
attempting to evade backpay liability by the formation of a separate corpo-
ration, which would justify piercing the veil of the corporate respondent here
to reach the individual. Of course, Herman, as president, has the responsibil-
ity as a corporate officer to take the necessary steps to effectuate the Board's
Order, and he may be punished for contempt if he fails to discharge his duty
as an officer to satisfy a court-enforced order. See Chef Nathan Sez Eat Here.
Inc.. et al., 201 NLRB 343 (1973); Riley Aeronautics Corporation, et al.. 178
NLRB 495 (1969).
SUPPLEMENTAL DECISION
MAX ROSENBERG, Administrative Law Judge: This is a
backpay proceeding which was heard before me in New
York, New York, on June 27 and July 3, 1979. upon an
amended Backpay Specification filed by the General Coun-
sel of' the National Labor Relations Board and an answer
filed thereto by Metropolitan International, Division of
Avenir Investigative & Security Services, Inc., herein called
Avenir, and George L. Herman, herein collectively called
Respondents.
The instant litigation finds its origin in a Board Order of
May 9, 1977, which, in the absence of exceptions thereto.
adopted the Decision of the Administrative Law Judge in a
case then styled as Metropolitan Bureau of Investigation,
Inc., herein called MBI. In that Order, the Board directed
MBI, inter alia, to make whole Felix Melecio and Herman
Cupid for their losses of pay resulting from MBl's unfair
labor practices committed against them in violation of Sec-
tion 8(a)(l), (3), and (4) of the National Labor Relations
Act, as amended. On September 12, 1978, the United States
Court of Appeals for the Second Circuit entered its sum-
mary judgment enforcing in full the reinstatement and
backpay provisions of the Order.
Thereafter, a controversy arose over the amount of back-
pay due Melecio and Cupid under the terms of the Board's
Order, as enforced by the Court, in consequence of which
the Regional Director for Region 2 issued and served upon
the parties on September 29, 1978, a backpay specification
and notice of hearing. Not having received a timely answer
to this pleading, the Region mailed a letter to MBI on Oc-
tober 19, 1978, setting forth the requirements embodied in
Section 102.54(b) and (c) of the Board's Rules and Regula-
tions, Series 8, as amended, regarding the filing of answers
to said specifications, and advising that the General Coun-
sel intended to file a motion with the Board for summary
judgment on the pleadings unless an answer was received
by October 31, 1978. Whereupon, on October 27, 1978,
MBI filed a response to the backpay specification.
On November 21, 1978, the General Counsel filed with
the Board a motion to strike Respondent's answer and Mo-
tion for Summary Judgment in accordance with backpay
specification on the ground that MBl's answer of October
27, 1978, had failed to satisfy the mandate of the aforesaid
Section of the Board's Rules and Regulations. On Decem-
ber 8, 1978, the Board issued an order transferring proceed-
ing to the Board and Notice to Show Cause why the Gen-
eral Counsel's motion should not be granted.
On January 10, 1979, the General Counsel advised the
Board in writing that, in the course of a continuing investi-
gation, the Region was informed that MBI had dissolved its
corporate entity. In this connection, the investigation re-
vealed that a new entity, under the corporate name of
Avenir, had continued to engage in the business of provid-
ing security guards and detective services, utilizing the same
employees and places of business as it had prior to the dis-
solution. Thereafter, on January 12, 1979. the General
Counsel issued an order amending backpay specification
and notice of hearing in which it alleged that Respondents
were alter egos and/or successors of MBI who were jointly
and severally liable for the backpay due and owing to dis-
criminatees Melecio and Cupid in the amounts set forth in
the original specification. On January 20, 1979, Respon-
dents filed an answer to the amended specification, where-
246 NLRB No. 88
544
METROPOLITAN BUREAU OF INVESTIGATION
upon, on January 22, 1979, the Board issued an Order in
which it granted the General Counsel's request to withdraw
its prior motion for summary judgment and to proceed on
the amended Specification.
Continuing the procedural narrative, on February 2,
1979, the General Counsel filed a motion with the Chief
Administrative Law Judge to strike the answers of MBI
and Respondents to the original and amended backpay
specifications in their entirety on the ground that they were
insufficient under Section 102.54(b) and (c) of the Board's
Rules and Regulations. Under date of February 15, 1979,
the Chief Administrative Law Judge issued an Order To
Show C(ause directing MBI and Respondents to show cause
on or before March 5, 1979. why the aforesaid motion
should not he granted. No response thereto was filed by
MBI or Respondents. Accordingly, on June 13. the Chief
Administrative Law Judge issued an order in which he
found the allegations of the backpay specifications. other
than those concerning the status of Respondents as alter
egos of and/or successors to MBI, to be admitted, and that
Respondents were therefore precluded from offering evi-
dence controverting said allegations.
At the hearing held hefore me, the sole issue thus pre-
sented for litigation concerned whether Respondents were
alter egos of and/or successors to MBI who should be held
jointly and severally liable for the backpay due and owing
to discriminatees Melecio and Cupid in the amounts set
forth in the original backpay specification. At the conclu-
sion of the hearing briefs were submitted by the General
Counsel and Respondents which have been duly consid-
ered.
The facts governing this litigation are not in essential dis-
pute and I find them to be as follows.
Prior to May 13, 1978, MBI, with its executive headquar-
ters in Timonium, Maryland, engaged in the business of
providing investigative and security services to customers
from offices located in New York. New York: Boston. Mas-
sachusetts; Wilmington, Delaware; Philadelphia, Pennsyl-
vania; Atlanta, Georgia; Baltimore, Maryland: Zanesville,
Ohio; Washington, D.C.: Chicago, Illinois; Los Angeles,
California; and Cleveland. Ohio. During MBl's corporate
existence, George L. Herman held the office of president of
MBI and was its sole stockholder, and Charles M. Shep-
perd occupied the posts of secretary and treasurer.
Commencing in early 1977, MBI fell upon hard times
with the result that President Herman decided to and did
close the offices situated in Chicago, Los Angeles, and
Cleveland. Because of MBI's growing indebtedness, which
reached a figure of approximately $200,000, Herman unsuc-
cessfully attempted to sell MBI's assets valued at $30,000 to
various security agencies around the country between
March and November 1977. In an attempt to salvage the
business, Herman executed articles of incorporation before
an appropriate agency in Maryland, its charter State, on
May 2, 1978, which gave corporate life to Respondent
Avenir. With Avenir's incorporation, Herman became the
president and sole stockholder of that entity, and Charles
M. Shepperd was designated as the secretary. Concurrently,
Herman took steps before a Maryland state court voluntar-
ily to liquidate MBI.
On May 3, 1978. the board of directors of the newly
formed Avenir. consisting of Herman. who was designated
as the chairman thereof, and Shepperd, met and resolved to
offer to purchase all of MBl's assets for the sum of approxi-
mately $30,000. Thereupon. MBl's board of directors. com-
prised of Herman, Shepperd and an individual named
Rankin, convened and voted to sell its assets at the afore-
mentioned price to Avenir. According to Herman's testi-
mony, Avenir had been formed for the sole purpose of ac-
quiring MBl's assets and business. and Herman personally
advanced the funds which Avenir utilized to gain control of
MBI.
On May 12. 1978, MBI ceased to exist and, on May 13,
1978. Avenir assumed the assets and business of MBI, and
was headquartered in MBl's executive offices in Timonium.
Maryland. Immediately thereafter. Avenir offered all for-
mer employees of MBI employment in the offices in New
York, Boston, Wilmington, Philadelphia. Baltimore, Wash-
ington. Atlanta. and Zanesville. the leases for which Avenir
had taken over from MBI. The record discloses that more
than 90 percent of those employees transferred to Avenir's
payroll and continued to perform the same duties for that
company as they had when they worked for MBI.
In Crawford Door Sales Conipanv, Inc., and Cardes Door
Sales Conypatv, Inc-.. the Board reiterated that it would
find an alter ego status to exist where the two enterprises
involved had substantially identical "management. business
purpose. operation. equipment, customers. and supervision.
as well as ownership." In the instant case, it is undisputed
and I find that the management. supervision. and owner-
ship of both MBI and Avenir rested in the hands of George
L. Herman. who was also the sole stockholder of both en-
terprises; that the business purpose. operation, offices, and
equipment of the two companies remained identical in that
Avenir continued to perform the same investigative and se-
curity services which MBI had previously undertaken by
utilizing the same work complement and tools of the trade
under the same supervision: and. that the customers of both
entities remained the same. In short. I find and conclude
that, on and after May 13, 1978, Avenir became the alter
ego of MBI and, as such, should be held accountable for
making Felix Melecio and Herman Cupid whole for the
amounts of backpay set forth in the General Counsel's
backpay specification.'
Upon the basis of the entire record, and pursuant to Sec-
tion 10(c) of the Act, I hereby issue the following recom-
mended:
226 NLRB 1144 (1976). See also Marquis Printing Corporation, and Mu-
tual Lithograph Company, 213 NLRB 394 (1974).
2 The amended backpay specification added the name of George . Her-
man as a party-Respondent in his individual capacity in an apparent attempt
to hold him jointly and severally liable with Avenir for the backplay sums
due herein. As heretofore found. Avenir. a corporate smrcture, became the
immediate alter ego of MBI. another corporate entiy. Although Herman
was the presiding officer and sole stockholder of both enterprises. I perceive
no legal warrant for piercing corporate veils in this proceeding in order to
hold Herman personally responsible for the backpay amounts found due,
particularly in view of the circumstance that he was not named as a party-
Respondent in the charges which tnggered this litigation. If the General
Counsel should harbor any reasonable cause to believe that Avenir might
embark upon a course of action designed to thwart recovery of the backpay
due and owing, he possesses ample weapons in his legal arsenal to forestall
such action.
545
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ORDER3
Having found and concluded that Avenir became the al-
ter ego of MBI on and after May 13, 1978, 1 shall order that
3 n the event no exceptions are filed as provided in Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and Recommended Order herein shall, as provided in Sec.
102.48 of the Rules and Regulations. be adopted by the Board and become
it pay to Melecio and Cupid the amounts specified in the
backpay specification,4 with the appropriate rate of interest
computed thereon, less any lawfully required tax withhold-
ing.
its findings, conclusions, and Order, and all objections thereto shall be
deemed waived for all purposes.
4The sums to which Melecio and Cupid are entitled are $1,329 and
$5,383, respectively.
546