NLRB v. CCC Associates, Inc.

• Decision Date: 30 July 1962
• Docket Number: 27313.,302,No. 246,Docket 27254,246
• Citation: 306 F.2d 534
• Parties: NATIONAL LABOR RELATIONS BOARD, Plaintiff-Appellee, v. C. C. C. ASSOCIATES, INC., John E. Wilson, Ira Conklin, Charles Conklin, W. H. Conklin, W. C. Conklin and Ira Conklin, Jr., Respondents-Appellants. NATIONAL LABOR RELATIONS BOARD, Appellant, v. John J. HARRIS, Appellee.
• Court: U.S. Court of Appeals — Second Circuit

306 F.2d 534 (1962)

NATIONAL LABOR RELATIONS BOARD, Plaintiff-Appellee, v. C. C. C. ASSOCIATES, INC., John E. Wilson, Ira Conklin, Charles Conklin, W. H. Conklin, W. C. Conklin and Ira Conklin, Jr., Respondents-Appellants.

NATIONAL LABOR RELATIONS BOARD, Appellant, v. John J. HARRIS, Appellee.

Nos. 246, 302, Docket 27254, 27313.

United States Court of Appeals Second Circuit.

Argued May 23, 1962.

Decided July 30, 1962.

Stephen B. Goldberg, National Labor Relations Board, Washington, D. C., (Stuart Rothman, General Counsel, Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel and Mary Louise Griffin, on the brief), for National Labor Relations Board.

Charles R. Katz, New York City (Katz & Wolchok, New York City, on the brief), for C. C. C. Associates, Inc., et al.

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

Before LUMBARD, Chief Judge, and SMITH and MARSHALL, Circuit Judges.

LUMBARD, Chief Judge.

These two appeals, both from orders of the United States District Court for the Southern District of New York, were argued together and raise a common major question: whether, after a court of appeals has ordered enforcement of an order of the N.L.R.B. requiring the payment of back pay to employees, the Board may proceed to conduct an inquiry as to alter ego and successor responsibility for compliance with the order, or whether it must apply to the court of appeals for authority so to inquire. We sustain the Board's power to proceed without further application to the court of appeals. Accordingly, we affirm Judge Metzner's order under § 11(2) of the National Labor Relations Act, 29 U.S. C.A. § 161(2) which enforced the Board's subpoenas demanding the appearance of the appellants in the C. C. C. Associates case at a hearing inquiring into their sucessorship to and relations with Cousins Associates, Inc., and reverse Judge Herlands' refusal to enforce a similar subpoena demanding Harris' appearance at a hearing to determine whether certain corporations owned by him are the alter egos of Marlo Offset Printing Corporation.

N. L. R. B. v. C. C. C. Associates et al. — On October 21, 1960 this court entered a decree enforcing the Board's order of November 12, 1959, 125 N.L.R.B. 73, which directed that certain unfair labor practices of Cousins Associates, Inc. should cease and that four employees be reinstated and given back pay because of their wrongful discharge. Our decree ordered that "Cousins Associates, Inc., its officers, agents, successors and assigns, abide by and perform the direction of the Board in said order contained." The Board in its brief states that the order "has been complied with in all respects material here except for the payment of back pay, Cousins having no assets with which to pay." On April 28, 1961 the Board's General Counsel served a back pay specification and notice of hearing on Cousins, and in addition on C. C. C. Associates, Charles Conklin, Ira Conklin, and John Wilson, none of whom had been parties to the unfair-labor-practice proceedings. The specifications alleged facts indicating that after the issuance of the Board's order, these two Conklins and Wilson as officers and directors of Cousins took steps to cause Cousins to cease operating, to pay over $35,000 in cash to them as a result of which Cousins had no funds to pay the back pay under the decree, and to transfer the business to C. C. C. Associates, Inc., of which Ira Conklin is the majority stockholder and three other members of his family are the other stockholders. It also stated that C. C. C. has continued to run the Cousins' gasoline service stations with substantially the same employees and supervisors. The Board alleged that as a result of these acts C. C. C. is the successor of Cousins "and is responsible for carrying out the * * back pay provisions," and that in the alternative the two Conklins and Wilson are liable for preventing Cousins from paying the required back pay. The specification then proceeded to an elaborate computation of the amounts due.

Cousins filed an answer denying most of the Board's allegations and alleging that Cousins had ceased to operate on December 14, 1959 "solely because of economic considerations" and that any back pay should not extend beyond that date.

The Board then issued and served, pursuant to § 11(1) of the N.L.R.A., 29 U.S.C.A. § 161(1), subpoenas returnable June 6, 1961, seven subpoenas duces tecum addressed to C. C. C., Wilson and the five Conklins,¹ and three subpoenas ad testificandum to Ira Conklin, Charles Conklin and John E. Wilson. On June 6 all those subpoenaed appeared specially by their attorney and asked the Trial Examiner to revoke the subpoenas, claiming that the Board had no jurisdiction in a back-pay proceeding to inquire into successor liability or personal liability for prevention of compliance by Cousins. The Trial Examiner held that the matter was properly before the Board, and denied the petition. The Board granted the appellants' "application for special permission to appeal" and sustained the Trial Examiner. Since the appellants indicated that they still would not comply, the General Counsel of the Board thereupon petitioned the district court, pursuant to § 11(2) of the N.L.R.A., 29 U.S.C. § 161(2), for enforcement of the subpoenas. On September 12, 1961 Judge Metzner granted the Board's petition, in an opinion which is reported at D.C., 197 F.Supp. 535. From this ruling C. C. C. and the six individuals appeal.

N. L. R. B. v. John J. Harris — On August 21, 1957, this court entered a consent decree enforcing the Board's order of August 19, 1955, 113 N.L.R.B. 841, directing that Marlo Offset Printing Corporation, "its officers, agents, successors, and assigns," cease certain unfair labor practices and, inter alia, make six employees whole for any loss of pay they might have suffered by reason of discrimination against them. Like Cousins, Marlo has complied in all respects but for the payment of the back pay, claiming that it has no assets. On February 4, 1960, the General Counsel served a back pay specification upon Marlo, and on November 23, 1960 made a motion, which the Chief Trial Examiner granted, to amend the specification to allege that John J. Harris is the president and sole owner of Marlo and various other corporations (the "associated companies"), all of which constitute a single integrated enterprise engaged in the production and distribution of sales promotion material. The amended specification alleges that the associated companies are in fact a single employer, each corporation being the alter ego of each of the others, with the result that the associated companies are liable for the discharge of Marlo's back pay obligation. The specification goes on to calculate the amounts of back pay alleged to be due. On February 13, 1960, the Trial Examiner granted the General Counsel's motion to strike Marlo's affirmative defenses attacking the Board's jurisdiction to determine alter ego responsibility in a back pay proceeding; this dismissal is, of course, not before us on this appeal.

Meanwhile, Harris had been served with a subpoena and his motion to revoke it was denied by the Trial Examiner on February 16, 1961. Harris' refusal to appear resulted in an enforcement order by the district court on April 11, 1961, which, however, left open Harris' objections to the subject of the inquiry until specific questions should be asked. A hearing was held on April 27, at which Harris refused to answer any questions concerning the relationship between Marlo and the Associated Companies, claiming — as did the appellants in the C. C. C. Associates case — that the Board lacked authority to determine the derivative liability of new parties in a back pay proceeding. In this case, however, Judge Herlands, on October 6, 1961, denied the Board's application for enforcement of the subpoena, 198 F.Supp. 947, and the Board appeals.

In N. L. R. B. v. C. C. C. Associates et al., Judge Metzner held that the order of this court, in directing compliance by the "officers, agents, successors and assigns" of Cousins Associates, thereby authorized the Board to pursue the investigation into successor liability and prevention of performance by officers, and thus to issue the subpoenas there in question. In N. L. R. B. v. Harris, Judge Herlands found no authorization in these words for an inquiry into alter ego liability, and therefore held that it was necessary for the Board, before starting such an inquiry, to obtain the permission of this court under § 10(e) of the N.L.R.A., 29 U.S.C.A. § 160(e), to adduce additional evidence on the subject of derivative responsibility; he held that the provision of § 10(e) making the jurisdiction of the court of appeals "exclusive" upon the filing of the record with it in the proceedings for the enforcement of the order ousted the Board of jurisdiction to investigate derivative liability.²

On the view which we take of these appeals, the two cases are indistinguishable and raise an identical question, since we hold that the "exclusive" jurisdiction of the court of appeals is not such as to require its authorization for investigation into derivative liability. In addition to this argument from the "exclusiveness" of our prior jurisdiction, two other major arguments are raised to support the proposition that the Board improperly issued the subpoenas involved in these two cases. First, it is argued that the additional parties named in the back pay specifications could not be proceeded against by the Board without being served with charges of unfair labor practices under the provisions of § 10(b) of the N.L.R.A., 29 U.S.C.A. § 160(b); in other words, the contention is that an order of the N.L.R.B. cannot be enforced against persons not served in the proceedings resulting in the order or served with charges in new proceedings. Second, it is contended that the Board's rules pertaining to back pay...