NATIONAL LABOR RELATIONS BOARD v. Harris

• Citation: 198 F. Supp. 947
• Parties: NATIONAL LABOR RELATIONS BOARD, Applicant, v. John J. HARRIS, Respondent.
• Decision Date: 06 October 1961
• Court: U.S. District Court — Southern District of New York

198 F. Supp. 947

NATIONAL LABOR RELATIONS BOARD, Applicant, v. John J. HARRIS, Respondent.

United States District Court S. D. New York.

October 6, 1961.

Samuel M. Kaynard, Regional Atty., National Labor Relations Board, New York City, Second Region, George Turitz, Asst. Regional Atty., of counsel.

James V. Altieri, New York City, for John J. Harris, respondent.

HERLANDS, District Judge.

The National Labor Relations Board (hereinafter referred to as the "Board") seeks an order pursuant to section 11(2) of the National Labor Relations Act, 29 U.S.C.A. § 161(2) (hereinafter referred to as the "Act"), directing the respondent, John J. Harris, to appear before it and give testimony in connection with the pending back-pay proceeding.

Respondent, in refusing to provide the evidence sought, challenges the authority of the Board to determine alter ego responsibility in such a proceeding.

The disputed issues of law will be brought into sharper focus by a delineation of the relevant facts.

By decree filed August 21, 1957, the United States Court of Appeals for the Second Circuit enforced an order of the National Labor Relations Board 113 N. L.R.B. 841 (1955), finding that Marlo Offset Printing Corporation (hereinafter referred to as "Marlo") had engaged in certain unfair labor practices (Applicant's Exh. A).

The Court's decree, which was entered on consent, ordered Marlo, "its officers, agents, successors, and assigns," inter alia, to cease and desist from certain practices, not here relevant, and to make whole six named employees for any loss of pay they may have suffered by reason of discrimination against them. This decree has been complied with in all respects except for the payment of back pay.

The Rules and Regulations of the Board provide that, if after the entry of a court decree enforcing an order of the Board, a controversy arises between the Board and a respondent concerning the amount of back pay due and the controversy is one which cannot be resolved without a formal proceeding, a back-pay specification shall be issued. The specification must show specifically and in detail the amount of back pay owing to each employee. The respondent is given fifteen days in which to file an answer; and a hearing is held before a trial examiner. (See National Labor Relations Board, Rules and Regulations and Statements of Procedure, Series 8 1959 sections 102.52-102.59, App. 29 U.S.C.A.)

Pursuant to these rules, a back-pay specification was issued February 4, 1960; and an answer was filed by Marlo on March 9, 1960 (Applicant's Exh. B, p. 2).

In May 1960, Marlo and the Regional Office of the Board stipulated that the amount of back pay due was $5,858.88; and Marlo consented to the entry of a supplemental court order and decree to that effect. The Board disapproved the stipulation (Affidavit of John J. Harris, sworn to May 25, 1961, pp. 8, 9).

On November 23, 1960, the General Counsel moved the Chief Trial Examiner for leave to amend the back-pay specification. The Board's purpose in amending the specification was to render certain alleged alter egos liable for carrying out the decree against Marlo; Marlo having asserted that it had no assets with which to pay the amounts due (See Applicant's Exh. B). The specification as amended alleged that a controversy existed both as to the amount of back pay due and the liability of the six named corporations and Harris personally for carrying out the Court's decree.

The amendments consisted of allegations in paragraphs I through VI that John Harris is president and sole owner of Marlo, Advertisers Production Services, Inc., Harris Advertisers Service, Inc., Harris Pocasset Press Corporation, Harris Union Photoengraving Corporation, Nu-Method Matrix Plate, Inc., and Facts and Features, Inc.; that Harris and all these corporations are engaged in a single, integrated enterprise in producing and distributing printed sales-promotion material; that they constitute a single employer, each the alter ego of the others; and that, in view of the foregoing, they are responsible for carrying out the remedies described in the decree and order, including the back-pay provisions; and directing that a hearing be held before a trial examiner of the Board. Paragraphs VII through XI related to the amounts of back pay owing to the individual employees.

Marlo, in an attempt to prevent the Board from litigating the issue of alter ego responsibility, opposed the motion, although it was first granted as unopposed. Marlo's request for leave to appeal this ruling was denied by the Board without prejudice to raising the issue in exceptions upon the issuance of an Intermediate Report (Applicant's Exh. H). The Board, however, ordered the Regional Director to set a new hearing date, giving Marlo an opportunity to file an answer.

Thereafter, the Trial Examiner received Marlo's opposition to the motion to amend, but again granted it. No request was made to the Board for leave to appeal this ruling.

Marlo persisted, however, in its efforts to prevent the Board from fastening liability on its alleged alter egos. In its answer to the amended back-pay specification (Applicant's Exh. C), it sought a dismissal as to the alleged alter egos on the grounds that: (1) the Board lacked jurisdiction to consider Marlo's relationship to the other corporations in this proceeding; and (2) that the parties named in paragraphs I through VI of the amended back-pay specification (i. e., the alleged alter egos) were not served with or named in any charge as provided by section 10(b) of the Act 29 U.S.C.A. § 160 (b) as thus are not proper parties-respondent.

At the hearing (which opened February 13, 1961), the trial examiner granted the General Counsel's motions to strike the above defenses and denied Marlo's motion to strike from the amended specification the allegations with respect to alter ego responsibility (Applicant's Memorandum, filed May 23, 1961, p. 3). No request for leave to appeal was made to the Board.

The subpoena here in question was served on John J. Harris by registered mail and was received by him February 6, 1961 (Applicant's Memorandum, p. 3; Applicant's Exh. E). Ten days later, on February 16, 1961, Harris moved pursuant to section 11(1) of the Act (29 U. S.C.A. § 161 1) to revoke the subpoena.

Section 11(1) pertinently provides:

"Within five days after the service of a subpoena on any person requiring the production of any evidence in his possession or under his control, such person may petition the Board to revoke, and the Board shall revoke, such subpoena if in its opinion the evidence whose production is required does not relate to any matter under investigation, or any matter in question in such proceedings, or if in its opinion such subpoena does not describe with sufficient particularity the evidence whose production is required."

The trial examiner refused to revoke on two grounds: (1) that the evidence to be adduced related to matters put in issue by the specification; and (2) that the petition to revoke was not timely (Applicant's Exh. G). Harris did not request leave to appeal from the Board. His attorney, however, indicated that Harris would not testify with respect to the alter ego allegations in the amended specification. (See Applicant's Exh. I).

On March 2, 1961 the Board, proceeding by order to show cause, sought judicial enforcement of its subpoena (Applicant's Memorandum, p. 2). The District Court (Noonan, J.) enforced the subpoena, holding respondent's defenses to be premature. In an endorsement dated April 11, 1961 (Applicant's Exh. 1), Judge Noonan stated:

"It is the opinion of this court that the defenses raised by the respondent are premature. At present he stands as a witness from whom the N.L.R.B. seeks to obtain information in a Back Pay Proceeding. Whether he will be asked questions which are not pertinent to the proceeding at hand is a question which looms in the future."

On April 27, 1961, the hearing on the amended back-pay specification was resumed before trial examiner Lloyd Buchanan. The respondent appeared and was sworn as a witness. However, he refused to answer questions relating to paragraphs I through VI of the amended specification.

It is not disputed that these questions bear no relation to the amount of back pay due but are concerned solely with establishing an interrelationship between the companies which may form the basis for alter ego liability.

The trial examiner thereupon adjourned the hearing to enable the Board to institute further judicial proceedings to compel Harris to testify.

In the instant proceeding, the Board seeks an order directing Harris to appear and give testimony and answer all questions relevant and material to the matters under investigation, including all questions relevant to paragraphs I through VI of the amended back-pay specification.

A proceeding for judicial enforcement of an administrative subpoena is a case or controversy. Interstate Commerce Commission v. Brimson, 1894, 154 U.S. 447, 14 S.Ct. 1125, 38 L.Ed. 1047, to which appropriate defense may be made. Oklahoma Press Publishing Co. v. Walling, 1946, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614. The judicial function in such a proceeding involves more than the automatic issuance of an order. 1 Davis, Administrative Law, section 3.12 (1958). "Instead of authorizing agencies to enforce their subpoenas, Congress has required them to resort to the courts for enforcement. In the discharge of that duty courts act as courts and not as administrative adjuncts." Mr. Justice Frankfurter, dissenting, in Penfield Co. of California v. Securities and Exchange Commission, 1947, 330 U.S. 585, 604, 67 S.Ct. 918, 928, 91 L.Ed. 1117.

The District Court, however, is restricted in the scope of the issues presented for adjudication by such an enforcement proceeding.

The coverage of the Act is for the administrative body to decide and not the District Court. The court must accept as...