913 F.3d 697 (7th Cir. 2019), 17-1895, In re Calvert
|Citation:||913 F.3d 697, 66 Bankr.Ct.Dec. 179|
|Opinion Judge:||Sykes, Circuit Judge.|
|Party Name:||IN RE: Edward L. CALVERT, Debtor-Appellee. Appeal of: National Labor Relations Board|
|Attorney:||William Russell Warwick, III, Attorney, Dalford Dean Owens, Jr., Attorney, National Labor Relations Board, Contempt Litigation & Compliance Branch, Washington, DC, for Appellant. Dustin DeNeal, Attorney, Elizabeth M. Little, Attorney, Harmony Ann Mappes, Attorney, Faegre Baker Daniels LLP, Indian...|
|Judge Panel:||Before Easterbrook and Sykes, Circuit Judges, and Bucklo, District Judge. Bucklo, District Judge, dissenting.|
|Case Date:||January 22, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
Argued January 8, 2018
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:16-cv-00161-SEB-MJD— Sarah Evans Barker, Judge .
William Russell Warwick, III, Attorney, Dalford Dean Owens, Jr., Attorney, National Labor Relations Board, Contempt Litigation & Compliance Branch, Washington, DC, for Appellant.
Dustin DeNeal, Attorney, Elizabeth M. Little, Attorney, Harmony Ann Mappes, Attorney, Faegre Baker Daniels LLP, Indianapolis, IN, for Debtor-Appellee.
Before Easterbrook and Sykes, Circuit Judges, and Bucklo, District Judge.[*]
Sykes, Circuit Judge.
Edward Calvert was the sole owner and president of E.L.C. Electric, Inc., an electrical contracting company. After a labor organization unsuccessfully campaigned to unionize his companys workforce, Calvert laid off most of E.L.C. Electrics rank-and-file electricians, which effectively prevented future unionization attempts. The National Labor Relations Board ("NLRB") determined that the company violated the National Labor Relations Act ("NLRA"), which prohibits discrimination against workers for exercising their statutory rights. See 29 U.S.C. § 158(a)(3). The Board ordered E.L.C. Electric to compensate the electricians with backpay.
Calvert tried to avoid the order by shifting his companys operations to two new corporate entities. He didnt succeed. The N.L.R.B. discovered Calverts plan and held him personally responsible for the backpay award. Facing more than $400,000 in liability, Calvert filed for Chapter 7 bankruptcy.
The Board challenged Calverts attempt to discharge the backpay liability, arguing that the debt was not dischargeable because it arose from a willful and malicious injury. See 11 U.S.C. § 523(a)(6). Calvert conceded the willfulness element but denied that he acted maliciously. The Board countered by asserting that Calvert was collaterally estopped from litigating the malice issue, but it made little effort to establish the elements of the doctrine. Indeed, the Board did not identify any specific findings in the N.L.R.B. ruling that should be given preclusive effect. The bankruptcy judge declined to apply collateral estoppel and instead held a bench trial on the issue of malice. Based on the trial evidence, the judge found that Calvert had not acted maliciously and thus ruled that the debt was not exempt from discharge.
On appeal to the district court, the Board again raised collateral estoppel but failed to analyze the elements of the doctrine or provide citations to the relevant parts of the agency record. The district judge noted these deficiencies and affirmed.
We likewise affirm. The Board does not challenge the evidence at trial or the bankruptcy judges factual findings. Instead it stakes its entire case on collateral estoppel. But it persists in providing only a generalized discussion of preclusion doctrine that is untethered to specific findings in the N.L.R.B. proceeding. Thats not enough to establish that Calvert is precluded from contesting the malice issue under § 523(a)(6).
In July 2002 the International Brotherhood of Electrical Workers, Local 481, campaigned to become the certified bargaining representative for E.L.C. Electrics rank-and-file electricians. Calvert launched his own campaign to oppose the Unions efforts. When the Union lost, it filed an objection with the NLRB, demanding a new vote on the ground that E.L.C. Electric had unlawfully meddled in the election.
While this objection was pending, E.L.C. Electric promoted two of its bargaining-unit electricians and fired the remaining sixteen, leaving the Union without a rank-and-file workforce at the company to unionize. The Union filed a second charge with the N.L.R.B. alleging that E.L.C. Electric unlawfully fired the electricians for exercising their right to unionize.
After a trial in April 2004, an administrative law judge ruled that E.L.C. Electric violated sections 8(a)(1) and (3) of the NLRA, 29 U.S.C. § 158(a)(1), (3). The N.L.R.B. affirmed the ALJs ruling a year later. E.L.C. Elec., Inc., 344 N.L.R.B. 1200 (2005). It determined that E.L.C. Electric violated § 158(a)(3) of the NLRA by firing the electricians to prevent them from organizing. The N.L.R.B. ordered the company to compensate the electricians with backpay.
E.L.C. Electric never paid the award. It ceased operations in March 2006. The ALJ initiated supplemental proceedings and concluded that Calvert shuttered the firm to avoid paying the electricians. The judge pierced the corporate veil and held Calvert personally liable for $437,427 in backpay and interest. The N.L.R.B. adopted the judges findings and conclusions, E.L.C. Elec., Inc., 359 N.L.R.B. 255 (2012), and we summarily enforced the order in July 2013.
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