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Industrial Turnaround Corp. v. National Labor Relations Board

May 30, 1997

INDUSTRIAL TURNAROUND CORPORATION; ELECTRICAL/MECHANICAL SERVICES, INCORPORATED, PETITIONERS,

v.

NATIONAL LABOR RELATIONS BOARD, RESPONDENT. NATIONAL LABOR RELATIONS BOARD, PETITIONER,

v.

INDUSTRIAL TURNAROUND CORPORATION; ELECTRICAL/MECHANICAL SERVICE, INCORPORATED, RESPONDENTS.



On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board. (5-CA-23392, 5-CA-23915)

Before LUTTIG and WILLIAMS, Circuit Judges, and CLARKE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

WILLIAMS, Circuit Judge

Argued: January 30, 1997

Petition for review granted in part and denied in part. Petition for enforcement granted in part and denied in part, and remanded by published opinion. Judge Williams wrote the opinion, in which Judge Luttig and Senior Judge Clarke joined.

OPINION

Industrial TurnAround Corporation (ITAC), an electrical construction firm, petitions for review of a decision and order of the National Labor Relations Board (NLRB) finding that ITAC and its alter ego, Electrical/Mechanical Services, Inc. (EMSI), violated Section(s) 8(a)(1), (a)(3), and (a)(5) of the National Labor Relations Act (the Act), see 29 U.S.C.A. Section(s) 158(a)(1), (a)(3), & (a)(5) (West 1973 & Supp. 1997), by refusing to abide by a collective-bargaining agreement negotiated on ITAC's behalf by the Virginia Chapter of the National Electrical Contractors Association (NECA). The NLRB cross-petitions for enforcement of its decision and order. For the reasons that follow, we conclude that ITAC and EMSI were alter egos, and that the companies violated Section(s) 8(a)(1), (a)(3), and (a)(5) of the Act. We also conclude, however, that the NLRB abused its discretion in ordering the remedy in this case. Accordingly, we grant in part and deny in part ITAC's petition for review, grant in part and deny in part the NLRB's cross-petition for enforcement, and remand the case to the NLRB for the entry of an appropriate remedial order.

I.

On April 2, 1990, ITAC President Sidney Harrison executed a letter of assent designating NECA as ITAC's "collective-bargaining representative for all matters contained in or pertaining to the current and any subsequent approved INSIDE CONSTRUCTION labor agreement between [NECA] and [the International Brotherhood of Electrical Workers, Local 666, AFL-CIO (the Union)]." (J.A. at 316.) By its terms, the letter of assent was to remain in effect until terminated by ITAC's "giving written notice to [NECA] and to the Local Union at least one hundred fifty (150) days prior to the then current anniversary date of the applicable approved labor agreement." (J.A. at 316.) At the time the letter of assent was executed, a collective-bargaining agreement between NECA and the Union was in force until August 31, 1992.

On August 31, 1992, when the 1990-92 agreement expired, the parties had not completed negotiations for a successor agreement. During the fall of 1992, while negotiations for a new agreement were underway, ITAC continued to comply with the 1990-92 agreement, paying wages specified in the expired agreement and collecting and remitting to the Union employee-authorized payroll deductions for Union dues and benefit funds.

On November 9, 1992, Harrison incorporated EMSI as a nonunion company performing electrical construction and pipefitting work. Harrison's primary purpose for establishing EMSI was to "get around" ITAC's union contract. Harrison's wife, Glenn, was the sole shareholder of EMSI. Her $100,000 investment in the company was made up of funds supplied to her by Harrison, who withdrew them from ITAC bank accounts and directed their deposit into an EMSI account.

ITAC stopped bidding on electrical construction jobs in November 1992. At that time, the company's outstanding electrical construction work was transferred to EMSI. During 1993, over 70 percent of EMSI's electrical projects were performed either directly for or under subcontract to ITAC, or for ITAC's former customers. ITAC was responsible for over 45 percent of EMSI's total sales during 1993. ITAC and EMSI shared a business address and premises, furnishings, tools, equipment, and trucks. The companies also used the same suppliers of accounting, insurance, and banking services. Sidney Harrison controlled both ITAC and EMSI.

In late 1992, ITAC informed its two remaining employees, John Perkins and David Deane, that ITAC had run out of electrical construction work and did not intend to bid for more, and asked them whether they would work at EMSI, a nonunion shop. Both declined. Beginning in November 1992 and continuing through 1993, EMSI hired electrical workers. During this time, EMSI told five employment applicants who wore union insignias or whose applications revealed prior employment with union contractors that it was not hiring. At one employment interview, an EMSI representative asked an applicant, "Are you Union?" (J.A. at 54.)

Finally, on January 25, 1993, NECA and the Union reached agreement and signed the 1992-94 successor agreement. The 1992-94 agreement, effective retroactively to September 1, 1992, required signatories to obtain unit employees from the Union's hiring hall. On May 6, 1993, ITAC notified NECA and the Union that effective immediately it was terminating its letter of assent, revoking its grant of bargaining authority to NECA, and repudiating the 1992-94 agreement.

On March 19 and September 20, 1993, the Union filed charges against ITAC, alleging that ITAC and EMSI were alter egos and that the companies had violated Section(s) 8(a)(1), (a)(3), and (a)(5) of the Act. The case was heard by an Administrative Law Judge (ALJ) on June 21-24, and August 8-10, 1994. The ALJ concluded that ITAC had violated Section(s) 8(a)(5) of the Act by creating EMSI as an alter ego and by repudiating the 1992-94 agreement. Additionally, the ALJ determined that ITAC and EMSI violated Section(s) 8(a)(1) and (a)(3) of the Act by interrogating a job applicant concerning his Union affiliation, by constructively discharging employees John Perkins and David Deane because they balked at working for a ...


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