J.M. Tanaka Const., Inc. v. N.L.R.B., s. 80-7252
| Decision Date | 26 April 1982 |
| Docket Number | Nos. 80-7252,80-7274 and 80-7345,s. 80-7252 |
| Citation | 675 F.2d 1029 |
| Parties | 110 L.R.R.M. (BNA) 2296, 94 Lab.Cas. P 13,538 J. M. TANAKA CONSTRUCTION, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. R. M. TANAKA CONSTRUCTION, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Barry W. Marr and Sidney Kanazawa, Honolulu, Hawaii, argued, for R. M. Tanaka; Torkildson, Katz, Jossem & Loden, Honolulu, Hawaii, on brief.
Kinji Kanazawa, Harilyn S. Mau, Sidney Kanazawa, Walter H. Ikeda, Honolulu, Hawaii, for J. M. Tanaka.
Susan L. Dolin, N. L. R. B., Washington, D. C., for N. L. R. B.
Before ALARCON, POOLE and FERGUSON, Circuit Judges.
J. M. Tanaka Construction Company (J. M. Tanaka) and R. M. Tanaka Construction Company (R. M. Tanaka) petition for review of a National Labor Relations Board (Board) order. The order adopted the findings of fact and conclusions of law of the Administrative Law Judge (ALJ) and substantially adopted the ALJ's recommended order.
The Board found that J. M. Tanaka and R. M. Tanaka were alter egos and thus constituted a single employer within the meaning of the National Labor Relations Act (Act). So finding, the Board held the companies to be in violation of § 8(a)(1) and (5) of the Act by virtue of their (1) unilateral withdrawal of recognition from the union and repudiation of an existing collective bargaining agreement, (2) failure to make fringe benefit payments to the union, (3) requirement that employees sign an agreement that the company is nonunion, and (4) interrogation of employees with respect to union activities and sympathies.
We grant the Board's cross-petition for enforcement.
Prior to the events at issue here, J. M. Tanaka was a construction company headquartered in Honolulu with operations on Oahu and in Kona. Raymond Tanaka (Tanaka) is J. M. Tanaka's president and owns eight percent of the corporation. His mother, brother and an uncle, Thomas Tanaka, collectively own 78%, the remaining shares are held by Tanaka's sisters and cousins.
At one time, J. M. Tanaka was involved in specialized and sophisticated projects such as bridge, reservoir and tunnel construction. Its Kona operation was less sophisticated, consisting primarily of paving and subdivision work. In 1978, its workforce numbered approximately 50, including 33 to 35 engineers in Kona and approximately three engineers located in Honolulu, all members of the Operating Engineers Local 3. A collective bargaining agreement effective until 1980 existed between J. M. Tanaka and Local 3.
For a number of years, J. M. Tanaka had suffered heavy financial losses, apparently stemming from its more sophisticated projects. A financial crisis was reached in August, 1978, when Local 3 threatened to pull its men off J. M. Tanaka jobs because the company's fringe benefit payments to the union were some $61,000 in arrears.
That same month, R. M. Tanaka, a construction company headquartered in Kona, was incorporated with Tanaka as sole shareholder and president. Takeo Wakida, Tanaka's uncle and the former general manager of J. M. Tanaka's Kona operations, was made vice-president. On September 14, 1978, J. M. Tanaka closed down operations and discharged its workers. 1
The new R. M. Tanaka company arranged to buy the bulk of J. M. Tanaka's equipment through an agreement of sale, and to lease J. M. Tanaka's Kona facilities. In R. M. Tanaka paid the workers the equivalent of union wages, and paid benefits required by state law, but did not pay the various fringes provided in the collective bargaining agreement between J. M. Tanaka and the union. As part of the application process, the employees hired directly by R. M. Tanaka and those ostensibly hired by Prime Electric were required to sign an agreement acknowledging R. M. Tanaka to be a nonunion employer, agreeing that required fringe benefit payments on government contracts be paid directly to the employees, and promising to reimburse the payments to the union in the event of a dispute.
early October, 1978, seven or eight engineers who had formerly worked for J. M. Tanaka were called to work for R. M. Tanaka. Another 25 former J. M. Tanaka employees began work ostensibly employed by Prime Electric, Inc., but actually working for R. M. Tanaka. 2 At the hearing before the ALJ, Tanaka testified that R. M. Tanaka is now engaged in essentially the same work formerly performed by J. M. Tanaka's Kona operation. In February the engineers on Prime Electric's payroll were transferred to R. M. Tanaka. All of J. M. Tanaka's engineers were ultimately called back to work for R. M. Tanaka, and one or two new engineers were hired
Around November, 1978, Wakida asked some of the employees whether they had signed union authorization cards. This interrogation was allegedly in response to a complaint that the union was coercing employees to sign authorizations. On a number of occasions in January and February, William Crozier, Local 3's business agent, demanded union recognition from R. M. Tanaka. R. M. Tanaka refused to recognize the union without an election, citing financial reasons.
On this appeal J. M. Tanaka and R. M. Tanaka argue that there was insufficient evidence to support the Board's determination that the two companies were alter egos. R. M. Tanaka also argues (1) it was denied due process in the hearing before the ALJ, and (2) the Board erred in finding that R. M. Tanaka had violated § 8(a)(1) by its interrogation of employees and its requirement that employees sign agreements acknowledging the company's nonunion status.
The Board's finding that R. M. Tanaka violated §§ 8(a)(1) and (5) by withdrawing recognition from the union, repudiating the collective bargaining agreement and failing to make fringe benefit payments to the union, and the imposition of liability on J. M. Tanaka, turns on whether the two companies are alter egos. Cf. NLRB v. Triumph Curing Center, 571 F.2d 462, 467 (9th Cir. 1978).
Petitioners argue that there is insufficient evidence to support a finding that the two corporations constitute a single employing enterprise. A conclusion by the Board that two corporations are alter egos is essentially factual and may not be disturbed if, looking at all the evidence, substantial evidence supports the determination. NLRB v. Lantz, 607 F.2d 290, 295 (9th Cir. 1979). See NLRB v. Triumph Curing Center, 571 F.2d at 468.
In determining whether two businesses are alter egos, a court must consider the following factors: (1) centralized control of labor relations, (2) common management, (3) interrelation of operations, and (4) common ownership and financial control. Radio Union v. Broadcast Service, 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965); NLRB v. Lantz, 607 F.2d at 295; NLRB v. Don Burgess Construction Corp., 596 F.2d 378, 384 (9th Cir. 1979). No factor is controlling and all need not be present. NLRB v. Lantz, 607 F.2d at 295; NLRB v. Don Burgess Construction Corp., 596 F.2d at 384.
The most important single factor is centralized control of labor relations. Los Angeles Marine Hardware Co. v. NLRB, 602 F.2d 1302, 1305 (9th Cir. 1979). The Board found, and Tanaka's testimony at the hearing clearly supports, that Wakida was in charge of day-to-day labor relations in Kona for both J. M. Tanaka and R. M. Tanaka. Tanaka himself had ultimate control of labor relations for both companies. Although Wakida was given increased authority when he went to work for R. M. Tanaka, the evidence demonstrates that he and Tanaka jointly controlled labor relations for both corporations. Thus this important element in determining alter ego status is strongly supported by the record.
Substantial evidence also supports a finding that J. M. Tanaka and R. M. Tanaka shared common management. J. M. Tanaka was once a state-wide operation centered in Honolulu, while R. M. Tanaka's activities were limited to the Kona area. The effect of this difference is only significant, however, in that it suggests that R. M. Tanaka became the alter ego of what had been J. M. Tanaka's Kona operations, not of the former state-wide J. M. Tanaka entity. An alter ego relationship may exist when only a portion of an enterprise is purportedly transferred to a new owner. See, e.g., Los Angeles Marine Hardware v. NLRB, 602 F.2d 1302; NLRB v. Burgess Construction Corp., 596 F.2d 378. Further, by the summer of 1978, J. M. Tanaka's operations outside of Kona had become minimal, with 33 to 35 engineers located in Kona, as compared to "about three" in Honolulu. Petitioners point to differences in headquarters locations-that J. M. Tanaka was headquartered in Honolulu near Tanaka's residence while R. M. Tanaka operates from Kona, on the island of Hawaii. They also lay emphasis on the fact that, except for Tanaka, the officers of the two companies were different. The answer to these arguments is that Wakida was in charge of daily operations on Kona for both J. M. Tanaka and R. M. Tanaka; that he and Tanaka constituted the effective management of both companies; and, finally, that it is actual and not merely potential control that is determinative. Poole's Warehouse, Inc., 158 N.L.R.B. 1281, 1286 (1966).
The evidence also indicates a close interrelation between the operations of the two construction companies. R. M. Tanaka took over J. M. Tanaka's Kona operation complete with office and staff, shop, asphalt plant, quarry, supervisors Wakida and Onumo, all of J. M. Tanaka's engineers and virtually all of its other employees. Most of R. M. Tanaka's supplies were purchased from J. M. Tanaka suppliers. R. M. Tanaka acquired most of J. M. Tanaka's equipment including, in Tanaka's own words, "practically 100%" of the equipment located on Kona. R. M. Tanaka also succeeded J. M. Tanaka on two unfinished projects. While at one stage, ...
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