N.L.R.B. v. International Measurement and Control Co., Inc., 92-1073

• Decision Date: 27 October 1992
• Docket Number: No. 92-1073,92-1073
• Citation: 978 F.2d 334
• Parties: 141 L.R.R.M. (BNA) 2601, 123 Lab.Cas. P 10,435 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. INTERNATIONAL MEASUREMENT AND CONTROL COMPANY, INC., et al., Respondents.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 334

978 F.2d 334

141 L.R.R.M. (BNA) 2601, 123 Lab.Cas. P 10,435

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. INTERNATIONAL MEASUREMENT AND CONTROL COMPANY, INC., et al.,

Respondents.

No. 92-1073.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 30, 1992.

Decided Oct. 27, 1992.

Elizabeth Kinney, N.L.R.B., Region 13, Chicago, Ill., Aileen A. Armstrong, William A. Baudler (argued), N.L.R.B., Appellate Court, Enforcement Litigation, Paul J. Spielberg, N.L.R.B., Litigation Branch, Washington, D.C., for petitioner.

Michael H. Moirano (argued), Kristen E. Crisp, Nisen & Elliott, Dennis R. Schlemmer, Leydig, Voit & Mayer, Chicago, Ill., for respondents.

Before CUDAHY and EASTERBROOK, Circuit Judges, and LEE, District Judge. ^*

EASTERBROOK, Circuit Judge.

For more than twelve years the Dybel family business has avoided its obligations under the labor laws. Now it contends that the wronged employees cannot receive their remedy, because while it waged a rear guard action before the Board and this court, the corporation that had employed these persons distributed its assets to family members. It even contends that its ability to string out the process is an independent bar to enforcement. Unfazed, the Board ordered the Dybels to pay personally. So they must.

In 1980 the International Measurement and Control Company ("Manufacturing")--which made electronic controls and transducers invented by Frank and William Dybel--fired three employees who joined a union and complained about working conditions. One employee believed that the cat excrement the Dybels allowed to accumulate in the plant was making her ill. The Dybels closed the plant to clean it, falsely telling their workers that the health department had directed this, and on reopening the facility did not recall the union supporters. In 1982 the Board concluded that in doing these things Manufacturing committed an unfair labor practice and must make the employees whole, a remedy that includes back pay. 261 N.L.R.B. 1323 (1982). (One of the Dybels testified at the Board's hearing that he viewed union organizing as "horseshit." Wrong sentiment, wrong setting, wrong species.)

Manufacturing neither complied nor sought judicial review but waited for the Board to apply for enforcement. When it did so, we enforced the order without published opinion. 732 F.2d 158 (7th Cir.1984). Manufacturing next waited for the Board to calculate the amount of back pay that was due for the period before it offered reinstatement. In 1985 the Board fixed this at a little less than $50,000, plus interest. 277 N.L.R.B. 962 (1985). Once again, Manufacturing neither complied nor sought judicial review but waited for the Board to apply for enforcement. When it did so, we enforced the order without published opinion. 808 F.2d 837 (7th Cir.1986).

Manufacturing did not comply with our order, contending that the cupboard was bare. In November 1984 Manufacturing began selling its assets and turning the proceeds over to members of the Dybel family. The process was completed in September 1985 (shortly before the Board's second order). All of these payments, Manufacturing contends, were on account of accumulated salary obligations rather than the family's stock ownership. Since 1982 Manufacturing had been losing money, and it had deferred executive compensation. Even after liquidating all of its assets, Manufacturing contends, it had not satisfied the debt to its managers.

Although Manufacturing shut down, the Dybels continued to sell their products. They subcontracted the manufacture of the devices (Manufacturing's role in the business) while two other corporations and two partnerships carried on: IMCO Sales Co. assembled and sold the devices; IMCO Service Co. installed and repaired the devices; Zoe Enterprises owned and leased the premises to these two firms; Dybel Enterprises provided capital for these three.

Not satisfied with Manufacturing's explanation, the Board opened supplemental proceedings and concluded that "the manner in which [Manufacturing]'s assets were distributed among the other entities and the individual Dybels demonstrates intent to avoid backpay obligations." 304 N.L.R.B. No. 94 at 7-8 (1991). It concluded that the four remaining Dybel businesses and Manufacturing were a single entity, on a variety of theories--common employer, alter ego, corporate group liability--and that all four, plus Frank, Margaret, William, and Palette Dybel personally, are responsible for the back pay obligation, which with interest still mounting exceeds $130,000. For a third time, the Dybels neither complied nor sought judicial review but waited for the Board to apply for enforcement. It has done so.

Calling the interest "an enormous windfall", the Dybels say that enforcing the award against them personally is "Fundamentally Unfair." That takes nerve! They (or their corporate creatures) could have paid a decade ago and cut short the accumulation of interest. Interest is not some kind of penalty. "Prejudgment interest is an element of complete compensation". West Virginia v. United States, 479 U.S. 305, 310, 107 S.Ct. 702, 706, 93 L.Ed.2d 639 (1987). See also, e.g., General Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56, 103 S.Ct. 2058, 2062, 76 L.Ed.2d 211 (1983). It reimburses victims for the time value of money, the benefit of which the workers lost and Dybels have had during the litigation. "[T]he passage of time ... is a reason to award interest, not to deny it." In re Oil Spill by the Amoco Cadiz, 954 F.2d 1279, 1334 (7th Cir.1992). Cf. NLRB v. Ironworkers, 466 U.S. 720, 104 S.Ct. 2081, 80 L.Ed.2d 715 (1984) (long administrative delay, while back pay accumulates, does not prevent enforcement of the Board's award); NLRB v. J.H. Rutter-Rex Manufacturing Co., 396 U.S. 258, 90 S.Ct. 417, 24 L.Ed.2d 405 (1969) (same). The funds the Dybels withdrew from Manufacturing have been earning a return for them since 1984 and 1985, or, equivalently, have enabled the Dybels to avoid the interest they would have had to pay to borrow the same amount. Meanwhile the wronged employees have lacked funds that they could have invested (or that would have enabled them to avoid the expense of borrowing). The return on the money belongs to the victim, not the wrongdoer, and interest is the means by which this transfer is accomplished.

No more persuasive is the Dybels' contention that the Board acted too late--that is, beyond the six months that § 10(b) of the NLRA, 29 U.S.C. § 160(b), allows for a charge--in adding them, and their other firms and partnerships, as parties. There was no need to do so until they liquidated the firm that was properly named as the employer. Supplemental proceedings to recover from the distributees are normal under state law and entirely appropriate in labor law. NLRB v. C.C.C. Associates, Inc., 306 F.2d 534, 539 (2d Cir.1962). See also, e.g., G & M Lath Plaster Co., 252 N.L.R.B. 969, 978 (1980), enforced, 670 F.2d 550 (5th Cir.1982). If, as the Board found, the two partnerships, three corporations, and four Dybels are but a single employer, then notice to one was notice to all. NLRB v. Deena Artware, Inc., 361 U.S. 398, 402, 80 S.Ct. 441, 443, 4 L.Ed.2d 400 (1960). Cf. Central States Pension Fund v. Slotky, 956 F.2d 1369, 1375 (7th Cir.1992). And if they are not, then everyone other than the defunct Manufacturing prevails without regard to § 10(b). Either way, § 10(b) plays no role in the outcome.

Having told us that the Board took too long, the respondents also tell us that we should defer enforcement while the Board conducts a fourth hearing. The administrative law judge heard a member of the NLRB's staff remark that Frank Dybel possesses firearms and had in the past made a threat of violence, a subject that acquired significance in light of an anonymous call stating that there might be a "security problem" at the hearing. Counsel and the ALJ discussed the phone call on the record at the start of the hearing. Later the ALJ granted a motion to strike the dialog and said that she would attempt to prevent the Board from receiving a copy of the interchange.

Administrative judges can't rip pages out of transcripts, so the Board received the full proceedings of the hearing. Claiming that they learned this only recently, the respondents ask us to remand for a new decision at which the Board will be ignorant of the subject. Just how ignorance can be achieved--short of waiting for a new complement of members to take office--the respondents do not say. Nothing in the Board's opinion suggests that its members were aware of, let alone influenced by, the contretemps. So there was no prejudice. A remand, with instructions to ignore something the members probably did not know in the first place, would backfire. It would be like remanding a case with instructions that none of the members of the Board think about Greenland anytime during the next month. The nature of the order would ensure its violation. At all events, the record shows that a copy of the transcript, including the pages that respondents say are not supposed to be there, was mailed to them in January 1990, and they did nothing to alert the General Counsel to this supposed "violation" of the ALJ's order. They did not raise the subject at all before the Board, or in this court until April 1992. Such delay by persons who accuse the Board of taking too much time is imprudent. See also 29 U.S.C. § 160(e) (precluding court from considering issues not presented to Board, save in exceptional circumstances).

Must the Dybels pay Manufacturing's debt to the three employees? The Board devoted a page and a half to this question, citing two of its own opinions and no statutes or cases. Although it used the jargon of shareholders' liability ("piercing the corporate veil" and so on), the extent to which investors are responsible for the corporate debts is a question of state law--for the National Labor Relations Act...