National Labor Relations Board v. Deena Artware

• Citation: 261 F.2d 503
• Decision Date: 13 December 1958
• Docket Number: No. 11156.,11156.
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. DEENA ARTWARE, Incorporated, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

261 F.2d 503 (1958)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. DEENA ARTWARE, Incorporated, Respondent.

No. 11156.

United States Court of Appeals Sixth Circuit.

December 13, 1958.

Irving M. Herman, Atty., N.L.R.B., Washington, D. C. (Jerome D. Fenton, Gen. Counsel, Thomas J. McDermott, Associate Gen. Counsel, Louis Schwartz, Asst. Gen. Counsel, Walter N. Moldawer, Atty., N.L.R.B., Washington, D. C., of counsel), for petitioner.

James G. Wheeler, of Wheeler & Marshall, Paducah, Ky., for respondent.

Before MARTIN and MILLER, Circuit Judges, and JONES, District Judge.

SHACKELFORD MILLER, Jr., Circuit Judge.

The National Labor Relations Board has petitioned this Court to adjudge in civil contempt of this Court the respondent, Deena Artware, Incorporated, hereinafter referred to as Artware, its president and agent George H. Weiner, and four other corporations who are affiliated with Artware as hereinafter set out, for resisting, disobeying and violating, and refusing to comply with the decree of this Court entered herein on July 30, 1952, and the supplemental decree entered herein on December 16, 1955.

This is the fifth time this case has been before us. Our previous opinions, to which reference is made, give in detail the factual background and history of the litigation. For our present purposes, we will restate only such basic facts as are necessary to present the issue now under consideration.

On July 30, 1952, this Court entered its decree in this case enforcing an order of the Board issued on October 25, 1949, against respondent Artware, directing inter alia, that Artware, its officers, agents, successors and assigns, make whole certain named employees for any losses in pay they may have suffered by reason of respondent's discrimination against them in refusing to reinstate them following the termination of a strike, in violation of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq. N. L. R. B. v. Deena Artware, Inc., 6 Cir., 198 F.2d 645, certiorari denied 345 U.S. 906, 73 S.Ct. 644, 97 L.Ed. 1342. The case was remanded to the Board for the purpose of hearings and findings as to the amounts due the individual employees.

On November 10, 1953, this Court denied motions of the Board to enjoin Artware and its president Weiner from assigning to Deena Products Co., its parent corporation, in part payment of an alleged indebtedness owing by Artware to Deena Products Co., the unpaid portion of a substantial judgment which Artware had recovered against United Brick & Clay Workers and the American Federation of Labor as damages resulting from an illegal secondary boycott. N. L. R. B. v. Deena Artware, Inc., 6 Cir., 207 F.2d 798; United Brick & Clay Workers of America v. Deena Artware, Inc., 6 Cir., 198 F.2d 637, certiorari denied 344 U.S. 897, 73 S.Ct. 277, 97 L.Ed. 694. The principal ground for this ruling was that the amounts due the employees whose claims the Board was attempting to protect against dissipation of Artware's assets were unliquidated. It was also pointed out in that opinion that since the claims were unliquidated, this Court would not treat the assignment by Artware of its assets as being in contempt of this Court's previous order to make whole the employees it had illegally discharged.

Following the remand of the case to the Board, the Board held hearings and issued its supplemental decision and order directing payments in specific amounts to designated individual employees, which totaled approximately $300,000.00. On December 16, 1955, this Court entered its supplemental decree enforcing the supplemental decision and order of the Board, the effect of which was to liquidate the amounts which Artware was ordered to pay to its individual employees. N. L. R. B. v. Deena Artware, Inc., 6 Cir., 228 F.2d 871.

Artware did not make the payments so ordered. It contended then, as it does now, that it was forced by economic conditions and the labor dispute involved in this litigation to discontinue the operation of its plant in Paducah, Kentucky, during the year 1953; that it was financially unable to make the payments; that there were no assets available for that purpose; and that whatever assets were previously available for creditors had through bona fide business transactions been used in the payment, or to secure the payment, of its legal obligations. The Board contended then, as it does now, that Artware and the several affiliated corporations were integral parts of a single enterprise, substantially owned and controlled by Weiner; that the operations of Artware were conducted in a manner which prevented it from having assets, and thereby prevented compliance with the back pay provisions of the decrees; that Artware's assets were siphoned off or transferred to affiliated companies, in consequence of which Artware was left with no assets with which to comply with the decree; that the affiliated corporations were alter egos and/or successors to Artware within the meaning of the decrees; and that Artware and the affiliated corporations were subject to the back pay provisions of the decree and responsible for the failure to comply therewith, and liable for payment of said back pay. The Board filed a motion that Artware and the several affiliated corporations be directed to produce and permit the Board to inspect, copy and photograph numerous books, records, bank statements and various types of papers and documents which would show the financial condition of Artware and the respective obligations and credits rendered between Artware and the affiliated corporations. It also asked that certain present or former officers of Artware and the affiliated corporations be directed to give depositions with respect to the financial ability of Artware to comply with the provisions of the supplemental decree and the dealings and relationship of Artware with said affiliated corporations. These motions were not in support of any contempt proceeding. For that reason this Court, with one judge dissenting, ruled on January 17, 1958, that the motions were premature and that such discovery proceedings would not be authorized or ordered in the absence of contempt proceedings, the validity of which, as a matter of law, should be first passed upon by this Court. N. L. R. B. v. Deena Artware, Inc., 6 Cir., 251 F.2d 183.

On August 20, 1958, the Board filed the present petition for adjudication in civil contempt. It has also refiled its motion, in substantially the same form as previously filed, for discovery and inspection of documents of Artware and the four affiliated corporations and for an order directing that depositions be taken of present or former officers of the five affiliated corporations.

The petition for adjudication in civil contempt names the five affiliated corporations as being Deena Products Company, Inc., hereinafter called Products, an Illinois corporation maintaining plants and its principal office in Chicago, Illinois, which is the parent corporation, and its four subsidiaries, namely, Artware, Deena of Arlington, Inc., hereinafter called Arlington, Sippi Products Company, Inc., hereinafter called Sippi, and Industrial Realty Company, Inc., hereinafter called Industrial. It alleges that at all times material herein, Weiner has owned all the shares of stock of Products except for the minimum shares required by directors to qualify for office; that Products has owned all the shares of stock of the four subsidiaries except for the minimum shares required by directors to qualify for office; that the officers and directors of Products and of the subsidiaries have been Weiner, his wife, his son, and whoever has been employed as Weiner's personal office secretary; that Weiner has been president and treasurer of Products and each of the subsidiaries and has actively directed and controlled the financial and business operations of Products and the subsidiaries; that Products and the subsidiaries have constituted and have been operated as a single enterprise, engaged in the manufacture, sale and distribution of lamps, with each of said corporations performing a particular function, as a department or division of one enterprise in the manufacture, sale and distribution of the common product; and that Products and Weiner, through and together with Arlington, Sippi and Industrial, have caused the affairs and business of Artware to be conducted in a manner which divested Artware of its assets during the litigation herein for the purposes of preventing and frustrating compliance with the Court's decrees.

Allegations of detailed facts are made in support of these general contentions. Of major importance are the following. Special attention is directed to the specific dates. (1) About March, 1949, following the hearings before the Board, Products and Weiner in the exercise of their control over the price which Products paid Artware for the urns which Artware manufactured and sold exclusively to Products, reduced such price despite added operations and increased costs, and required Artware to continue to sell and deliver its entire output to Products and/or Arlington at prices which did not constitute adequate or proper consideration or value for such products or permit Artware to show a fair return. In consequence thereof Artware showed losses from its operations, although Products made substantial profits on the sale of the completed product. (2) About October 31, 1949, a few days after the issuance of the Board's decision and order of October 25, 1949, Products and Weiner caused Artware to execute mortgages on all of its real and personal property, allegedly to secure the payment of a promissory note, executed at the same time, undertaking to pay Products $75,459.65 within five years from the date thereof, with 6 per cent interest payable semi-annually; that about September 19, 1952, Products and Weiner caused Artware to execute further mortgages on said real and personal property, allegedly to...