NOTICE: This
opinion is subject to formal revision before publication in the bound volumes
of NLRB decisions. Readers are requested
to notify the Executive Secretary, National Labor Relations Board,
Diverse Steel, Inc. and Pinnacle Steel, Inc., alter
egos and International Association of
Bridge, Structural, Ornamental, and Reinforcing Iron Workers Local 321,
AFL–CIO. Case 26–CA–20799
April 30, 2007
DECISION AND ORDER
By Chairman Battista and Members Liebman
and Walsh
On March 21, 2003, Administrative Law Judge Margaret G.
Brakebusch issued the attached decision.
The Respondents filed exceptions and a supporting brief. The General Counsel and the
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,1 and conclusions as modified and to adopt the recommended Order as modified and set forth in full below.2
The judge found, and we agree, that Respondent Pinnacle
Steel was an alter ego of Respondent Diverse Steel, and that these Respondents
violated Section 8(a)(5) and (1) when Pinnacle failed to apply the terms of
Diverse’s collective-bargaining agreement to its ironwork employees.3
In finding that Pinnacle and Diverse were alter egos, the judge
concluded that “Pinnacle ultimately became the means by which Diverse could []
continue to do business without the limitations and expenses of the Union
contract” and that “since May 2002, Pinnacle has functioned as a disguised
continuance of Diverse.” We agree with
those findings. The judge, however,
failed to also find that Pinnacle was created for the purpose of evading the
The Board generally will find alter ego status where two entities have substantially identical management, business purposes, operations, equipment, customers, supervision, and ownership.4 Not all of these indicia need be present, and no one of them is a prerequisite to an alter ego finding.5 Although unlawful motivation is not a necessary element of an alter ego finding, the Board also considers whether the purpose behind the creation of the alleged alter ego was to evade responsibilities under the Act.6 Where there is evidence that the second company was formed to take over the business of the first—in order to reduce its labor costs by repudiating the union’s collective-bargaining agreement—the Board has found that the second company was formed with the unlawful motive of avoiding the first company’s responsibilities under the Act. Midwest Precision Heating & Cooling, Inc., supra, 341 NLRB at 439.
Here, the relevant facts are that Troy Noe, his wife Gwen
Noe, and Gwen Noe’s mother, Joan Drilling, incorporated Diverse Steel in May of
1997 to perform structural steel erection, rebar installation, rigging, and
machinery moving work. At all times
relevant, Diverse was a member of the association of steel erector employers
and signatory to the
The judge correctly found that Diverse and Pinnacle shared substantially identical ownership, business purposes, operations, equipment, customers, supervision, and management. However, the judge also found that there was insufficient evidence to conclude that Pinnacle was specifically created with the intention to avoid Diverse’s contractual obligations. Contrary to the judge, we find that there is sufficient evidence to establish that Pinnacle was formed in part in order to avoid Diverse’s contractual and statutory obligations under the Act.
The record shows that Gwen Noe stated that she wanted to
resign from Diverse because she felt her husband, Troy Noe, did not get his
“money’s worth” from the Union. Union
secretary Doris Mae Eoff testified that Gwen Noe told her that, according to
Diverse’s accountant, Diverse would be better off if it went nonunion. The Chairman of Arkansas Best Contractors’
Association, Boyd Sanders, stated that, during a meeting with Troy Noe to
discuss negotiations with the
Considered as a whole, the foregoing evidence establishes
that Pinnacle was formed in an attempt to evade Diverse’s responsibilities under
the Act, because the Respondent felt that Diverse’s labor costs were too
great. Thus, in addition to the reasons
cited by the judge for finding Diverse and Pinnacle to be alter egos, we find
that the formation of Pinnacle in order to avoid Diverse’s responsibilities
under the Act further supports an alter ego finding. See
ORDER
The Respondents, Diverse Steel, Inc. and Pinnacle Steel,
Inc.,
1. Cease and desist from
(a) Failing and refusing to recognize and bargain collectively with the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Local 321, AFL–CIO, in an appropriate unit of Ironworkers, by refusing to apply the terms and conditions of its collective-bargaining agreement, including wage rates and fringe benefit fund contributions to the employees and by abrogating the agreement.
(b) In any like or related manner interfering with, restraining, 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) Within 14 days of the date of this Order, offer full
and immediate employment to those work applicants who would have been referred
to the Respondents for employment through the
(b) Make whole those work applicants who would have been referred to the Respondents for employment through the Union’s hiring hall for any loss of earnings and other benefits they may have suffered by reason of the Respondents’ failure to hire them, in the manner set forth in F. W. Woolworth Co., 90 NLRB 289 (1950), with interest as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987).
(c) Honor and abide by the terms and conditions of its
executed collective-bargaining agreement with the Union since May 2002, and make
whole its employees represented by the
(d) Pay all contractually-required fringe benefit fund contributions not previously paid, in accordance with Merryweather Optical Co., 240 NLRB 1213, 1216 (1979). In addition, make all unit employees whole for any expenses resulting from the failure to make such contributions, with interest, as set forth in Kraft Plumbing and Heating, 252 NLRB 891 fn. 2 (1980), enfd. 661 F.2d 940 (9th Cir. 1981).
(e) Preserve and, within 14 days of a request, or such additional time as the Regional Director may allow for good cause shown, provide at a reasonable place designated by the Board or its agents, all payroll records, social security payment records, timecards, personnel records and reports, and all other records, including an electronic copy of such records if stored in electronic form, necessary to analyze the amount of backpay and benefit contributions due under terms of this Order.
(f) Within 14 days after service by the Region, post at their place of business and at each of their jobsites copies of the attached notice marked “Appendix.”8 Copies of the notice, on forms provided by the Regional Director for Region 26, after being signed by the Respondents' authorized representative, shall be posted by the Respondents and maintained for 60 consecutive days in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondents to ensure that the notices are not altered, defaced, or covered by any other material. In the event that, during the pendency of these proceedings, the Respondents have gone out of business or closed the facility involved in these proceedings, the Respondents shall duplicate and mail, at their own expense, a copy of the notice to all current employees and former employees employed by the Respondents at any time since May 2002.
(h) Within 21 days after service by the Region, file with the Regional Director a sworn certification of a responsible official on a form provided by the Region attesting to the steps that the Respondents have taken to comply.
It is further ordered that the complaint is dismissed insofar as it alleges violations of the Act not specifically found.
Dated,
Robert J. Battista , Chairman
Wilma
B. Liebman, Member
Dennis P. Walsh, Member
(seal) National Labor Relations Board
APPENDIX
Notice To Employees
Posted by Order of the
National Labor Relations Board
An Agency of the
The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities.
We will not fail or refuse to recognize and bargain collectively with the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Local 321, AFL–CIO, in an appropriate unit of Ironworkers, by refusing to apply the terms and conditions of our collective-bargaining agreement, including wage rates and fringe benefit fund contributions, to the employees and by abrogating the agreement.
We will not in any like or related manner interfere with, restrain, or coerce employees in the exercise of the rights guaranteed them by Section 7 of the Act.
We
will, within 14 days from the date of the Board’s Order, offer full and
immediate employment to those work applicants who would have been referred to us
for employment through the
We will make those work applicants who would have been referred to us for employment through the Union’s hiring hall whole for any loss of earnings and other benefits they may have suffered by reason of our failure to hire them, plus interest.
We
will honor and abide by the terms and conditions of our
collective-bargaining agreement with the
We will pay all contractually required fringe benefit fund contributions not previously paid and make whole Unit employees for any expenses resulting from our failure to make such contributions, plus interest.
Diverse Steel, Inc. and Pinnacle Steel, Inc., alter egos
Rosalind Eddins, Esq., for the General Counsel.
Oscar E. Davis, Jr., Esq., for the Respondent.
James E. Nickels, Esq., for the Charging Party.
DECISION
Statement of the Case
Margaret G.
Brakebusch, Administrative Law Judge.
The charge was filed by the International Association of Bridge,
Structural, Ornamental and Reinforcing Iron Workers Local 321, AFL–CIO (
I heard this matter in
Findings of Fact
i. jurisdiction
Respondent, a corporation is engaged in the building and
construction industry performing structural steel erection in central
ii. alleged unfair labor practices
A. Issues
The threshold issue in this case is whether Pinnacle and Diverse
have been alter egos and/or single employers within the meaning of the
Act. Once General Counsel has established
the existence of an alter ego or single employer, the issue then becomes the
extent to which Pinnacle is liable for Diverse’s contractual obligations and
Diverse’s unfair labor practices under the Act.
General Counsel also alleges that Diverse and Pinnacle have violated
Section 8(a)(3) and (1) of the Act by refusing to recall any of the Unit
employees of Diverse to work on the Rave 18 project performed by Pinnacle. General Counsel submits that Respondent
failed to recall these employees because they joined and assisted the
B. Background
In January 1994, Troy Noe formed Central Arkansas ReBar, Inc., herein ReBar, a company specializing in the reinforcement of steel within concrete structures. Troy Noe was the president and sole stockholder and his wife, Gwen Noe, was the corporation’s secretary/treasurer. In May 1997, Troy Noe, Gwen Noe, and Gwen Noe’s mother; Joan Drilling, incorporated Diverse Steel, Inc. to do structural steel erection, rebar installation, rigging, and machinery moving. Noe testified that he discontinued the work of ReBar, with Diverse Steel Inc., (Diverse) being more of a change in name and the addition of structural steel work. Troy Noe is the sole owner of all Diverse stock. Not only has his name appeared on Diverse’s corporate tax return, but he applied for, and met the state’s requirements for Diverse’s yearly renewal of its contracting license.
Noe has had a relationship with the
Noe estimated that as an employer, he has been delinquent in paying health and welfare contributions since at least 1992 or 1993. On March 15, 2002, the Trustees of the Iron Workers of Saint Louis District Council Annuity Trust, Trustees of the Iron Workers Saint Louis District Council Pension Fund Trust and Trustees of the Iron Workers Saint Louis District Council Welfare Plan filed suit against both Rebar, and Diverse for failure to pay the requisite and past due benefit contributions.
C. The Formation of Pinnacle Steel, Inc.
Gwen Noe testified that while she had initially been a
full partner with her husband and a corporate officer in Diverse, she ceased to
be a corporate officer in December 1997.
She explained that elections were held for office in 1997 and she asked
that she not be considered for office. Neither Gwen Noe nor Troy Noe identified
any other individuals who ever served or sought to be Diverse corporate officers
other than the three original incorporating officers. Gwen Noe acknowledged however, that here she
did not document her resignation as corporate officer with the State of
Pinnacle Steel, Inc. (Pinnacle), was incorporated in
February 1998. Gwen Noe testified that
she is President of Pinnacle and that she and her father; John Drilling, are
the sole owners of Pinnacle. There is no
dispute that since its inception, Pinnacle has not recognized the International
Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers
Local 321, AFL–CIO or any other union as representative of its employees. Pinnacle’s Articles of Incorporation list
Gwen Noe, John Drilling, and Joseph Jackson as the company’s incorporators. Troy Noe testified that
Gwen Noe testified that she takes care of the day-to-day
management of Pinnacle. Her father lives in Russellville
D.
Pinnacle Begins Working in the
Prior to 2002, Pinnacle performed all jobs outside
On April 23, 2002, Diverse submitted a proposal to General
Contractor Vratsinas Construction Company (herein VCC) to perform work on the
Rave 18 Theatre project in
E. The Formation of Wildcat Crane and Rigging
In July 2001, Wildcat Crane and Rigging Inc. (herein Wildcat)
was incorporated in the State of
Troy Noe testified that Diverse ceased to own this equipment when Wildcat was created.[5] He testified that he had not wanted the equipment or the vehicles to be in his name for purposes of liability and that Wildcat had been created to shield him from personal liability. He acknowledged however, that in February 2002, a statement confirming ownership and insurance was submitted by Diverse to the Bank of the Ozarks and he admitted that he used the Wildcat equipment in an attempt to secure a loan for Diverse.
The record contains documentation of current liability insurance coverage for five separate vehicles. The insured is shown to be Troy Noe of Wildcat Crane and Rigging. Pinnacle is shown as additionally insured on these policies. The coverage related to four of the vehicles specifies the listed drivers as Troy Noe, Joseph Jackson, and Gwen Noe.
iii. factual and legal conclusions
A. Whether Pinnacle and Diverse are Single Employers and/or Alter Egos
General Counsel submits that Pinnacle is a disguised continuation of Diverse and the two entities have held themselves out to the public as a single-integrated business enterprise, such that they are alter egos and a single employer. General Counsel alleges that Diverse and Pinnacle have been affiliated business enterprises with common officers, ownership, directors, management, and supervision; have formulated and administered a common labor policy; have shared common premises and facilities; have provided services for and made sales to each other; and have interchanged personnel with each other.
The Board and the courts have applied the alter ego doctrine in those situations where one employer entity will be regarded as a continuation of a predecessor, and the two will be treated interchangeably for purposes of applying labor laws. The most obvious example occurs when the second entity is created by the owners of the first for the purpose of evading labor law responsibilities; but identity of ownership, management, supervision, business purpose, operation, customers, equipment, and work force are also relevant in determining alter ego status. See Fallon-Williams Inc., 336 NLRB 602 (2001), C.E.K. Industries Mechanical Contractors, Inc. v. NLRB, 921 F.2d 350, 354 (1st Cir. 1990). While the Board considers whether one entity was created in an attempt to enable another to avoid its obligations under the Act, the Board has consistently held that such a motive is not necessary for finding alter ego status. Crawford Door Sales Co., 226 NLRB 1144 (1976). In looking at the various factors shared by the entities, the Board has noted that no one factor is controlling or determinative. NLRB v. Welcome-American Fertilizer Co., 443 F.2d 19, 21 (9th Cir. 1971). The existence of such status ultimately depends on “all circumstances of the case” and is characterized as an absence of an “arms’ length relationship found among unintegrated companies” Operating Engineers Local 627 (South Prairie Construction) v. NLRB, 518 F.2d 1040, 1045–1046 (D.C. Cir. 1975), affd. on this issue sub. nom.
The single employer doctrine is found when two ongoing
businesses are treated as a single employer based upon the ground that they are
owned and operated as a single unit. See
Penntech Papers, Inc. v. NLRB, 706 F.2d 18 (1st Cir. 1983), cert. denied
464 U.S. 892 (1983). While most of the
alter ego criteria remain relevant, motive is normally irrelevant. In finding single employer status, the Board
has typically looked to whether there is (1) common ownership; (2) common management;
(3) functional interrelation of operations; and (4) centralized control of
labor relations. See Broadcast Employees
Local 1264 v. Broadcast Service of
1. Ownership, management and supervision
Respondent asserts that Troy Noe is the sole owner of Diverse and that Gwen Noe and her father; John Drilling, are the sole owners of Pinnacle and Wildcat. Gwen Noe testified that she not only makes the decisions concerning Pinnacle’s job bids, but she also goes to the general contractors to pick up building plans, types and prepares bids, submits the bids, and signs the contracts on behalf of Pinnacle. She also maintained that she visits the jobsites two or three times each day during the work projects. She explained that her father is an ironworker and that she gained experience by watching the construction process. Respondent also submitted evidence to show that Gwen Noe took the structural steel erection examination for the Louisiana Contractors Licensing Board in December 1998. While she had not passed the examination, she scored 55 out of a possible score of 70.
2. Toy Noe and Diverse’s relationship with Pinnacle
Despite Noe’s assertion that she operates Pinnacle independently
of her husband, the evidence reflects the contrary. Troy Noe testified that his only relationship
with Pinnacle has been as a subcontractor and an employee. He testified that as an employee of Pinnacle,
he takes direction from John Drilling and as a superintendent; he oversees the
work on Pinnacle’s jobsites. While he asserts that he is paid by salary, he
gave no other information as to the amount or the frequency of payment. Troy Noe’s own testimony however, demonstrates
the significant role that he plays in Pinnacle’s management. Troy Noe testified that Joe Jackson first
began working for him at Diverse in 1997 after
Q: At some point in time, were there discussions between yourself, Mr. Jackson, and your wife as to potential even involvement in him in her company?
A: Yes, once I felt confident of him running a job without me being there or a lot of phone conversations, I was going to let Gwen and John hire him. I was going to—
Respondent’s counsel then interrupted his witness and attempted to rehabilitate and redirect his response by inquiring who made the hiring decisions for the respective companies. Noe then testified that he made the decision for Diverse and that his wife and his father-in-law made the decisions for Pinnacle. Despite counsel’s redirection, I believe that Noe’s initial response was the more candid response and reflective of his true perception of his relationship with Pinnacle.
Respondent asserts that Troy Noe became Pinnacle’s project manager for the Rave 18 project on June 3, 2002. Noe testified that as superintendent for Pinnacle, he is responsible for production and assuring that quality control standards are met on the particular job. He contended however, that even as the superintendent he was never involved in labor relations decision-making for Pinnacle. He testified that he had no involvement in determining wages or benefits and that foreman Paul Britton did all of the hiring. Gwen Noe however, testified that Troy Noe directly supervised Britton. Although Troy Noe asserts that he has no involvement in Pinnacle’s labor relations, he admitted that his wife solicited his opinion with respect to hiring certain employees. Noe added that because he had been involved in organizing and “salting” jobs for the union, his wife would ask him if he knew an applicant and she would not hire him if he were known to Noe. Noe then quickly added that this had not occurred because “And course, you can’t really discriminate on jobs like that when it comes to salting.”
The subcontract agreement between Pinnacle and
East-Harding Inc., for the Cantrell West project in January 2002 was
specifically directed to the attention of Troy Noe at Pinnacle’s box office
address. The subcontract agreement
between Pinnacle and East-Harding, Inc. for the Morrillton Medical Clinic in
April 2002 was also directed to the attention of Troy Noe at Pinnacle’s box
office address. Gwen Noe acknowledged
that prior to Troy Noe’s becoming project manager for Pinnacle on the Rave 18
job in June 2002, he had been active and supervised other Pinnacle
projects. Troy Noe supervised Pinnacle’s
1998 Wal-Mart job in Selmer, Tennessee, Pinnacle’s April 2002 Morrillton
Medical Clinic job in Morrillton, Arkansas, as well as the February 2002
Cantrell West job that was subcontracted to Diverse. Toy Noe also recalled that
he supervised Pinnacle’s job in
Troy Noe acknowledges that he looks for jobs for Pinnacle and will sometimes take blue prints to his father-in-law for potential jobs. Noe explained that he has a personal relationship with all of the general contractors’ estimators and they usually call him about potential jobs whether the bid is from Diverse or Pinnacle. Gwen Noe confirms that her husband assists her with preparing bids and proposals and that she generally discusses her bid with her husband before she submits the proposal. Gwen Noe recalled that the general contractor contacted her husband about the Alltell Distribution job. He came to her with the information and they bid the job together. The job was performed by Pinnacle in November and December 2002. Gwen Noe admitted that many of the jobs that Pinnacle was able to obtain were, in part, related to her husband’s reputation and business with Diverse. She admitted that the general contractor’s main condition for Pinnacle’s getting the Rave 18 job was the assurance that Troy Noe would run the job. I also note that Pinnacle did not require Diverse to sign any contract for the subcontracting of the Cantrell West project.
Troy Noe testified that the last job performed by Diverse was the Cantrell West project that was subcontracted from Pinnacle and completed by May 23, 2002. Invoices from NES Equipment Services however, reflect that three booms and a scissor lift were rented to Diverse for the Rave 18 project from June 3, 2002 to June 20, 2002. Noe asserted that NES must have simply put Diverse’s name on the invoice by mistake, however he never contacted NES to tell them that they had incorrectly billed Diverse.
3. Gwen Noe’s Continuing Involvement with Diverse
Gwen Noe asserts that she withdrew as an officer of
Diverse in 1997 and has had no ownership or management authority since that
time. She asserts that while she has
continued to do bookkeeping, payroll, and perform other secretarial functions,
she has done so without management authority.
Gwen Noe however, continues to have authorization to sign checks for
Diverse. Minutes from Diverse Directors’
meetings submitted by Respondent reflect that Gwen Noe continued to attend the
meetings until at least September 28, 2002.
Minutes from the December 22, 2001 Directors’ meeting document Gwen
Noe’s meeting with Diverse’s worker’s compensation carrier about its
cancellation of coverage for Diverse.
The minutes from the January 26, 2002 meeting include the statement that
Diverse is barely making payroll and that the company borrowed money from
4. Equipment
The equipment used by Pinnacle is the same equipment that was used by Diverse and initially purchased or acquired by Troy Noe and Gwen Noe using their personal credit. Gwen Noe acknowledged that Troy Noe purchased the skytrack now used by Pinnacle in 1997 or 1998 and he purchased the crane now used by Pinnacle in 2000. Her father originally gave the welding machines that are now used by Pinnacle to Troy Noe. There is no evidence that Pinnacle ever owned any steel erection equipment of its own and apparently used Diverse’s until July 2001. The record is without dispute that after the incorporation of Wildcat in July 2001, the ownership of Diverse’s equipment was transferred to Wildcat without compensation. Wildcat has subsequently leased the equipment to Diverse and Pinnacle for less than market value. Although Gwen Noe testified that Wildcat could rent the skytrack, crane and welding machines to companies other than Pinnacle or Diverse, she could recall only two incidences when this has occurred. In one of the two examples, no rent was actually charged for the use of a stud box. She explained, “I did not charge them rent on that, as they had done a favor for us.” She did not explain nor was she asked whom she meant by “us.”
During testimony, as Gwen Noe was describing Wildcat’s equipment, she was asked and answered as follows:
Q: Okay, Where did you acquire the equipment?
A: The skytrack was purchased by
Q: When you say the company, which company are you—
A: Wildcat.
Q: Wildcat
A: Well, they were originally given to
As indicated by her response, Gwen Noe appears to acknowledge a continuity of ownership beginning with Rebar and continuing to Wildcat; a company that is alleged to be separate and apart from Troy Noe and Diverse.
Gwen Noe testified that while Diverse carried the insurance on the equipment prior to 2001, Pinnacle has covered the insurance premiums since Wildcat’s formation.
5. Continuity of work force
The record reflects that Joe Jackson began working for Diverse
in 1997 and continued to work for Diverse until 2002. After Pinnacle was formed in 1998,
6. Business purpose, operations, customers
There is no dispute that there is no difference in the scope of work performed by Pinnacle and Diverse. Both companies have a common business purpose of erecting commercial steel structures. Admittedly, Pinnacle’s clients were primarily clients of Diverse and both companies have used the same vendors. Union Business Manager Thomas Marsh testified that several years ago Noe offered to allow Marsh to rent equipment using his account with a vendor. When Marsh received the bill, Pinnacle was shown to be the customer. At that time Marsh was unaware of Pinnacle’s existence. When he questioned Troy Noe about Pinnacle, Noe denied any knowledge of the identity of Pinnacle. Noe testified that he had denied the existence of Pinnacle to Marsh because he didn’t think that it was any of Marsh’s business.
7. Overall similarity and interrelatedness
The overall record reflects a significant overlap and
interrelatedness in ownership, management, and supervision for both companies. Throughout the relevant period, Troy Noe has
supervised and managed projects for both Diverse and Pinnacle. He has actively assisted his wife in bidding
and seeking work for Pinnacle. While he
contends that he is not involved in the labor relations decision making of
Pinnacle, he also admitted that only when he was confident that
Despite Respondent’s establishment of Wildcat to buffer liability, both Diverse and Pinnacle have used the same equipment. Although Respondent asserts that Wildcat now owns the equipment, no compensation was given to Diverse for the change in ownership. See Valley Electric, Inc., 336 NLRB No. 133 (2001) where the Board took specific note of the fact that no money ever changed hands in any of the transactions including the sale or transfer of assets such as vehicles, real property or company stock. Diverse has continued to claim ownership as evidenced by its 2002 documentation for a loan application. Although Respondent asserts that Diverse and Pinnacle leased the equipment from Wildcat, such leasing was based upon less than the market value. The facts of the present case are contrary to those of Friederich Truck Service, Inc., 259 NLRB 1294, 1300 (1982) where the Board did not apply the alter ego doctrine. Among the factors relied upon by the Board in Friederich in finding an arms’ length relationship was the fact that market value was used for equipment rental.
The record reflects that vendors and customers have continued to treat the companies as the same entity. Gwen Noe admitted that many of the jobs that Pinnacle was able to obtain were based in part upon her husband’s reputation and business with Diverse. Bid responses to Pinnacle have been directed to the attention of Troy Noe and Pinnacle’s name was substituted for Diverse or Troy Noe for equipment rental . When Diverse could not perform the work on the Rave 18 project because of inadequacy of insurance coverage, the general contractor insisted on Troy Noe’s presence on the project and it didn’t matter whether the company was Diverse or Pinnacle.
The only major difference in the two companies appears to
be the fact that while Pinnacle has employed some of the same employees as
Diverse, Pinnacle has not utilized the
The overall record evidence establishes that Diverse and
Pinnacle have substantially identical ownership, business purpose, operation,
supervision and management. In so finding,
I note that both entities are family-owned commercial steel erection companies
with Troy Noe functioning in a major role in the overall operation and
management of both companies. Both
companies use identical equipment and receive the same favorable treatment from
a third family-owned company. Both
companies perform work for the same customers, based in large part upon Troy
Noe’s reputation and past business relationships. Both companies use the same vendors who treat
them as a single enterprise. The companies have functioned interchangeably. Pinnacle subcontracted to Diverse to perform
the Cantrell West project without requiring a written subcontracting
agreement. In the alternative, Pinnacle
performed the work that Diverse began but could not complete on the Rave 18 project. Respondent argues that Gwen Noe and her
father are Pinnacle’s sole owners and they make policy decisions while also
providing day-to-day personal oversight on Pinnacle’s jobs. The evidence however, reflects that Gwen
Noe’s father lives 75 miles away from
Respondent cites a number of cases where the Board
rejected a finding of single-employer status, relying upon the absence of
common control of labor relations.
Respondent argues that the circumstances are the same in the instant
case. While Troy Noe testified that he has
no involvement in the labor relations matters of Pinnacle, the evidence does
not support this assertion. Noe
specifically admitted that Gwen Noe consults with him about the union background
of Pinnacle applicants before they are hired.
Troy Noe also admitted that Gwen Noe and her father hired Joe Jackson
only after he determined that
Respondent argues that the record does not establish that
Diverse had any desire to run away from obligations under its collective-bargaining
agreement with the
Based upon the alleged statements by Gwen and Troy Noe it is apparent that they considered the benefits of Diverse being nonunion. I don’t find however, that these statements alone support a finding that Pinnacle was specifically created with the intention to avoid Diverse’s bargaining obligation. The Board has however, found two business entities to be alter egos and held the alter ego employer liable for the predecessor’s contractual obligations and unfair labor practices, even when evidence of antiunion animus or an intent to evade contractual obligations was neither apparent nor shown to have been a factor in the creation of the alter ego. See Johnstown Corp., 313 NLRB 170, 171 (1993), affd. in pertinent part sub nom., A & P Brush Mfg. Corp., 323 NLRB 303, 309 (1997). Accordingly, while animus is a factor that has been considered, its absence does not preclude a finding of alter ego status.
The Board has found that the collective-bargaining agreement
of one entity does not attach and bind the single employer because there is a
single employer finding. See Samuel
Kossoff & Sons, Inc., 269 NLRB 424, 429 (1984). The Board has also determined that the
criteria for finding a single employer are not the same as those used in
determining the scope of the unit. See Acoustics,
Inc., 270 NLRB 1046 (1984).
Respondent argues that in the instant case, the question of whether employees
of Diverse and Pinnacle constitute an appropriate bargaining unit was not
legally or factually addressed by either the General Counsel or the
Respondent further argues that Diverse had no alternative
but to cease operations when it did because it could not legally continue to
operate under
Based upon the record evidence discussed above, I do not
find that Diverse and Pinnacle have functioned independently nor dealt with
each other in an arms’ length relationship.
Finding that both companies have substantially identical ownership,
business purpose, operation, customers, equipment, supervision and management,
I find Pinnacle to be the alter ego of Diverse.
In making this finding, I note that the record is without evidence of
any independent 8(a)(1) violations or specific evidence that Pinnacle was
formed in 1998 for the sole purpose of evading Respondent’s contractual and
bargaining obligations. Diverse, in
fact, entered into a subsequent collective-bargaining agreement with the
B. Pinnacle’s Contractual Obligations as an Alter Ego
In the complaint, General Counsel alleges that about May
20, 2002, Respondent withdrew its recognition of the
C. Section 8(a)(3) Allegation
Finally, the complaint alleges that Respondent violated Section
8(a)(3) and (1) by refusing to recall any of the unit employees of Diverse to
work on the Rave 18 theater project in Little Rock, Arkansas because the
employees joined and assisted the Union and engaged in concerted activities and
that Respondent did so to discourage employees from engaging in these
activities. A finding that an employer’s
decision or action discriminated against employees in violation of Section
8(a)(3) generally requires a showing that antiunion animus was a motivating
factor in that decision. In the instant
case there is no alleged independent 8(a)(1) nor any evidence of specific antiunion
animus. Neither Troy Noe’s discussions
with other employers preceding bargaining in 2001 nor Gwen Noe’s statement to
the
Additionally, no evidence was presented of specific unit employees who would have been recalled to the Rave 18 project or evidence of specific employees who attempted to apply and were rejected because of their union affiliation. While I find that Pinnacle violated Section 8(a)(5) and (1) of the Act by its failure to abide by Diverse’s contractual obligations, I do not find that Pinnacle violated Section 8(a)(3) of the Act. Under the test set forth in Wright Line,[8] the General Counsel must initially establish a prima facie case that Pinnacle’s decision not to recall specific employees to the Rave 18 project was motivated, at least in part, by the employees’ protected activity. I do not find sufficient evidence to support such a finding in this case.
Conclusions of Law
1. Respondent Diverse Steel Inc., is now and at all times material herein, has been an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act.
2. Respondent Pinnacle Steel, Inc. is the alter ego of Diverse Steel, Inc.
3. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Local 321, AFL–CIO is a labor organization within the meaning of Section 2(5) of the Act.
4. All ironworkers as referenced in the collective-bargaining
agreement[9]
between the
5. At all times material here, the Union has been the exclusive collective bargaining representative of all employees in the unit found appropriate in Conclusion of Law 4 for the purpose of collective bargaining within the meaning of 9(a) of the Act.
6. By failing and refusing to apply the terms and conditions of the collective-bargaining agreement entered into by the Union and Diverse Steel, Inc., to all employees employed in the bargaining unit found appropriate in Conclusion of Law 4, both Respondent Diverse and Pinnacle violated Section 8(a)(5) of the Act.
7. The unfair labor practices set forth in Conclusions of Law 6 violated Section 8(a)(5) and (1) of the Act and affect commerce within the meaning of Section 2(6) and (7) of the Act.
8. Respondent did not violate 8(a)(3) of the Act as alleged in the complaint.
Remedy
Having found that the Respondent has engaged in certain unfair labor practice conduct in violation of Section 8(a)(5) and (1) of the Act, I shall recommend that it be ordered to cease and desist and to take certain affirmative action designed to effectuate the policies of the Act.
On these findings of fact and conclusions of law and on the entire record, I issue the following recommended[11]
ORDER
The Respondents, Diverse Steel, Inc. and Pinnacle Steel,
Inc., located in
1. Cease and desist from
(a) Refusing to
bargain collectively with the
(b) In any like or related manner interfering with, restraining, 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) Honor and abide
by the terms and conditions of its executed collective-bargaining agreement
with the Union since May 2002, and make whole its employees represented by the
(b) Pay all contractually required fringe benefit fund contributions not previously paid, in accordance with Merryweather Optical Co., 240 NLRB 1213, 1216 (1979). In addition, make all unit employees whole for any expenses resulting from the failure to make such contributions, with interest, as set forth in Kraft Plumbing and Heating, 252 NLRB 891 fn. 2 (1980), enfd. 661 F.2d 940 (9th Cir. 1981), such amounts to be computed in the manner set forth in Ogle Protection Service, 183 NLRB 682 (1970), enfd. 444 F.2d 502 (6th Cir. 1971), with interest, as provided in New Horizons for the Retarded, supra.
(c) Preserve and, within 14 days of a request, or such additional time as the Regional Director may allow for good cause shown, provide at a reasonable place designated by the Board or its agents, all payroll records, social payment records, including an electron copy of such records if stored in electronic form, necessary to analyze the amount of backpay and benefit contributions due under terms of this Order.
(d) Post at their place of business and at each of their jobsites copies of the attached notice marked “Appendix.”[12] Copies of the notice, on forms provided by the Regional Director for Region 26, after being signed by the Respondent’s authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices 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. In the event that, during the pendency of these proceedings, the Respondent has gone out of business or closed the facility involved in these proceedings, the Respondent shall duplicate and mail, at its own expense, a copy of the notice to all current employees and former employees employed by the Respondent at any time since May 2002.
(e) Sign and return
to the Regional Director sufficient copies of the notice for posting by the
(f) Within 21 days after service by the Region, file with the Regional Director a sworn certificate of a responsible official on a form provided by the Region attesting to the steps that the Respondent has taken to comply.
Dated,
APPENDIX
Notice To Employees
Posted by Order
of the
National Labor Relations
Board
An Agency of the
The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice.
federal law gives you the right to
Form, join, or assist any union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities.
We will not fail or refuse to recognize and bargain collectively with the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Local 32, AFL–CIO, in an appropriate unit of Ironworkers, by refusing to apply the terms and conditions of the collective-bargaining agreement, including wage rates and fringe benefits fund contributions to the employees and by abrogating the agreement.
We will honor and abide by the terms and conditions of our contract with the Union since May 2002 and make whole our employees and those individuals who would have been referred through the Union’s hiring hall for any loss of pay and other benefits suffered as a result of our refusal to apply the contract to unit employees and to unit work, plus interest.
We will pay all contractually required fringe benefit fund contributions not previously paid and make whole unit employees and those individuals who would have been referred through the Union’s hiring hall for any expenses resulting from our failure to make such contributions, plus interest.