East Tennessee Packing Co./Selecto Meats, Inc.

National Labor Relations Board - Board DecisionsDec 31, 1985

277 N.L.R.B. 1433 (N.L.R.B. 1985)

EAST TENNESSEE PACKING-CO., 1433 East Tennessee Packing Company/Selecto Meats, Inc. and United Food and Commercial Workers, District Lodge 405. Case 10-CA-1821(E) 31 December 1985 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND JOHANSEN On 22 October 1984 Administrative Law Judge J. Pargen Robertson issued the attached supple- mental decision. The Applicants filed exceptions and'supporting briefs. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the supplemental deci- sion and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions' and to adopt the recom- mended Order. ORDER The National Labor, Relations Board adopts the recommended Order of the administrative law judge and orders that the applications are denied. i We find that the General Counsel was "substantially justified" under the Equal Access to Justice Act, as amended, in issuing and prosecuting the unfair labor practice complaint in this proceeding We believe that Congress, in amending the Act, did not alter, but merely clarified, the definition of "substantially justified," which means more than " mere rea- sonableness ." H R Rep 99-120 at 9 Mary L. Bulls, Esq., for the General Counsel. William Hutcheson, Esq., and Frank P. Pinchak; Esq. (Humphreys, Hutcheson, Moseley), of ' 'Chattanooga, Tennessee, for Applicant East Tennessee Packing Company. Robert S. Young, Esq. (McCampbell & Young), of Knox- ville, Tennessee, for Applicant East Tennessee Packing Company. Dennis R. McClane, Esq. (Baker-, Worthington, Crossley, Stansberry & Woolf), of Knoxville, Tennessee, for Ap- plicant Selecto Meats, Inc. James G. Stranch, III, Esq. (Branstetter, Kilgore & Stranch), of Nashville, Tennessee, for the Charging Party. SUPPLEMENTAL DECISION (Equal Access to Justice Act) STATEMENT OF THE CASE J. PARGEN ROBERTSON, Administrative Law Judge. Applicants, pursuant to the Equal Access to Justice Act, 5 U.S.C. 504 et seq., seek fees and expenses for their suc- cessful defense in an unfair labor practice proceeding and for the prosecution of the instant claims under the Equal Access to Justice Act (EAJA). On June 7' sand 11, 1984, Applicants Selecto Meats, Inc. and East Tennessee Packing Company filed with the National Labor Relations Board applications to recover fees and expenses, under the EAJA. On June- 14, 1984, the Board ordered that the application be referred to Ad- ministrative Law Judge Leonard N. Cohen, Subsequent- ly, due to the death of Judge Cohen, this matter was re- assigned to me. On July 2, 1984, the General Counsel for the National Labor Relations Board filed a "Motion to Dismiss Appli- cation for an Award of Attorney Fees and Expenses Under the Equal Access to Justice Act." Subsequently, on July 17 and 23, respectively, Applicants Selecto and East Tennessee filed responses to the General Counsel's motion to dismiss. In its motion to dismiss, the General Counsel contends: (1) That the applications are deficient in that they fail to demonstrate that Applicants meet all the eli- gibility requirements under EAJA; (2) The instant applications fail to fully document the claimed fees and expenses; and, (3) Based on the record before the administrative law judge in the underlying unfair labor practice hearings , the General Counsel's position was sub- stantially justified. I am persuaded that the respective applications should be dismissed on the grounds alleged in item (3) above. The Board has determined that the test of whether the General Counsel is substantially justified in proceeding in an unfair labor practice complaint is one of reasonable- ness. The underlying unfair labor practice proceedings in- volved complaint allegations that Applicants refused to bargain with United Food and Commercial Workers, District Lodge 405 (the Union). The underlying decision of the National Labor Relations Board (270 NLRB 520 (1984)) illustrates that those issues revolved around the termination of operations by Applicant East Tennessee and the beginning of operations by Applicant Selecto. Both Applicants are, or were, in the meat products business in Knoxville, Tennessee. For some period before May 21, 1982, East Tennessee experienced financial diffi- culties. As shown in the underlying decision , several at- tempts to sell the business failed until, in April 1982, a decision was made that East Tennessee would go out of business. After East Tennessee ceased operations on May 21, 1982, a portion of its business was taken over by Se- lecto. The gravamen of the underlying unfair labor practice case deals with the question of Selecto's obligation to bargain with the Union. Before it ceased operations, the Union was the certified collective-bargaining representa- tive of East Tennessee's production and maintenance em- ployees. During the underlying hearing, Selecto's presi- dent and owner admitted that Selecto refused to recog- nize the Union as bargaining representative of its em- ployees. 277 NLRB No. 168 1434 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The General Counsel contended in the underlying pro- ceeding that Selecto was legally obligated to recognize and bargain with the Union on the contention that Se- lecto is the alter ego of East Tennessee. The underlying decision held that Selecto was not shown to be East Tennessee's alter ego, and, therefore, the General Coun- sel failed to prove his allegation. The question in this EAJA proceeding must be, did the General Counsel have a reasonable basis to allege that an alter ego relationship existed. In her motion to dismiss, the General Counsel cited a recent EAJA decision of the Board as being dispositive of the issue here In that case, Iowa Parcel Service, 266 NLRB 392 (1983), the central issue involved an alter ego allegation. In finding that the General Counsel was sub- stantially justified in alleging the alter ego relationship, the administrative law judge held: Notwithstanding the ultimate rejection of the General Counsel's contentions, as briefly summa- rized above, I must conclude here that the General Counsel presented, if not a prima facie case, a case which still had a substantial basis in fact and law. Thus, it was arguable, and I could have inferred, that Walker's financial support of the Applicant, in light of the statements made by the various partici- pants, gave him continued actual control over the Applicant such as would establish alter ego status notwithstanding the absence of other evidence of "substantially identical" ownership. [266 NLRB 395.] The alleged alter ego entity in Iowa Parcel was formed by "two high ranking and long-term managerial employ- ees of the predecessor employer. The administrative law judge and the Board pointed out that the General Counsel's evidence could lead to an inference that the high-ranking, managerial employees that formed the second employer were controlled by the managing agents of the predecessor employer. In the instant case, the evidence shows that the chief managing officer of the predecessor was the same indi- vidual that formed Selecto. David M. Traver was, until his resignation on May 19, 1982, the president of East Tennessee. Traver formed Selecto in May 1982, and became its president and sole owner. Moreover, East Tennessee's vice president immediately before it ceased operations in May 1982 was Weldon Shealy. Shealy became vice president of Selecto from its incorporation. Selecto continued the same product name, Selecto Meats, as previously used by East Tennessee. Selecto's products which included franks, bologna, luncheon meats, and bacon carried the Selecto Meats name. Imme- diately on termination of East Tennessee's operations, Selecto undertook the servicing of East Tennessee's cus- tomer accounts. In order to continue servicing East Ten- nessee customers, Selecto purchased East Tennessee's in- ventory Selecto assumed the leases of some of East Tennessee's automobiles and trucks. Selecto operated those vehicles without changing the Selecto logo used in the East Ten- nessee operations. David M. Traver admitted in his testimony that there was no hiatus between the closing of East Tennessee and the beginning operation of Selecto. Selecto applied for, and received, East Tennessee's Department of Agricul- ture number. Traver testified that it was customary for a company using the same plant to be given the identifica- tion number of the previous employer. Selecto rented a portion of East Tennessee's facilities and originally Se- lecto's entire operation was located at the former facili- ties of East Tennessee. Selecto employed its sales and clerical personnel from East Tennessee' s sales and clerical employees. Harold Wright, who was in charge of purchasing all the supplies for East Tennessee, was employed by Se- lecto as its secretary-treasurer. East Tennessee's plant manager, Richard Luzby, was employed as plant manager by Selecto. Carl Luzby, who ran East Tennessee's beef operation, became supervisor in Selecto's hotel and restaurant divi- sion. Lowell Cole moved from transportation at East Ten- nessee to warehouse and traffic manager at Selecto. George Shaver, an East Tennessee salesman, became sales superintendent at Selecto. Although Selecto's total work force was much smaller than East Tennessee's, those employees were selected from the former East Tennessee employees. In her motion to dismiss, the General Counsel cited American Pacific Concrete Pipe Co., 262 NLRB 1223 (1982), and J. M. Tanaka Construction, 249 NLRB 238 (1980). The American Pacific case turned on the question of "control." The Board held: As in most alter ego situations , Ampac and Dean had substantially identical business purpose, oper- ations, equipment , and customers . They did not, however , share common ownership ; nor, did they, on paper, share common management or supervi- sion . In point of fact, however, Ampac exercised a degree of control over Dean as to obliterate any separation between them . [262 NLRB 1226, foot- note omitted.] In the instant case, I must consider what reasonable in- ferences could have been drawn from the evidence pos- sessed by the General Counsel. It is not significant that the deciding administrative law judge and the Board drew inferences which resulted in a dismissal . What is significant is the question of whether the evidence could have supported a finding of an alter ego status I am con- vinced that the record illustrates the continuance at Se- lecto of management and labor relations control by the same individuals that maintained a significant portion of that control at East Tennessee . An inference could have been made by a reasonable person, that East Tennessee "exercised a degree of control over [Selecto] so as to ob- literate any separation between them ." American Pacific Concrete Pipe Co ., supra In J. M. Tanaka , supra , the Board stated the alter ego test is as follows: EAST TENNESSEE PACKING CO. 1435 The Board has held that alter ego status is con- ferred where two enterprises have substantially identical management, business purpose, operation, equipment, customers, and supervision, as well as ownership [249 NLRB 239, footnote omitted.] The Board in Tanaka found an alter ego relationship existed where, as here, the predecessor employer's presi- dent and minority stockholder became president and sole owner of the alter ego employer. The above cases illustrate that the evidence available to the General Counsel herein, substantially justified the decision in issuing a complaint, prosecuting the case, and taking exceptions to an adverse finding of an administra- tive law judge. In point of fact, the General Counsel had no choice other than the course followed. To have re- fused to proceed as she did, would have involved a de- parture from established precedent requiring the General Counsel to proceed in instances where outstanding Board law supports a violation if reasonable inferences are made on the basis of record evidence. See Iowa Parcel Service, supra. Therefore, I grant the General Counsel's motion to dismiss and make the following recommended' ORDER It is recommended that the applications be dismissed. I If no exceptions are filed as provided by Sec 102 .46 of the Board's Rules and Regulations, the findings , conclusions , and recommended 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 pur- poses