Wayne Electric, Inc.

National Labor Relations Board - Board Decisions

Apr 20, 1979

241 N.L.R.B. 1056 (N.L.R.B. 1979)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Wayne Electric, Inc.; and Electrical Installation and
Services and Local Union No. 441, International
Brotherhood of Electrical Workers, AFL-CIO and
Wayne E. Steward, Party Charged with Derivative
Liability. Case 21-CA-14099
April 20, 1979
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND MURPHY
On October 14, 1976, the National Labor Relations
Board issued its Decision and Order' in the above-
entitled proceeding in which it directed, inter alia,
that Respondent Wayne Electric, Inc. (hereinafter
called Wayne Electric), and its alter ego Electrical In-
stallation and Services (hereinafter called EIS), their
officers, agents, successors, and assigns, make whole
certain employees and employee benefit funds for
losses resulting from Respondent's unfair labor prac-
tices in violation of Section 8(a)(1) and (5) of the Na-
tional Labor Relations Act, as amended. On August
14, 1978, the United States Court of Appeals for the
Ninth Circuit entered its judgment, enforcing in full
the Board's Order, including its backpay provisions.
A controversy having arisen over the amounts of
backpay due under the terms of the Order, as en-
forced by the court, the Regional Director for Region
21, on November 16, 1978, issued and duly served on
Respondent and Wayne E. Steward as party charged
with derivative liability a backpay specification and
notice of hearing, alleging the amounts of backpay
and employee benefit fund contributions due under
the Board's Order and notifying Respondent and
Steward that they should file a timely answer comply-
ing with the Board's Rules and Regulations, Series 8,
as amended.
Respondent Wayne Electric and EIS failed to file
an answer, but on December 7, 1978, Wayne E. Stew-
ard filed an answer which generally denied the allega-
tions contained in enumerated paragraphs of the
backpay specification, without explaining the basis
therefor. After General Counsel informed Steward
that his answer was not viewed to be in conformity
with the applicable Rules and Regulations and
threatened to file a Motion for Summary Judgment,
Steward, on December 20, filed an amended answer,
stating that he admitted, denied, or lacked informa-
tion regarding specified allegations in the backpay
specification and contending, inter alia, that he was
not personally liable for the amounts due.
1 226 NLRB 409 (1976). Wayne E. Steward was not named as a separate
respondent in the underlying unfair labor practice proceedings.
Thereafter, on January 26, 1979, counsel for the
General Counsel filed directly with the Board a mo-
tion to strike the answer of Wayne E. Steward and
Motion for Summary Judgment, and Wayne E. Stew-
ard filed oppositions to these motions. Wayne Electric
and EIS filed no response to these motions. Subse-
quently, on February 2, 1979, the Board issued an
order transferring the proceeding to the Board and a
Notice To Show Cause why the General Counsel's
motions should not be granted. No party filed a re-
sponse to the Notice To Show Cause.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
Upon the entire record in this proceeding, the
Board makes the following:
Ruling on Motion for Summary Judgment
Section 102.54 of the Board's Rules and Regula-
tions, Series 8, as amended, provides, in pertinent
part, as follows:
(a) . . . The respondent shall, within 15 days
from the service of the specification, if any, file
an answer thereto ....
(b) . . . The respondent shall specifically ad-
mit, deny, or explain each and every allegation
of the specification, unless the respondent is
without knowledge, in which case the respondent
shall so state, such statement operating as a de-
nial. Denials shall fairly meet the substance of
the allegations of the specification denied. When
a respondent intends to deny only a part of an
allegation, the respondent shall specify so much
of it as is true and shall deny only the remainder.
As to all matters within the knowledge of the
respondent, including but not limited to the var-
ious factors entering into the computation of
gross backpay, a general denial shall not suf-
fice ...
(c) . . .If the respondent fails to file any an-
swer to the specification within the time pre-
scribed by this section, the Board may, either
with or without taking evidence in support of the
allegations of the specification and without no-
tice to the respondent, find the specification to be
true and enter such order as may be appropri-
ate ...
The backpay specification, issued and served on
Respondent Wayne Electric and EIS and Steward on
or about November 20, 1978, specifically states that
Respondent shall, within 15 days from the date of the
specification, file with the Regional Director for Re-
gion 21 an answer to the specification and that if the
241 NLRB No. 170
1056
WAYNE ELECTRIC
answer fails to deny the allegations of the specifica-
tion in the manner required under the Board's Rules
and Regulations and the failure to do so is not ade-
quately explained, such allegations shall be deemed
to be admitted to be true, and the Respondent shall
be precluded from introducing any evidence contro-
verting them.
Respondent Wayne Electric and EIS has failed to
respond to the Notice To Show Cause and, therefore,
the allegations of the specification with respect to it
stand uncontroverted. As Respondent Wayne Elec-
tric and EIS has not filed an answer to the specifica-
tion or offered any explanation for its failure to do
so,2 the allegations of the specification with respect to
its liability, in accordance with the Rules set forth
above, are deemed to be admitted as true and are so
found by the Board, without taking evidence in sup-
port of said allegations.
Wayne E. Steward, in his amended answer to the
backpay specification, denies the allegation that at all
times material herein EIS has been, and is, the alter
ego of Wayne Electric, and EIS has been, and is, a
sole proprietorship owned by Wayne E. Steward. Fol-
lowing from this denial, Steward also denies that the
named employees of Wayne Electric or EIS were his
employees and that he is personally liable for the
amounts due them or the relevant employee benefit
funds. He also denies that he caused the losses sus-
tained by the named employees or that he has suffi-
cient information as to the meaning of the terms used
in calculating the backpay amounts, the accuracy of
the amounts so calculated, or whether the named em-
ployees have been made whole for their losses. Stew-
ard also denies that Wayne Electric is an active cor-
poration in good standing in the State of California
since the latter part of 1976.
In the underlying unfair labor practice proceedings
only Wayne Electric and EIS were named as Respon-
dent in the complaint. The complaint, however, spe-
cifically alleged that Steward was the president and
owner of Wayne Electric, a corporation, and that EIS
was a sole proprietorship owned by Steward. Respon-
dent Wayne Electric and EIS was represented by
counsel at the hearing before Administrative Law
Judge Stevens, at which Steward was present and tes-
tified.3 The Board adopted the Administrative Law
Judge's findings that Steward was the owner and
president of Wayne Electric and that EIS was a sole
proprietorship owned by Steward, as well as an alter
2 Respondent Wayne Electric and EIS, through its attorney, did inform
counsel for the General Counsel pnor to the issuance of the backpay specifi-
cation of an assertion that Wayne Electric and EIS went out of business in
approximately the latter part of 1976. has not resumed operations, and owns
no assets. This assertion, however. is not a sufficient explanation to justify
the failure to respond. McLoughlin Manufacturing Corporation. et al. 219
NLRB 920 (1975).
226 NLRB at 412. fn. 10.
ego of Wayne Electric. The Board also adopted the
finding that Steward's creation of EIS was a sham
transaction entered into for the sole purpose of en-
abling Steward to avoid his responsibility under the
contract between Wayne Electric and the Charging
Party Union.
The General Counsel has pointed out these find-
ings in support of its motion and asserts, moreover,
that Steward individually is the alter ego of Respon-
dent and, as such, is personally liable for the amounts
owed by Respondent. The General Counsel also
notes that Wayne Electric remained active during the
applicable backpay period and that Steward admits
continued employment in the construction business in
Riverside, California. Steward, in his brief in opposi-
tion to the General Counsel's motions, argues that he
is not personally liable and that nowhere in the un-
derlying proceedings was he expressly found to be
individually the alter ego of Wayne Electric or per-
sonally liable. Steward also argues that he cannot
now be made personally liable in the backpay pro-
ceeding, since he was not alleged as a separate re-
spondent in the underlying unfair labor practice pro-
ceedings, citing Chef Nathan Sez Eat Here, Inc., et al.,
201 NLRB 343 (1973).
A careful examination of the underlying proceed-
ings herein convinces us, in light of the applicable
law, that the contentions raised by Steward do not
raise issues of fact or law sufficient to warrant a hear-
ing on the allegations stated in the backpay specifica-
tion.
Steward does not deny, and the record affirma-
tively shows, that he was the owner and chief corpo-
rate officer of Wayne Electric, as alleged in the com-
plaint. Furthermore, the complaint alleged that he
was the sole proprietor of EIS, and the record shows
that he was present and testified at the hearing that
he filled out and signed a National Labor Relations
Board commerce questionnaire form, indicating that
he was an individual doing business under the trade
name "Electrical Installations and Service." Al-
though he was not separately named as a respondent
in the original complaint, he does not now allege that
he was unaware of these pleadings prior to the hear-
ing thereon. On the contrary, his connections with
Wayne Electric as owner and principal officer and
with EIS as sole proprietor as well as his presence and
testimony at the hearing is sufficient to establish that
he had notice of the allegations set forth in the under-
lying unfair labor practice case.
Although Steward now denies that EIS is the alter
ego of Wayne Electric, Inc., and that EIS is a sole
proprietorship owned by Wayne E. Steward, these
matters have been fully litigated in the underlying
proceeding and may not now be subject to relitiga-
tion. Consequently, as Steward has been found to be
1057
1058 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the sole proprietor of EIS, he stands personally liable
for the obligations incurred by EIS.4 Furthermore, as
we have found that Steward is the president of
Wayne Electric, we also find him liable in his official
capacity.5 In view of these findings, we find it unnec-
essary to determine whether Steward as an individual
is the alter ego of Wayne Electric.6 Moreover, in view
of our conclusions herein, we need not consider
whether such special circumstances have been alleged
as would raise the issue of the personal liability of a
corporate officer or agent7 or of a successor organiza-
tion.8
Inasmuch as Steward is the sole proprietor of EIS
and the owner and principal officer of Wayne Elec-
tric, we find that that part of his answer which claims
insufficient information regarding the backpay com-
putations and relief already afforded the specified em-
ployees constitutes a general denial. Inasmuch as
such information is within the knowledge of Respon-
dent and Steward, this general denial is not a suffi-
cient answer as specified in Section 102.54 (b) and (c)
of the Board's Rules and Regulations. Consequently,
these allegations of the backpay specification against
Steward are deemed to be admitted as true, and the
Board so finds. We further find that the status of
Wayne Electric, Inc., as an active corporation in good
standing after the latter part of 1976, which is denied
by Steward, is irrelevant to the proceedings herein, as
the backpay specification encompasses only such
losses which were incurred by persons while em-
ployed by Respondent through December 5, 1976.
Accordingly, on the basis of the allegations of the
backpay specification, the Board finds the facts as set
forth therein to be true, grants the General Counsel's
Motion for Summary Judgment against Wayne Elec-
tric, EIS, and Steward, and concludes that the net
backpay due each of the employees as well as the
amounts due the specified employee benefit funds on
their behalf are as stated in the computations of the
specification and orders that payment thereof be
made jointly and severally by the Respondent and
4 "The basic disadvantage of the sole proprietorship arises from the com-
plete identity of the business entity with the individual doing business. In
contrast with the limited-liability characteristic of a corporation or limited
partnership, the liabilities of the business venture are the personal liabilities
of the individual proprietor. The financial risk of the sole proprietor is not
limited to the amount invested in the business but encompasses all his assets.
This factor is important mainly where the individual possesses extensive
assets that are not invested in the business, or where the business conducted
is a hazardous or speculative one." IZ. Cavitch. Business Organizations, Sec.
4.01 (1977).
Pollack Electric Company, Inc., 240 NLRB No. 71. fn. I (1979).
6Ski Craft Sales Corp., 237 NLRB 122 (1978): Ogle Protection Service,
Inc., 183 NLRB 682, fn. 5 (1970). But see Rose Knitting Mills, Inc., 237
NLRB 1382 (1978), which concerned two interrelated but coexisting corpo-
rations.
7 Chef Nathan Sez Eat Here, Inc.. supra; Riley Aeronautics Corporation,
178 NLRB 495 (1969). See also D & I Trucking, Inc., 237 NLRB 55 (1978).
' Perma Vinyl Corporation et al., 164 NLRB 968 (1967).
Steward to each named employee and to the specified
employee benefit funds.9
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board hereby orders that Respondent, Wayne
Electric, Inc., and Electrical Installation and Services,
Anaheim, California, its officers, agents, successors,
and assigns, and Wayne E. Steward, as the party
charged with derivative liability, jointly and severally,
shall make whole each of the employees named below
by payment to each of them of the amount specified
as net backpay, with interest thereon accrued at the
rate of 6 percent per annum,' ° until payment of all
backpay due is made as provided for in F. W. Wool-
worth Company, 90 NLRB 289 (1950), less tax with-
holdings required by Federal and state laws:
Donald G. Albright
Nicholas Alvarado
Michael J. Belisle
Miles Brozowsky
Donald Dickinson
Douglas Dike
Bruce Gillum
Robert Mohring
Warren Neeman
William Ferrell Norris
James O'Keefe
Fredrick A. Signorelli
James Smith
Philip Virga
Bruce Williams
Wilson D. Work
$274.94
4,320.23
636.80
1,336.28
9,095.65
4,803.00
864.40
623.72
2,484.53
1,043.24
2,856.25
2,660.12
6,295.60
19,724.21
4,273.23
4,990.12
IT IS FURTHER ORDERED that the above-named par-
ties jointly and severally shall reimburse Local Union
No. 441, International Brotherhood of Electrical
Workers, AFL-CIO, for the loss of all health and
welfare, pension plan, and other payments incurred
by the Union by payment to such plans of the
amounts specified below, with interest thereon ac-
crued at the rate of 6 percent per annum until pay-
ment is made of all such amounts due, as provided in
our original order:
I In view of our disposition of the General Counsel's Motion for Summary
Judgment, we deny his motion to strike the answer of Wayne E. Steward.
10 Inasmuch as the court of appeals enforced the Board's Order providing
for interest to be paid at the rate of 6 percent. that rate shall be used in
computing the interest due on backpay. See Florida Steel Corporation, 234
NI.RB 1089 (1978).
WAYNE EI.ECTRIC
Pension Plan
$16,631.48
Health and Welfare Plan
7,171.92
Joint Apprenticeship Training Committee
318.75
National Employee Benefit Fund
1,790.98
1059