KB In & Out, Inc. dba Century Car Wash

National Labor Relations Board - Board Decisions

Mar 30, 2016

363 NLRB No. 156 (N.L.R.B. 2016)

363 NLRB No. 156
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
KB In & Out, Inc. d/b/a Century Car Wash; Steven
Rushtabadi d/b/a Lax Century Car Wash; K&G
Franchise Corp. d/b/a National Car Wash; Ken-
ny Gharib, an Individual Charged with Personal
Liability; Steven Rushtabadi a/k/a Steven Rush,
an Individual Charged with Personal Liability
and Carwash Workers Organizing Committee of
the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied-Industrial and
Service Workers International Union, AFL–
CIO, CLC. Cases 31–CA–076280, 31–CA–
078621, 31–CA–078622, 31–CA–082049, and 31–
CA–091603.
March 30, 2016
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS HIROZAWA
AND MCFERRAN
The General Counsel seeks a default judgment in this
case on the ground that KB In & Out, Inc. d/b/a Century
Car Wash; Steven Rushtabadi d/b/a LAX Century Car
Wash; K&G Franchise Corp. d/b/a National Car Wash;
and Kenny Gharib and Steven Rushtabadi a/k/a Steven
Rush, individuals (collectively the Respondents), have
failed to file an answer to the compliance specification.
On April 23, 2014, the Board issued an Order1 that,
among other things, ordered the Respondent KB In &
Out, Inc. d/b/a Century Car Wash (KB In & Out), to of-
fer reinstatement to discriminatees Julio Ponce and Isaac
Alvarez and make them whole for any loss of earnings
and other benefits resulting from their unlawful dis-
charges in violation of Section 8(a)(3) and (1) of the Act.
On July 7, 2014, the United States Court of Appeals for
the Ninth Circuit entered its judgment enforcing in full
the remedial requirements of the Board’s Decision and
Order.2
A controversy having arisen over the amount of back-
pay due the discriminatees, on October 30, 2015, the
Acting Regional Director for Region 31 issued a compli-
ance specification and notice of hearing alleging the
amount of backpay due under the Board’s Order and
notifying the Respondents that an answer must be filed
by November 20, 2015, in conformity with the Board’s
Rules and Regulations. Although not parties to the orig-

1 Unpublished Order, adopting, in the absence of exceptions, the de-
cision of Administrative Law Judge Dickie Montemayor issued on
March 19, 2014 (JD(SF)–08–14).
2 No. 14–71501.
inal unfair labor practice litigation, Respondents Steven
Rushtabadi d/b/a LAX Century Car Wash (LAX Centu-
ry) and K&G Franchise Corp. d/b/a National Car Wash
(K&G), were added to the compliance specification and
are alleged to be jointly and severally liable for KB In &
Out’s unfair labor practices because Respondents KB In
& Out, LAX Century, and K&G constitute a single-
integrated business enterprise and alter egos within the
meaning of the Act; Respondents KB In & Out and LAX
Century constitute a single employer; and Respondent
LAX Century is a successor to Respondent KB In & Out.
In addition, Respondents Kenny Gharib and Steven
Rushtabadi aka Steven Rush, individuals, are alleged to
be personally liable, jointly and severally, to fulfill the
remedial obligations of the Board’s Order as alter egos of
Respondents KB In & Out and K&G.
The compliance specification additionally sets forth
the following allegations.
Relationships among the Respondents
1. Operations of the Respondents
(a) Since about August 2010, and continuing through
about May 25, 2014, Respondent KB In & Out was a
corporation with a place and business at 4700 West Cen-
tury Boulevard, Inglewood, California and engaged in
the operation of a carwash.
(b) Since about April 3, 2013, and continuing through
about May 25, 2014, Respondent LAX Century was a
sole proprietorship with a place of business at 4700 West
Century Boulevard, Inglewood, California, and engaged
in the operation of a carwash.
(c) Since about November 6, 2009, and at least
through the date of the compliance specification’s issu-
ance, Respondent K&G has been a corporation with a
place of business at 9001 National Boulevard, Los Ange-
les, California engaged in the operation of a carwash.
2. Respondent LAX Century and Respondent KB In
& Out—Single Employer/Alter Ego and Successor
(a) Since about April 3, 2013, and continuing through
May 25, 2014, Respondents KB In & Out and LAX Cen-
tury had substantially identical management, business
purposes, operations, equipment, customers, supervision,
and ownership.
(b) About April 3, 2013, Respondent LAX Century
was established by Respondents KB In & Out and Steven
Rushtabadi as a disguised continuance of KB In & Out.
(c) Since about April 3, 2013, and continuing through
May 25, 2014, Respondents KB In & Out and LAX Cen-
tury were affiliated business enterprises with common
ownership, management, supervision, and financial con-
trol; had formulated and administered a common labor
policy; shared common premises, facilities, equipment,
and personnel with each other; had interrelated opera-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD2
tions with common businesses of operating a carwash;
and held themselves out to the public as a single-
integrated business enterprise.
(d) About April 3, 2013, Respondent LAX Century
took over the business of Respondent KB In & Out and
continued to operate the business of KB In & Out in ba-
sically unchanged form.
(e) Before engaging in the conduct described above,
Respondent LAX had actual notice of KB In & Out’s
potential liability in Cases 31–CA–076280, et al. because
Steven Rushtabadi, the sole proprietor of LAX Century,
was a corporate officer of Respondent KB In & Out and
witnessed the commission of some of KB In and Out’s
unfair labor practices alleged in the charges.
(f) Based on the operations and conduct described
above in paragraphs 1(a) through (b), and 2(a) through
(c), Respondent KB In & Out and Respondent LAX Cen-
tury are, and have been at all material times, alter egos
and a single employer within the meaning of the Act.
(g) Based on the operations and conduct described
above in paragraphs 1(a) through (b), and 2(d) through
(e), Respondent LAX Century continued the employing
entity with notice of Respondent KB In & Out’s potential
liability to remedy its unfair labor practices, and Re-
spondent LAX Century is a successor to KB In & Out.
(h) Based on the operations and conduct described
above in paragraphs 1(a) through (b), and 2(a) through
(g), and below in paragraphs 3 through 5, Respondent
LAX Century is jointly and severally liable with the oth-
er named Respondents for remedying Respondent KB In
& Out’s unfair labor practices, including the payment of
backpay, interest, and other relief required by the
Board’s Order as enforced by the Court.
3. K&G and KB In & Out/LAX Century—Single-
Integrated Business Enterprise/Alter Ego
(a) At all material times, Respondents KB In & Out,
LAX Century, and K&G have been affiliated business
enterprises with common financial control, management,
and supervision; and have provided financial assistance
to each other without documentation or corporate resolu-
tions.
(b) Based on the operations described above in para-
graphs 1(a) through (c), 2(a) through (e), and 3(a), Re-
spondents KB In & Out, LAX Century, and K&G consti-
tute a single-integrated business enterprise.
(c) At all material times, Respondents KB In & Out,
LAX Century, and K&G have been under the financial
and operational control of Respondents Kenny Gharib
and Steven Rushtabadi.
(d) Based on the operations and conduct described
above in paragraphs 1, 2, and 3(a) through (c), Respond-
ents KB In & Out, LAX Century, and K&G are, and
have been at all material times, alter egos within the
meaning of the Act.
(e) Based on the operations and conduct described
above in paragraphs 1, 2, and 3(a) through (d), and below
in paragraphs 4 through 5, Respondent K&G is jointly
and severally liable with the other named Respondents
for remedying Respondent KB In & Out’s unfair labor
practices, including the payment of backpay, interest, and
other relief required by the Board’s Order as enforced by
the Court.
4. Individual Liability of Kenny Gharib
(a) At all material times, Kenny Gharib, an officer of
Respondents KB In & Out and K&G, was personally
involved in the commission of the unfair labor practices
by Respondent KB In & Out.
(b) At all material times, Kenny Gharib, as president
and sole owner of Respondents KB In & Out and K&G,
has controlled the day-to-day management, labor rela-
tions policies, business operations, and financial re-
sources of Respondents KB In & Out and K&G.
(c) At all material times, Respondent Gharib failed to
adhere to corporate formalities in the management and
direction of Respondents KB In & Out and K&G by:
(i) failing to maintain an arm’s length relationship be-
tween Respondents KB In & Out, K&G, and himself;
(ii) commingling and using his personal assets in the
operation of Respondents KB In & Out and K&G;
(iii) commingling and using corporate assets of Re-
spondents KB In & Out and K&G for his personal use
and the personal use of his brother, Steven Rushtabadi;
and
(iv) diverting corporate funds to his personal accounts
and using corporate funds to pay for personal expenses.
(d) Respondent Kenny Gharib engaged in the conduct
alleged in paragraph 4(c) in order to render Respondent
KB In & Out insolvent and make it incapable of fulfilling
its obligation to pay backpay to employees, including by
transferring corporate funds and corporate assets to him-
self and to Respondent LAX Century without fair con-
sideration.
(e) By the conduct described above in paragraphs 3
and 4(a) through (d), Kenny Gharib, individually, acted
as an alter ego of Respondents KB In & Out and K&G,
and is therefore an individual Respondent who is person-
ally liable, jointly and severally, with the other named
Respondents for remedying Respondent KB In & Out’s
unfair labor practices, including the payment of backpay,
interest, and other relief required by the Board’s Order as
enforced by the Court.
KB IN & OUT, INC. 3
5. Individual Liability of Steven Rushtabadi
(a) At all material times, Respondent Steven
Rushtabadi was the sole proprietor and officer of LAX
Century.
(b) At all material times, Respondent Steven
Rushtabadi was an officer and agent of Respondents KB
In & Out and K&G, and controlled the assets and finan-
cial resources of Respondents KB In & Out and K&G.
(c) At all material times, Respondent Steven
Rushtabadi failed to adhere to corporate formalities in
the management of KB In & Out and K&G by:
(i) failing to maintain an arms’ length relationship be-
tween Respondents KB In & Out, K&G, and himself;
(ii) failing to maintain adequate corporate records;
(iii) commingling and using corporate assets of Re-
spondents KB In & Out and K&G for his personal use
and the personal use of his brother, Kenny Gharib;
(iv) diverting to himself the assets of Respondents KB
In & Out and K&G; and
(v) transferring corporate assets without fair considera-
tion.
(d) Respondent Steven Rushtabadi had knowledge of
Respondent KB In & Out’s liability in Board Case 31–
CA–076280, et al. as he was present at the March 2012
meeting where Respondent Kenny Gharib engaged in
conduct which the Board found violated Section 8(a)(1)
of the Act.
(e) Respondent Steven Rushtabadi engaged in the
conduct alleged in paragraph 5(c) in order to render Re-
spondent KB In & Out insolvent and make it incapable
of fulfilling its obligation to pay backpay to employees,
including by transferring corporate funds and corporate
assets to himself and to Respondent LAX Century with-
out fair consideration.
(f) As sole proprietor of LAX Century, and by the
conduct described in paragraphs 2, 3, and 5(a) through
(e), Steven Rushtabadi, individually, acted as an alter ego
of Respondents KB In & Out and K&G, and is therefore
an individual Respondent who is personally liable, joint-
ly and severally, with the other named Respondents for
remedying Respondent KB In & Out’s unfair labor prac-
tices, including the payment of backpay, interest, and
other relief required by the Board’s Order as enforced by
the Court.
Failure to file an answer
Although properly served with a copy of the compli-
ance specification, the Respondents failed to file an an-
swer. By letter dated November 23, 2015, counsel for
the General Counsel advised the Respondents that no
answer to the compliance specification had been re-
ceived, and that unless an answer was filed by December
7, 2015, a motion for default judgment would be filed.
The Respondents failed to file an answer.
On December 14, 2015, upon learning that Respondent
Kenny Gharib was incarcerated in the Los Angeles Met-
ropolitan Detention Center (LAMDC), counsel for the
General Counsel sent Gharib a second letter informing
him that he had until December 28, 2015, to file an an-
swer to the compliance specification. However, Gharib
failed to file an answer.
Motion and Order
On January 25, 2016, the General Counsel filed with
the Board a Motion to Transfer and Continue Matter be-
fore the Board and for Default Judgment, with exhibits
attached. On January 28, 2016, the Board issued an or-
der transferring the proceeding to the Board and a Notice
to Show Cause why the motion should not be granted.
On February 24, 2016, the Board issued an Order Cor-
recting and Supplemental Notice to Show Cause why the
motion should not be granted, correcting the error in the
prior order regarding the date the General Counsel’s mo-
tion was filed, and setting a new response date. The Re-
spondents filed no response. The allegations in the mo-
tion and in compliance specification are therefore undis-
puted.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
Ruling on the Motion for Default Judgment
Section 102.56(a) of the Board’s Rules and Regula-
tions provides that a respondent shall file an answer
within 21 days from service of a compliance specifica-
tion. Section 102.56(c) provides that if the respondent
fails to file an answer to the specification within the time
prescribed by this section, the Board may, either with or
without taking evidence in support of the allegations of
the specification and without further notice to the re-
spondent, find the specification to be true and enter such
order as may be appropriate.
According to the uncontroverted allegations of the mo-
tion for default judgment, the Respondents, despite hav-
ing been advised of the filing requirements, have failed
to file an answer to the compliance specification. In the
absence of good cause for the failure to file an answer,
we deem the allegations in the compliance specification
to be admitted as true, and we grant the General Coun-
sel’s Motion for Default Judgment. Accordingly, we
conclude that the Respondents are jointly and severally
liable for the backpay due Ponce and Alvarez as de-
scribed in the compliance specification and we will order
the Respondents to pay those amounts to the
discriminatees, plus interest accrued to the date of pay-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD4
ment. Further, we find that backpay, expenses, and in-
terest continue to accrue until the Respondent makes a
valid offer of reinstatement to the discriminatees.
ORDER
The National Labor Relations Board orders that the
Respondents, KB In & Out, Inc. d/b/a Century Car
Wash; Steven Rushtabadi d/b/a LAX Century Car Wash;
K&G Franchise Corp. d/b/a National Car Wash; Kenny
Gharib and Steven Rushtabadi aka Steven Rush, individ-
uals, Inglewood and Los Angeles, California, their offic-
ers, agents, successors, and assigns, shall make whole
discriminatees Julio Ponce and Isaac Alvarez, by paying
them the amounts following their names, plus additional
net backpay which accrues to the date the Respondent
makes them valid offers of reinstatement, plus interest
accrued to the date of payment as prescribed in New Ho-
rizons, 283 NLRB 1173 (1987), compounded daily as
prescribed in Kentucky River Medical Center, 356 NLRB
6 (2010), and minus tax withholdings required by Feder-
al and State laws:3

3 As set forth in the compliance specification, the Respondents are
also liable for the adverse tax consequences for any discriminatee re-
ceiving a lump-sum backpay award. These amounts may be updated to
reflect the actual date of payment.
Employee Backpay owed Excess Tax
Amount
Julio Ponce $40,246 $1504
Isaac Alvarez $22,103 $720
Totals $62,349 $2224
Total amount due: $64,573
Dated, Washington, D.C. March 30, 2016
______________________________________
Mark Gaston Pearce, Chairman
______________________________________
Kent Y. Hirozawa, Member
______________________________________
Lauren McFerran, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD