Carpenters Local 745 (SC Pacific)

National Labor Relations Board - Board Decisions

Sep 30, 1993

312 N.L.R.B. 903 (N.L.R.B. 1993)

903
312 NLRB No. 136
CARPENTERS LOCAL 745 (SC PACIFIC)
1 Our dissenting colleague also agrees with this finding of the
judge.
2 Sec. 22 C 1(a) of the Master Agreement prevents a signatory
contractor from ‘‘illegally using an alter-ego operation to escape the
obligations of this collective bargaining Agreement.’’
United Brotherhood of Carpenters and Joiners of
America, Local No. 745, AFL–CIO and SC Pa-
cific Corporation and S & M Sakamoto, Inc.,
Intervenor. Case 37–CE–18
September 30, 1993
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND RAUDABAUGH
On June 3, 1992, Administrative Law Judge William
L. Schmidt issued the attached decision. The Respond-
ent filed exceptions and a supporting brief. The Gen-
eral Counsel filed an answering brief. The Charging
Party and the Intervenor filed briefs in opposition to
the Respondent’s exceptions and in support of the
judge’s decision.
The National Labor Relations Board has considered
the decision and the record in light of the exceptions
and briefs and has decided to affirm the judge’s rul-
ings, findings, and conclusions and to adopt the rec-
ommended Order.
As more fully described by the judge, S & M
Sakamoto (S & M) is one of Hawaii’s larger building
contractors in new commercial, industrial, and govern-
ment construction. In 1986, SC Pacific (SC) com-
menced operations as a building contractor for residen-
tial construction and renovation. Although the two
companies are essentially owned by the same family,
the judge found that S & M and SC are not operation-
ally integrated, financially dependent on each other, or
commonly managed. He also found that they serve ba-
sically different customer markets and have separate
labor relations policies, employees, supervisors, office
locations, bank accounts, insurance policies, and busi-
ness licenses. The judge further found that the equip-
ment purchases, rentals, and repairs between the two
companies have been arm’s-length transactions. Under
these circumstances, the judge found no alter-ego rela-
tionship between the two companies. Indeed, he found
the companies to be separate employers. We agree.1
On September 29, 1989, 4 years after SC’s incorpo-
ration, the Respondent filed a grievance contending
that S & M had contravened section 22 C 1(a) of the
Master Agreement2 by using nonunion SC as a ‘‘dou-
ble-breasted operation’’ on the theory that this contract
provision prohibits double-breasting altogether. Ac-
cording to the testimony of Ronald Takeda, the Re-
spondent’s community service and education director,
and Walter Kupau, its financial secretary and business
representative, the Respondent viewed section 22 C
1(a) as designed to reach double-breasting regardless
of whether a single-employer/alter-ego relationship ex-
ists. Thus, both witnesses indicated that the Respond-
ent viewed double-breasting and alter-ego status as co-
extensive and interchangeable.
The grievance was referred to the State Joint Board
(SJB) for an expedited hearing. On October 12, 1989,
the SJB upheld the grievance and granted the relief re-
quested by the Respondent. Thereafter, the Respondent
sought to confirm the subsequent favorable SJB award
in Federal district court. As explained by the adminis-
trative law judge, when the court requested clarifica-
tion of this award, the SJB unanimously decided that
S & M had violated section 22 C 1(a) by using SC
as ‘‘a double-breasted operation.’’ The SJB specifically
stated that S & M had to ‘‘immediately cease the dou-
ble-breasting operation.’’
For the reasons given by the judge, we agree with
his conclusion that the Respondent violated Section
8(e) of the Act by filing the September 29 grievance,
prosecuting it before the SJB, and thereafter seeking to
confirm the subsequent favorable SJB award in Federal
district court. The judge initially found that the Re-
spondent’s grievance and subsequent effort to enforce
the favorable SJB award satisfied the ‘‘enter into’’ and
‘‘cease doing business’’ requirements of Section 8(e).
He also observed that the Respondent did not claim
that the onsite proviso of Section 8(e) applied here.
Then, based on his findings summarized above, he
found that SC and S & M are separate employers and
therefore the Respondent’s work-preservation claim
lacked merit. He thus concluded that the September 29
grievance was actually a ‘‘work acquisition device.’’
In declining to find a violation here, our dissenting
colleague suggests that this was just a case of innocent
confusion regarding terminology by a union that was
simply pursuing a ‘‘colorable work preservation
claim’’ against a stonewalling employer. He argues
that because the language of the contract clause in
question was not unlawful on its face, the Respondent
should not be faulted for pursuing a grievance under
it simply because, as it turned out, the targeted entity
was not a true alter ego of the signatory employer.
In fact, we are not finding a violation merely on the
ground that the Respondent’s understanding of the
facts turned out to be wrong. Our decision turns on our
finding that the Respondent’s theory of what would
constitute a contract violation amounted to enforcing
the clause as if it were the equivalent of a clause that
would be unlawful on its face. Nor was this just a mat-
ter of innocently confused terminology, as our dissent-
ing colleague suggests. Business Representative Kupau
did not merely make the mistake of confusing the con-
cepts of alter ego and single employer with the phe-
904 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
3 It is clear in judicially approved Board law that the term ‘‘double
breast’’ is broader than the terms ‘‘alter ego’’ or ‘‘single employer.’’
A company may set up a related company in such a way that it is
neither an alter ego nor a single employer with the first company.
See Carpenters District Council of Northeast Ohio (Alessio Con-
struction), 310 NLRB 1023 (1993), and cases there cited.
4 In particular, Kupau testified: ‘‘It was a general understanding of
the industry, not only my understanding, that any signatory employer
who had ownership or joint ownership in any other company doing
business in the industry was considered a double-breasting company
and that would be illegal under their Union contract.’’ Although the
award of the Joint Board was not similarly explicit when it stated
that the clause was ‘‘intended to prohibit double breasting,’’ the fact
that its award rested on stipulated facts that would not support a
finding of alter ego or single employer under applicable law makes
clear the unlawful manner in which the Joint Board construed the
clause. Certainly our dissenting colleague cannot reasonably maintain
that the Joint Board was simply ‘‘confused’’ about the meaning of
the terms. It is the decision of the Joint Board which the Respondent
is seeking to have enforced in court.
5 We acknowledge, as our dissenting colleague points out, that
Schebler concerned a clause unlawful on its face. But other Board
precedents establish that a union or employer cannot evade the stric-
tures of Sec. 8(e) by the subterfuge of agreeing to a provision lawful
on its face and then construing and enforcing that provision so as
to accomplish objectives forbidden by Sec. 8(e). Elevator Construc-
tors (Long Elevator), 289 NLRB 1095 at fn. 2 (1988), enfd. 902
F.2d 297 (8th Cir. 1990); Retail Clerks Union Local 779 (Hughes
Markets), 218 NLRB 680, 683 fn. 11 (1975). Indeed, in Longshore-
men ILWU Local 13 (Egg City), 295 NLRB 704, 705 (1989), on
which our dissenting colleague relies, the Board expressly noted that
‘‘there are circumstances under which the Board will find a violation
of Section 8(e) by virtue of an arbitrator’s award issued within the
10(b) period, even if the collective-bargaining agreement was not un-
lawful on its face.’’ No 8(e) violation was found in Egg City be-
cause the Board concluded that the clause at issue there was not
even ‘‘amenable’’ to an unlawful construction. Id. That is not the
case here, where the contract does not define the phrase ‘‘alter ego.’’
6 Shelby Memorial Home, 305 NLRB 910 fn. 2 (1991), enfd. 1
F.3d 550 (7th Cir. 1993), citing Sav-On Drugs, 253 NLRB 816,
820–821 (1980), enfd. 726 F.2d 1254 (9th Cir. 1984) (en banc).
1 Even though the judge ultimately found that the Respondent’s
work-preservation claim lacked merit, he explicitly recognized that
the position taken by the Respondent had ‘‘considerable appeal’’ and
was not clearly untenable.
nomenon of double-breasted employers.3 He made it
quite clear in his testimony that the clause was in-
tended to prohibit a signatory employer even from sim-
ply owning another company that does business in the
same industry unless that other company is brought
under the master agreement.4 This is the same vice
that the Board found in the ‘‘Integrity Clause’’ at issue
in Sheet Metal Workers Local 91 (Schebler Co.), 294
NLRB 766, 770–771 (1989), enfd. 905 F.2d 417 (D.C.
Cir. 1990): treating common ownership alone, without
regard to whether there is evidence of common man-
agement or common control of labor relations, as a
trigger for forcing a signatory employer to the choice
of either extending the contract to the affiliated entity
or eliminating its ownership of that entity.5
Finally, we are not persuaded by our colleague’s
view that the Respondent was entitled to pursue its
grievance and seek confirmation of the SJB award be-
cause it had received insufficient answers to its ques-
tionnaire directed to S & M and there had been no
‘‘prior Board determination’’ that the contract clause,
as the Respondent construed it, violated Section 8(e).
If the Respondent had reasonable grounds for suspect-
ing that SC was an alter ego of S & M and the latter
refused to give complete answers to questions relevant
to such an inquiry, this agency was available to pro-
vide appropriate relief. See, e.g., Consolidation Coal
Co., 307 NLRB 69 (1992), and cases there cited (re-
quiring the employer to provide information relevant to
alter-ego theory). Certainly it was not necessary to pur-
sue a grievance on an unlawful theory to obtain the in-
formation. As for the suggestion that the Respondent
may, with impunity, enforce a clause in a manner that
violates Section 8(e) so long as the Board has not yet
spoken on the legality of such conduct, we note that
this is contrary to the customary application of legal
prohibitions. Just as an ‘‘employer acts at its peril
when it takes steps calculated to chill the exercise of
Sec. 7 rights by individuals who may later be found
to be under the protection of the Act,’’6 so a union
acts at its peril in enforcing a contractual restraint that
may later be deemed unlawful under Section 8(e).
Congress did not provide that it was lawful to enter
into agreements of the sort proscribed in Section 8(e)
so long as the Board had not held in some earlier case
that they were unlawful.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, United Brotherhood of
Carpenters and Joiners of America, Local No. 745,
AFL–CIO, Honolulu, Hawaii, its officers, agents, and
representatives, shall take the action set forth in the
Order.
MEMBER DEVANEY, dissenting.
I agree with the judge that the Charging Party and
the Intervenor are not alter egos, despite their close
ties. However, I decline to join my colleagues in
adopting the judge’s finding that the Respondent vio-
lated Section 8(e) of the Act. In my view, the result
reached by the judge encourages an artificial applica-
tion of Section 8(e) and is not consistent with the pol-
icy goals of the NLRA. In precluding the Respondent
from taking reasonable measures to pursue its
colorable work-preservation claim1 against the Charg-
ing Party, the Board discourages resort to the expe-
dited arbitral process agreed on by the parties.
A brief overview of the facts follows. In 1940,
Katsuki Sakamoto and his brother, Minoru, formed K
& M Sakamoto (K & M), a partnership, to operate as
a building and construction contractor in Hawaii. K &
M constructed industrial, commercial, and govern-
905CARPENTERS LOCAL 745 (SC PACIFIC)
2 Sec. 22 C 1(a) reads as follows:
Section 22: Grievance Procedure and Arbitration. . .
C. Grievances Subject to An Expedited Hearing
1. The following grievances shall be subject to an Expedited
hearing:
(a) a complaint filed by the Union alleging a violation of Sec-
tion 7 (No Strike Or Lockout), Section 26.C (Referral And Hir-
ing Procedure), or a Contractor illegally using an alter-ego op-
eration to escape the obligations of this collective bargaining
Agreement. [Emphasis added.]
3 The parties have since agreed to stay this court action pending
the outcome of these proceedings.
4 Particularly informative on this point is the following testimony
by Ronald Takeda, the Respondent’s community service and edu-
cation director, and Walter Kupau, its financial secretary and busi-
ness representative:
[By the Intervenor’s counsel]
Question: Mr. Takeda, do you define double breasting as a sit-
uation where a union contractor owns an interest in a non-union
contractor?
[By Takeda]
Answer: I think that is an instance of double breasting.
Question: And you believe that alter-ego and double breasting
are interchangeable?
Answer: Yes.
Question: You’ve never heard any other definition of alter-
ego?
Answer: I think I might have read something somewhere
where alter-ego is when somebody goes out of business and
starts up somewhere else non-union, but that has never been our
understanding or intent when we agreed upon the content lan-
guage and it is not mine today.
. . . .
[By the Charging Party counsel]
Question: Nature of grievance: The Employer is in violation
of the Agreement by its use of SC Pacific Corp. as a double
breasted operation. And that was the alleged violation of S &
M Sakamoto, is that right?
[By Kupau]
Answer: That’s what on the grievance form.
Question: Okay. You weren’t accusing them of being an alter-
ego of each other, were you, sir?
Answer: What’s the difference?
Question: Were you accusing them of being--
Answer: What’s the difference?
Question: Answer my question, sir.
Answer: I’m accusing them of alter-ego, double breasting, and
anything to do with it. You tell me what’s the difference.
Question: I’m asking you at the time you did not accuse them
of being an alter ego, did you?
Answer: I don’t know if I did or not.
mental facilities and private residences. In the early
1960s, K & M ceased building private residences and
focused entirely on its business and Government mar-
ket. In 1965, K & M was succeeded by S & M
Sakamoto (S & M), a closely held family corporation
formed by Minoru Sakamoto and another brother,
Shuichi. Their four sons became S & M’s corporate
officers. S & M continued K & M’s operations, includ-
ing its bargaining relationship with the Respondent,
and later became bound to the Master Agreement cov-
ering carpenters in Hawaii effective August 2, 1984. In
1984 or 1985, Norman Sakamoto, the son of Shuichi
and a vice president and director of S & M, expressed
a desire to form his own company to specialize in resi-
dential construction and renovation. In September
1985, SC Pacific Corporation (SC) was incorporated
for this purpose. Shortly thereafter, Norman resigned
from his positions at S & M and took over as SC’s
president and secretary-treasurer. In January 1986, SC
commenced operations on a nonunion basis.
In the summer of 1989, the Respondent had mis-
givings about S & M’s connection to SC and the
latter’s nonunion status. Previously, as a result of the
1984 contract negotiations, the parties had added sec-
tion 22 C 1(a) of the Master Agreement2 and the Re-
spondent suspected that S & M may have run afoul of
that provision based on its involvement with SC. In
July 1989, the Respondent sent Gerard Sakamoto, Nor-
man’s brother and the president of S & M, an 11-page
document listing 79 separate questions. This question-
naire sought detailed information to ascertain the exact
extent of S & M’s relationship to SC. Gerard com-
pleted the questionnaire, but did not consult with his
brother Norman or any other SC representative. As a
consequence, many questions pertaining to SC were
left unanswered, and vital data about S & M’s connec-
tion to SC sought by the Respondent was not provided.
I am persuaded that this lack of cooperation by S &
M influenced the Respondent to take the more formal
approach, described below, to ferret out the facts relat-
ing to its plausible suspicions about SC’s separateness
from S & M.
In this context, the Respondent filed its September
29, 1989 grievance against S & M. The Respondent
identified section 22 C 1(a) as the contract provision
involved and described SC as a ‘‘double-breasted oper-
ation’’ of S & M. The State Joint Board (SJB) upheld
the grievance and granted the relief sought by the Re-
spondent. In an attempt to stay the SJB hearing, S &
M commenced an action in Federal district court.
Then, on March 27, 1990, the Respondent filed a mo-
tion with the district court seeking confirmation of the
SJB award. At the court’s request, the SJB award was
clarified on May 29, 1990, as summarized in the
judge’s decision.3
In finding that the Respondent’s grievance and its
subsequent motion filed with the court converted sec-
tion 22 C 1(a) into a de facto hot cargo agreement pro-
hibited by Section 8(e), my colleagues rely on the Re-
spondent’s misunderstanding of the precise meaning of
the terms ‘‘double-breasting’’ and ‘‘alter ego.’’ Un-
questionably, the two union representatives who testi-
fied were confused about the exact definitions of dou-
ble-breasting and alter ego.4 Even so, a reliance on
such confusion is inappropriate because the General
Counsel alleged that the violation is based only on
how the contract provision at issue was applied in one
instance, i.e., to S & M and SC. The General Counsel
admittedly does not contend that the language of sec-
906 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 On the grievance form, the dispute with S & M was described
in terms of double-breasting. I do not consider this less-than-perfect
draftsmanship harmful to the Respondent’s position because the in-
tended contract violation was clearly spelled out. In addition, in light
of its own written arguments presented by its October 12, 1989 letter
to the SJB, S & M was indeed aware that the issue to be resolved
by the Respondent’s grievance was whether alter-ego status existed.
6 Of course, a dismissal of the 8(e) allegation here does not now
permit the Union to seek enforcement of the SJB award given our
adoption of the judge’s finding that the companies are indeed sepa-
rate employers.
tion 22 C 1(a), in particular the phrase ‘‘illegally using
an alter-ego operation,’’ violates Section 8(e).
The fact that the General Counsel eschewed any
claim that section 22 C 1(a) is unlawful on its face dis-
tinguishes this case from the situation presented in
Sheet Metal Workers Local 91 (Schebler Co.), 294
NLRB 766 (1989), enfd. 905 F.2d 417 (D.C. Cir.
1990). That case involved whether the respondent
union violated Section 8(e) by entering into and main-
taining the ‘‘Integrity Clause’’ in a collective-bargain-
ing agreement with Winger Contracting Company. The
Integrity Clause required that the signatory employer
force firms with whom the employer has an ownership
interest, either directly or as a parent or subsidiary, to
grant to their employees the same contractual wages,
benefits, and working conditions. The Board found the
violation because the language of the clause itself was
not limited to the single-employer definition and, addi-
tionally, even if the clause was somehow ambiguous in
meaning, which it clearly was not, the respondent
union’s intent was not limited to affecting the labor re-
lations of firms which come within the single employer
definition. Thus, in that case, the respondent union’s
intent was considered critical to resolve any ambiguity
in the meaning of the language set forth in the Integ-
rity Clause. Therefore, because there is no finding that
the language of section 22 C 1(a), i.e., ‘‘alter-ego oper-
ation,’’ is ambiguous, examining either party’s intent
in agreeing to that contract clause is inappropriate.
Given the complaint allegations then, our inquiry is
limited to how the Union applied section 22 C 1(a).
The Union filed the grievance pursuant to the terms
of section 22 C 1(a), seeking to apply this contract
provision to what is arguably an alter-ego situation al-
though, as found by the judge, the alter-ego theory ul-
timately fails. In this regard, as recognized by the
judge, there were certain facts that could have favored
a finding of alter ego status—the two companies are
commonly own by the Sakamoto family; SC was
formed to perform residential work, an area previously
done by S & M; S & M gave initial financial assist-
ance to SC; equipment sales, rentals, and repairs have
occurred between the two companies; two SC execu-
tives were formerly associated with S & M; and S &
M previously provided certain payroll and administra-
tive support services to SC. However, the judge found
these factors were outweighed by the credited testi-
mony regarding SC’s independence.
My colleagues argue that the Union never really
pursued an alter ego theory for its grievance because
Business Representative Kupau thought that common
ownership was critical in proving a violation of section
22 C 1(a). This argument fails for two reasons. First,
the fact that Kupau may have viewed common owner-
ship as an important ingredient is not inconsistent
whatsoever with the Union’s alter ego theory. Al-
though common ownership is not the determinative
factor in establishing an alter ego relationship, cer-
tainly it often precipitates the claim that the two com-
panies may not be separate entities but, in fact, alter
egos. Second, it is irrelevant that the union representa-
tive may have thought that the scope of section 22 C
1(a) was broader than alter ego because the Respond-
ent’s application of that contract provision was not di-
rected to a situation in which an alter-ego relationship
was unfathomable. Two examples illustrate this last
point. Here, had S & M and SC in fact been alter
egos, the Board would not find the pursuit of the
grievance to have been unlawful even had the Re-
spondent’s representatives been laboring under the
same confusion as to the meaning of the term ‘‘alter
ego.’’ Conversely, if the two companies were not argu-
ably alter egos under a standard of reasonableness, the
fact that the Respondent’s representatives may have
correctly understood the meaning of ‘‘alter ego’’
would not have rendered the pursuit of the grievance
lawful in those circumstances.
Nor do the Respondent’s actions belie an alter-ego
theory for its grievance. The July questionnaire submit-
ted to S & M represented an attempt to elicit the very
information that is traditionally considered relevant to
an alter ego status inquiry. When that attempt was met
with resistance, the Respondent filed the September
grievance which specifically keyed the dispute with S
& M concerning SC to section 22 C 1(a) of the Master
Agreement. The Respondent and S & M then handled
the grievance by following the expedited procedure to
the SJB, reserved for an alter-ego claim, under the
terms of the prevailing collective-bargaining agree-
ment.5
Moreover, in the circumstances of this case, I do not
believe the SJB award should constitute the basis for
a violation of Section 8(e). First, alter-ego claims re-
quire a fact-specific evaluation and, when the SJB be-
came involved, there had been no prior Board deter-
mination as to the kind of relationship which existed
between S & M and SC. The SJB was charting new
territory and did not have the benefit of the Board’s
insight.6 Second, the SJB award is, at best, ambiguous.
The majority of the numbered findings comprising its
May 29, 1990 clarification for the court could conceiv-
ably point to an alter-ego relationship as well as they
907CARPENTERS LOCAL 745 (SC PACIFIC)
7 See, e.g., Crawford Door Sales Co., 226 NLRB 1144 (1976).
8 See Longshoremen ILWU Local 13 (Egg City), 295 NLRB 704,
705 (1989) (the Board declined to find a violation of Sec. 8(e) pre-
mised on an arbitrator’s unlawful interpretation of contract provision
at issue).
1 Further dates refer to the 1989 calendar year unless otherwise in-
dicated.
2 The caption of the case is corrected to reflect S & M Sakamoto,
Inc. as a party based on its motion to intervene, granted at the hear-
ing.
3 The motion to correct the transcript based on the joint stipulation
of the parties is granted.
4 SC’s direct inflow exceeds the Board’s nonretail discretionary
standard for exercising its statutory jurisdiction. The same is true for
S & M separately. To the extent that SC may also be deemed a re-
tail enterprise, its gross revenues also exceed the applicable jurisdic-
tional standard. Accordingly, I find that it would effectuate the poli-
cies of the Act for the Board to exercise its jurisdiction to resolve
this dispute.
can be construed as indicators of a non-alter ego, dou-
ble-breasting operation. Nor is the SJB’s eighth find-
ing, i.e., ‘‘[t]he fact that the Master Agreement was in-
tended to prohibit double-breasting as it is understood
in the contruction industry’’ dispositive since alter
egos may also be double-breasted operations.7 Finally,
section 22 C 1(a), never alleged as invalid on its face,
is clearly phrased and does not even suggest the un-
lawful interpretation that the judge would impute to
the SJB’s ambiguous findings. In fact, the judge found
that, during the parties’ contract negotiations, the lan-
guage of section 22 C 1(a) was probably selected to
avoid any potential 8(e) problem.8
For the above reasons, I would hold that the Re-
spondent did not violate the Act by reasonably trying
to determine whether the bargaining and contractual
obligations owed by S & M extended to SC’s oper-
ations. Therefore, I would dismiss the complaint.
Wanda Pate Jones, Esq., for the General Counsel.
Dale L. Bennett, Esq., with Michael F. O’Connor and James
K. Tam (Moon, O’Connor, Tam & Yuen), on the brief, of
Honolulu, Hawaii, for the Respondent.
Richard M. Rand, Esq. (Torkildson, Katz, Jossem, Fonseca,
Jaffe & Moore), of Honolulu, Hawaii, for the Charging
Party.
Mark S. Kawata, Esq., with Tamotsu Tanaka, Leslie Alan
Ueoka, and Eric H. Tsugawa (Tanaka & Kawata), on the
brief, of Honolulu, Hawaii, for S & M Sakamoto, Interve-
nor.
DECISION
STATEMENT OF THE CASE
WILLIAM L. SCHMIDT, Administrative Law Judge. SC Pa-
cific Corporation (SC or Charging Party) filed an unfair labor
practice charge against United Brotherhood of Carpenters
and Joiners of America, Local No. 745, AFL–CIO (Respond-
ent or Union) on December 29, 1989.1
On April 25, 1990, the Regional Director for Region 20
of the National Labor Relations Board (NLRB or Board)
issued a formal complaint. The complaint was amended on
May 30 and again on July 19, 1990. The second amended
complaint (the operative pleading of the General Counsel
called complaint here) alleges that Respondent is engaging in
unfair labor practices within the meaning of Section 8(e) of
the National Labor Relations Act (Act) by acting to enforce
an unlawful interpretation of the current collective-bargaining
agreement between the Union and S & M Sakamoto, Inc. (S
& M or Intervenor)2 in order to cause S & M to cease doing
business with SC. Respondent timely answered the complaint
denying any unlawful conduct.
Pursuant to a notice of hearing, I heard this matter on June
4 and 5, 1991, at Honolulu, Hawaii. Based on the hearing
record,3 the demeanor of the witnesses, and the posthearing
briefs received from each party, I find Respondent is engag-
ing in the unfair labor practice alleged based on the follow-
ing
FINDINGS OF FACT
I. THE ALLEGED UNFAIR LABOR PRACTICE
A. The Pleadings
The essence of the complaint is this: SC and S & M, both
subsidiaries of S Group, Inc. (S Group), are separate employ-
ers under the Act.4 The Union and S & M are parties to a
collective-bargaining agreement (Master Agreement) applica-
ble to employees performing carpentry work in the State of
Hawaii. On September 29, 1989, the Union filed a grievance
under section 22 C 1(a) of the Master Agreement alleging
that S & M was using SC as an alter ego operation to escape
S & M’s obligations under the Master Agreement. The
Union successfully pursued that grievance through the Mas-
ter Agreement’s grievance-arbitration procedure and, there-
after, sought confirmation of its favorable arbitration award
in Federal district court. Because SC and S & M are legally
separate employers under the Act, the Union’s action vio-
lated Section 8(e) of the Act.
The gravamen of Respondent’s answer is that SC and S
& M are alter egos and not separate employers. The Union
alleges affirmatively that it pursued the grievance through ar-
bitration and sought confirmation in Federal district court
lawfully in order to preserve the work of unit employees
under the Master Agreement.
B. Facts
1. Historical overview of the relevant enterprises
In 1940, Katsuki Sakamoto and his brother, Minoru,
formed a business partnership to engage in business as con-
tractors in the building and construction industry. This part-
nership, known as K & M Sakamoto (K & M), operated
throughout the Territory—and then the State—of Hawaii
over the next 2-1/2 decades. In the late fifties or early sixties,
K & M entered into a collective-bargaining relationship with
the Union.
For most of its existence, K & M constructed various
types of structures including industrial, commercial, and gov-
908 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 For example, Gerard reported that one of S & M’s more recent
projects included one phase of the renovation at the Honolulu Air-
port.
6 Presumably, on the formation of S Group, S & M’s original
stock was exchanged for S Group stock to establish S Group’s own-
ership of S & M. Although this fact is not specifically reflected in
the record, S & M’s brief alludes to the fact that ‘‘controlling inter-
est’’ in S & M is held by S Group. This choice of words apparently
takes into account the new class of S & M stock created for key,
nonfamily employees.
ernmental facilities as well as private residences. However,
in the early sixties, K & M ceased building private resi-
dences and focused entirely on the business and government
market.
In 1965, K & M was succeeded by S & M, a closely held
family corporation formed by Minoru Sakamoto and his
brother, Shuichi. S & M continued K & M’s collective-bar-
gaining relationship with the Union. It is bound to the cur-
rent Master Agreement by virtue of its membership in the
General Contractors Labor Association, a local multiem-
ployer group. Over the years, K & M or S & M, or both,
acquired valuable real property in Hawaii which was held by
the partnership and/or corporation.
By the early to mid-seventies, the next generation of
Sakamotos assumed corporate leadership positions. During
this period, the sons of Shuichi Sakamoto, Gerard and Nor-
man, and the sons of Minoru Sakamoto, J. Makoto and
Francis, became S & M corporate officials.
In 1983, Gerard Sakamoto became president of S & M.
His brother Norman was a vice president as were J. Makoto
and Francis. This arrangement continued through 1985. By
this time, S & M had become one of Hawaii’s larger con-
tractors regularly building new commercial, industrial, and
government facilities worth at several million dollars yearly.
In 1984 or 1985, Norman expressed a desire to form his
own firm to specialize in residential construction and renova-
tion. At the time S & M generally did not operate in either
segment of the construction business. More particularly, nei-
ther S & M, nor its predecessor K & M, had engaged in the
home building and renovation sector of the construction in-
dustry in over two decades; however, S & M does seek large
commercial, industrial, and government renovation projects.5
For whatever reason, Norman chose not to divorce himself
entirely from the existing Sakomoto family operation to es-
tablish a new company. Instead, outside consultants and a
labor law expert were retained to provide advice about estab-
lishing a new company—eventually to be headed by Nor-
man—without disrupting S & M’s existing labor relations
climate.
In the course of this planning, two other objectives were
established. These secondary objectives included the estab-
lishment of S & M stock options for key S & M employees
who were not related to the Sakamoto family and the concur-
rent removal of S & M’s real estate holdings to prevent non-
family members from acquiring an interest in the real estate.
To achieve all these objectives the consultants rec-
ommended—and the Sakamotos adopted—a plan to establish
a single holding company with separate operating subsidi-
aries. Consequently, in February 1985 S Group was formed
as a holding company and S & M became an operating sub-
sidiary of S Group.6 In September 1985, SC was incor-
porated as a wholly owned, second operating subsidiary of
S Group.
Later in approximately 1990, three separate real estate
firms were established to hold and manage the Sakomoto
family real estate investments. At or about the same time, a
new class of S & M voting stock was created and made
available to two key S & M employees, Richard Luke and
Dennis Ideta. Gerard attributed some of the delay in imple-
menting these secondary objectives to efforts aimed at mini-
mizing potential taxes resulting from the transfer of real
property from S & M to the S Group real estate subsidiaries.
2. Post-1985 ownership, control, and operations
Interest in S Group is equally divided between the ances-
tral lines of Shuichi and Minoru Sakamoto. Thus, Gerard (its
vice president-secretary) and Norman (its treasurer) each
hold a 25-percent interest in S Group; the remaining 50 per-
cent is divided equally among Minoru Sakamoto and his
sons, J. Makoto (its president) and Francis (its vice presi-
dent). These five individuals comprise S Group’s board of
directors which meets once a year. S Group has no employ-
ees and engages in no day-to-day operations. It has an office
at S & M’s facility.
SC commenced operations in January 1986. Effective De-
cember 31, 1985, Norman resigned as vice president and di-
rector of S & M and became SC’s president and secretary-
treasurer; at that time Norman ceased all employment con-
nection with S & M. Vaughn Miyauchi also resigned his po-
sition as an S & M assistant vice president at the end of
1985 and became SC’s vice president. Norman, Miyauchi,
and Penelope Sakamoto, Norman’s wife, comprise SC’s
board of directors.
After Norman’s resignation, S & M’s executive committee
included: Gerard, president; J Makoto, executive vice presi-
dent, secretary-treasurer, and marketing director; Francis,
vice president of operations; Ideta, vice president-finance;
and Luke, vice president for interior construction. These five
individuals comprise S & M’s board of directors.
S & M is managed by its executive committee. These indi-
viduals hire employees, set wages and fringe benefits, ap-
prove job bids, secure supplies and materials, and manage
projects successfully bid or negotiated.
Apart from this dispute and the related litigation, S & M’s
collective-bargaining relationships with the Union and other
recognized labor organizations has continued amicably. At
the time of the hearing, S & M employed about 90 individ-
uals including 50 carpenters (all procured under the hiring
hall arrangement in the Master Agreement), 3 operating engi-
neers, 2 laborers, and about 23 office employees. In the years
following SC’s establishment, S & M’s revenues from its tra-
ditional operations have steadily increased.
As noted, SC’s employees are not represented. At the time
of the hearing, it employed about 50 employees including 9
office employees. Its field employees—hired from responses
to newspaper advertisements or word-of-mouth applicants—
are classed as lead mechanics, mechanics, and helpers rather
than along traditional craft lines in the industry. One of SC’s
field supervisors transferred from S & M when SC began op-
eration; otherwise its project managers and field supervisors
were never previously employed at S & M. One SC field
mechanic had previously been employed at S & M; one
909CARPENTERS LOCAL 745 (SC PACIFIC)
7 This is so notwithstanding the fact that the Union has had access
to the discovery process under the Federal Rules of Civil Procedure
in the ancillary case pending in Federal district court on the griev-
ance decisions.
8 SC’s current lease for its office space is with SM Associates
(SMA), one of the real estate subsidiaries of S Group. However,
SMA was also described as limited partnership in which S & M
holds as 50-percent interest. Gerard indicated that S & M plans to
eventually divest itself completely of its interest in SMA.
9 Although he denied any awareness of the circumstance when it
occurred, Gerard admitted that SC and S & M had been competing
bidders on one recent renovation project. The two companies appear
to have never bid against each other for any other project.
10 Among other matters sec. 22 C 1(a) provides for an expedited
hearing on a ‘‘complaint filed by the Union alleging . . . a Contrac-
tor illegally using an alter-ego operation to escape the obligations of
this collective bargaining Agreement.’’ All agree that the Union’s
grievance relates to this specific provision. The Union believes this
language prohibits double-breasting altogether.
11 During that particular term of the SJB, Kupau served as the SJB
chairman; one of the signatory contractors’ executives served as the
SJB secretary. These positions rotate between the Union and the
contractors each term. The SJB voting members always consist of
an equal number of union-designated members and contractor-des-
ignated members.
former S & M office clerk was hired at SC in response to
a newspaper advertisement.
Norman hires SC’s office employees and sets their wage
rates. He also establishes the fringe benefit programs for all
employees. The bulk of Norman’s time is spent marketing
SC’s services to architects and owners, and overseeing the
project estimating process and other office operations.
Miyauchi hires and fixes the wage rates for SC’s field em-
ployees. Most of his time is spent overseeing SC’s field op-
erations.
In February 1986, SC purchased a limited amount of tools,
office equipment, and two vehicles from S & M. From time
to time, SC has rented certain construction equipment from
S & M and has had a limited repairs performed on its equip-
ment in S & M’s shop. In addition, when SC first began op-
erating, it rented computer time and payroll services from S
& M but that arrangement ceased after SC obtained its own
computer and payroll clerks. However, the bulk of SC pur-
chases, rentals, and repairs have been secured from outside
vendors unrelated to the Sakamoto family. No effort was
made to establish that any of the foregoing exchanges were
other than regular arm’s-length transactions commonly en-
gaged in by most contractors in the area.7
S Group files consolidated tax returns for its subsidiaries.
In their most recent fiscal years, S & M’s gross revenues ex-
ceeded $30 million and SC’s gross revenues were about $6
million. Although the evidence does not show the manner in
which S Group may have financially supported SC’s startup,
the evidence shows that S Group did loan SC $100,000 in
February 1988 on an unsecured 90-day note and provided SC
with an unsecured $150,000 line of credit in August 1988.
Both have been repaid and SC now maintains a separate line
of credit with the Bank of Hawaii.
Both SC and S & M bank at the same branch of the Bank
of Hawaii but have separate accounts. Each company oper-
ates with its own state contractor’s license, Federal income
and state excise tax identification numbers, unemployment
insurance account, and worker compensation and temporary
disability insurance policies.
SC initially leased office and shop space in a vacant build-
ing owned by S & M in the Ewa Beach area on the island
of Ohau pursuant to a written lease agreement. Later, SC
leased added shop space near its office from an unrelated
landlord and has renewed its lease for its original space. S
& M’s offices and shop are located near the Honolulu Inter-
national Airport about 20 miles away from SC’s offices.
Again, no effort was made to establish that SC’s space leases
are mere paperwork shams.8
No evidence was adduced to establish that S & M’s execu-
tives, engineers, or administrative personnel render any as-
sistance to the SC operation or vice versa. Since resigning
their S & M employment at the end of 1985, Norman,
Miyauchi, and Supervisor Allan Imamura have had no in-
volvement in the day-to-day operation of S & M. Employees
and supervisors of the two operating companies are never
interchanged. Although two other former S & M employees
now work for SC, nothing suggests that this circumstance
was initiated by anyone other than the employees themselves.
SC almost never competes for work sought by S & M and
vice versa.9 The two companies do not consult one another
concerning projects of interest or the bids which are submit-
ted to obtain work. SC executives secure their supplies and
materials independent of S & M. Gerard and Norman attend
family social gatherings a few times each year but, according
to Gerard, business is not discussed on these occasions.
3. The grievance against S & M concerning SC
In June 1989, Walter Kupau, the Union’s financial sec-
retary, and Gerard spoke by telephone on two occasions con-
cerning SC. In essence, Kupau asked that SC become a
union signatory and Gerard, after speaking with Norman, ad-
vised Kupau that Norman declined to do so.
The Union next sent Gerard extensive questionnaires in
late July 1989 seeking information concerning S & M’s rela-
tionship and involvement in the affairs of SC and S Group.
Gerard completed the questionnaires with Ideta’s assistance
and returned them to the Union. No SC executive was con-
sulted in the preparation of the questionnaires; consequently,
interrogatories concerning SC’s operation went largely unan-
swered.
On September 29, the Union filed a grievance under sec-
tion 22 C 1(a) of the Master Agreement against S & M.10
Specifically, the grievance charges that S & M ‘‘is in viola-
tion of the Agreement by its use of SC Pacific Corp. as a
double-breasted operation.’’ The Union’s grievance sought a
cessation of the alleged contract violation and a make whole
remedy for the ‘‘union/employees.’’
In accord with 22 C procedure, the grievance was referred
to a contractual, bilateral grievance resolution committee
known as the State Joint Board (SJB) for an expedited hear-
ing.11 The hearing was held on October 12. The Union’s
presentation was made by Ron Taketa, the Union’s commu-
nity service and education director, who relied largely on the
questionnaires. Gerard appeared and responded to Taketa’s
questions. And in response to a question from Kupau, Gerard
acknowledged that SC was a double-breasted operation but
asserted that it was a legal double-breasted operation. Fol-
lowing Gerard’s appearance, S & M’s attorney, Mark S.
Kawata, presented the SJB with a lengthy legal memorandum
910 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
12 The Board described the essence and legal ramifications of dou-
ble-breasting as follows in Walter N. Yoder & Sons, 270 NLRB 652
fn. 6 (1984):
A ‘‘double-breasted’’ operation is one in which a contractor op-
erates two companies, one unionized and the other nonunion-
ized. Depending on how the companies are structured and oper-
ated, each may be a separate corporation or else both may be
so interrelated that they constitute a single employer or one may
be the alter ego of the other. A collective-bargaining contract
signed by one of the companies would not bind the other if each
were a separate corporation, but would bind the other if both
constituted a single employer and the employees of both compa-
nies constitute a single appropriate bargaining unit or the non-
signatory company is an alter ego of the signatory company. As-
sociated General Contractors of California, 242 NLRB 891, 892
fn. 5 (1979), enfd. as modified 633 F.2d 766 (9th Cir. 1980),
cert. denied 452 U.S. 915 (1981); Burgess Construction, 227
NLRB 765, 770–771, 773–774 (1977), enfd. 596 F.2d 378 (9th
Cir. 1979), cert. denied 440 U.S. 940 (1979); George C. Shearer
Exhibitors Delivery Service, 262 NLRB 622, 623–624 (1982),
enfd. mem. 714 F.2d 124 (3d Cir. 1983).
13 The General Counsel eschews any claim that sec. 22 C 1(a) is
unlawful on its face. The position of the Charging Party and Interve-
nor on this point is less clear. To the extent that they make that
claim, I have disregarded it both as lacking merit and as an imper-
missible effort to effectively amend the General Counsel’s com-
plaint.
arguing that S & M and SC were separate employers and not
alter egos.
At the conclusion of the hearing, the SJB deliberated and
later that afternoon announced that the Union’s grievance
had been upheld. The following day the SJB sent written
confirmation of its decision to Gerard. The SJB letter directs
S & M to ‘‘cease the contract violation and make the
union/employees whole for any loss sustained therefrom.’’
In the meantime, S & M commenced an action in Federal
district court on the day before the SJB hearing in an effort
to stay the proceedings. Over the next 5 months the parties
engaged in a series of maneuvers in this proceeding until
March 27, 1990, when Respondent filed a motion for con-
firmation of the arbitration award and entry of judgment. On
April 11, Judge Alan C. Kay remanded the proceeding to the
SJB to clarify its award and to make specific findings con-
cerning the contract violations.
On May 29, 1990, the SJB reconvened and considered the
remand. The minutes reflect the following:
CONTRACT VIOLATION:
Chairman Kupau read the following State Joint Board’s
decision which was based on the following evidence:
(1) Gerard Sakamoto, President of S & M Sakamoto,
admitted that his company and SC were double-breast-
ed;
(2) All of the principal representatives of S & M
Sakamoto, Inc. are members of the Board of Directors
for the S Group, which is the holding company of S
& M Sakamoto, Inc. and SC Pacific Corp.;
(3) Gerard Sakamoto admitted that profits from S &
M Sakamoto and SC Pacific Corp., go to the S Group;
(4) The directors of all three companies are the same
people;
(5) Gerard Sakamoto, as a Director, derives income
from profits received from S & M Sakamoto and SC
Pacific Corp.;
(6) The same firms are used by S & M Sakamoto
and SC Pacific Corp. for Workers’ Compensation insur-
ance, banking and payroll;
(7) The office of SC Pacific Corp. was previously
owned by S & M Sakamoto, and;
(8) The fact that the Master Agreement was intended
to prohibit double-breasting as it is understood in the
construction industry.
Based on these facts, the SJB unanimously decided that S
& M violated section 22 C 1(a) ‘‘by its use of SC Pacific
Corp., as a double-breasted operation.’’ The supplemental de-
cision requires S & M to: (1) cease the contract violation;
(2) pay SC’s carpenters the difference between their actual
wage rate and the contract scale; (3) make the contractual
trust funds whole on behalf of SC’s carpenters; (4) submit
to the SJB a verified payroll audit as provided in section 23
F of the Agreement; and, (5) ‘‘immediately cease the double-
breasting operation.’’
Pending the outcome of this litigation, the parties have
agreed to stay the Federal district court proceeding.
C. Further Findings and Conclusions
Double-breasting in the building construction industry, at
the core of this dispute, is a practice which construction trade
unionists regard as a pustule on the collective-bargaining
process.12 Their call for legislative surgery to remove it im-
plicitly acknowledges that double-breasting is lawful in cer-
tain circumstances. BNA News and Background Information,
134 LRR 378, 379, July 23, 1990.
Here, the Union believes S & M has engaged in a form
of double-breasting prohibited by the Master Agreement. The
General Counsel, Charging Party, and Intervenor claim that
the Union’s successful pursuit of its 22 C 1(a) grievance and
its motion to confirm the SJB award in the Federal district
court serve to convert that contractual provision into a de
facto hot cargo agreement prohibited by Section 8(e) of the
Act.13
The General Counsel’s case is grounded on the claim that
S & M and SC are legally separate employers and the out-
come of the Union’s grievance here will either force SC to
adhere to all terms of the Master Agreement or force S &
M to effectively cease doing business with SC.
The Union believes that its successful 22 C 1(a) grievance
against S & M and its subsequent Federal district court en-
forcement action are efforts directed at a primary, rather than
a secondary, objective and, therefore, it is outside the ‘‘cease
doing business’’ proscription of Section 8(e).
Hence, the Union’s brief asserts that the ‘‘focus [of section
22 C 1(a) and the Union’s enforcement action] is the concern
. . . [the Union] had with the growing tide [of] non-union
contractors created by employers who also had a union oper-
ation.’’ Fairly read, the Union is claiming that its 22 C 1(a)
grievance seeking the elimination of the admitted double-
breasting present here falls within the work preservation ex-
ception recognized under Section 8(e).
From the Union’s viewpoint, the strict application of the
Board’s single employer doctrine in these cases perverts Sec-
911CARPENTERS LOCAL 745 (SC PACIFIC)
14 The Union does not claim that the onsite proviso of Sec. 8(e)
applies here. And it plainly does not. As shown below, S & M and
SC do not consciously compete in the same market.
tion 8(e)’s intent, encourages double-breasting, and erodes
work opportunities for unit employees. But aside from these
other claims, the Union also argues that SC is legally S &
M’s alter ego.
Section 8(e) provides in relevant part that:
It shall be an unfair labor practice for any labor organi-
zation and any employer to enter into any contract or
agreement, express or implied, whereby such employer
ceases or refrains or agrees to cease or refrain from
handling, using, selling, transporting or otherwise deal-
ing in any of the products of any other employer, or to
cease doing business with any other person, and any
contract or agreement entered into heretofore or here-
after containing such an agreement shall be to such ex-
tent unenforceable and void: Provided, That nothing in
this subsection (e) shall apply to an agreement between
a labor organization and an employer in the construc-
tion industry relating to the contracting or subcontract-
ing of work to be done at the site of the construction,
alteration, painting, or repair of a building, structure, or
other work. . . .
This 1959 amendment to the Act sought to close one of
the loopholes in the secondary boycott provisions originally
enacted in 1948. The principal evil congressional proponents
of this provision sought to outlaw was the so-called hot
cargo agreement in the transportation industry. Such agree-
ments typically required the contracting employer to refrain
from handling the goods of any other employer with whom
the Teamsters Union had a labor dispute. However, Section
8(e) bans ‘‘not just explicit ‘hot cargo’ clauses, but all
clauses sanctioning in advance a secondary boycott’’ other
than as specified in the proviso—not applicable here—with
respect to onsite construction.14 Orange Belt District Council
of Painters v. NLRB, 328 F.2d 534, 537 fn. 6 (D.C. Cir.
1964).
Section 8(e)’s limited application only to secondary activ-
ity is clear. National Woodwork Mfrs. Assn. v. NLRB, 386
U.S. 612 (1967). There the Supreme Court observed that
‘‘[a]lthough the language of § 8(e) is sweeping, it . . . [does]
not reach employees’ activity to pressure their employer to
preserve for themselves work traditionally done by them,
[and] § 8(e) does not prohibit agreements made and main-
tained for that purpose.’’ Id. at 635. Instead, the Court said
that ‘‘[t]he touchstone [of Section 8(e)] is whether the agree-
ment or its maintenance is addressed to the labor relations
of the contracting employer vis-a-vis his own employees’’ as
opposed to being ‘‘tactically calculated to satisfy union ob-
jectives elsewhere.’’ Id. at 645, 646.
And in Operating Engineers Local 12 (Griffith Co.), 212
NLRB 343 (1974), enf. denied 545 F.2d 1194 (9th Cir.
1976), cert. denied 434 U.S. 854 (1977), the Board explained
that:
[E]very bargaining contract with a cease doing business
objective, although literally within the proscription of
Section 8(e) of the Act, is not necessarily unlawful. The
Board and the courts have held that a union may law-
fully require a contracting employer to cease or refrain
from doing business with another employer if the
union’s objective properly falls within certain carefully
delineated exceptions, such as ‘‘work preservation’’ and
maintenance of ‘‘union standards.’’ [Footnotes omitted.]
Section 8(e)’s ‘‘enter into’’ requirement reaches both the
initial agreement and any subsequent bilateral affirmation or
interpretation which may be deemed unlawful. Elevator Con-
structors (Long Elevator), 289 NLRB 1095 (1988); Brick-
layers Local 2 (Gunnar I. Johnson & Son), 224 NLRB 1021,
1024–1025 (1976), enfd. 562 F.2d 775 (D.C. Cir. 1977).
Thus, the Union’s 22 C 1(a) grievance against S & M and
its subsequent effort to enforce the favorable SJB awards—
all occurring within the 10(b) period—satisfy the ‘‘enter
into’’ requirement.
Likewise, the ‘‘cease doing business’’ requirement of Sec-
tion 8(e) includes ‘‘any pressure calculated to cause a signifi-
cant change or disruption of a neutral employer’s mode of
business.’’ Sheet Metal Workers Local 91 v. NLRB, 905 F.2d
417, 421 (D.C. Cir. 1990). Union efforts aimed at compelling
SC to apply the Master Agreement to its employees perform-
ing carpentry work meets that requirement if such efforts are
not otherwise privileged.
On its face, the Union’s work preservation claim has con-
siderable appeal. Thus, its bargaining unit is comprised of all
employees performing work under the Master Agreement in
Hawaii who are employed by employers bound to the agree-
ment. A cursory review of the Master Agreement discloses
that it applies not only to journeymen carpenters but also to
more specific employee categories including hardwood floor
layers, pneumatic nailers, and wood shinglers. Those are
skills extensively employed in homebuilding and renovation
work such as that performed by SC.
In addition, the Master Agreement provides for the mainte-
nance of separate referral lists for finish, form, and framing
carpenters, hardwood floor layers, pneumatic nailers, and
wood shinglers on an island-by-island basis. These hiring
hall provisions, a core element in most construction trade
collective-bargaining agreements, further reinforce the
Union’s legitimate interest in work opportunities for its
members and nonmember hiring hall applicants. Here too,
the skills reflected obviously parallel those which SC re-
quires in its business pursuits.
The antipiece work, contracting, and moonlighting work
rules in the Master Agreement also seek to limit the perform-
ance of work covered by the agreement to the confines of
the contracting employer-employee relationship. In particular,
the antimoonlighting rules provide that ‘‘[n]o contractor shall
allow any moonlighting of work to be done for him’’ and
defines moonlighting as ‘‘an employee performing work cov-
ered by this Agreement for someone other than the Contrac-
tor by whom he is employed at less than the wage and bene-
fit rates as provided for in this Agreement.’’ Under this con-
tract, moonlighting appears to include more than afterhours
work.
Recognizing that unit employees who work on S & M
projects from time to time are well qualified to perform SC’s
regular work obviously leads the Union to question why the
owners of an enterprise bound to its Master Agreement
should be entitled shield themselves against the clear terms
of the agreement by means of corporate structuring devices.
912 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
15 The Ninth Circuit, where this case arises, perceives the evasion
of the Act motive as critical in alter ego cases. Thus, in A. Dariano
& Sons v. District Council of Painters No. 33, 869 F.2d 514, 519
(9th Cir. 1989), that court asserted that ‘‘[i]n all alter ego determina-
tions an element of fraud or misrepresentation also exists’’ and that
‘‘it is proper to conclude that in all alter ego determinations there
must first be a threshold finding of single employer of some kind.’’
16 Here, of course, sec. 22 C 1(a), not surprisingly, specifically re-
lates to unlawful alter ego situations. Notwithstanding Union Agent
Kupau’s repeated assertions, spiced with a good deal of bluster, that
this language really prohibits double-breasting in all forms, I strong-
ly suspect that someone at the bargaining table where this language
was produced, or their advisors, recognized that the terms are not
conterminous and carefully selected the 22 C 1(a) language precisely
to avoid claims, like here, of unlawful secondary activity.
17 But for the separate class of stock later created at S & M to
permit ownership involvement by that company’s nonfamily, key
employees, the ownership of the two companies would be com-
pletely identical.
18 Gerard acknowledged that he had studied the double-breasting
literature in trade journals and that the professional advice sought
was designed to establish lawful double-breasting operations. Absent
the fundamental decision about SC’s nonunion status, the caution
seen here involving the creation of SC would most likely not be
present.
19 And Penelope, the other SC director, has never been involved
in S & M operations even as an employee.
Nevertheless, it is entirely possible to do just that. Clearly,
if S & M had merely branched out into the work now per-
formed by SC, the Union’s claim that the agreement applied
to that carpentry work would be unquestionable. But on the
other hand, if S & M and SC were completely unrelated enti-
ties the Union’s claim would obviously be untenable. The
situation here falls between those two extremes.
The element of common ownership, such as is found be-
tween S & M and SC, invariably ignites these controversies.
However, for decades the national labor law simply has not
accorded conclusive weight to this element in deciding sin-
gle-employer questions. See, e.g., Miami Newspaper Printing
Pressmen Local 46 (Knight News Papers), 138 NLRB 1346
(1962).
The legal norm is that separate business entities of all
forms are deemed to be separate employers. However, where
nominally separate entities are shown to be integrated to
such a degree that they no longer exhibit the qualities char-
acteristic of the arm’s-length relationship found among
unintegrated companies, the separate business form is dis-
regarded and those entities are treated as one either under the
theory that one is the alter ego of the other or that, together,
they constitute a single employer. See, e.g., Crawford Door
Sales Co., 226 NLRB 1144 (1976); Overton Markets, 142
NLRB 615 (1963).
Although the impact of an alter-ego finding can differ con-
siderably from a single-employer finding, these two legal
theories examine many similar elements. Thus, factors rel-
evant in alter ego cases include the degree of common own-
ership, management, supervision, operation, equipment, and
customers among related entities, as well as the presence or
absence of an unlawful motive to evade responsibilities
under the Act. Asbestos Carting Corp., 302 NLRB 197
(1991); Advance Electric, 268 NLRB 1001 (1984).15
Single-employer questions are resolved by examining
whether the entities have common ownership, common finan-
cial control, interrelated operations, and centralized control of
labor relations. Radio Union Local 1264 v. Broadcast Serv-
ice, 380 U.S. 255 (1965).
No one factor controls under either theory and all factors
need not be present before the separate business form can be
disregarded. Operating Engineers Local 627 v. NLRB, 518
F.2d 1040, 1045 (D.C. Cir. 1975), affd. in pertinent part 425
U.S. 800 (1976).
As noted, the real divergence between the alter-ego and
single-employer concepts is seen in their potential impact.
For example, in the circumstances found here, an alter ego
finding, ipso facto, subjects SC to the terms of the Master
Agreement. Advance Electric, supra at 1004.
By contrast, a single-employer finding would mean only
that employees performing carpentry work for the nominally
separate employers are actually employed by the same em-
ployer. In this case, the added question as to whether two
groups of employees also comprise a single bargaining
unit—and potentially subject to the same collective-bargain-
ing agreement—rests on the further consideration of tradi-
tional community-of-interest factors.16 South Prairie Con-
struction Co. v. Operating Engineers Local 627, 425 U.S.
800 (1976).
I have concluded that SC and S & M are separate employ-
ers and that SC is not S & M’s alter ego. The Union’s alter-
ego argument is particularly unsupportable. The facts here do
not reflect the characteristic ‘‘technical change in the struc-
ture or identity of the employing identity, frequently to avoid
the effect of the labor laws, without any substantial change
in . . . ownership and management.’’ Howard Johnson v.
Detroit Local Joint Executive Board, 417 U.S. 249, 259 fn.
5 (1974).
Instead, SC was carefully created and is operated for the
purpose of engaging in a segment of the construction busi-
ness S & M avoided for two decades, largely continues to
avoid to this day and plans to avoid in the future. SC’s cre-
ation and operation resulted in no real impact on S & M’s
continued existence or operation, a circumstance almost al-
ways present in alter ego cases. Even assuming, as I have,
that the Sakamoto family business managers consciously pre-
determined SC nonunion status before it was formed and
commenced operation, that fact would not merit the conclu-
sion that they were seeking to evade their obligations under
the Act with respect to S & M’s traditional operation.
Concededly, these two operating companies are commonly
owned by the Sakamoto family for all practical purposes.17
And clearly, both S & M and S Group, provided some direct
and indirect financial seeding for SC in the form of costly,
expert technical advice concerning the formation of SC and,
later, a loan and credit line, since repaid, to support SC oper-
ations. And as noted, for purposes of this decision I have as-
sumed that the Sakamoto family business managers did make
a fundamental decision at the outset that SC would be a non-
union operation.18
Yet, practically no evidence supports a finding that the
two companies are operationally integrated, financially de-
pendent on each other, or commonly managed. From all ap-
pearances, S Group does not interfere even in fundamental
policy making related to its subsidiaries’ operations. Follow-
ing their departure from S & M at the end of 1985, neither
Norman nor Miyauchi have had the slightest involvement in
S & M’s operations;19 similarly, after SC was ‘‘up and run-
913CARPENTERS LOCAL 745 (SC PACIFIC)
20 I credit Gerard’s claim that he did not become aware of this
competition until long after it had occurred. In general, I found both
Gerard and Norman to be very credible witnesses based on their se-
rious demeanor, candor, and responsiveness while testifying.
21 Based on this record, the SJB finding that ‘‘the directors of [S
Group, S & M, and SC] are the same people’’ is erroneous.
ning’’ no S & M executive has been involved with SC’s af-
fairs.
Furthermore, the markets which the two companies are de-
signed to exploit only marginally overlap. Gerard’s acknowl-
edgement that the two had competed against each other only
for a single renovation project in more than 5 years lends
considerable credence to the separate employer claim and
substantially undercuts the argument that SC was designed
to—or indeed does—undermine S & M’s traditional business
operation.20 The two Sakamoto firms were never designed to
compete with one another and they have not done so; rather
they are designed to function in radically different segments
of the construction industry. Office and industrial building
contractors are rarely found competing to build custom, mid-
dle-class homes; custom home builders are rarely found
building high rises.
Although I am entirely skeptical of claims that Norman
alone is vested with authority to alter the fundamental deci-
sion concerning SC’s nonunion status, all remaining labor re-
lations policies of the two companies are not centrally con-
trolled; during their concurrent existence, the labor policies
at both companies have been separately determined and man-
aged by their own executives. S & M’s unit employees are
compensated under the union contract; its executive commit-
tee fixes the wages and benefits of nonunit employees. S &
M has taken no steps to evade its historic bargaining obliga-
tions with the Union and fully anticipates a continued rela-
tionship.
No personnel integration of any kind exists between the
two Sakamoto operating companies. S & M’s executives
have nothing to do with the wages or benefits at SC. To the
contrary, the evidence shows these matters are in the exclu-
sive domain of Norman and Miyauchi. Each maintains sepa-
rate work forces which are separately supervised. Neither
employees nor supervisors are utilized commonly or inter-
changed. No evidence shows that either operating company
looks to the other as a source for its nonunit personnel. The
fact that two former S & M employees now work at SC is
without significance where they initiated the move.
The executives of each operating company appear to be
vested with full authority to manage their respective compa-
nies.21 No evidence shows that the executives regularly visit
other company’s premises or confer on job bids or potential
business. The financial affairs of each company appears to
be the responsibility of their respective executives. Although
SC initially had contracts with S & M for certain payroll and
computerized administrative support services that have now
been discontinued, no effort was made to show that these
transactions were a sham or otherwise not at arm’s length,
properly purchased and paid for at reasonable market rates.
Similarly, the initial sale of equipment as well as the sub-
sequent equipment rentals and repairs between S & M and
SC also appear to have been limited and somewhat routine
in the business. The fact that S & M from time to time en-
gages in similar business transactions with other unrelated
enterprises substantially diminishes the significance this evi-
dence might otherwise have.
Moreover, the office locations of the two operating compa-
nies are entirely separate and no showing was made that
managers or employees had any regular contact with each
other. The fact that SC leases a portion of its office and shop
space from other Sakamoto family firms lacks significance in
the absence of evidence indicating that the leases were not
genuine or that the rental amounts were not reasonable mar-
ket prices for similar accommodations.
Each company maintains separate bank accounts (albeit at
the same branch bank), insurance policies, and business li-
censes. Each company procures its own supplies and mate-
rials independent of the other. Each company utilizes a sepa-
rate group of specialized subcontractors for the performance
of their separate work.
In sum, the establishment of SC has caused no change in
S & M’s business purpose, scope or method of operation, or
labor relations policies. The establishment of SC did not re-
sult in the loss of existing employment opportunities at S &
M; indeed, S & M appears to have expanded within its tradi-
tional area of operation as measured by its increasing gross
revenues since the creation of SC.
Concluding as I have that SC and S & M are separate em-
ployers notwithstanding their common ownership, I find that
the Union’s work preservation argument lacks merit. Instead,
the Union’s grievance in this case is a work acquisition de-
vice; the Union’s pursuit of its 22 C 1(a) grievance against
S & M at all stages did not address the labor relations of
S & M but rather sought to satisfy the Union’s objectives
elsewhere, namely, at SC. Therefore, I find that the Union
violated Section 8(e) as alleged.
II. THE EFFECT OF THE UNFAIR LABOR PRACTICES
ON COMMERCE
The activities of the Respondent set forth above, occurring
in connection with the Charging Party’s business operations,
have a close, intimate, and substantial relationship to trade,
traffic, and commerce among the several States and tend to
lead to labor disputes burdening and obstructing commerce
and the free flow of commerce.
CONCLUSIONS OF LAW
1. SC and S & M are separate employers engaged in com-
merce within the meaning of Section 2(2), (6), and (7) and
Section 8(e) of the Act.
2. The Respondent is a labor organization within the
meaning of Section 2(5) of the Act.
3. By filing its September 29, 1989 grievance under sec-
tion 22 C 1(a) of the Master Agreement against S & M,
prosecuting the grievance before the State Joint Board, and
thereafter seeking to confirm the State Joint Board’s awards
on the grievance in Federal district court, Respondent vio-
lated Section 8(e) of the Act as alleged.
4. Respondent’s unfair labor practice affects commerce
within the meaning of Section 2(6) and (7) of the Act.
REMEDY
The recommended Order requires Respondent to cease and
desist from the unfair labor practice found and to take the
914 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
22 All outstanding motions inconsistent with this decision are over-
ruled. If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions and rec-
ommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
23 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
following affirmative action designed to effectuate the poli-
cies of the Act.
The recommended Order requires Respondent to notify the
State Joint Board in writing that it has withdrawn its Septem-
ber 29, 1989 grievance against S & M and to request the
State Joint Board to vacate its awards on that grievance. As
the object of Respondent’s grievance is unlawful, Respondent
is further required to dismiss its action in Federal district
court seeking confirmation of the State Joint Board awards
on its grievance against S & M. See Elevator Constructors
(Long Elevator), supra.
Finally, Respondent must post the attached notice to in-
form employees and members of the outcome of this matter.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended22
ORDER
The Respondent, United Brotherhood of Carpenters and
Joiners of America, Local No. 745, AFL–CIO, its officers,
agents, and representatives, shall
1. Cease and desist from pursuing in any manner its Sep-
tember 29, 1989 grievance against S & M Sakamoto, Inc.
which alleges that firm violated the Master Agreement cover-
ing carpenters in the State of Hawaii to which Respondent
is bound by engaging in the practice of double-breasting with
SC Pacific, Corp., or entering into any other agreement, ex-
press or implied, whereby an employer agrees to cease and
refrain from handling, using, selling, transporting, or other-
wise dealing in any of the products of any other employer,
or from doing business with any other person in violation of
Section 8(e) of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Notify in writing the State Joint Board established
under the aforesaid Master Agreement that it withdraws its
September 29, 1989 grievance against S & M Sakamoto, Inc.
and request the State Joint Board to vacate its awards related
to that grievance.
(b) Dismiss its action before the United States District
Court for the District of Hawaii in Civil Case 89–00792
ACK seeking confirmation of the awards of the State Joint
Board concerning its September 29, 1989 grievance against
S & M Sakamoto, Inc.
(c) Post at its offices and meeting halls in the State of Ha-
waii copies of the attached notice marked ‘‘Appendix.’’23
Copies of the notice, on forms provided by the Officer-in-
Charge for NLRB Subregion 37, after being signed by the
Respondent’s authorized representative, shall be posted by
the Respondent immediately on receipt and maintained for
60 consecutive days in conspicuous places including all
places where notices to members are customarily posted.
Reasonable steps shall be taken by the Respondent to ensure
that the notices are not altered, defaced, or covered by any
other material.
(d) Sign and return to the Officer-in-Charge of Subregion
37 sufficient copies of the notice for posting by SC Pacific,
Corp. and S & M Sakamoto, Inc., if willing, at all places
where notices to employees are customarily posted.
(e) Notify the Officer-in-Charge of Subregion 37 within 20
days from the date of this Order what steps have been taken
to comply.
APPENDIX
NOTICE TO EMPLOYEES AND MEMBERS
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT pursue in any manner our September 29,
1989 grievance against S & M Sakamoto, Inc. which alleges
that firm violated the Master Agreement by engaging in the
practice of double-breasting with SC Pacific, Corp., or enter
into any other agreement, express or implied, whereby an
employer agrees to cease and refrain from handling, using,
selling, transporting, or otherwise dealing in any of the prod-
ucts of any other employer, or from doing business with any
other person in violation of Section 8(e) of the National
Labor Relations Act.
WE WILL notify, in writing, the State Joint Board estab-
lished under our Master Agreement that we withdraw our
September 29, 1989 grievance against S & M Sakamoto,
Inc., and request the State Joint Board to vacate its awards
related to that grievance.
WE WILL dismiss our action before the United States Dis-
trict Court for the District of Hawaii in the Civil Case 89–
00792 ACK seeking confirmation of the awards of the State
Joint Board concerning our September 29, 1989 grievance
against S & M Sakamoto, Inc.
UNITED BROTHERHOOD OF CARPENTERS AND
JOINERS OF AMERICA, LOCAL NO. 745, AFL–
CIO