Morgan's Holiday Markets

National Labor Relations Board - Board Decisions

Apr 5, 2001

333 N.L.R.B. 837 (N.L.R.B. 2001)

MORGAN’S HOLIDAY MARKETS 837
Morgan’s Holiday Markets, Inc., and its alter ego,
North State Grocery, Inc. and United Food and
Commercial Workers, Local 588, United Food
and Commercial Workers International Union,
AFL–CIO. Cases 20–CA–23314 and 20–CA–
25025
April 5, 2001
DECISION AND ORDER
BY CHAIRMAN TRUESDALE AND MEMBERS
LIEBMAN AND HURTGEN
On December 1, 1995, Administrative Law Judge
Mary Miller Cracraft issued the attached decision. The
General Counsel and the Charging Party filed exceptions
and supporting briefs. The Respondents filed joint cross-
exceptions, and a brief in support. The Respondents also
filed a joint answer to the General Counsel’s and Charg-
ing Party’s exceptions. The General Counsel filed a brief
in opposition to the Respondents’ cross-exceptions, and
the Charging Party filed both an answering brief and a
reply brief to the Respondents’ cross-exceptions. The
Respondents filed a joint reply brief to the General
Counsel’s opposition and the Charging Party’s answer to
its cross-exceptions.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and the record
in light of the exceptions and briefs and has decided to
affirm the judge’s rulings, findings, and conclusions and
to adopt the recommended Order.
To date, the litigation in this alter ego case has con-
cerned only a preliminary procedural issue, whether the
General Counsel’s reinstatement of the dismissed charge
in Case 25–CA–23314 was proper under the fraudulent
concealment exception to Section 10(b) of the Act.1 The
judge concluded that the charge cannot be reinstated be-
cause the facts concealed were not “material.” Accord-
ingly, she dismissed the complaint on the ground that it
was barred by Section 10(b). Although we agree with
the judge’s conclusion, we find that this case presents the
Board with an appropriate opportunity to clarify the
standard it uses to determine whether the “materiality”
element of the fraudulent concealment doctrine has been
met.
BACKGROUND
As the judge recognized, the basis for the Board’s
fraudulent concealment exception to Section 10(b) is the
equitable doctrine set forth in Holmberg v. Armbrecht.2
Under the Holmberg doctrine, if a party “has been in-
jured by fraud and ‘remains in ignorance of it without
any fault or want of diligence or care on his part, the bar
of the statute does not begin to run until the fraud is dis-
covered.’”3

1 Sec. 10(b) provides that no complaint shall issue based on an unfair
labor practice occurring more than 6 months prior to the filing of the
unfair labor practice charge.
In 1985, the Board adopted the rule that “a dismissed
charge may not be reinstated outside the 6-month limita-
tions period of Section 10(b) absent special circum-
stances in which a respondent fraudulently conceals the
operative facts underlying the alleged violation.” Du-
cane Heating Corp.4 More recently, the Board applied
this doctrine in litigation involving Brown & Sharpe
Manufacturing Company where the issue was whether
Brown & Sharpe had engaged in fraudulent concealment
of documents regarding its bargaining strategy so as to
warrant reinstatement of a surface bargaining charge
which the General Counsel had originally dismissed. In
Brown & Sharpe I,5 the Board dismissed the complaint
on Section 10(b) grounds, finding that the facts that were
alleged to have been fraudulently concealed were not
“operative facts.”6
In 1991, the District of Columbia Circuit Court of Ap-
peals reversed,7 stating that the Board had failed to ade-
quately explain the “operative facts” standard and re-
manded the case to the Board “for resolution of the
fraudulent concealment issue.”8
On remand (Brown & Sharpe II),9 the Board an-
nounced that it was abandoning the “operative facts”
2 327 U.S. 392 (1946). In addition, the judge found that the doctrine
of “self-concealing” fraud is not applicable here. In Brown & Sharpe
Mfg. Co. (Brown & Sharpe II), 312 NLRB 444 (1993), the Board stated
that, by embracing the standard for fraudulent concealment in Holmberg
v. Armbrecht, “we do not necessarily adopt all the glosses on the fraudu-
lent concealment doctrine set forth by various Federal courts.” 312
NLRB 444 fn. 5. Brown & Sharpe II cited Teamsters Local 170 v.
NLRB, 993 F.2d 990 (1st Cir. 1993), in which the court noted that Board
holdings have not followed Federal cases allowing a finding of fraudu-
lent concealment on the basis of a “self-concealing scheme” as opposed
to independent affirmative acts of concealment. Even in O’Neill Ltd.,
288 NLRB 1354 (1988), enfd. 965 F.2d 1522 (9th Cir. 1992), cert. de-
nied 509 U.S. 904 (1993), relied on by the General Counsel and the
Charging Party in their exceptions, the Board relied on an affirmative
act: the attorneys’ affirmative misrepresentation of material facts, to find
fraudulent concealment. As the instant case involves affirmative acts of
concealment, we find that the issue of whether the Board should adopt
the “self-concealing fraud” doctrine and, if adopted, what is meant by
such fraud is more properly left to another case. Accordingly, we do not
pass on the judge’s statements regarding what constitutes “self-
concealing fraud.”
3 327 U.S. at 397.
4 273 NLRB 1389.
5 299 NLRB 586 (1990).
6 Id.
7 District Lodge 64, IAM v. NLRB, 949 F.2d 441 (1991).
8 Id. at 449–450.
9 312 NLRB 444 (1993).
333 NLRB No. 92
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 838
standard and instead would require that the allegedly
concealed evidence constitute “material facts” in accor-
dance with the test enunciated by the D.C. Circuit in
Fitzgerald v. Seamans,10 which it summarized as follows:
[Fraudulent concealment] has three critical require-
ments: (1) deliberate concealment has occurred; (2)
material facts were the object of the concealment; and
(3) the injured party was ignorant of those facts, with-
out any fault or want of due diligence on its part.11
Specifically, addressing the second element, the Board
formulated the materiality test as follows:
concealed evidence is “material” if it would make a
critical difference between establishing a violation and
not doing so. Thus, if the absence of that evidence re-
sults in the dismissal or withdrawal of the charge, the
subsequent discovery of that evidence will permit the
resurrection of the charge, provided that the other two
elements are present, viz, the evidence was fraudulently
concealed and the injured party could not have discov-
ered the evidence earlier through the exercise of due
diligence.12
On review, the D.C. Circuit again reversed and re-
manded, saying that the Board had “again failed to ar-
ticulate a coherent materiality standard. . . .”13 The court
stated that while the Board might be free to adopt its own
standard for what constituted “materiality,” here the
Board had “purported to adopt this circuit’s [Fitzgerald]
standard for materiality,” but had then articulated it in a
way that “makes no sense” and is “internally inconsis-
tent.”14 The court explained its reasoning as follows:
The Board’s initial statement of its test—that “con-
cealed evidence is ‘material’ if it would make a critical
difference between establishing a violation and not do-
ing so”—simply cannot be read consistently with its
second articulation of the test—that “if the absence of
that evidence results in the dismissal or withdrawal of
the charge, the subsequent discovery of that evidence
will permit the resurrection of the charge.” The first
statement of the test, which essentially requires that al-
legedly concealed evidence, to be material, be disposi-
tive of the unfair labor practice claim, is a much higher

10 553 F.2d 220 (D.C. Cir. 1977) (“[r]ead into every federal statute of
limitations . . . is the equitable doctrine that in the case of defendant’s
fraud or deliberate concealment of material facts relating to his wrong-
doing, time does not begin to run until plaintiff discovers, or by reason-
able diligence could have discovered, the basis of the lawsuit.”). Id. at
228 (emphasis added).
11 312 NLRB 444.
12 Id. at 445.
13 Machinists District Lodge 64 v. NLRB, 50 F.3d 1088, 1093 (1995).
14 Id.
standard than the second articulation of the test, which
appears to require only evidence sufficient to defeat a
motion to dismiss the charge. These are two incom-
patible standards.15
The court held that the second part of the Board’s
standard was an accurate statement of, or “akin” to, its
own materiality test, which is as follows:
We do not provide for tolling simply because a plain-
tiff’s ability to mount a successful case has been im-
paired in some degree. Instead, we provide for tolling
only when concealment has so impaired the plaintiff’s
case that he is not able to survive a threshold motion to
dismiss for failure to tender a claim that would advance
beyond the pleading stage.16
The court then went on to apply the “correct” test to
find that the allegedly concealed evidence was material,
and remanded to the Board to determine whether the
evidence had been fraudulently concealed. On remand
(Brown & Sharpe Mfg. Co. III),17 the Board accepted the
court’s analysis as the law of the case and found that the
material evidence at issue had not been fraudulently con-
cealed. The court subsequently affirmed on review.18 In
no subsequent case has the Board had occasion to clarify
its materiality test in light of the court’s concerns. We
therefore take this opportunity to do so.
Analysis
We agree with the court that, while purporting to adopt
the Fitzgerald standard for materiality, the Board in
Brown & Sharpe II articulated that test in a way that was
internally inconsistent. We also agree that the first part
of that test—that concealed evidence is material if it
would make a critical difference between establishing a
violation and not doing so—is too high a standard. Re-
quiring dispositive evidence to avoid Section 10(b) is
contrary to the concept of “tolling” for fraudulent con-
cealment. To require the General Counsel to show that
he can “prevail on the merits in order to allow tolling for
a hearing on the merits, . . . [would] effectively nullif[y]
the purpose of tolling.”19 The question then is whether
the second part of the standard articulated in Brown &
Sharpe II (which the court stated was an accurate state-
ment of the circuit’s materiality test, but which the Board
failed to apply) is the most appropriate test of materiality
for the Board to adopt. In deciding this case, the judge
applied, as the current state of the law, the second part of
15 Id.
16 Id. at 1094 (quoting Hohri v. U.S., 782 F.2d 227, 249–250 fn. 57
(D.C. Cir. 1986)).
17 321 NLRB 924 (1996).
18 130 F.3d 1083 (D.C. Cir. 1997), cert. denied 524 U.S. 926 (1998).
19 50 F.3d at 1094 (emphasis added).
MORGAN’S HOLIDAY MARKETS 839
the Brown & Sharpe II materiality test, recognizing that
the Board might decide to alter its test in the future.
As the D.C. Circuit recognized, since neither Section
10(b) nor any other provision of the Act addresses the
issue of time limits on revival of a dismissed charge, the
Board is exercising its policy making authority to fill this
“gap” in the statutory scheme.20 Thus, the Board is not
required to use the court’s standard, “and may well be
free to” use another.21
On further reflection, we have decided to modify our
materiality standard to better reflect Board administrative
procedure. As discussed, the D.C. Circuit likened the
second part of the test—”if the absence of [the newly
discovered] evidence results in the dismissal or with-
drawal of the charge, the subsequent discovery of that
evidence will permit resurrection of the charge”—to the
test used when assessing pleadings on a motion to dis-
miss. The difficulty with applying this formulation in
unfair labor practice proceedings derives from the sig-
nificant differences between Board administrative proc-
ess and federal civil litigation practice, and in particular
the “considerable power” which the statutory scheme
gives the General Counsel of the Board.22
“Enforcement of the NLRA’s prohibition against un-
fair labor practices is accomplished through a split-
enforcement system, assigning all prosecutorial functions
to the General Counsel of the NLRB and all adjudicatory
functions to the Board.”23 Under the Act, the enforce-
ment scheme begins with the filing of a charge with a
regional office of the Board alleging that a violation of
the Act has been committed by an employer, a labor or-
ganization, or their agents. “Any person,” that is any
individual or organization, may file a charge. The charge
is then investigated by a Board agent from a regional
office acting on behalf of the General Counsel. Gener-
ally, upon completion of the investigation, the regional
director will decide whether there is reasonable cause to
believe the Act has been violated and whether a formal
complaint is warranted. If the regional director deter-
mines that the charge lacks merit, the regional director
will refuse to issue a complaint and dismiss the charge.
This refusal, or dismissal, may be appealed to the Gen-
eral Counsel.24

20 949 F.2d at 445.
21 50 F.3d at 1094 (quoting 949 F.2d at 449).
22 NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 139 (1975).
23 Beverly Health Services v. Feinstein, 103 F.3d 151, 152 (D.C. Cir.
1996), cert. denied 522 U.S. 816 (1997) (citing NLRB v. Food & Com-
mercial Workers Local 23, 484 U.S. 112, 123–128 (1987).
24 The General Counsel permits appeals from adverse determinations
on the issuance of complaints to be reviewed by a central office within
the Office of the General Counsel to insure that a national labor policy is
uniformly administered.
The General Counsel’s authority over the issuance of
complaints is plenary. Under Section 3(d) of the Act, the
General Counsel of the NLRB “shall have final author-
ity, on behalf of the Board, in respect of the investigation
of charges and issuance of complaints under section 10,
and in respect of the prosecution of such complaints be-
fore the Board.” This broad discretionary authority is not
reviewable by the Board or the courts.25 The Supreme
Court has declared that “the General Counsel has unre-
viewable discretion to refuse to institute an unfair labor
practice complaint.”26 The Court has described the divi-
sion of authority between the Board and the General
Counsel as follows:
Although Congress has designated the Board as the
principal body which adjudicates the unfair labor prac-
tice case based on such charge, . . . the Board may ad-
judicate only upon the filing of a “complaint”; and
Congress has delegated to the Office of General Coun-
sel “acting for the Board” the unreviewable authority to
determine whether a complaint shall be filed, . . . . In
those cases in which he decides not to issue a com-
plaint, no proceeding before the Board occurs at all.
The practical effect of this administrative scheme is
that a party believing himself the victim of an unfair la-
bor practice can obtain neither adjudication nor remedy
under the labor statute without first persuading the Of-
fice of General Counsel that his claim is sufficiently
meritorious to warrant Board consideration.27
This description highlights the critical distinction be-
tween civil litigation and the Board administrative proc-
ess. In civil litigation, a plaintiff files suit directly in
court, the court makes the threshold legal determination
whether the case will proceed or be dismissed for failure
to state a claim, and an order dismissing the case is ap-
pealable. By contrast, the decision to both investigate
and dismiss a charge (or issue complaint) is committed
by statute to the unreviewable discretion of the General
Counsel of the agency, not to the Board. Upon filing a
charge and presentation by a charging party of support-
ing evidence, it is then up to the General Counsel of the
NLRB to decide whether to prosecute. If he decides not
to do so, he dismisses the charging party’s charge. Al-
25 See, e.g., Fitz v. Communications Workers, affd. 917 F.2d 62 (D.C.
Cir. 1990), cert. denied 499 U.S. 960 (1991); United Elec. Contractors
Assn. v. Ordman, 366 F.2d 776 (2d Cir. 1966), cert. denied 385 U.S.
1026 (1967).
26 Vaca v. Sipes, 386 U.S. 171, 182 (1967). See also NLRB v. Food &
Commercial Workers Local 23, 484 U.S. 112.
27 NLRB v. Sears, Roebuck & Co., 421 U.S. at 138–139. See also H.
Con. Rep. 510, on H.R. 3020, 80 Cong., 1st Sess., p. 37. The purpose of
Sec. 3(d) is to separate the Board’s prosecutorial and adjudicative func-
tions.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 840
though this action is termed a “dismissal,” it is not the
same as a dismissal of a private plaintiff’s case. The
former is the General Counsel’s unreviewable decision
not to prosecute, i.e., not to file suit; the latter is a court’s
judgment, subject to review, that a filed suit has no merit.
Thus, unlike a court, the Board does not make the
threshold determination whether a case will proceed on
the merits.
Because of these procedural distinctions, we believe
that the second part of the standard articulated in Brown
& Sharpe II, sets a threshold for materiality that is too
low. Thus, in every case where the General Counsel
decides to resurrect a previously dismissed charge based
on newly discovered evidence, it could be said that the
“absence of the evidence resulted in dismissal of the
charge.” As the court discussed,
the mere fact that the General Counsel decides to rein-
state previously dismissed charges based on allegedly
concealed evidence, as occurred in this case, is not dis-
positive. The threshold of materiality is not that low.
Rather, it remains the province of the Board to deter-
mine whether the General Counsel’s decision to rein-
state the charges at issue was reasonable in light of the
delineated materiality standard.28
Accordingly, we must delineate a standard that
achieves a balance between the statutory limitations pol-
icy of repose and the important purpose of tolling for
fraudulent concealment. In other words, we seek a stan-
dard that is not too high—i.e., does not require newly
discovered evidence that is dispositive of a violation in
order to toll the limitations period—nor too low—i.e.,
does not leave the General Counsel free to reinstate
charges in every case of newly discovered evidence.
And, we must adopt a standard tailored to the administra-
tive adjudicatory process under this statute.
The Board’s Materiality Standard
Once the General Counsel does issue an unfair labor
practice complaint, it is subject to adjudication by the
Board. As part of that process, the Board will consider a
respondent’s defense that the complaint allegations are
time-barred under the 6-month limitations period pro-
vided for by Section 10(b) of the Act. When, as in the
instant case, the complaint allegations are based on
charges resurrected outside the 10(b) period, the General
Counsel can assert, in response to that defense, that the
running of the 10(b) period is tolled by fraudulent con-
cealment.
When the General Counsel seeks to reinstate a dis-
missed or withdrawn charge outside of the 6-month limi-

28 50 F.3d at 1094.
tations period, the issue is no longer one of the General
Counsel’s prosecutorial discretion. Rather, the applica-
tion of Section 10(b) is a legal question of the Board’s
authority to dismiss a complaint as time-barred, distin-
guishable from questions of prosecutorial discretion.
The standard guiding that determination must be an ob-
jective one based on the Board’s examination of the evi-
dence existing both at the time of the prosecutorial deci-
sion to dismiss the charge and the time of the decision to
reinstate the charge. The standard set must not simply
duplicate the General Counsel’s determination that the
acquisition of the fraudulently concealed evidence made
a difference in the decision to issue a complaint. As the
D.C. Circuit put it, “the mere fact that the General Coun-
sel decides to reinstate previously dismissed charges
based on allegedly concealed evidence, as occurred in
this case, is not dispositive.”29 That standard is too low
and effectively nullifies the Board’s role as the adjudica-
tive body.
Taking all of this into account, therefore, we have de-
cided to adopt a standard of materiality under which a
charge may be reinstated if the addition of evidence pre-
viously fraudulently concealed would, as an objective
matter, make the critical difference in determining
whether or not there was reasonable cause to believe the
Act was violated. The new evidence would make a “criti-
cal difference” if it so significantly alters the total mix of
information available that, for the first time, there is rea-
sonable cause to believe that the Act has been violated.
Under this objective “reasonable cause” standard our in-
quiry is twofold: 1) whether, based on the evidence before
the General Counsel at the time of dismissal, there was no
reasonable cause to believe that the Act had been vio-
lated, and 2) whether, based on the evidence before the
General Counsel at the time of the reinstatement of the
charge and issuance of complaint (including the fraudu-
lently concealed evidence), there is reasonable cause to
believe that the Act was violated. If we find that there
was “reasonable cause to believe” at the time of dis-
missal, then the concealed evidence, even if it strengthens
the case, is simply incremental and does not significantly
alter the total mix of information initially available to the
General Counsel. Such evidence will not be treated as
“material,” and Section 10(b) will bar the complaint.
We believe that this standard strikes the middle road
between the two articulations of the materiality standard
set forth by the Board in Brown & Sharpe, one of which
placed the bar too high and the other too low for Board
procedure. This test focuses initially on the assessment of
the evidence at the time the charge was originally dis-
29 Id.
MORGAN’S HOLIDAY MARKETS 841
missed. The assessment is one of law and objectivity,
that is, whether there was reasonable cause to believe the
Act has been violated.30 A similar assessment is made at
the time of reinstatement of the charge. Thus, our test
avoids the error of setting the bar too high, i.e., the find-
ing of a violation. At the same time, it avoids the error of
setting the bar too low, i.e., making the actions of the
General Counsel dispositive.
In applying the materiality standard announced, we will
examine only whether the new evidence would make a
critical difference on the legal determination of whether
there is reasonable cause to believe the Act has been vio-
lated. This limited focus recognizes the General Coun-
sel’s authority under Section 3(d) of the Act. Thus, we
acknowledge that many considerations, apart from the
purely legal sufficiency of the evidence presented, go into
the sometimes policy-laden determination whether to
issue a complaint or dismiss the charge. “A charging
determination . . . is a quintessential example of a prose-
cutorial decision. It involves a balancing of culpability,
evidence, prosecutorial resources, and the public interest.
The weighing of all those considerations factors into the
issuance of a complaint.”31 It is not our function to sec-
ond-guess the General Counsel on the other considera-
tions that factor into the decision to dismiss a charge, and
by objectively evaluating the “legal sufficiency” of the
evidence before the General Counsel at the time of dis-
missal, we avoid making judgments reserved exclusively
to the General Counsel.
At the same time, however, the standard also gives
appropriate weight to the policies underlying Section
10(b). Thus, if the General Counsel initially had evi-
dence that would have supported a reasonable cause
determination, but did not issue a complaint, the addi-
tion of cumulative evidence, even if fraudulently con-

30 See, e.g., Kinney v. Pioneer Press, 881 F.2d 485, 490 fn. 2 (7th Cir.
1989). In discussing a reasonable cause inquiry, that court suggested
that “[u]nless acting capriciously, the General Counsel would establish
something like ‘reasonable cause’ as the threshold for filing an adminis-
trative complaint. Nothing in the statute requires this, however, see 29
U.S.C. 153(d), and courts do not review the General Counsel’s exercise
of prosecutorial discretion.” As the court explained, “[i]n any case, the
level of belief required to proceed to court cannot equate with the level
of proof required to succeed in court; otherwise the court would have no
discretion to exercise. Reasonable cause focuses on the preliminary
investigation instead of on the likely success of the complaint on the
merits.” Cf. Plumbers Local 562 (C & R Heating & Service Co.), 328
NLRB 1235 (1999) (description of reasonable cause standard necessary
to proceed under Sec. 10(k) of the Act to resolve a jurisdictional dis-
pute).
31 Beverly Health Services v. Feinstein, 103 F.3d at 153. See also
Staff Builders Services v. NLRB, 879 F.2d 1484, 1486 (7th Cir. 1989).
(The Board’s exercise of its discretionary jurisdiction in a particular case
“is a matter of resource allocation. . . . [T]he Board must decide where
to devote its energies.”)
cealed, does not justify unsettling the initial exercise of
discretion to dismiss the charge or the policy of repose
underlying Section 10(b).32
In short, the General Counsel is entitled to weigh all
factors in the exercise of his prosecutorial discretion, and
may decline to issue a complaint on a timely filed charge
for a variety of discretionary reasons, even if the evidence
before him establishes reasonable cause. But when he has
made that judgment, we believe the policy of repose em-
bodied in Section 10(b) is best served by holding the
General Counsel to that judgment, even if new evidence
strengthens the prior “legally sufficient” case. At the
same time, the General Counsel will not be deprived of
his discretion to proceed (or not) upon the filing of an
untimely charge supported by fraudulently concealed
evidence which satisfies our materiality standard. Indeed,
the addition of “material” evidence previously concealed
will enlarge his options, giving him for the first time an
opportunity to exercise the discretion to proceed that ini-
tially was unavailable due to insufficient information be-
fore him.
In sum, the standard we announce today does not re-
quire that the new evidence be dispositive of a violation
of the Act (the first part of the Brown & Sharpe test).
Reasonable cause is a lower standard. But, it does require
more than what was described in the second part of the
Brown & Sharpe test. The standard we adopt is an ana-
logue to the test for ruling on a federal court motion to
dismiss, in that the absence of evidence makes a critical
difference in whether the General Counsel, like a plain-
tiff, can get over the preliminary legal threshold. How-
ever, it is alike in the legal respect only. The distinction,
and where the analogy breaks down, relates to the consid-
erable factor of prosecutorial discretion present in unfair
labor practice case procedure. When the General Counsel
decides not to issue a complaint, no proceeding before the
Board occurs at all. We believe that the test announced
promotes the policy of repose underlying Section 10(b)
by ensuring an objective review of the alleged materiality
of the fraudulently concealed evidence. At the same time,
this standard will permit the reinstatement of a charge
where the respondent, by engaging in fraudulent con-
cealment of material facts, has forfeited its right to any
assurances that it will not be called on to defend itself
against stale charges.
32 Because there are a myriad of reasons, in addition to the legal mer-
its of the case, that factor into the General Counsel’s discretionary
decision not to prosecute a case, the Board’s conclusion in a given case,
that there was reasonable cause to believe that the Act was violated, is
not to be taken as a criticism of the General Counsel.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 842
Application to this Case
Applying our standard of materiality to the present
case, we find that the new evidence was not material be-
cause, at the time the General Counsel dismissed the
charge, there was reasonable cause to believe that the Act
had been violated.
The Union filed its unfair labor practice charge on
April 25, 1990, alleging that Morgan’s Holiday Market,
Inc. (Morgan’s) owned by Richard Morgan Sr., had
unlawfully repudiated its collective-bargaining agreement
with the Union at its Chico, California location. At the
heart of this charge, as the judge recognized, was the is-
sue of whether Morgan’s was an alter ego of North State
Grocery, Inc. (North State), the purchaser of the Chico
store. At the time the charge was under investigation, the
Union and the General Counsel possessed a great deal of
information concerning the relationship between Mor-
gan’s and North State. The Union knew that the owners
of North State were the son and daughter of Richard
Morgan Sr. The Union also knew that the Chico store
operated under the same name and sold the same products
to the same target audience as had the store under Mor-
gan’s. With regard to management, the Union knew that
Morgan Sr., through an advisory services agreement, pro-
vided his expertise to North State, and that North State
retained two supervisors previously employed by Mor-
gan’s. In addition, the Union knew that Morgan Sr. had
stated that he would sell some of his stores in order to
meet the economic demands of the Union, and that at
least three stores had already been sold and were being
operated on a nonunion basis, including the previous sale
of one unionized store to North State.
The Union also knew that Morgan Sr.’s attorney, John
Reese, was on the Board of Directors for Morgan’s Holi-
day Market. During the investigation, the Region learned
that Reese was on the Board of Directors for North State.
Also during the investigation the Region learned that
Morgan Sr.’s son and daughter had obtained initial fi-
nancing from the company that was the supplier for Mor-
gan’s.
The Region dismissed the charge by letter dated July
25, 1990. The dismissal letter stated that the investigation
had failed to establish that Morgan’s had sold its Chico
store in order to repudiate its collective-bargaining
agreement with the Union. The letter stated that the sale
was a bona fide arm’s length transaction, and that North
State maintained ultimate control over the day-to-day
operation and labor relations policies of the store. The
letter concluded that it therefore “does not appear that
North State is an alter ego of the [Morgan’s].”
In 1992 the Union’s pension and health and welfare
trust funds filed suit in Federal court alleging alter ego
theory as to Morgan’s and North State pursuant to
ERISA32 and Section 301.33 During pretrial discovery,
the attorney for the trusts ascertained several previously
unknown facts. He discovered that North State was
owned by The Hooker Creek Irrevocable Trust, whose
sole trustee was John Reese, Morgan Sr.’s attorney, and
the beneficiaries of the Trust were the son and daughter of
Morgan Sr. He also learned that Morgan Sr. had commit-
ted to remain involved with North State for at least 7
years. In addition, he learned that Morgan Sr. had guar-
anteed the leases and the start-up loans that North State
had received from Morgan’s and North State’s common
supplier. Further, he discovered that Morgan’s and North
State filed a joint loan request in 1991 that included a
written plan outlining the potential acquisition by North
State of additional Morgan’s stores.
The judge found that at least one piece of this evidence
was affirmatively concealed. This was the existence of
the Hooker Creek Irrevocable Trust,34 and with it, the
knowledge that Morgan Sr.’s son and daughter were the
beneficial owners rather than the outright owners of the
corporation.
We find that the subsequently discovered evidence does
not make a critical difference, as we have defined it, in
establishing reasonable cause to believe that the Act had
been violated. Rather, objectively viewing the evidence
known to the Union and General Counsel at the time of
dismissal of the charge, we find that there was reasonable
cause to believe that Morgan’s had, as alleged, unlawfully
repudiated its agreement with the Union following the
sale of the Chico store to North State, because North State
was an alter ego of Morgan’s.
As the judge set out, the Board applies a “flexible” test
to determine alter ego status, which involves considera-
tion of whether the two enterprises have substantially
identical management, business purpose, operations,
equipment, customers, supervision, and ownership. See
Advance Electric, 268 NLRB 1001 (1984); and Crawford
Door Sales Co., 226 NLRB 1144 (1976). Facts known to
the Union and the General Counsel during the investiga-
tion of the initial charge related to each of the factors
relevant to an alter ego determination. The business pur-
pose, operation, equipment, and customers were the same.
The evidence also showed that Morgan Sr., owner of
Morgan’s, remained involved in the management of

32 Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et.
seq.
33 29 U.S.C. 185.
34 The judge erroneously stated that the Trust was not introduced into
evidence in this proceeding. However, the conclusions she drew from
the title of the trust are correct and her failure to realize the Trust was
entered into evidence by the General Counsel does not affect the out-
come of the case.
MORGAN’S HOLIDAY MARKETS 843
North State, through an advisory services agreement to
provide his expertise to North State. In addition, two of
Morgan’s supervisors continued to work at North State,
and Morgan’s attorney served on the boards of directors
of both companies. Moreover, members of the same fam-
ily owned both companies. As the administrative law
judge noted, where other alter ego factors exist, owner-
ship of both companies by members of the same family
can be deemed “substantially identical.” See, for example,
Kenmore Contracting Co., 289 NLRB 336, 337 (1988),
enfd. mem. 888 F.2d 125 (2d Cir. 1989).
Finally, although alter ego status does not require a
showing that the motivation for creating the new entity
was to evade obligations of the collective-bargaining rela-
tionship, here it was known that Morgan Sr. had stated
that he would sell some of his stores in order to meet the
economic demands of the Union, and that, in fact, he had
sold several stores, including a prior sale of a unionized
store to North State, which was operating that store on a
nonunion basis.
Accordingly, we find that because the evidence known
at the time of the dismissal of the original charge pro-
vided the basis for a reasonable cause to believe that the
Act had been violated as alleged in the charge, the later
discovered evidence, while arguably strengthening the
case, was simply incremental and did not significantly
alter the total mix of information available to the General
Counsel initially. Accordingly, we find that the new evi-
dence does not meet our standard of materiality, and
therefore we shall dismiss the complaint.
ORDER
The recommended order of the administrative law
judge is adopted and the complaint is dismissed.

Jonathan J. Seagle, Esq., for the General Counsel.
Anne E. Libbin, Esq. (Ann E. Polus, Esq., on the brief) (Pills-
bury, Madison & Sutro), of San Francisco, California, for
Respondent Morgan’s Holiday Markets, Inc.
Patrick W. Jordan and Christine Coverdale, Esqs. (Keck, Ma-
hin & Cate), of San Francisco, California, for Respondent
North State Grocery, Inc.
Andrew J. Kahn, Esq. (Davis, Cowell & Bowe), of San Fran-
cisco, California, for the Charging Party.
DECISION
STATEMENT OF THE CASE
MARY MILLER CRACRAFT, Administrative Law Judge.
The General Counsel and Charging Party1 contend that they
should be allowed to litigate time-barred allegations regarding
the Respondents’ alleged alter ego status because the 6-month

[Morgan’s].”4

1 The Charging Party, also referred to as the Union or Local 588, is
United Food & Commercial Workers, Local 588, United Food &
Commercial Workers International Union, AFL–CIO.
statute of limitations,2 which Respondents assert as an affirma-
tive defense, has been tolled pursuant to the doctrine of fraudu-
lent concealment. Following 16 days of hearing at various
times from June through October 1995 and an agreement by the
parties to separately litigate the limitations issue, on October
30, 1995, the General Counsel and the Charging Party rested.
Thereafter, the Respondents filed a motion to dismiss for fail-
ure to prove that the statute of limitations should be tolled.
The procedural background frames the limitations issue. On
April 25, 1990, the Charging Party filed a charge in Case 20–
CA–23314. The parties agree that this was a timely charge.
This charge alleged that Morgan’s Holiday Markets, Inc. (Mor-
gan’s) violated Section 8(a)(1) and (5) of the Act by failing to
recognize the Charging Party at its grocery store in Chico, Cali-
fornia. At the heart of this charge was the issue of whether
Morgan’s was an alter ego of North State Grocery, Inc. (North
State), the purchaser of Morgan’s Chico store. On July 25,
1990, this charge was dismissed. No appeal was taken from the
dismissal and no other unfair labor practice charge was filed
within the 6-month limitations period.
The charge in Case 20–CA–25025, filed November 25,
1992, and amended January 21, 1993, alleged that North State
Grocery, Inc. (North State) and Morgan’s were alter egos and
had failed to observe the terms and conditions of the collective-
bargaining agreements at the North State stores and had dis-
criminated against union supporters in violation of Section
8(a)(1), (3), and (5). A charge in Case 20–CA–25176 filed
February 17, 1993, as amended March 29, 1993, alleged unilat-
eral changes, bad-faith bargaining, direct dealing, and repudia-
tion of the trust agreement of the collective-bargaining agree-
ment in violation of Sec. 8(a)(1), (3), and (5).3 The consoli-
dated complaint in Cases 20–CA–23314, 20–CA–25025, and
20–CA–-25716 issued on December 16, 1994. It resurrects the
dismissed charge in 20–CA–23314 and alleges that,
“commencing on an unknown date in May 1989 . . . the
Respondents fraudulently concealed relevant facts from the
Union regarding the establishment of [North State] and its
relation to
2 Sec. 10(b) of the Act governs issuance of a complaint upon a
charge of unfair labor practice, “Provided, That no complaint shall
issue based upon any unfair labor practice occurring more than 6
months prior to the filing of the charge with the Board.”
3 The consolidated complaint allegations based on the charge in Case
20–CA–25176 are not subject to the motion to dismiss. By separate
order issued Monday, November 13, 1995, the parties were informed of
my ruling on this motion to dismiss and instructed to show cause why
Case 20–CA–25176 should not be severed. In a conference call on
November 29, 1995, all parties stated their positions regarding sever-
ance. Having fully considered the parties’ positions, a separate order
issued severing Case 20–CA–25176 and continuing it before me.
4 The Charging Party stated an intention to try this case on an alter-
native theory of fraudulent concealment from the Regional Office of
the NLRB. The General Counsel and Respondents moved to preclude
litigation of this alternative theory. By order of July 12, 1995, I ruled
that the Charging Party was precluded from advancing an alternate
theory to the one alleged in the consolidated complaint. A request for
special permission to appeal this ruling pursuant to Rule 102.26 fol-
lowed. On September 14, 1995, the Board granted the request and
affirmed the above ruling.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 844
On the entire record and after considering the briefs filed by
all parties, I make the following
FINDINGS OF FACT
A. Events Preceding the First Unfair Labor Practice Charge
Morgan’s, owned by Richard Morgan Sr. (Morgan Sr.), has
had a long-bargaining relationship with the Union. Morgan’s
stores are operated as “Holiday Quality Markets.” Local 916,
which merged with Local 588 in April 1989, represented gro-
cery employees at many of Morgan’s stores.5 Local 916 repre-
sentatives were aware in the mid-to-late 1980s that Morgan Sr.
desired economic relief from the terms of the collective-
bargaining agreements. In fact, Local 916 agreed to economic
concessions during this period of time. Local 916 knew that
Morgan Sr. had stated that he might have to sell some stores in
order to meet the terms of the contracts and, in fact, in May
1988 he sold two stores located in Redding, California, to
Shasta View for that stated purpose.
Effective April 2, 1989, Morgan Sr. sold Holiday Market No.
5 located on Solano Street in Corning, California, to North
State. The Union was notified of this sale by letter of April 3,
1989. This was the first known sale of a Morgan’s store to
North State. North State operated this store nonunion. By
visiting the store following its sale, the Union was able to as-
certain that the store continued to operate as a “Holiday Quality
Market” with the same brands of product, the same signage,
and the same advertisements as the unionized Morgan’s stores.
During grievance meetings, when this subject was discussed,
Floyd Morgan, personnel director of Morgan’s, stated that
North State was a separate company run by Richard Morgan Jr.
(Morgan Jr.), Richard Sr.’s son. The Union was also told by
Floyd Morgan that the purchase was an arm’s-length transac-
tion. The Union also knew that Morgan Jr. was listed as the
agent for service of process for North State. No unfair labor
practice charge was filed regarding this transaction. By memo-
randum of April 24, 1989, Local 588 business representative
Boehme notified Local 588 President Loveall as well as Regi-
nato, secretary/treasurer of Local 588, and Heise, grievance
coordinator for Local 588, that North State was opening a store
in Red Bluff on May 1, 1989.
In both 1986 and 1989, a representative of Provigo, Mor-
gan’s supplier, participated in bargaining. The collective-
bargaining agreement expired June 30, 1989, shortly after the
merger of Local 916 with Local 588. In September 1989, the
Union and Morgan’s reached agreement for a 3-year contract.
Effective November 13, 1989, Morgan’s Store No. 12 lo-
cated on Esplande in Chico, California, was sold to North State.

5 The Respondents deny that Local 588 represented employees in
appropriate bargaining units and at hearing to date, the parties have not
entered into stipulations regarding this matter. For purposes of this
motion, it is unnecessary to resolve this matter definitively. For pur-
poses of this motion I conclude that the record reflects a bargaining
status and further reflects that Local 588, following mergers of various
other locals with it, is the collective-bargaining representative. In 1989,
Local 916, which represented certain of Morgan’s grocery employees,
merged with Local 588. In addition, former meatcutters Local 498
merged with Local 588 in 1991 and meatcutters Local 115 transferred
representation of some of Morgan’s employees to Local 588 in 1992.
Overnight, the store became nonunion. By letter of December
13, 1989, the Union requested the identity of the current owner
of Store No. 12, each shareholder and the shareholder’s inter-
est, copies of all documents which set forth any purported sale,
the sales price and manner of payment, information regarding
employment of former employees, and the ownership interest
retained by Morgan’s. The Union also asserted that it did not
believe there was a bona fide change in ownership.
Morgan’s attorney John W. Reese Jr. responded to Loveall
by letter of December 15, 1989, stating that the Union’s request
for information was untimely and, in any event, there was “no
common ownership or control,” no shareholders in common,
the sale of the store was pursuant to written agreements and
appropriate escrows, the sales price was a market value negoti-
ated price, and Morgan’s had subleased the property to North
State by permission of the owner of the real property. In an
additional letter to Local 588 administrative assistant, Frank
Neth, dated January 3, 1990, Reese stated that Morgan’s had no
control over North State or its employees.
In January 1990, by agreement of the parties, Union Counsel
Steve Stemerman reviewed the sales documents involved in the
Chico transfer at Reese’s offices. Stemerman inquired about
ownership documents for North State but was told these were
not available because North State was a separate entity. Reese
confirmed that Morgan Sr.’s son and daughter were the true
owners of North State. Specifically, Stemerman was shown (1)
an agreement for purchase and sale of assets, (2) a warranty bill
of sale, (3) an equipment lease, (4) a determination of inven-
tory, (5) a promissory note, (6) a personal guarantee, (7) a sub-
lease, and (8) a licensing and advisory services agreement.
From these documents, Stemerman’s notes reflect that he
learned that the purchase price for the Chico store was the retail
value of the inventory as of November 12, 1989, minus 20 per-
cent plus $15,000 for the liquor license. The inventory value
reflected was $219,826.49. Twenty thousand dollars was
placed in escrow with the remainder paid by a 3-year promis-
sory note with interest at 10 percent. Monthly payments on this
note began January 1, 1990, at $6931.83 per month. The note
was guaranteed by Morgan Jr. and his sister, Sharon LaVonne
Zacharias.
Stemerman further noted there was no assumption of liabili-
ties and that North State agreed to retain the trade name “Holi-
day Quality Foods” pursuant to the licensing and advisory ser-
vices agreement. This agreement further provided that advice
regarding purchasing merchandise, pricing, merchandising,
advertising along with licenser’s stores, inventory control ser-
vices, developing, revising floor layout, bookkeep-
ing/accounting, and security could be obtained for one percent
of total gross monthly sales. Stemerman learned that Morgan’s
retained the shopping carts, fixtures, and equipment and leased
these to North State for $3226.72 per month with no deposit.
By memorandum of January 30, 1990, Local 588 Business
Representative Boehme stated to co-director of organizing
DiProsper that Morgan’s claimed that certain stores previously
acquired by Holiday Quality Markets were being operated by
North State nonunion.
MORGAN’S HOLIDAY MARKETS 845
B. The Initial Unfair Labor Practice Charge:
Case 20–CA–23314
On April 25, 1990, the Union filed a charge in Case 20–CA–
23314 alleging that Morgan’s had repudiated its collective-
bargaining agreement at its Chico location. The Union submit-
ted a position letter from Stemerman and an affidavit from
Frank Neth, assistant to the president of Local 588. In addition
to noting the financial transactions outlined above, Stemer-
man’s letter stated, “While I suspect that whatever money was
actually placed into escrow was not put up by the son and
daughter, the Union does not have access to information which
would disclose the actual source for that money.” Neth’s affi-
davit noted that the store looked the same before and after the
transfer as far as signage, products, and advertising. He also
stated that two supervisors had carried over from Morgan’s to
North State. Morgan’s counsel, Henry Telfeian, submitted
position letters and allowed the Region to examine the same
documents which Stemerman had seen. Telfeian told the Re-
gion that the son and daughter obtained their initial financing
through Provigo, the joint supplier for Morgan’s and North
State.
After unsuccessfully soliciting a withdrawal of the charge,
the Region dismissed it by letter of July 25, 1990, stating,

The investigation did not establish that the Employer
sold its Chico store in order to repudiate its collective bar-
gaining agreement and to withdraw recognition from the
Union. Rather, the evidence disclosed that the sale was a
bona fide arm’s length business transaction. Although the
store appears to the public to still be part of the Em-
ployer’s chain of supermarkets, and the purchaser, North
State Grocery, Inc., pays the Employer for store manage-
ment consulting services, the instant case is distinguish-
able from Big Bear Supermarkets No. 3, 239 NLRB 179
(1978). North State maintains ultimate control over the
day-to-day operations of the store and labor relations pol-
icy. Further, North State may sell products and brands not
sold by the Employer’s other stores. With respect to the
management consulting service mentioned above, North
State is not obligated to implement suggestions made by
Employer representatives. Thus, it does not appear that
North State is an alter ego of the Employer. Furthermore,
there is no independent evidence of antiunion motivation
for the sale of the store.

No appeal from the dismissal was taken.
C. Postcharge Developments
By letter of April 11, 1991, Morgan Sr. gave notice to Local
588 President Loveall that Morgan’s Store No. 21 located in
Burney, California, would be sold effective April 30, 1991.
North State was named as the purchaser. Morgan Sr. stated that
he would be willing to meet and bargain regarding the effects
of the sale. The Union thereafter picketed this store with area
standards signs.
Following notice on February 10, 1992, of Morgan’s inten-
tion to sell its Store No. 18 on Antelope Boulevard in Red
Bluff, California, to North State effective February 15, 1992,
Stemerman wrote to Reese requesting information in order to
ascertain whether the transaction was arm’s length. Stemerman
also requested effects bargaining. Following the sale, Reese
offered to show the Union the transaction documents. Al-
though Union Counsel Kahn called for these documents later,
they were never received.
D. Section 301 and ERISA Action
An article in the February 10, 1992 Red Bluff Daily News
featured Morgan Sr. and referred to his “31-store chain” and
850 employees, numbers which could only be accurate if they
included North State. In addition, the article noted that Mor-
gan Jr. planned to get into the grocery store business attribut-
ing the following quote to Morgan Sr.: “My goal is for them
[his son and daughter] to have their own companies some day.”
A lawsuit alleging alter ego theory as to Morgan’s and North
State pursuant to ERISA6 and Section 3017 was commenced by
the union pension and health and welfare trust funds. In re-
sponse, Morgan’s filed a unit clarification petition with the
NLRB and thereafter moved to stay the district court action.
On November 13, 1992, the district court granted the motion to
stay.
Prior to the action being stayed, Kahn, as counsel for the
trusts, conducted pretrial discovery of defendants and third
parties. Based on this discovery, he ascertained the following
previously unknown facts:

• Ownership: The Hooker Creek Irrevocable Trust
owned North State. There was only one trustee,
John W. Reese, Jr.
• Management: Reese served on the Board of Directors
of both corporations.8 Morgan Sr. committed to stay
involved with the business for at least 7 years.
• Operation: Respondents’ common supplier Provigo
made large loans to North State when North State be-
gan operations. Morgan Sr. guaranteed the start-up
loans and leases. Six hundred shares of stock in North
State owned by the Hooker Creek Irrevocable Trust
for the benefit of Richard E. Morgan Jr. and 400
shares of stock owned by the Hooker Creek Irrevoca-
ble Trust for the benefit of Sharon LaVonne Zacharias
were assigned by Reese to Provigo on October 12,
1990. A joint loan request from Morgan’s and North
State was filed on March 31, 1991.
• Motivation: In support of the joint loan request was a
written plan dated March 31, 1991, outlining potential
acquisition by North State of further Morgan’s stores,
detailing the year of potential acquisition and assign-

6 Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et
seq.
7 29 U.S.C. Sec. 185.
8 Prior to filing the initial unfair labor practice charge, the Union
knew that Reese served on Morgan’s board of directors. However,
through filing a Freedom of Information request to the Region seeking
all materials submitted by the Employer in Case 20–CA–23314, on
August 19, 1992, Kahn ascertained that Reese, who he previously knew
was on Morgan’s Board of Directors, was also on North State’s board
of directors. The Region, presumably, knew this when it dismissed the
charge.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 846
ing a store number in the North State system to each
store.
E. Current Unfair Labor Practice Charges
On November 25, 1992, the Union filed an unfair labor prac-
tice charge in Case 20–CA–25025. As amended on January 21,
1993, the charge alleges that Morgan’s and North State, operat-
ing as an alter ego or single employer, violated Section 8(a)(1),
(3), and (5) by failure to apply the collective-bargaining agree-
ment, by bargaining in bad faith over the closing and sale of
stores, and by discriminating against union supporters. On
February 17, 1993, the Union filed a charge in Case 20–CA–
25176 alleging violation of Section 8(a)(1), (3), and (5) by
unilateral implementation of new terms and conditions of em-
ployment, unlawfully insisting on waiver of the Union’s posi-
tion in NLRB charges, withdrawal from pension, health and
welfare funds for discriminatory reasons, and bargaining in bad
faith. This charge was amended on March 29, 1993, to add
allegations of repudiation of the trust agreement and direct
dealing. The allegations in the consolidated complaint based
on the charge in Case 20–CA–25176 are not subject to this
motion to dismiss.
III. ANALYSIS
Preliminarily, I find that this case does not involve fraud
which “is of such character as to conceal itself,”9 or “self-
concealing” fraud. On the merits, of the three components of
the test for fraudulent concealment—(1) deliberate conceal-
ment, (2) of material facts, (3) which could not otherwise have
been discovered through due diligence,10 I am convinced that
only materiality is at issue. When the facts are viewed in a
light most favorable to the General Counsel, I do not believe
that the materiality threshold has been met. Were it necessary
to reach the further issues, I would find that at least one fact
which the Union discovered in 1992 was deliberately concealed
and I would further find that the Union exercised due diligence
in seeking to uncover all relevant facts.
Generally, a timely filed charge which has been dismissed
cannot be reinstated outside the limitations period absent
fraudulent concealment. Ducane Heating Corp., 273 NLRB
1389, 1390 (1985), enfd. without opinion, 785 F.2d 304 (4th
Cir. 1986). Accordingly, the consolidated complaint alleges
that Morgan’s “intentionally misrepresented certain facts relat-
ing to the ownership and control of stores covered by the
[Charging Party’s] collective-bargaining agreements . . . in
response to the Union’s requests for information relating to the
retail food stores newly opened, acquired and sold to Respon-
dent North State.” The consolidated complaint further alleges
that the Charging Party could not reasonably have known be-
fore October 2, 1992, that North State stores were subject to the

9 Bailey v. Glover, 88 U.S. (21 Wall.) 342, 349–350 (1874).
10 Brown & Sharpe Mfg. Co., 312 NLRB 444 (1993) (Brown &
Sharpe II), remanded sub nom. Machinists District Lodge 64 v. NLRB,
50 F.3d 1088 (D.C. Cir. 1995). The Board has accepted this remand.
A prior decision in this case, reported at 299 NLRB 586 (1990) (Brown
& Sharpe I), was also remanded by the court. Machinists District
Lodge 64 v. NLRB, 949 F.2d 441 (D.C. Cir. 1991).
terms of the collective-bargaining agreements between it and
Morgan’s.
A. The Self-Concealing Doctrine
The General Counsel argues that Morgan’s engaged in a
“self-concealing” scheme designed to conceal the operative
facts of its alter ego relationship with North State by stating that
it had “sold the store(s)” implying that it had no control over
the purchaser or its employees. The General Counsel relies on
O’Neill, Ltd., 288 NLRB 1354 (1988), enfd. 965 F.2d 1522 (9th
Cir. 1992), and Barnard Engineering, 295 NLRB 226 (1989).
Although these cases do not utilize the term “self-concealing”
fraud, the General Counsel argues that these cases implicitly
adopt the self-concealing doctrine set forth in Hobson v. Wil-
son, 737 F.2d 1, 33–35 (D.C. Cir. 1984), cert. denied sub nom,
Brennan v. Hobson, 470 U.S. 1084 (1985). This doctrine, in
turn, derives from Holmberg v. Armbrecht, 327 U.S. 392
(1946).
Respondents’ argument is two-fold. First, Respondents con-
tend that the Board has not adopted the self-concealing fraud
doctrine. Moreover, were such a doctrine applicable, Respon-
dents argue that the Union was clearly aware of sufficient facts
to identify a particular cause of action in 1990 and, indeed, filed
a timely unfair labor practice charge alleging that the Chico
store transaction was a sham. Because the Union knew enough
facts to file a charge, Respondents argue that the doctrine of
fraudulent concealment is inapplicable, citing Hobson.
I agree that the District of Columbia Circuit has recognized
two theories of fraudulent concealment in Hobson. One
method is by affirmative acts of concealment and the other is
by a “self-concealing” scheme. However, without deciding
whether the Board has adopted the “self-concealing” doctrine
in O’Neill,11 I find that the cases dealing with “self-concealing”
fraud involve factual patterns in which the party allegedly ag-
grieved remained totally ignorant of the existence of a potential
cause of action through no fault or lack of due diligence on his
or her part. When all facts are fraudulently concealed, it is
unnecessary to analyze materiality of these facts. However,
where as here, only some facts are allegedly concealed but a
potential cause of action can be identified, the test enunciated in
Brown & Sharpe II, discussed below, is applicable. Moreover,
contrary to the Respondents’ argument that the equitable doc-
trine of fraudulent concealment should not apply, I find that this
doctrine is directly applicable.12
11 See, e.g., Teamsters Local 170 v. NLRB, 993 F.2d 990, 998 (1st
Cir. 1993), concluding that statements in O’Neill discussing “the more
relaxed standard of self-concealing wrongs explained in Hobson,” were
dicta.
12 Based upon the doctrine in equity of unclean hands, Respondents
assert that the Charging Party cannot pursue tolling of the statute of
limitations. Respondents’ assertion is based on 1989 bargaining in
which, according to the Respondents, the Union achieved an advanta-
geous economic agreement by using the North State stores as a bargain-
ing chip. The Respondents argue that the Union, by agreeing to limit
the bargaining unit to Morgan’s stores and forego inclusion of the
North State stores in return for the economic package, only to pursue
the North State stores at a later time, is precluded from reliance on an
equitable doctrine such as tolling. I find that the evidence, when
MORGAN’S HOLIDAY MARKETS 847
B. Fraudulent Concealment
Fraudulent concealment “has three critical requirements: (1)
deliberate concealment has occurred; (2) material facts were the
object of the concealment; and (3) the injured party was igno-
rant of these facts without fault or want of due diligence on its
part.” Brown & Sharpe II, 312 NLRB at 444–445. In Brown &
Sharpe II, the Board explicitly adopted the standard for fraudu-
lent concealment enunciated in Holmberg v. Armbrecht, 327
U.S. 392, 397 (1946), as applied in Fitzgerald v. Seamans, 553
F.2d 220 (D.C. Cir. 1977). After setting forth this standard,
“deliberate concealment of material facts,” the Board applied it
to the facts in Brown & Sharpe II concluding that although the
allegedly concealed documents might be relevant to the charge
of surface bargaining, the facts did not make a “critical differ-
ence” in establishing a violation.
On petition for review, the District of Columbia Circuit
faulted the Board for applying a standard of “critical differ-
ence,” stating that this phrase did not correctly interpret the
Fitzgerald standard. However, the court opined that an alterna-
tive statement in Brown & Sharpe II was an accurate statement
of the materiality test: “If the absence of [the newly discov-
ered] evidence results in the dismissal or withdrawal of the
charge, the subsequent discovery will permit resurrection of the
charge.” 50 F.3d at 1094. The Board has accepted the court’s
remand but no decision has issued. The Charging Party urges
that a decision herein at this time would be inappropriate due to
the uncertainty of controlling authority. Although it is possible
that the Board may decide to alter its test for fraudulent con-
cealment in the future, the current state of the law adopts the
standard enunciated by the D.C. Circuit. This standard is quite
minimal. If I am satisfied that the evidence does not meet even
this minimal standard, it would appear that any more stringent
standard would also require the same result.
In making this ruling I have viewed the evidence in a light
most favorable to the General Counsel and the Charging Party.
I have done this for two reasons. First, the general rule in view-
ing the evidence pursuant to a motion to dismiss at the close of
the General Counsel’s case is to look at the evidence, together
with all reasonable inferences which may be drawn therefrom,
in a light most favorable to the General Counsel (the nonmov-
ing party). Secondly,

Under this test of materiality, the standard is akin to
that used when assessing pleadings on a motion to dismiss:

We do not provide for tolling simply because a plaintiff’s
ability to mount a successful case has been impaired in some
degree. Instead, we provide for tolling only when conceal-
ment has so impaired the plaintiff’s case that he is not able to
survive a threshold motion to dismiss for failure to tender a
claim that would advance beyond the pleading stage.”

Id. 50 F.3d at 1094, quoting 312 NLRB 444, 445 at fn. 25.
Applying this standard, it appears that there are actually two
phases of analysis. First, it is necessary to ascertain whether,
accepting as true the General Counsel’s allegation that the facts

viewed in a light most favorable to the nonmoving party, does not
conclusively support such a factual scenario.
were deliberately concealed and could not have been discov-
ered through due diligence, the facts were material under the
standard enunciated: the absence of the newly discovered evi-
dence would result in dismissal or withdrawal of the charge.13
If so, then the analysis proceeds to determine whether the facts
were actually deliberately concealed and whether they could
have been discovered through due diligence.
1. Materiality of the facts
In order to assess materiality of the facts, the multifaceted al-
ter ego framework must be utilized. The Board determines
alter ego status by examination of seven objective factors:
whether the two enterprises have substantially identical man-
agement; business purpose; operation; equipment; customers;
supervision; and ownership. Advance Electric, 268 NLRB
1001 (1984); and Crawford Door Sales Co., 226 NLRB 1144
(1976). An additional factor is whether the motivation for the
creation of the alleged alter ego was to evade contractual obli-
gations or other obligations under the Act. See Perma Coat-
ings, Inc., 293 NLRB 803, 834 (1989). No one factor is control-
ling. Kenmore Contracting Co., 289 NLRB 336, 337 (1988);
and Fugazy Continental Corp., 265 NLRB 1301, 1301–1302
(1982), enfd. 725 F.2d 1416 (D.C.Cir. 1984). Common owner-
ship is not the sine qua non of alter ego status. Goldin-
Feldman, Inc., 295 NLRB 359, fn. 3 (1989); and Crawford
Door Sales, Co., supra.14
At the time the Union filed its unfair labor practice charge in
April 1990, it possessed a great deal of information. For in-
stance, with regard to management, the Union knew that the
Chico store, as run by North State, retained two supervisors
previously employed by Morgan’s. Morgan Sr., through an
advisory services agreement, provided his expertise to North
State regarding inventory control, purchasing merchandise,
pricing, advertising, security, bookkeeping/accounting, and
13 However, “the mere fact that the General Counsel decides to rein-
state previously dismissed charges based on allegedly concealed evi-
dence . . . is not dispositive. The threshold of materiality is not that
low. Rather, it remains the province of the Board to determine whether
the General Counsel’s decision to reinstate the charges at issue was
reasonable in light of the delineated materiality standard.” 50 F.3d at
1094.
14 In Gartner-Harf Co., 308 NLRB 531 (1992), the Board stated that
alter ego status is a subset of single employer status. See also UA Local
343 v. Nor-Cal Plumbing, 38 F.3d 1467, 1473 (9th Cir. 1994). This
issue is currently before the Board on remand. Stardyne v. NLRB, 41
F.3d 141, 153–154 (3d Cir. 1994). It is not necessary to reach this issue
herein. Although the consolidated complaint alleges both alter ego and
single employer status, the parties have limited their arguments to alter
ego theory. However, in the event it were necessary to consider single
employer status, pertinent observations will be interspersed throughout
the remainder of the decision keeping in mind that the controlling crite-
ria for single employer status are interrelationship of operations, com-
mon management, centralized control of labor relations, and common
ownership. Television Artists AFTRA Local 1264 v. Broadcast Service
of Mobile, 380 U.S. 255 (1965) (per curiam). Of these factors, central-
ized control of labor relations is particularly important. Richmond
Convalescent Hospital, 313 NLRB 1247, 1249 (1994); see also Soule
Glass & Glazing Co. v. NLRB, 652 F.2d 1055 (1st Cir. 1981); and Los
Angeles Marine Hardware Co. v. NLRB, 602 F.2d 1302 (9th Cir. 1979).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 848
developing and revising floor plans. The Union was told that
Morgan Jr. was running North State.
The Union also knew that North State and Morgan’s had an
identical business purpose; i.e., operation of retail grocery
stores in Northern California. Both entities utilized the trade
name of “Holiday Quality Foods.” By visiting the Chico store,
the Union learned that operation by North State was identical to
operation by Morgan’s. Nothing had changed. The signage,
store layout, and advertising were identical. The product con-
tinued to be supplied from the two entities’ common supplier,
Provigo, both before and after the change in ownership. More-
over, pursuant to Stemerman’s examination of the documents
surrounding North State’s acquisition of the Chico store from
Morgan’s, he knew that North State leased the shopping carts,
fixtures, and equipment from Morgan’s.
Further, the Union knew that the Chico store continued to be
located at the same place in the same community. There is no
specific evidence about customers but a reasonable inference
may be drawn that customers did not change. The Union knew
that two of Morgan’s supervisors had been retained at the
Chico store by North State. There is no specific evidence re-
garding whether these were the only supervisors. I infer that
they most likely had loyal customers. In addition, the Union
knew, based on Stemerman’s examination of documents, that
the Chico store had been acquired by a corporation named
North State Grocery, Inc. Stemerman as well as business
agents of the Union were told that North State was owned by
Morgan Jr. and his sister.
As to the additional factor of intent to evade statutory obliga-
tions, the Union knew that Morgan Sr. had stated that he would
sell some of his stores in order to meet the economic demands
of the Union. The Union also knew that Morgan Sr. had sold
some of his stores to Shasta View and some to Bill Hicks. Both
of these entities operated the stores nonunion.
It is not my purpose to second-guess the decision of the Re-
gion that the above facts were insufficient to support an alter
ego finding. To do so would defeat the purposes of Section
10(b). My examination is limited to determining whether ab-
sence of the new facts which were discovered, assuming they
were deliberately concealed and could not have been discov-
ered through due diligence, resulted in dismissal of the charge.
Accordingly, I must assume that the above facts could not have
withstood a motion to dismiss.
I do not believe that the absence of the new facts which the
Union learned in 1992 resulted in dismissal of the charge in
Case 20–CA–23314. Rather, these facts were cumulative of
facts already known or represented merely technical details of
what was already known.
Ownership: I have found that the Union learned of the exis-
tence of the Hooker Creek Irrevocable Trust and its ownership
of North State. In other words, Morgan Jr. and his sister are the
beneficial owners rather than the outright owners of the corpo-
ration. The General Counsel and the Charging Party did not
introduce the trust documents in this proceeding. Accordingly,
the only evidence before me is the title of this trust. It is an
“irrevocable” trust. From this title, I assume that the General
Counsel and the Charging Party are correct in their assertion
that Morgan Jr. and his sister cannot divest their interest in the
corporation for a period of time. There is no evidence as to the
identity of the grantor of this trust although Morgan Sr.’s attor-
ney states in a letter Union Counsel Kahn was shown by sup-
plier Provigo that he is the sole trustee and that Morgan Sr.
established the trust. This letter was admitted as evidence of
what Counsel Kahn discovered during the ERISA/Sec. 301
litigation. This “evidence” of ownership, even assuming the
statements in the letter are true, does not assist the Union in
defeating a motion to dismiss. Whether the son and daughter
were the outright owners or the beneficial owners of the corpo-
ration is not material. The fact still remains that Morgan Sr.’s
children, both in their mid-twenties at the time, were the own-
ers (beneficial or otherwise) of North State.15 This was known
as early as 1989. There is no evidence that Reese, acting as
trustee for North State, carried out his duties in anything other
than a fiduciary manner and I cannot draw an inference of
unlawful activity on his part. Accordingly, both before and
after discovery of the Hooker Creek Irrevocable Trust, the Un-
ion knew essentially the same thing. Existence of the Hooker
Creek Irrevocable Trust is simply a technical detail of owner-
ship.16
Management: The Region knew that Reese served on both
Boards of Directors at the time of dismissal of the original un-
fair labor practice charge. Accordingly, the fact that the Union
only ascertained this fact upon receipt of materials from the
Region pursuant to a FOIA request cannot serve as an addi-
tional fact which must be tested under the “materiality” stan-
dard. However, the Union did learn that Morgan Sr. signed an
agreement with Provigo to stay involved in management of
North State (through the advisory services agreement) and
Morgan’s for a period of 7 years. The existence of the fran-
chise agreement and the advisory services agreement were
known at the time the initial unfair labor practice charge was
filed. This explicit agreement to stay involved is merely con-
sistent with Morgan’s actions already known to the Union.17
Operation: The Union knew that Morgan’s and North State
utilized the same supplier, Provigo. It knew that Provigo ap-
pointed members to Morgan’s board of directors during 1986
and 1989 collective bargaining. It knew that Morgan Sr. guar-

15 I note that common ownership by any family member is some-
times sufficient to establish the requirement of common ownership.
See, Schmitz Food, 313 NLRB 554, 559 (1993), citing Gilroy Sheet
Metal, 280 NLRB 1075 fn. 2 (1986), Campbell-Harris Electric, 263
NLRB 1143 (1983), enfd. 719 F.2d 292 (8th Cir. 1983); Bryar Con-
struction Co., 240 NLRB 102, 104 (1979); and M.P. Bldg. Corp., 165
NLRB 829, 831 (1967), enfd. 411 F.2d 567 (5th Cir. 1969). However,
the Board has also held that family relationship does not result in an
alter ego finding absent other indicia of alter ego status. See, Victor
Valley Heating & Air Conditioning, 267 NLRB 1292 (1983); First
Class Maintenance Service, 289 NLRB 484 (1988); and Friederich
Truck Service, 259 NLRB 1294 (1982). Further, common ownership is
not a necessary element of alter ego status in some circumstances. See,
e.g., Bryar Construction Co., 240 NLRB 102, 104 (1979).
16 Similarly, absence of the evidence as to the single employer crite-
rion, common ownership, would not have resulted in dismissal of the
charge as the ownership information discovered in 1992 was either
cumulative or technical in nature.
17 The same result would occur if the single employer criterion,
common management, were utilized.
MORGAN’S HOLIDAY MARKETS 849
anteed loans from Provigo to North State. Through post-
dismissal discovery, the Union learned additionally that Mor-
gan Sr. guaranteed not only North State’s operating loans but
the actual start-up loan from Provigo. It learned that one loan
request to Provigo was submitted jointly from Morgan’s and
North State. It also learned that shares of North State were
assigned by Reese to Provigo. I do not view these additional
facts as anything other than cumulative of what the Union al-
ready knew when it filed the original charge.18
Motivation: Finally, the Union learned that in support of a
March 31, 1991 loan application, North State submitted a
1991–1995 mission and goal statement which indicated that
among other acquisitions, new construction projects, and capi-
tal improvements, North State wanted to acquire further Mor-
gan’s stores. Considering that at the time of the original unfair
labor practice charge, North State had already acquired two of
Morgan’s stores, the existence of a plan for further acquisition
is hardly surprising. Rather, such a plan is merely consistent
with actions clearly known by the Union. More importantly,
the fact of such a plan does not support the Union’s contention
that Morgan Sr. was controlling North State. Accordingly, I
conclude that the absence of this evidence would not have re-
sulted in dismissal of the charge.
Taking all of the additional facts as a whole or individually,
their absence would not have resulted in dismissal of the
charge. Accordingly, I am unable to conclude that these facts
are “material” under the standard adopted by the Board in
Brown & Sharpe II.19 Although it is unnecessary to proceed
any further in the analysis, I have also considered the issues of
deliberate concealment and due diligence.
2. Deliberate concealment
Mere silence where there is no duty to speak does not rise to
the level of deliberate concealment. Here, however, Respon-
dent Morgan’s was under a statutory duty to supply relevant
information to the bargaining agent of the employees. Prior to
filing the timely unfair labor practice charge on April 25, 1990,
Reese told Stemerman in January 1990 that the true owners of
North State were the son and daughter of Morgan Sr. He did
not mention the Hooker Creek Irrevocable Trust. At a griev-
ance meeting in 1989, representative Boehme asked Floyd
Morgan about the sale of stores under union contract to which
Floyd Morgan replied that the stores were sold to North State
which was owned by either Morgan Sr.’s son or his son and
daughter. Similar statements were attributed to Floyd Morgan

18 The same result would be reached if the single employer indicium,
interrelationship of operations, were utilized. I also note that the fourth
criterion for single employer, centralized control of labor relations,
lacked evidence both before and after discovery of the allegedly con-
cealed evidence.
19 The tests for alter ego and single employer are multifaceted. No
one factor is controlling under either analysis. However, I note that
both before and after discovery of allegedly concealed facts, the evi-
dence failed to indicate substantially identical supervision (alter ego
factor) or centralized control of labor relations (single employer factor).
See, e.g., J. M. Tanaka Construction v. NLRB, 675 F.2d 1029 (9th Cir.
1982), enf. 249 NLRB 238 (1980) (most important single factor is
centralized control of labor relations); and Haley & Haley v. NLRB, 880
F.2d 1147 (9th Cir. 1989) (reiterating test articulated in J. M. Tanaka).
by Local 588 Secretary/Treasurer Reginato. Accordingly, I
find that the existence of the Hooker Creek Irrevocable Trust
was affirmatively concealed. See, e.g., Girardi Distributors,
307 NLRB 1497, 1512–1513 (1992), enfd. in relevant part sub
nom. Teamsters Local 170 v. NLRB, supra (there must be an
affirmative misrepresentation concerning material facts);
O’Neill, Ltd., 288 NLRB 1354, 1355 (1988) (misrepresentation
made that employer was going out of business and never
returning, had no interest in Fresno Beef Processor when in fact
owned it, and had not leased plant when in fact it had, consti-
tuted part of elaborate scheme to evade contractual obligation);
and Strawsine Mfg. Co., 280 NLRB 553 (1986) (misrepresenta-
tion of plans to close one facility and concealing plans to relo-
cate).
3. Due diligence
Due diligence does not require litigation in order to procure
court-ordered discovery of concealed facts. Baskin v. Hawley,
807 F.2d 1120, 1130–1131 (2d Cir. 1986). Here the Union
repeatedly requested information about the ownership of North
State. Although a statutory duty to divulge such information
existed, the true identity of the owner was not forthcoming.
Were I to reach the issues of due diligence at this juncture,
viewing the evidence in a light most favorable to the General
Counsel, I would find that the Union satisfied the due diligence
requirement. See Garrett Railroad Car, 289 NLRB 158
(1988); cf. Moeller Bros. Body Shop, 306 NLRB 191, 192
(1992) (union’s failure to exercise due diligence in discerning
whether employer paid contractual wage rates and fringe bene-
fits limited remedial relief to 10(b) period where union failed to
appoint a job steward, rarely visited the shop, and never took
any measures to enforce the union security provisions of the
contract).
CONCLUSION OF LAW
Prosecution of the consolidated complaint against alleged al-
ter egos Morgan’s Holiday Markets, Inc. and North State Gro-
cery, Inc. is barred by Section 10(b) of the Act.
On these findings of fact and conclusion of law and on the
entire record, I issue the following recommended20
ORDER
The consolidated complaint in Cases 20–CA–23314 and 20–
CA–25025 is dismissed.
20 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and recom-
mended 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.