Fugazy Continental Corp. v. N.L.R.B., s. 83-1045

• Decision Date: 20 January 1984
• Docket Number: 83-1297,Nos. 83-1045,s. 83-1045
• Citation: 725 F.2d 1416
• Parties: 115 L.R.R.M. (BNA) 2571, 233 U.S.App.D.C. 310, 99 Lab.Cas. P 10,750 FUGAZY CONTINENTAL CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FUGAZY CONTINENTAL CORPORATION, Elite Services, Inc., and Ganser's Auto Service, Inc., Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1416

725 F.2d 1416

115 L.R.R.M. (BNA) 2571, 233 U.S.App.D.C. 310,

99 Lab.Cas. P 10,750

FUGAZY CONTINENTAL CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FUGAZY CONTINENTAL CORPORATION, Elite Services, Inc., and Ganser's Auto Service, Inc., Respondents.

Nos. 83-1045, 83-1297.

United States Court of Appeals District of Columbia Circuit.

Argued Dec. 13, 1983.

Decided Jan. 20, 1984.

Petition for Review and Cross Application for Enforcement of an Order of the National Labor Relations Board.

Sanford E. Pollack, Newlett, N.Y., with whom Stewart M. Kirshenbaum, Brooklyn, N.Y., was on the brief, for Fugazy Continental Corp., et al., petitioner in No. 83-1045 and respondents in No. 83-1297.

Michael D. Fox, Washington, D.C., of the Bar of the Supreme Court of Wisconsin, pro hac vice by special leave of the Court, with whom Elliott J. Moore, Deputy Associate Gen. Counsel, N.L.R.B., Washington, D.C., was on the brief, for respondent in No. 83-1045 and petitioner in No. 83-1297.

Before WALD and STARR, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion Per Curiam.

PER CURIAM:

This case is before us on a petition by Fugazy Continental Corporation to review and set aside an order of the National Labor Relations Board (NLRB) in Fugazy Continental Corp., 265 NLRB No. 165 (1982), ¹ and on the NLRB's cross-application for enforcement of that order. The Board found that Fugazy ² and Ganser's Auto Service, as Fugazy's alter ego, had violated the National Labor Relations Act (NLRA) by engaging in a bad faith attempt to evade their duty to bargain with the representative of their employees, threatening to discharge employees and to shut down operations in retaliation for union activities, coercively interrogating employees about their union activities and sympathies, soliciting support for a rival union, promising benefits to employees if they refrained from union activities and denying accrued vacation pay to employees because of those activities. Fugazy does not contest most of the unfair labor practice findings; it appeals only from three aspects of the Board's decision and order: (1) the critical finding that the transfer of auto repair operations from Fugazy to Ganser's was a sham, and that Ganser's was therefore the alter ego of Fugazy; (2) the allegedly discriminatory denial of vacation benefits; and (3) the alleged refusal to bargain. For the reasons stated below, we deny Fugazy's petition for review and grant enforcement of the Board's order in all respects.

I. FACTS

Fugazy Continental Corporation, which has offices throughout New York City, is engaged in providing limousine and other transportation services. ³ Amalgamated Local Union 355 ("Local 355" or "the Union") began its organizing drive among the eleven employees at Fugazy's auto repair shop in Queens Village in February, 1978. In mid-March, Local 355 held meetings and distributed authorization cards. On March 17, the Union presented eight signed cards to Fugazy and demanded recognition. When Fugazy refused this demand the Union filed an election petition with the NLRB the next day. In early April Fugazy began the illegal and coercive campaign against the Union that ultimately led to numerous serious unfair labor practice findings. ⁴

On May 31, 1978, Local 355 won the Board-conducted election. ⁵ The following day Fugazy informed the Union that it had sold the service shop to Stefan Ganser and Ronald Marra, supervisors who were leading participants in the illegal anti-union campaign, and would cease operations by June 12. Ganser reopened the shop on June 12 as Ganser's Auto Service. He hired none of the former employees except for one, Samuel Davis, who had not supported Local 355. ⁶

The Union filed unfair labor practice charges which ultimately led to a decision by the Board finding Fugazy to have committed many serious unfair practices during the anti-union campaign. These findings were in accord with the ALJ's decision in almost all respects. However, unlike the ALJ, the Board found that Fugazy's failure to pay accrued vacation benefits upon terminating the employees on June 9 was in retaliation for their union activities and violated sections 8(a)(1) and 8(a)(3) of the Act. It further found, contrary to the ALJ, that the sale to Ganser was not a bona fide transfer and that Fugazy was therefore responsible for the discriminatory discharge and refusal to rehire the shop employees by its alter ego, Ganser's, and for the refusal to bargain with the union upon its election victory on May 31. Fugazy appeals from only three of the Board's findings: (1) that Ganser's was the alter ego of Fugazy, (2) that vacation pay was discriminatorily denied, and (3) that Fugazy had a duty to bargain with Local 355 as of May 31, 1978.

II. THE ALTER EGO FINDING

Under well-established NLRB doctrine, one entity is responsible as the alter ego for another's unfair labor practices if an apparent transfer of operations is not an "arms length" transaction between distinct entities, Local No. 627, International Union of Operating Engineers v. NLRB, 518 F.2d 1040, 1045-46 (D.C.Cir.1975), aff'd on this issue per curiam sub nom. South Prairie Construction Co. v. International Union of Operating Engineers, 425 U.S. 800, 96 S.Ct. 1842, 48 L.Ed.2d 382 (1976), but merely a sham, creating a "disguised continuance" of the predecessor's operations. Southport Petroleum Co. v. NLRB, 315 U.S. 100, 106, 62 S.Ct. 452, 455, 86 L.Ed. 718 (1942); NLRB v. Al Bryant, Inc., 711 F.2d 543, 553 (3d Cir.1983); Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 508 (5th Cir.1982), cert. denied, --- U.S. ----, 104 S.Ct. 335, 78 L.Ed.2d 305 (1983). Among the factors that enter into a determination of alter ego status are substantial identity of management, business purpose, operation, equipment, customers, supervision and ownership between the old entity and its successor. See NLRB v. Al Bryant, Inc., 711 F.2d at 553-54; Carpenters Local Union No. 1846, 690 F.2d at 507; Amalgamated Meat Cutters and Butcher Workmen v. NLRB, 663 F.2d 223, 226-27 (D.C.Cir.1980); NLRB v. Scott Printing Co., 612 F.2d 783, 786 (3d Cir.1979). In addition, the Board will give substantial weight to evidence that the motive for the transaction was to evade statutory and contractual duties under the NLRA or to escape the reach of the Board's remedies. Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14, 65 S.Ct. 478, 481, 89 L.Ed. 661 (1945); Southport Petroleum Co. v. NLRB, 315 U.S. at 106, 62 S.Ct. at 455; NLRB v. Al Bryant, Inc., 711 F.2d at 553; Penntech Paper, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 237, 78 L.Ed.2d 228 (1983); Carpenters Local Union No. 1846, 690 F.2d at 508; NLRB v. Tricor Products, Inc., 636 F.2d 266, 270 (10th Cir.1980).

The Board pointed to several aspects of the transfer from Fugazy to Ganser in support of its conclusion that "the sale was a hastily and haphazardly arranged maneuver to continue Fugazy's operations in a disguised form while avoiding its obligations and responsibilities under the Act." ⁷ The Board points first to the irregular practices and lack of formalities surrounding the transfer. For example, no formal purchase agreement was prepared until two months after the purported sale, after the issue of alter ego status had been raised by the NLRB in unfair labor practice proceedings. ⁸ The Board continued:

We consider it significant that Fugazy directed and managed both ends of the transaction and continues to retain a financial interest in Ganser's Auto Service. Fugazy, not Ganser, solicited Ronald Marra's participation as a partner in Ganser's Auto Service. Fugazy, not Ganser, insured the operations and employees of Ganser's Auto Service until mid-August. Fugazy, not Ganser, continues to assume direct responsibility for Ganser's Auto Service's electric bills, secretaries, guards, and bill collectors. The belatedly signed purchase agreement provides that Ganser's Auto Service will maintain and repair all vehicles owned, leased, or operated by Fugazy at its Queens Village location and that Ganser's Auto Service will return 8 percent of its gross receipts on these operations to Fugazy. The agreement even goes so far as to specify the days and hours which Ganser's Auto Service must be open. The umbilical relationship between Fugazy and Ganser's Auto Service is further demonstrated by the fact that, until proceedings began in this case, all of Ganser's Auto Service's business consisted of work for Fugazy; since November 22, 1978, Ganser's Auto Service has performed work for outsiders on a small scale. It is clear that Ganser's Auto Service "virtually exists at the sufferance" of Fugazy Continental Corporation. ⁹

Finally, the Board points to the overwhelming coincidence in the timing of the June 1 "sale" and Fugazy's loss in the May 31 election after a highly coercive campaign of serious unfair labor practices, much of which focused on the threat to discontinue operations. ¹⁰

Fugazy argues that common ownership, not present here, is virtually a sine qua non of a finding of alter ego status, citing our decision in Amalgamated Meat Cutters v. NLRB, 663 F.2d 223 (D.C.Cir.1980). In that case, we upheld a decision of the Board refusing to find an alter ego relationship, relying heavily on the absence of any significant financial interest retained by the former entity in its successor. Id. at 227. Fugazy ignores not only the fact that it has retained a substantial financial interest in Ganser's operations--$2000 per month in rent and eight percent of its gross income ¹¹--but also the presence here of many additional factors, such as the overwhelming evidence of anti-union animus and the extremely suspicious timing and informality of the transaction, not present in Amalgamated Meat Cutters. In any event, common ownership is not an absolute prerequisite to a...