Rfs Foundation And Carpentry

National Labor Relations Board - Board Decisions

Aug 14, 1989

296 N.L.R.B. 105 (N.L.R.B. 1989)

PRECISION BUILDERS
Precision Builders, R.S., Inc . and its alter ego RFS
General Contracting , Inc., d/b/a RFS Founda-
tion and Carpentry and Carpenters' District
Council of St. Louis, affiliated with United
Brotherhood of Carpenters and Joiners of
America, AFL-CIO. Case 14-CA-19481
August 14, 1989
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
On January 27, 1989 , Administrative Law Judge
Claude R. Wolfe issued the attached decision. The
Respondent filed exceptions and a supporting brief.
The National Labor Relations Board has delegat-
ed 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 brief, and has
decided to affirm the judge 's rulings, findings, and
conclusions ' and to adopt the recommended Order
as modified.2
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge as modified below and orders that the Re-
spondent, Precision Builders, R.S., Inc . and its alter
ego, RFS General Contracting , Inc., d/b/a RFS
Foundation and Carpentry , Festus, Missouri , its of-
ficers, agents, successors, and assigns , shall take the
action set forth in the Order as modified.
1. Delete paragraph 2(a), and reletter present
paragraph 2(b) as 2(a).
2. Insert the following as paragraphs 2(b)
through (d) and reletter all subsequent paragraphs
accordingly.
"(b) Comply with the terms and conditions of
the collective -bargaining agreement between the
Union and the Home Builders Associated to which
' We agree with the judge that the General Counsel showed by a pre-
ponderance of the evidence that a purpose behind the creation of Re-
spondent RFS General Contracting was to evade responsibilities imposed
by the Act . We therefore find it unnecessary in this case to address the
concerns raised by Chairman Stephens
Chairman Stephens agrees that the evidence establishes that Precision
Builders , R.S., Inc ., and RFS General Contracting , Inc constitute both a
single employer and alter egos . He disagrees , however , with the judge's
observation that a motive to evade obligations under the Act is unneces-
sary to the alter ego finding in this case , i e, a case in which two entities
were both in existence during the time they were alleged to constitute
alter egos Without the motive finding, the alter ego test is indistinguish-
able from the single employer test . The alter ego cases in which a finding
of unlawful motive may be dispensed with are the disguised continuance
cases, i.e, those in which one entity has disappeared and has been suc-
ceeded by another that is indistinguishable from it in certain specified re-
spects See , e.g, Advance Electric, 268 NLRB 1001 , 1004 (1984)
8 We shall modify the judge 's recommended Order to conform with
his notice
105
Precision Builders , R.S., Inc ., and RFS General
Contracting , Inc. are bound retroactively to Sep-
tember 1 , 1987, and prospectively until such time
as proper and timely notice of cancellation is given
in the manner set forth in that agreement.
"(c) Make whole the unit employees by transmit-
ting the contributions owed to the Union's health
and welfare , pension , vacation and holiday, and
other funds pursuant to the terms of the collective-
bargaining agreement with the Union , and by reim-
bursing unit employees for any medical , dental, or
any other expenses ensuing from its unlawful fail-
ure to make such requested contributions.
"(d) Make whole the unit employees for any
wages lost as a result of its failure to comply with
the terms of the collective-bargaining agreement,
with interest."
Mary J. Tobey, Esq., for the General Counsel.
Daniel C. McCarthy, Esq., for the Respondent.
Jeffrey E. Hartnett, Esq., for the Union.
DECISION
STATEMENT OF THE CASE
CLAUDE R. WOLFE, Administrative Law Judge. This
proceeding was litigated before me at St. Louis, Missou-
ri, on September 6 and 7, 1988 , pursuant to charges and
amended charges filed on May 3 and June 23, 1988, re-
spectively , and complaint issued June 23, 1988 . The com-
plaint alleges that (1) Precision Builders, R.S., Inc. (Pre-
cision) established RFS General Contracting , Inc., d/b/a
RFS Foundry and Carpentry (RFS) as its alter ego; (2)
Precision and RFS are a single employer as well as alter
egos; and (3) that RFS, as a subordinate instrument and
disguised continuation of Precision , has, since on or
about September 1, 1987, violated Section 8(a)(5) and (1)
of the National Labor Relations Act (Act) by refusing to
apply to its employees the terms and conditions of a cur-
rent collective-bargaining agreement between Precision
and the Union . Respondent denies it has violated the
Act.
Upon the entire record, including the stipulations of
the parties and my observation of the demeanor of the
witnesses as they testified , and after considering the post-
trial briefs of the parties, I make the following findings
and conclusions.
1. JURISDICTION
Precision is a Missouri corporation engaged in the
building and construction industry , with an office and
place of business in Festus , Missouri . During the calen-
dar year ending December 31, 1987, Precision, in the
course and conduct of these business operations, per-
formed services valued in excess of $50,000 directly to
Taylor-Morley -Simon, Inc. and other enterprises located
within the State of Missouri , each of which enterprises
satisfies an appropriate standard for the assertion of juris-
296 NLRB No. 15
106 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
diction by the Board other than solely an indirect stand-
ard.
RFS is, and has been since on or about September 1,
1987, a corporation with an office and place of business
in Festus , Missouri , and is a contractor in the building
and construction industry engaged in the construction
and installation of foundations and related work. Based
upon a projection of its operations for the 12-month
period beginning September 1, 1987, at which time it
commenced its business operations, RFS, in the course
and conduct of its operations described above, will annu-
ally perform services valued in excess of $50,000 directly
to K & A Jones Enterprises , Inc., and other enterprises
located within the State of Missouri , each of which en-
terprises satisfies an appropriate standard for the asser-
tion of jurisdiction by the Board other than solely an in-
direct standard.
Precision and RFS are each an employer engaged in
commerce within the meaning of the National Labor Re-
lations Act.
II. LABOR ORGANIZATION
Carpenters ' District Council of St . Louis, affiliated
with United Brotherhood of Carpenters and Joiners of
America, AFL-CIO (the Union) is a labor organization
within the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Preliminary Findings of Fact
There is little dispute regarding the facts set forth by
stipulation of the parties and additional evidence in the
record . It is the meaning of these facts, viewed as a
whole, which is at issue.
Home Builders Association (the Association) is an or-
ganization composed of employers engaged in the build-
ing and construction industry which exists for the pur-
pose , among others, of representing its employer-mem-
bers in negotiating and administering collective-bargain-
ing agreements with various labor organizations , includ-
ing the Union . Precision was an employer-member of the
Association from September 12, 1986 , through Septem-
ber 1987, and during that time Precision authorized the
Association to represent it in negotiating and administer-
ing collective-bargaining agreements. Since May 1, 1986,
the Union has been the designated exclusive collective-
bargaining representative of certain employees of mem-
bers of the Association, and since said date , the Union
has been recognized as such by the Association. Such
recognition has been embodied in a collective-bargaining
agreement effective by its terms for the period May 1,
1986, through April 30, 1989 (the Association Agree-
ment). The unit of employees set forth in this agreement
is a unit appropriate for the purposes of collective bar-
gaining within the meaning of the Act.
On September 12, 1986 , Precision and the Union, pur-
suant to Section 8(f) of the Act, entered into the afore-
said agreement between the Association and the Union.
Since that date, the Union has been and is the exclusive
representative of Precision 's employees included in the
unit described above for the purposes of collective bar-
gaining with respect to rates of pay, wages, hours of em-
ployment , and other terms and conditions of employ-
ment . These employees are all those performing founda-
tion and carpentry work.
Precision was incorporated by Raymond F. Smith Jr.
in September 1986.1 He and his wife Kathleen S. Smith
each owned 50 percent of the stock in the corporation
and were its only directors . The initial capitalization of
Precision consisted of a Small Business Administration
loan of $150,000 and a $50,000 loan from Clayton
Maupin, the stepfather of Smith. The corporate officers
were Raymond and Kathleen Smith , president and
secretary/treasurer respectively, but Kathleen Smith was
employed full time as a medical secretary and did not ac-
tually do any hands-on work for the corporation until
about June 1987. The active staff consisted of Ron Kali-
cak, the office manager who ran the office, made bids on
jobs, and generally took care of all financial details, an
office secretary , and Smith who supervised all the field
work. From the beginning, Precision performed most of
its work for Taylor-Morley-Simon, Inc. (Taylor-Morley),
a general contractor . This work consisted of constructing
concrete foundations and performing carpentry work.
About 60 percent of the work involved foundations. The
remainder was carpentry.
Kalicak unexpectedly abandoned his employment in
May 1987, and left without explanation . After his depar-
ture, the Smiths discovered Precision 's taxes had not
been paid , the company had lost money because bids
made by Kalicak had been too low, and Precision's fi-
nances were generally in very bad shape. Alarmed at
finding their capital seriously depleted and their records
in disarray , the Smiths in late June 1987 consulted an at-
torney who referred them to Kay Walker , a financial
consultant .2 Walker obtained Precision 's financial
records and caused them to be examined by his brother
Gene Walker, an accountant . This examination by Gene
Walker took about 3 weeks and revealed Precision was
indeed in serious financial trouble.3 The minutes of the
Precision board of directors meeting on August 3, 1987,
with Kay Walker present, relates that K. Smith, who
became actively involved in the operation of the Compa-
ny after Kalicak 's departure , had found the following sit-
uation to exist:
1. The I.R.S. is owed approximately $100,000.00.
2. The suppliers Valley Material , NuWay, and
others are owed about $60,000.
3. The union is carding employees at Taylor,
Morley work site constantly , thus killing productivi-
ty.
4. The company is losing money on sub work in
carpentry, but has some profit in foundation work.
i The Certificate of Incorporation issued on September 22, 1986.
2 By that time, the office secretary had been laid off and Precision's
office equipment moved from rented space in Chesterfield, Missouri, to
the Smith's home where K Smith attempted to unravel the Company's
records
8 Precision's collection information statement filed with the Internal
Revenue Service shows a net loss of $231,205 31 for the 11 months
ending August 31, 1987.
PRECISION BUILDERS 107
5. Kathleen had further reported that previous
C.P.A. firm had recommended considering bank-
ruptcy for Precision Builders.
6. Kathleen further reported that she had dis-
cussed the situation with Vince Vogler Attorney at
Law, who specializies in practice of bankruptcy, in
late June and he had advised working with Walker
Financial and Kay L. Walker to fully evaluate the
situation . It was Vince's recommendation that bank-
ruptcy be last choice if no other solution was avail-
able.
7. Vince Vogler had further suggested finding
new investors , changing management (removing
Ray from day to day control of company) and per-
haps forming a new company with new directors
and officers to do foundation work and other activi-
ties, and to get rid of unprofitable carpentry.
The minutes of that meeting then reflect that Kay
Walker made the following recommendations:
1. That Precision Builders cease doing business
with Taylor , Morley, and Simon as soon as possible
since that association had cost the company in ten
months approximately $200,000.
2. That Walker Financial be given authority to
find investors and help organize new company
without Raymond F . Smith Jr. as a stockholder.
Ray would be beneficial to new company otherwise
he would seek employment elsewhere.
3. That Precision Builders , R.S., Inc . effective
immediately cease doing any foundation or carpen-
try work.
4. Since Precision Builders, R.S., Inc . had ap-
proximately $ 150,000 in forms and equipment that
efforts be made to find some construction firm who
would lease same so as to prevent default on S.B.A.
loan securing equipment.
5. Walker Financial further suggested that bank-
ruptcy not be filed, that efforts for arrangements be
made with I.R.S. and creditors to pay obligations.
6. That Raymond and Kathleen pursue all ave-
nues for borrowing to satisfy I.R.S. within twelve
months.
The minutes then note:
The Board reviewed the above proposals of
Walker Financial and Raymond F. Smith moved
that recommendations be accepted as noted in the
minutes . Kathy agreed.
Raymond moved to implement recommendations
of Walker Financial and Vince Vogler, and Kathy
seconded. Kathy was further directed by the board
to work with Kay L . Walker of Walker Financial,
new accountants AmTax , and Vince Vogler & As-
sociates to terminate association with Taylor,
Morley, and Simon , and cause Precision Builders,
R.S., Inc . to cease operations as a sub- contracting
company and begin doing business as only a leasing
company of equipment.
The minutes of a following meeting of the Precision
board of directors on August 31, 1987, also attended by
Kay Walker, read , in relevant part , as follows:
Kathleen S . Smith submitted her resignation as a
Board member of Precision Builders R.S., Inc. ef-
fective at midnight August 31, 1987.
Raymond F . Smith then noted that he had imple-
mented directives from the last meeting that effec-
tive immediately all construction work done by Pre-
cision Builders R.S., Inc . would cease and that em-
ployees . would be terminated . Raymond also noted
that he had verbally informed Home Builders Asso-
ciation officers of Precision 's decisions to cease op-
erations and that they had verbally informed him he
didn 't have to notify the union since there would be
no employees working.
Raymond as Chairman proposed that Precision
accept the following proposal put forth by Walker
Financial:
1. That Precision Builders enter into a flexible
lease with R . F.S. General Contracting Inc. The
lease would allow payments sufficient to cover
S.B.A. payment , equipment payments, and insur-
ance.
2. That Precision make available to Drury
Walker Construction , Inc. and others equipment on
"as needed basis" and charge by the hour depend-
ing on equipment used . Raymond would be author-
ized to set fees.
3. That Raymond F . Smith continue as President
and make all efforts to sell or lease equipment to
reduce debt load of Precision.
4. That Kathleen S. Smith continue association
with Precision Builders R.S., Inc . only as a part-
time employee . She would continue to sign on
checking account, but could not create additional
credit for Precision Builders R.S. Inc . Kathleen
would be restricted from making corporate deci-
sions without Raymond F. Smith's direct approval
and/or advice of Kay L. Walker of Walker Finan-
cial. Should her signature be required to expediate
business as it was agreed that she could sign as As-
sistant Secretary to Corporation , but only under di-
rection of Raymond F. Smith Jr . Secretary.
5. That Raymond F . Smith purchase interest of
Kathleen S. Smith in Precision for $1.00 and thus
making Raymond F. Smith sole stockholder of said
corporation.
6. The final proposal was that Precision Builders
R.S., Inc . continue as a functioning corporation and
as member of the Home Builders Association.
Should the corporation ever decide to re-enter the
construction business , it would have preexisting
labor agreement still in force.
After much discussion Raymond moved the pre-
ceding recommendations be approved and Kathleen
seconded.
108 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
The foregoing minutes are consistent with the testimo-
ny of K. Smith and Kay Walker,4 and are found to be a
reasonably accurate summary of the events discussed in
the minutes.
As Precision was being reduced from a builder to an
equipment supplier in August, RFS was in its formative
stages . On August 20, 1987, K. Smith signed Articles of
Incorporation for RFS General Contracting, Inc. which
were subsequently filed on September 1, 1987, at which
time a certificate of incorporation issued. The initial fi-
nancing of the corporation was K. Smith's purchase of
500 shares of common stock at $1 per share. She was the
sole incorporator . The corporation's registered agent was
listed as Gene Walker. Kay Walker persuaded Clayton
C. Maupin Jr., K. Smith's stepfather, to agree to pur-
chase 20,000 shares of stock, and Thomas Dempsey, K.
Smith's father, to purchase 4000 shares. These oral prom-
ises were reduced to signed subscription agreements on
September 5, 1987, whereby Maupin agreed to pay
$20,000 for the stock and Dempsey $4000, with an addi-
tional promise by Dempsey to loan $1000, said payments
to be made by June 1, 1988.5 Maupin also loaned $40,000
to the Smiths to help pay Precision's tax bills. Maupin,
Dempsey, and K. Smith were and are the sole stockhold-
ers of RFS. K. Smith is the corporation's president and
secretary, Maupin the vice president, and Dempsey the
treasurer . Kay Walker is the comptroller.
On the day of incorporation, September 1, 1987,
Maupin and Smith entered into a lease agreement where-
by RFS would lease construction equipment from Preci-
sion at a minimum rental of $4000 per month and an ad-
ditional fee if RFS completes more than 10 foundations
in any month. On October 1, 1987, RFS agreed to lease
office space from Walker, Morris, and Walker in Hazel-
wood, Missouri , at $125 per month and additional office
space from Smith at his home address ranging from $275
to $350 per month. On the same day the directors,
Maupin and K. Smith, authorized Maupin and/or Comp-
troller Walker to contract with Smith to be the general
manager of installation for RFS, with responsibility for
all bids and the hiring and firing of hourly employees, at
an annual salary of $50,000 to be paid only if Smith's ef-
forts assisted RFS in becoming profitable. Smith was also
given paid health insurance, a production incentive, and
a company vehicle of his choice. The employment con-
tract ultimately entered into by Smith and Maupin on
behalf of RFS on October 29, 1987, differs somewhat
from that authorized on October 1, 1987, and provides as
follows:6
1. R.F.S. will pay up to $48,000.00 per year for
Ray's full time service as general foreman and site
manager.
2. R.F.S. will provide Ray with hospitalization
insurance.
3. R.F.S. will provide Ray either by our purchase
or reimbursement should he personally purchase a
4 Kay Walker appeared to be a forthright, credible witness, and K
Smith was a candid witness who, although confused on occasion, was
clearly trying hard to be responsive and truthful
S Neither Maupm nor Dempsey testified
6 Raymond Smith is referred to as Ray in the contract
pick- up truck of Ray's choice, providing said truck
will be used exclusively for business.
4. R.F.S. will consider bonus of $100.00 per foun-
dation should Ray be able to produce a net profit of
10%.
5. Ray will be accountable for time up to maxi-
mum of 48 hours per week.
6. Ray will be given full authority to direct work
in the field to sign pay checks in the field, to rec-
ommend hiring and recommend termination of em-
ployees. The final decision on employees will be up
to Kathleen S. Smith.
7. Ray covenants he will not enter into competi-
tion with R.F.S. for one (1) year after termination
of this agreement. (i.e. for clarification competition
is defined as running or starting a foundation/-
construction company)
8. R.F.S. agrees to give Ray a sixty day notice
should R.F.S. elect to terminate agreement. R.F.S.
agrees to show cause for termination and to have
decision reviewed by Kay L. Walker of Walker Fi-
nancial for arbitration and review. Both covenant to
accept recommendations and to implement same.
9. Vacations are to be for not more than two
weeks.
RFS commenced its operations by doing foundation
work for Taylor-Morley, as had Precision. After con-
structing three such foundations in September 1987, RFS
and Taylor-Morley severed their business relationship.
At that time Taylor-Morley owed RFS some money for
its work, and also held Precision's unpaid invoices, but
Taylor-Morley was holding chargebacks to Precision
whose dollar amount exceeded Precision's unpaid in-
voices. In short, RFS was owed money, but Precision
owed money . In negotiating settlement of these claims
with Kay Walker, Taylor-Morley, over Walker's objec-
tions, insisted on offsetting the amounts owed by Preci-
sion against the moneys due RFS, and would not settle
on any other terms. Needing the money in order to meet
RFS obligations, Walker agreed. Taylor-Morley's lawyer
drafted the settlement and made out the check in satis-
faction thereof. The settlement and the check both
named "Ray Smith, R.A. Smith Precision Builders, Pre-
cision Builders R.S. Inc., R.F.S. Foundations and Car-
pentry" as the parties to the settlement with Taylor-
Morley. This was a unilateral act by Taylor-Morley
devoid of probative worth on the issues of alter ego and
single employer. Moreover, the acceptance of the settle-
ment and the check with this objected to connection of
both firms and Smith personally was under duress and
similarly is not evidence of an alter ego or single em-
ployer situation.
Subsequent to its work for Taylor-Morley, RFS has
continued to do foundation work and is also engaged in
the general contracting of housing construction. It is
clear that Smith either directly hires or effectively rec-
ommends the hiring of hourly employees and directs
them in their work. He testified without contradiction
that he has hired employees at RFS other than those pre-
viously employed by Precision "because the employees
of Precision Builders were all Union employees that I
PRECISION BUILDERS
had and when Clayton [Maupin] created RFS I had to
find other employees which were non-union employees
because this was to Clayton's instructions ." Of the 77
employees employed by RFS at various times from its
inception to August 19, 1988, 47 were previously em-
ployees of Precision and thus represented by the Union.
The complaint does not allege the unlawful exclusion of
union members for employment with RFS, nor was the
matter litigated.
On June 29, 1988, Smith wrote the following to the
Union:
Precision Builders, R.S., Inc . d/b/a RASMITH is
no longer operating as of September 30, 1987 and
prepared to negotiate the impact of closing on the
employees.
We regret that we did not notify you sooner of
this closing , as we have just recently learned of our
obligation to bargain with you on the impact of this
closing upon the employees.
The parties stipulated , and I find, that since on or about
September 1, 1987, and continuing to date, RFS has
failed to pay its employees health and welfare benefits,
pension benefits , and vacation fund benefits required by
the Association contract , is otherwise failing to apply the
terms and conditions of that agreement , and does not
recognize the Union as the representative of its employ-
ees.
Thus matters stood when this case was heard.
B. Discussion, Further Findings, and Conclusions
The issues raised by the pleadings are (1) whether
RFS and Precision are alter egos and /or whether the
two are a single employer , and (2) whether the Associa-
tion agreement was unlawfully repudiated by the failure
to apply its terms and conditions to RFS employees.
The criteria applicable to an alter ego/disguised con-
tinuance issue are set forth in Fugazy Continental Corp.,8
as follows:
In determining whether [one employer] is the
alter ego of [another], we must consider a number
of factors , no one of which , taken alone, is the sine
qua non of alter ego status . Among these factors
are: common management and ownership ; common
business purpose, nature of operations , and supervi-
sion ; common premises and equipment ; common
customers, i.e., whether the employers constitute
"the same business in the same market"; as well as
the nature and extent of the negotiations and for-
malities surrounding the transaction. We must also
consider whether the purpose behind the creation of
the alleged alter ego was legitimate or whether, in-
stead , its purpose was to evade responsibilities
under the Act.
The factors to be considered in determining whether or
not two companies constitute a single employer are (1)
' David L. Doza Jr , Mark Huck , Michael F . Mathews , Gregory L
Smith
8 265 NLRB 130 (1982), enfd . 725 F 2d 1416 (D C Cir 1984)
109
interrelation of operations , (2) common management, (3)
centralized control of labor relations , and (4) common
ownership. It is not necessary that all four criteria be
met, and no one of them is controlling," but the Board
considers the degree of actual and active common con-
trol of labor relations to be a critical factor, notwith-
standing the presence of common ownership with poten-
tial control . 10 It appears from Board and court decisions
on the matter that the existence or nonexistence of
common control of labor relations outweighs the absence
or presence of any other single factor enumerated above
and may well be "the most significant criteria for deter-
mining single employer status." t l
The ownership of all stock in both corporations by
family members and the fact that all corporate officers
and directors are members of the family warrants a find-
ing of common ownership12 and control . There is no
showing of special circumstances compelling a contrary
conclusion . 13 Moreover , the evidence is persuasive, not-
withstanding Respondent's arguments to the contrary,
that Smith does substantially the same thing for RFS that
he did as the man in complete charge of field work at
Precision . I believe it likely on the basis of the evidence
before me that, inasmuch as he is the only person con-
nected with RFS who has any expertise in the construc-
tion business , there is minimal , if any, review by Maupin
or Kathleen Smith of his conduct in hiring, firing, or su-
pervising the field employees of RFS and their foreman
in his (Ray Smith 's) capacity as "general foreman and
site manager." Common supervision of field operations at
both RFS and Precision is clear . The record suggests
that his responsibilities at RFS may even be greater than
at Precision because he now solicits and makes job bids,
whereas Kalicak had those duties at Precision . The injec-
tion of Kay Walker into the picture as a financial advisor
does not obscure the simple fact both companies were
and are family corporations entered into by and for the
benefit of family members, and owned and managed by
family members . The effort to portray Maupin and
Dempsey as disinterested investors involved because
RFS would be profitable to them is not convincing. RFS
was established upon the advice of Walker as a vehicle
to utilize Ray Smith's skills in a venture unburdened by
debt and unpaid taxes for the purpose of generating suffi-
cient earnings to liquidate the obligations of Precision,
which were also the personal obligations of the Smiths as
guarantors thereof. In order to accomplish these goals, it
was necessary (1) to stop the performance of unprofit-
able work by Precision , (2) to establish RFS to continue
in the foundation work with more realistic job bidding
9 See, e.g, Weldment Corp., 275 NLRB 1432 (1985), Fedco Freightlmes,
273 NLRB 399 fn 1 (1984), Watt Electric Ca, 273 NLRB 655 (1984),
Samuel Kosoff & Sons, 269 NLRB 424 , 427 (1984), Friedrich Truck Serv-
ice, 259 NLRB 1294, 1300 (1982).
10 Watt Electric Co, 273 NLRB 655, 657 in 13 (1984 ), Shellmaker,
Inc., 265 NLRB 749, 754 (1982), Gerace Construction , 193 NLRB 645
(1971)
11 Shellmaker, Inc., supra , Super Save, 273 NLRB 20, 28 (1984).
12 Mid-Hudson Leather Goods Co., 291 NLRB 449 (1988), Advance
Electric, 268 NLRB 1001, 1004 (1984); East Tennessee Packing Ca, 270
NLRB 520 , 524 (1984), Watt Electric Co., 273 NLRB 655 (1984), Craw-
ford Door Sales Co., 226 NLRB 1144 (1976).
13 See, e.g., Gilroy Sheet Metal, 280 NLRB 1075 (1985)
110 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
and thus greater profit opportunities, (3) to utilize Preci-
sion equipment in view of RFS' undercapitalization,
which Walker concedes, (4) to use space in the Smith
home for RFS business , as had been done for Precision,
and (5 ) to utilize Smith 's expertise , albeit on a conditional
salary basis . This arrangement immediately lightened the
financial burden on Precision and the Smiths by provid-
ing regular equipment lease payments to Precision and
rental income and salaries and other benefits for Ray-
mond and Kathleen Smith , who left her job as a medical
secretary to manage , with Walker's guidance , RFS' fi-
nancial affairs . There is nothing improper per se in such
arrangements . I recite them for the purpose of illustrat-
ing the transition from Precision and RFS was the result
of family cooperation to alleviate the financial problems
of the Smiths, is a family endeavor , and exists for the
benefit of family members.
Respondents contend RFS and Precision have no
common business purpose , and proffers that RFS was es-
tablished to do general contracting and real estate devel-
opment as well as foundations whereas Precision was es-
tablished to do foundation and carpentry work. This
proffer is based on Respondents ' comparison of the arti-
cles of incorporation of Precision and RFS. The compar-
ison so put forth is erroneous and does not support the
argument because the articles of Precision permit general
contracting and real estate development as do those of
RFS. The real purpose of both is to liquidate existing
debt and proceed to more profitable circumstances, but
this does not answer whether they have a common busi-
ness purpose in terms of what they in fact do in the
course of conducting their business . When Precision
ceased building foundations , RFS started building them
and still is primarily engaged in that business even
though it has recently ventured into some general con-
tracting and housing development which Precision did
not do, although empowered by its articles of incorpora-
tion to so do. As presently constituted, RFS and Preci-
sion amount to a single enterprise with interrelated oper-
ations . In practical terms, neither can exist without the
other . RFS needs Precision's equipment, Precision needs
its income from RFS to survive because it has no other
income, and both need Ray Smith and the other family
members involved, Ray Smith for his expertise and the
family for its financial support.
There is no reason to belabor the point that Precision
was and RFS is engaged in the same business in the same
market, housing construction in the St. Louis area, and
utilizes the same class of suppliers , because that conclu-
sion is compelled by the evidence of record.
Although Respondent contends that Maupin or K.
Smith is the final arbiter in matters touching on labor re-
lations at RFS, Maupin is not involved in day-to-day op-
erations and neither he nor K. Smith have been shown to
have any expertise in construction work or labor rela-
tions . I am persuaded that Smith , who actually runs the
entire field operation every day, hires and fires field em-
ployees or effectively recommends such action , assigns,
supervises, pays, and is otherwise in charge of the total
work force excepting family members and Kay Walker,
is in control of day-to-day labor relations at RFS as he
was at Precision , and plays a dominant role in RFS' op-
erations . This conclusion gains some support from the
use of Smith's initials in the corporate name of RFS
which was , I believe, designed to inform the industry it
was still dealing with Ray Smith , and amounts to a
public holding out of RFS as a successor to Precision
controlled by Smith. The use of his initials in the corpo-
rate title reasonably implies some permanence in Smith's
tenure with the Company and a superior status in the
corporate hierarchy , and I conclude Smith 's initials were
used to convey that very impression.
Hostility toward union representation is inferable from
Smith's recitation that low productivity by unionized em-
ployees at Precision was part of the reason for his losses
there, and that he was shut down by the Union one day
for nonpayment of health and welfare funds and on an-
other day because some of his employees had not paid
their union dues . Similarly, Kathleen Smith 's August 3,
1987 report at the Precision board meeting , "The union
is carding employees at Taylor Morley worksite con-
stantly, thus killing productivity" shows the Union was
considered to be partially responsible for Precision's dire
straits . Smith 's relation that he did not use Precision em-
ployees at RFS because they were union members illus-
trates that RFS' attitude toward union affiliation paral-
leled that of Precision. Although I conclude and find
that the lack of productivity attributed to union represen-
tation by the Smiths played a part in the decision to shut
Precision down as a construction company, the evidence
preponderates to a conclusion the company would not
have been shut down had not it been faced with financial
disaster mostly caused by mismanagement of its assets
and underbidding , both allegedly by Kalicak prior to his
sudden departure . That the employment of union mem-
bers was largely avoided at RFS after Precision cease
construction does not persuade me that the presence of
union representation was the root cause of the Precision
shutdown , but I conclude it was a contributing reason
therefor . For these reasons, I conclude General Counsel
has shown by a preponderance of the evidence that a
purpose behind the creation of RFS was to evade re-
sponsibilities imposed by the Act. Even if this were not
so it is settled law that the presence of unlawful motiva-
tion is not essential to a finding of alter ego , 14 and the
evidence on other relevant factors is sufficient.
The applicable criteria having been met, I find Preci-
sion and RFS to be a single-integrated employer and
alter egos . Precision 's duty to bargain with the Union
and its duty to honor existing collective-bargaining
agreements with the Union are binding on RFS.15 By re-
jecting the existing contract with the Union, by failing to
pay fringe benefit contributions required by that agree-
ment, by otherwise failing to apply the terms and condi-
tions of that agreement , and by refusing to recognize and
bargain with the Union as the representative of RFS em-
ployees, Respondent Precision and RFS have violated
Section 8(a)(5) and (1) of the Act.
14 See , e.g, Gilroy , supra, fn 1
15 Advance Electric , 268 NLRB 1001 , 1004 (1984).
PRECISION BUILDERS 111
CONCLUSIONS OF LAW
1. Respondent Precision and RFS are employers
within the meaning of Section 2(2), (6), and (7) of the
Act.
2. Respondents Precision and RFS are a single em-
ployer and RFS is the alter ego of Precision.
3. The Union is a labor organization within the mean-
ing of Section 2(5) of the Act.
4. All carpenters and joiners employed by Precision
and its alter ego RFS , including all employees perform-
ing foundation and carpentry work, constitute a unit ap-
propriate for purposes of collective bargaining within the
meaning of the Act.
5. At all times material Carpenters ' District Council of
St. Louis, affiliated with United Brotherhood of Carpen-
ters and Joiners of America, AFL-CIO has been the ex-
clusive collective-bargaining representative of the em-
ployees in the aforesaid appropriate unit.
6. By failing and refusing to recognize and bargain
with the Union as the exclusive representative of its em-
ployees in the appropriate unit, by failing to honor the
existing collective -bargaining agreement with respect to
such employees , and by failing to apply to such employ-
ees the terms and conditions of the agreement , Precision
and RFS have violated Section 8(a)(5) and (1) of the
Act.
7. The aforesaid violations of the Act are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
THE REMEDY
Having found that Precision and RFS have violated
Section 8(a)(5) and (1) of the Act, my recommended
Order will require them to cease and desist therefrom
and take affirmative action designed to effectuate the
policies of the Act.
Inasmuch as RFS is the alter ego of Precision and the
two are a single employer continuing to operate the same
business, but have failed and refused to recognize the
Union as the collective-bargaining representative of RFS
employees or to apply the terms of the collective-bar-
gaining agreement between Precision and the Union, I
shall recommend RFS be ordered to recognize the
Union as the representative of its employees and to
honor and apply the terms of that agreement, and any
subsequent agreement , to its employees. I shall also order
Precision and RFS to make the contractually established
payments due on and after September 1, 1987, to the var-
ious trust funds established by the collective-bargaining
agreement, with interest in accordance with the criteria
set forth in Merryweather Optical Co., 240 NLRB 1213,
1216 fn. 7 (1979), and by reimbursing unit employees for
any expenses they incurred as a result of the unlawful
failure to make such required payments, as provided in
Kraft Plumbing & Heating, 252 NLRB 891 fn. 2 (1980).
Precision and RFS are also ordered to make their em-
ployees whole for any loss of wages suffered by virtue of
the failure to apply the collective -bargaining agreement
to RFS employees,' a with interest.' 7
On these findings of fact and conclusions of law and
on the entire record , I issue the following recommend-
ed's
ORDER
Respondent Precision and RFS , Festus, Missouri, their
officers, agents, successors , and assigns, shall
1. Cease and desist from
(a) Refusing to recognize and bargain with the Union
as the exclusive representative of its employees in the ap-
propriate unit with respect to wages, hours, working
conditions, or other terms or conditions of employment
of said employees, and refusing to honor the collective-
bargaining agreement herein found applicable to those
employees.
(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Comply with the terms and conditions of the col-
lective-bargaining agreement between the Association
and the Union to which Precision and RFS are bound
retroactively to September 1, 1987, and prospectively
until such time as proper and timely notice of cancella-
tion is given in the manner set forth in the collective-bar-
gaining agreement , including making the appropriate
trust funds and the employees whole in the manner de-
scribed in the remedy section of this decision.
(b) On request , recognize and bargain with the Union
as the exclusive representative of the employees in the
following appropriate unit concerning terms and condi-
tions of employment:
All carpenters and joiners employed by Precision
Builders, R.S. Inc . and its alter ego RFS General
Contracting, Inc., including all employees perform-
ing foundation and carpentry work.
(c) Preserve and, on request , make available to the
Board or its agents for examination and copying , all pay-
roll records , social security payment records, timecards,
personnel records and reports , and all other records nec-
essary to analyze the amounts due under the terms of
this Order.
(d) Post at its facilities in Festus and Hazelwood, Mis-
souri, and at its jobsites , copies of the attached notice
18 See Johnson Electric Ca, 196 NLRB 637 fn 1 ( 1972).
17 In accordance with its decision in New Horizons for the Retarded,
283 NLRB 1173 (1987 ), interest on and after January 1 , 1987, shall be
computed at the "short-term Federal rate" for the underpayment of taxes
as set out in the 1986 amendment to 26 U .S.C. § 6621 . Interest on
amounts accrued prior to January 1, 1987 (the effective date of the 1986
amendment to 26 U S C § 6621 ), shall be computed in accordance with
Florida Steel Corp., 231 NLRB 651 (1977).
18 If no exceptions are filed as provided in Sec 102 46 of the Rules and
Regulations of the National Labor Relations Board , the findings , conclu-
sions , and recommended Order herein shall, as provided in Sec . 102.48 of
the Rules and Regulations, be adopted by the Board and become its find-
ings, conclusions , and Order , and all objections to them shall be deemed
waived for all purposes.
112 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
marked "Appendix.""' Copies of the notice, on forms
provided by the Regional Director for Region 14, after
being signed by the Respondent's authorized representa-
tive, shall be posted by the Respondent for 60 consecu-
tive in conspicuous places including all places where no-
tices to employees are customarily posted . Reasonable
steps shall be taken by the Respondent to ensure that the
notices are not altered , defaced or covered by any other
material.
(e) Notify the Regional Director in writing within 20
days from the date of this Order what steps Respondent
has taken to comply.
19 If this Order is enforced by a judgment of a United States Court of
Appeals, the words in the notice reading "Posted by Order of the Na-
tional Labor Relations Board " shall read "Posted Pursuant to a Judgment
of the United States Court of Appeals Enforcing an Order of the Nation-
al Labor Relations Board."
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT refuse to recognize and bargain with
Carpenters ' District Council of St . Louis, affiliated with
United Brotherhood of Carpenters and Joiners of Amer-
ica, AFL-CIO as the exclusive bargaining representative
of our employees in the following appropriate unit:
All carpenters and joiners employed by Precision
Builders, R.S. Inc . and its alter ego RFS General
Contracting , Inc., including all employees perform-
ing foundation and carpentry work.
WE WILL NOT repudiate the collective-bargaining
process by withdrawing recognition from the above-
named Union as the exclusive collective-bargaining rep-
resentative of our unit employees , and WE WILL NOT
refuse to follow the collective-bargaining agreements ap-
plicable to our unit employees.
WE WILL NOT in any like or related manner interfere
with, restrain , or coerce you in the exercise of the rights
guaranteed you by Section 7 of the Act.
WE WILL , on request , bargain with the above-named
Union as the exclusive representative of all the employ-
ees in the appropriate unit concerning rates of pay,
wages, hours of work, and other terms and conditions of
employment.
WE WILL comply with the terms and conditions of the
collective-bargaining agreement between the Union and
the Home Builders Association to which Precision Build-
ers, R .S., Inc., and RFS General Contracting, Inc. are
bound retroactively to September 1, 1987, and prospec-
tively until such time as proper and timely notice of can-
cellation is given in the manner set forth in said agree-
ment.
WE WILL make whole our unit employees by transmit-
ting the contributions owed to the Union's health and
welfare, pension , vacation and holiday, and other funds
pursuant to the terms of our collective-bargaining agree-
ment with the Union, and by reimbursing unit employees
for any medical, dental, or any other expenses ensuing
from our unlawful failure to make such required contri-
butions.
WE WILL also make our employees whole for any
wages lost as a result of our refusal to comply with the
terms of the collective-bargaining agreement , with inter-
est.
PRECISION BUILDERS , R.S., INC. AND RFS
GENERAL CONTRACTING, INC.