Ristorante Donatello

National Labor Relations Board - Board Decisions

Aug 8, 1994

314 N.L.R.B. 693 (N.L.R.B. 1994)

693
314 NLRB No. 113
RISTORANTE DONATELLO
1 In this motion, dated January 13, 1994, counsel for the General
Counsel claims that the Respondents never served her with a copy
of the exceptions. However, the Respondents filed proof of service
on the General Counsel with the Board on January 3, 1994. Because
we find that the Respondents’ exceptions have no merit, we find it
unnecessary to resolve whether the Respondents served the excep-
tions on the General Counsel or to pass on the General Counsel’s
motion to strike. (We note that counsel for the General Counsel ac-
knowledges that she received the exceptions from counsel for the
Charging Party and that she answered the exceptions.)
2 The Respondents have excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an admin-
istrative law judge’s credibility resolutions unless the clear prepon-
derance of all the relevant evidence convinces us that they are incor-
rect. Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188
F.2d 362 (3d Cir. 1951). We have carefully examined the record and
find no basis for reversing the findings.
3 In adopting the judge’s finding that the evidence clearly supports
the General Counsel’s theory that Respondents Ristorante Donatello
and Respondent Stanford-Carlton Hotel Restaurant Company are
alter egos, we find it unnecessary to pass on the judge’s statement
that the evidence does not support the theory that Respondent Stan-
ford-Carlton is the successor of Respondent Ristorante Donatello.
4 Member Devaney would remand to the judge those issues raised
by the General Counsel’s cross-exceptions. The complaint alleged
certain violations of Sec. 8(a)(1) but the judge neglected to discuss
these allegations and to set out the evidence in support of them. Al-
though, as noted by his colleagues, the evidence regarding these alle-
gations is ‘‘uncontradicted,’’ Member Devaney notes that it does not
necessarily follow that the evidence is credible. In Member
Devaney’s view, it would be better to permit the judge to review
this evidence, assess its credibility, and thereafter make appropriate
findings. Member Devaney notes further that because the judge did
not address these issues, the Respondents did not address them in
their brief. In sum, noting also that the General Counsel requested
as an alternative position that this matter be remanded to the judge
for findings on these allegations, Member Devaney would grant that
alternative request. He would, however, issue a decision at this time
adopting the judge on all those issues addressed by the judge. See
Harris-Teeter Super Markets, 307 NLRB 1075 (1992).
5 See A.J.R. Coating Division Corp., 292 NLRB 148, 163 (1988);
Honda of Hayward, 307 NLRB 340, 349 fn. 9 (1992).
Ristorante Donatello and the Stanford-Carlton
Hotel Restaurant Company and Local 2, Hotel
& Restaurant Employees Union, Hotel & Res-
taurant Employees International Union, AFL–
CIO. Cases 20–CA–24136 and 20–CA–24137
August 8, 1994
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS STEPHENS
AND DEVANEY
On December 3, 1993, Administrative Law Judge
James M. Kennedy issued the attached decision. The
Respondents filed exceptions and a supporting brief.
The General Counsel filed cross-exceptions and a sup-
porting brief, a motion to strike the exceptions,1 and
an answering brief to the exceptions.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions, cross-exceptions, and
briefs, and has decided to affirm the judge’s rulings,2
findings,3 and conclusions as modified and to adopt
the judge’s recommended Order as modified.
In her cross-exceptions, counsel for the General
Counsel argues that the judge ignored uncontradicted
testimony in support of three complaint allegations that
the Respondents engaged in independent violations of
Section 8(a)(1). We agree.4
1. First, the General Counsel contends that the Re-
spondents violated Section 8(a)(1) when Respondent
Ristorante Donatello’s general manager, Zoran
Matulic, informed an employee that his chances of
being rehired after the sale of the restaurant to Re-
spondent Stanford-Carlton Restaurant Company were
very slim because of his union involvement.
The pertinent uncontradicted testimony is as follows.
On July 25, 1991, Respondent Ristorante Donatello in-
formed its employees that the Company was being sold
to Respondent Standford-Carlton and that they would
have to apply with Respondent Standford-Carlton if
they wanted to continue their employment.
According to employee Saulo Diaz, a waiter with 10
years’ experience with Respondent Ristorante
Donatello, General Manager Zoran Matulic conducted
an interview with him on July 25. When Diaz asked
Matulic what his chances of being rehired were,
Matulic replied they were very slim. When Diaz in-
quired why, Matulic responded, ‘‘Because of the union
relations that you have.’’ According to Diaz, Matulic
further explained:
[H]e would be very happy to have me back, but
they were going to hire just one or two per-
sons. . . . Because if they hire all of us back
again, they would still have the same problem
with the union.
Waiter Eric Mendez, who was working nearby, cor-
roborated Diaz’ testimony. He testified that he over-
heard Diaz ask Matulic what chance he would have of
being rehired and that Matulic’s answer was, ‘‘[I]t was
not too many chances, because we were union people,
we belonged to a union.’’
We agree with the General Counsel that Matulic’s
statement that Diaz’ chances of being hired were poor
because the new employer wanted to avoid a bargain-
ing obligation with the Union violated Section 8(a)(1).5
2. The General Counsel also contends that the Re-
spondents violated Section 8(a)(1) when General Man-
ager Zoran Matulic informed an employee he was not
hired because of his involvement with the Union.
According to the undisputed testimony of employee
Saulo Diaz, on August 6, 1991, he went to the execu-
tive offices of the hotel to pick up his final check. At
that time, Diaz asked Matulic why he had not been re-
hired. According to Diaz, Matulic replied:
694 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
6 See, e.g., Service Master, 267 NLRB 875 (1983).
Saulo, we’d love to have you back. You are one
of my best waiters, but there were some unfavor-
able comments about you.
When Diaz asked Matulic for more details, Matulic ex-
plained, ‘‘Because of your relation with the Union and
because you’ve been here too long.’’
We agree with the General Counsel that Matulic’s
statement to Diaz, that directly links an employer’s re-
fusal to hire with Diaz’ union activity, violated Section
8(a)(1).
3. The General Counsel further contends that the
Respondents violated Section 8(a)(1) when General
Manager Zoran Matulic interrogated an employee
about her union activities.
The undisputed evidence shows that Matulic inter-
viewed Carol Lee, an employee of Respondent
Ristorante Donatello, on July 25, 1991, for employ-
ment with Respondent Stanford-Carlton. During this
interview, Matulic asked Lee if she was a member of
a union.
We agree with the General Counsel that Matulic’s
questioning an employee in the context of a job inter-
view about her union sympathies is inherently coercive
and in violation of Section 8(a)(1).6
AMENDED CONCLUSIONS OF LAW
Insert the following as Conclusion of Law 5 and re-
number the remaining paragraphs.
‘‘5. Since July 25, 1991, Respondents violated Sec-
tion 8(a)(1) by informing employees that their chance
of being rehired were lessened because of their union
activities, telling an employee that he was not rehired
because of his relationship with the Union, and interro-
gating an applicant for employment about her union
affiliation.’’
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondents, Ristorante Donatello and
its alter ego Stanford-Carlton Hotel Restaurant Com-
pany, San Francisco, California, its officers, agents,
successors, and assigns shall take the action set forth
in the Order as modified.
1. Substitute the following for paragraph 1(a), and
reletter all subsequent paragraphs.
‘‘(a) Informing employees that their chances of
being rehired are lessened because of their union ac-
tivities, telling employees that they were not rehired
because of their relationship with the Union, and inter-
rogating applicants for employment about their union
affiliation.’’
2. Substitute the attached notice for that of the ad-
ministrative law judge.
APPENDIX
NOTICE TO EMPLOYEES
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
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec-
tion
To choose not to engage in any of these pro-
tected concerted activities.
WE WILL NOT inform employees that their chances
of being rehired are lessened because of their union ac-
tivities, tell employees that they were not rehired be-
cause of their relationship with the Union, or interro-
gate applicants for employment about their union af-
filiation.
WE WILL NOT withdraw recognition from or repu-
diate our collective-bargaining contract with Local 2,
Hotel & Restaurant Employees Union, Hotel & Res-
taurant Employees International Union, AFL–CIO.
WE WILL NOT discharge our employees in order to
evade our obligation to bargain with that labor organi-
zation or because our employees were members of or
have engaged in activities on behalf of that labor orga-
nization.
WE WILL NOT fail to pay wages to our employees
and fringe benefit contributions on their behalf in ac-
cordance with the terms and conditions of employment
as established by our collective-bargaining contract of
April 3, 1991.
WE WILL NOT in any other manner interfere with,
restrain, or coerce our employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
WE WILL immediately recognize and bargain with
Local 2, Hotel & Restaurant Employees Union, Hotel
& Restaurant Employees International Union, AFL–
CIO as the exclusive collective-bargaining representa-
tive of the employees employed in the appropriate bar-
gaining unit and reestablish the collective-bargaining
contract of April 3, 1991.
WE WILL offer the following employees reinstate-
ment to their former jobs or, if those jobs no longer
exist, to substantially equivalent positions, without
prejudice to their seniority or any other rights or privi-
leges previously enjoyed and WE WILL make them
whole for any loss of earnings and other benefits re-
695RISTORANTE DONATELLO
1 On the joint request of the parties during a scheduled hiatus, the
hearing was postponed indefinitely by my order of September 25,
1992, to allow the parties to pursue a settlement and/or to permit
discovery to run its course in a related action in U.S. district court
under Sec. 301 of the Act. Counsel for the General Counsel subse-
quently sought to resume the hearing. It reopened and concluded on
September 10, 1993.
2 See generally Fugazy Continental Corp., 265 NLRB 1301
(1982).
3 NLRB v. Burns Security Services, 406 U.S. 272 (1972).
sulting from their discharge, less any net interim earn-
ings, plus interest.
Hendrik Johannes
Bouwen Howard Huynk
Armando Cachapero Johnny Lam
Mario Canizales Carol Lee
Saulo Diaz Jiam Lee
Roberto Donaire Erick Mendez
Daniel Erman Oscar Platero
Cesar Evangelista Antonio Portugal
Clothilde Fernando Steven Troung
Sing Hui Claudio Vietti
Raymon Ortiz Shahbaz Ilami
WE WILL make whole those employees who suffered
wage and fringe benefit losses since August 6, 1992,
plus interest.
WE WILL remove from our files any reference to the
unlawful discharges and notify the employees in
writting that this has been done and that the discharges
will not be used against them in any way.
RISTORANTE DONATELLO
STANFORD-CARLTON HOTEL RES-
TAURANT COMPANY
Margaret Dietz, for the General Counsel.
A. Cal Rossi, of San Francisco, California, CEO, Ristorante
Donatello, Inc., for Respondents Ristorante Donatello, Inc.,
and Stanford-Carlton Hotel Restaurant Company.
Matthew Ross and Beth Ross (Leonard, Carder, Nathan,
Zuckerman, Ross, Chin & Remar), of Oakland, California,
for the Charging Party.
DECISION
STATEMENT OF THE CASE
JAMES M. KENNEDY, Administrative Law Judge. This case
was tried before me in San Francisco, California, on June
22–26, 1992, and September 10, 1993,1 on a complaint
issued by the Acting Regional Director for Region 20 of the
National Labor Relations Board on November 29, 1991. The
consolidated complaint is based on charges filed by Local 2,
Hotel & Restaurant Employees Union, Hotel & Restaurant
Employees International Union, AFL–CIO (the Union) on
July 24 and 26, 1991. The complaint, as amended and cor-
rected, alleges that Ristorante Donatello and the Stanford-
Carlton Hotel Restaurant Company (Respondents RD and
SC, respectively) have committed certain violations of Sec-
tion 8(a)(1), (3), and (5) of the National Labor Relations Act
(the Act).
Issues
The complaint offers two alternative theories with respect
to the manner in which the Act was violated. The first alter-
native is that RD’s principal owner created SC deceitfully,
seeking to avoid RD’s collective-bargaining obligations to
the Union and that the two are alter egos, bound to the col-
lective-bargaining contract in effect at the time of the transfer
of operation from RD to SC.2 The second alternative is that
SC is a successor to RD under the Burns3 doctrine.
Under the first theory, RD’s conduct is alleged to be a
cover for the unlawful discharge of the entire bargaining unit
and a subsequent avoidance of the contractual obligation to
pay the proper wages and the fringe benefit plans. Under the
second theory, SC is alleged to have discriminatorily refused
to hire RD’s union-represented employees and therefore has
forfeited its right initially to set the terms and conditions of
employment; that being the case, the appropriate remedy
would include a requirement that the last lawfully set terms
and conditions of employment, under Section 8(d) of the Act,
be considered as those established by RD’s collective-bar-
gaining contract with the Union and that SC was bound to
maintain those terms until lawfully changed.
The parties were given full opportunity to participate, to
introduce relevant evidence, to examine and cross-examine
witnesses, to argue orally, and to file briefs. All parties have
filed briefs which have been carefully considered. Based on
the entire record of the case, as well as my observation of
the witnesses and their demeanor, I make the following
FINDINGS OF FACT
I. JURISDICTION
Respondents are both California corporations which either
operate or have operated the restaurant located in the Hotel
Donatello in downtown San Francisco. Although their an-
swers originally denied that the restaurant meets the Board’s
retail standard for the assertion of jurisdiction, it is not now
in dispute that the restaurant’s annual gross sales exceed
$500,000 and that its direct inflow exceeds the de minimus
level. I find that the restaurant is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7)
of the Act.
II. LABOR ORGANIZATION
Respondents admit, and I find, that the Union is a labor
organization within the meaning of Section 2(5) of the Act.
III. ALLEGED UNFAIR LABOR PRACTICES
A. Background
Prior to 1980, the structure which is now the Hotel
Donatello was known as the Barrett Motor Lodge. Located
in a prime downtown San Francisco location, at 501 Post
Street, it was a hotel of moderate reputation and operated a
coffeeshop. About that time it was purchased by A. Cal
Rossi and his wife. Rossi is a property developer and man-
ager with expertise in the operation of hotels. He controls a
696 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
4 Among his interests is the Rossi Hotels Corporation, a hotel op-
erating company. Rossi Hotels has operated the Monterey Plaza
Hotel in Monterey, California. When this hearing began, it was oper-
ating the Hotel Majestic in San Francisco and also the Club
Donatello, the condominiumized portion of the Hotel Donatello.
5 The Caffe Donatello is owned by a partnership of two corpora-
tions, Grupo Donatello, owned by Rossi and his wife, and MPS, a
corporation created by some foreign investors.
6 Subject to a mortgage.
7 It did cover room service waiters who were required to go to and
from the restaurant.
number of corporations which he collectively calls the Rossi
Group.
He is also one of the persons responsible for establishing
the Stanford Court Hotel located on the city’s Nob Hill. Re-
lying on his experience with the Stanford Court, Rossi spent
about a year renovating the Barrett, renaming it the Pacific
Plaza Hotel. After renovation, it had about 140 guest rooms.4
When it reopened in 1981, the hotel’s restaurant, the
Ristorante Donatello, quickly became known as a posh res-
taurant serving elegant Italian cuisine.
The restaurant’s repute became international, attaining a
four-star rating in the Mobil guide. Because of the fame,
Rossi realized the Donatello name had become a marketable
commodity. Holding the copyright, he began using it to com-
mercial advantage in several ways. One thing he did in 1985
was to rename the Pacific Plaza Hotel as the Hotel
Donatello.
Later, he decided to use the name in the operation of simi-
larly named restaurants elsewhere. Among other things, he
created the Caffe Donatello in other cities, including Sac-
ramento.5
Visualizing a time-share resort in the middle of the city,
in 1984 or 1985, Rossi also decided to condominiumize the
hotel. He created another corporation to sell time-share units
in the hotel rooms which he had converted to condominiums.
The entity created to sell the time shares was originally
known as Pacific Plaza Associates. A health spa was added
and the entire time-share resort became known as Club
Donatello. He created another corporation to be responsible
for the common area of the condo complex and formed yet
another to operate the health club which condo owners and
hotel guests were entitled to use.
To assist in the sale of the units, one of the marketing
techniques Rossi utilized was to provide potential time-share
purchasers a free meal valued at $100 at the Ristorante.
The Union had represented the Barrett’s hotel and res-
taurant workers and when Rossi reopened it, he recognized
it as the employees’ collective-bargaining representative. At
that time the entire property was owned by Rossi as an indi-
vidual.6 The hotel, including the Ristorante, became a part of
a multiemployer collective-bargaining unit. In 1985, the mul-
tiemployer bargaining unit broke up. Eventually, Rossi
signed a collective-bargaining contract for the hotel. As it
previously had, that contract covered both the hotel employ-
ees and the Ristorante employees.
As the 1985–1989 contract neared its end, Rossi deter-
mined that his interests would be best served if the hotel and
the restaurant employees were split into two separate bar-
gaining units. He believed the restaurant’s labor costs were
too high and also thought he could leverage money from the
hotel as a separate entity. On April 19, 1990, Rossi created
two new corporations, as evidenced by two initial corporate
filings with the California secretary of state that day. The
first of these was a corporation known as 501 Post Investors,
Inc. (501 Post). That corporation, with Rossi as the principal
shareholder, purchased the hotel building from Rossi the in-
dividual. It received assistance from a financial organization
called Kawasaki Corporation, which became both a part
owner and a mortgagee. Another entity known as American
Realty also had an interest as did Paz Company and
Enismore Corp. Simultaneously, Rossi created the Ristorante
Donatello corporation (RD) to operate the restaurant as a les-
see of 501-Post. He was the chief executive officer of both.
On May 8, 1990, a lease between 501 Post and RD was
signed. Rossi signed on behalf of both entities, the lessee,
501 Post, and the lessor, RD. The lease remained in effect
up through 1992, when this hearing began. Indeed, in 1991,
SC became an apparent sublessor.
The Union, although initially opposed to the division of
the bargaining unit, eventually agreed to it and on August 13,
1990, signed a collective-bargaining agreement with 501 Post
covering only the hotel employees.7 A new agreement cov-
ering the Ristorante was to be more difficult.
Even before the hotel agreement was reached, Rossi was
treating the restaurant situation quite differently. On July 6,
1990, RD’s negotiator, D. N. Cornford, wrote the Union’s
negotiator a letter, supposedly confirming an earlier tele-
phone call with another union official. In that letter,
Cornford stated that the Union’s deadline for reaching a con-
tract needed to be extended for 2 additional days, to July 19.
Then he went on to say: ‘‘I do, however, need to point out
that pending the conclusion of negotiations, that business rea-
sons dictate that escrow be opened for the sale of the
Ristorante should the parties be unable to reach mutual
agreement on the terms of a new contract. At the present
time, it is contemplated that escrow will be opened during
the week of July 9, 1990 with an anticipated closure of es-
crow August 9, 1990 if negotiations do not result in a mutu-
ally agreeable Collective Bargaining Agreement.’’ (Emphasis
added.)
Cornford went on to say that the sale was not designed as
an antiunion action, but only as a reasonable business alter-
native because the current labor costs were too great to allow
the restaurant to be profitable. He asserted that the prospec-
tive buyer was a corporation ‘‘solely owned’’ by George
Brown IV.
When Brown testified about a prospective 1990 purchase,
however, he was unable to describe it at all. He testified that
he did not become interested in purchasing the Ristorante
until the early summer of 1991, almost a year later than
Cornford’s letter described. If that is so, it demonstrates at
the very least that RD was using the idea of a sale as a tac-
tical threat to get what Rossi believed were favorable con-
tract terms. There is certainly no evidence that Brown had
ready a solely owned corporation poised to purchase the fa-
cility at that time.
The deadline came and went. The main thing which oc-
curred during the remainder of 1990 was a temporary shut-
down in August 1990 during which a computerized guest
check system was installed and, Rossi says, the kitchen was
remodeled. When the Ristorante reopened, RD imposed the
terms of its last proposal. These involved both wage cuts and
697RISTORANTE DONATELLO
8 At that time Patrick was both a student at San Francisco State
University and training to be a chef. By 1993, he was pursuing a
career as a firefighter.
9 From Brown, the notice’s text reads: ‘‘As you know, the Res-
taurant has been sold. If any of you are interested in continuing to
work for the new restaurant company, please send a current copy of
your resume to [SC] [giving a postal mailing address].’’
10 These are:
Hendrik Johannes
Bouwens Shahbaz Ilami
Armando Cachapero Johnny Lam
Mario Canizales Carol Lee
Saulo Diaz Jiam Lee
Roberto Donaire Erick Mendez
Daniel Erman Raymon Ortiz
Cesar Evangelista Oscar Platero
Clothilde Fernando Antonio Portugal
Sing Hui Steven Troung
Howard Huynk Claudio Vietti
11 G.C. Exh. 21 is a list of 35 individuals whose last day of em-
ployment by RD was August 6, 1991. Counsel for the General
Counsel offered that list for comparison purposes with G.C. Exh. 22.
She has offered no explanation why the complaint only seeks a rem-
edy for 20 of those 35.
reducing the employees’ health insurance contributions, a de-
cision which meant the employees had to pay half of the
health insurance premium instead of none.
The Union responded by conducting a series of demonstra-
tions and publicizing the situation. Although it did not call
a strike, and none of the employees withheld their services,
the demonstrations were noisy and disruptive of the business,
particularly the luncheon trade. The demonstrations were
usually manned by union officials who were accompanied by
off-duty employees, either from RD or other union houses.
At one time or another nearly all the RD employees partici-
pated. The record shows that at least the following RD em-
ployees were observed demonstrating by the Ristorante’s
managers: Armando Cachapero, Saulo Diaz, Clothilde Fer-
nando, Erick Mendez, and Raymond Ortiz. Others, such as
Steve Troung, Claudio Vietti, and Shahbaz Ilami had been on
the Union’s negotiating committee.
As a result both of the demonstrations and because one of
the employees, Ortiz, was permitted to negotiate without the
presence of a union negotiator, a collective-bargaining con-
tract of sorts was agreed on on April 3, 1991. A truncated
document, it seems to incorporate the preceding contract and
to modify it. Although signed on April 3, 1991, its duration
was from August 14, 1989, through December 31, 1992.
In the meantime, about March 15, Brown and Patrick
Rossi, the Rossis’ 24-year-old son, formed SC.8 The lawyer
who prepared the filings for the California secretary of
state’s office signed them on that date; the actual filing date
stamp mark is obscured by the copying process, but appears
to be 3 days later, April 18. Brown supposedly had an 80-
percent interest while Patrick Rossi owned the other 20 per-
cent.
B. George Brown IV
If believed without reservation, George Brown IV appears
to be a remarkable individual. He describes himself as an in-
vestor. He says he develops office buildings, has operated
two hotel companies, developed over 40 restaurants, and has
been the licensee for 85 fast food chain restaurants called the
Waffle House in Georgia, Florida, and Virginia. He also
owns two restaurants in Atlanta called the O.K. Cafe. He
says he has been the chairman of Rock Resorts and head of
the Ritz-Carlton Hotel Company; in addition, he held the
franchise for the Marriott Hotel at Fisherman’s Wharf in San
Francisco. Big money does not seem to concern him. He tes-
tified that once he paid $45 million for the name ‘‘Ritz-
Carlton,’’ another $40 million for the property, lost $7 mil-
lion in the first year and then, 10 years later, received an
offer for $1.2 billion.
Despite that background, he says he went to work for
Rossi in San Francisco as a ‘‘consultant,’’ somewhat casually
appearing on the payroll of Rossi Hotels. He explains that
he has known Rossi for over 10 years and they are good per-
sonal friends. Before he moved to San Francisco in 1990, he
lived with his family in Jacksonville Beach, Florida. Due to
the dissolution of his marriage, he moved to San Francisco
because, he says, he admired Rossi’s concept of putting con-
dominium clubs in hotels. He says Rossi was ‘‘generous
enough’’ to allow him to learn that business. Accordingly,
Rossi put him in charge of selling the condo units. He seems
to have performed some other duties as well, including
‘‘managing the assets’’ of the Hotel Majestic, another Rossi
property in San Francisco. That duty was not described in
any detail, but he clearly drew a distinction between that
function and managing the hotel itself.
During this period, 1990–1991, Brown had an office and
living quarters in the Hotel Donatello. In addition to drawing
payments from Rossi Hotels as a consultant, he earned some
commissions from 501 Post for the time-share sales program.
He says he didn’t keep track of any of these earnings.
C. The Stanford-Carlton Hotel Restaurant Corporation
As noted earlier, SC was created on March 15, 1991. At
that time RD’s restaurant manager was Zoran Matulic, the
assistant manager was Marla Aroesty, and the chef was Luigi
Mavica. On June 10, Rossi and Brown signed a bulk sales
agreement and opened an escrow with the Spring Mountain
Escrow Company. That agreement was filed with the San
Francisco recorder’s office on June 20. It provided that the
restaurant was to be sold for $41,000, but no money was ac-
tually put into the escrow account at that time. It provided
that $11,000 cash was to be deposited together with $30,000
in notes. Eventually, Patrick Rossi’s note for $12,000 was
placed into the escrow. There is no evidence that Brown ever
deposited anything. The escrow never closed, remaining open
for over 2 years, finally being canceled sometime in July
1993. (See G.C. Exh. 45.)
On July 15, 1991, a notice was posted at the restaurant an-
nouncing that it had been sold to SC, advising the RD em-
ployees that if they wished to remain employed at the
Ristorante they would have to file an employment applica-
tion with SC.9 Most of the employees either filed application
forms or resumes as requested. On August 6, when SC actu-
ally began operating the restaurant, only two of RD’s em-
ployees were retained, both of whom were quite junior and
neither of whom had been involved in union activity. The re-
maining individuals who had applied but were not retained
are listed in the footnote.10 These 20 are the only employees
whose names are listed in the complaint as amended.11
On August 6, when SC apparently took over the operation
of the Ristorante, the managers remained the same: Zoran
698 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
12 The General Counsel also offered evidence that SC was paying
other bills incurred by RD, including the electric and gas utility bill
from Pacific Gas & Electric Co. (PG&E). The evidence here is more
tenuous, because the documentation chain is broken by intermediate
payments to a bank for the purchase of cashier’s checks, but fails
to connect the checks to the payment of the PG&E bills. I therefore
decline to rely on them.
Matulic, Marla Aroesty, and Chef Luigi Mavica. When these
individuals left and needed to be replaced, Rossi and Mavica
flew to London to interview the individuals who eventually
took over the operation of the Ristorante, Adriano Paganini
and his wife Deborah Blum-Paganini. Brown, the putative
owner of the Ristorante was not involved, although both
Paganinis became employed by SC—he as chef and she as
manager. They assumed those duties on their arrival from
England in February 1992. Chef Paganini testified that he ne-
gotiated his salary with Rossi, first by letter, then by tele-
phone. He did not meet Brown until well after he had taken
charge of the Ristorante’s kitchen. Even then, their principal
reason for meeting was Brown’s desire to eat at the res-
taurant. On one occasion, Paganini says Brown asked how
the business was doing, but made no detailed inquiry. For the
most part, the Paganinis dealt with the accountant’s office on
purchases and other financial matters. When Chef Paganini
wanted to discuss menu changes, he did it with Rossi, whom
he regarded as his boss.
There is also evidence that Rossi continued to control pur-
chases. RD was in arrears for the purchase of advertising in
the April and August 1991 issues of San Francisco Focus,
the magazine published by KQED–TV, a public television
station. On December 16, 1991, the magazine’s credit man-
ager wrote Rossi saying it had tried to get payment from the
business office without success, asking him to personally in-
tervene. On receiving the letter, Rossi wrote on it directions
to Steve Pauley, SC’s accountant/controller: ‘‘Steve, Need to
pay Today, Club D Rest Coffer.’’ The bill was promptly paid
by an SC check, despite the fact that at least the April ad
must have been an RD obligation. Similarly, SC paid in Au-
gust 1991 a judgment against RD obtained by Kray Cabling
Co. for installing RD’s computer guest check system in Au-
gust 1990. That check was cut at the request of 501 Post’s
controller, David Kopp. Also in August SC paid RD’s chef,
Mavica, his annual bonus—for work performed prior to the
SC takeover. Similarly, on September 6, SC issued George
‘‘Geordy’’ Murphy a check which seems to have covered
both salary and bonus which he had earned for RD. Mur-
phy’s duties for RD are not fully clear in the record. He
seems to have been Matulic’s supervisor. He may well have
worked for other Rossi entities as some sort of executive. In
August and September, SC made two payments to Miller’s
Meats covering an RD account payable. Also in August SC
paid RD’s outstanding breadstuffs bill to Bakers of Paris.
Later, in December, it began paying off another vendor, Dan-
iels Creamery, for an outstanding RD account payable.12
Finally, it appears for the most part that Brown was absent
from San Francisco, in 1992 except for a week or two when
he returned to testify. From early 1992 until the time the
hearing ended in 1993, he resided in the Netherlands, having
become the chairman of what he described as a hotel/resort
investment arm of KLM Royal Dutch Airlines, Golden Tulip
Investments.
Having absented himself with that endeavor, in December
1992, Brown allowed SC’s temporary liquor license applica-
tion extensions, which he had filed with the California De-
partment of Alcoholic Beverage Control (ABC), to nearly ex-
pire and the sales transaction to be canceled. On December
3, 1992, Rossi had his son, Patrick, withdraw SC’s liquor li-
cense application. At the time Patrick signed the form re-
tracting SC’s license application, he was no longer associated
with SC. Rossi says Patrick had abandoned his interest in the
Ristorante sometime before. He had, however, signed some
of the liquor license extension requests, so his connection
was known to the ABC.
There is very little evidence regarding how SC was fund-
ed. Brown does mention at one point that Rossi had lent SC
some money and perhaps he had put some capital into it
himself. SC, of course, had the obligation to pay rent to RD
(which still held the lease from 501 Post). It also was obli-
gated to pay Rossi a license fee for the use of the Donatello
name. There is no evidence that such payments were ever
made. Rossi and Brown both explain that 501 Post and the
Club both owed large amounts payable to SC due to meals
incurred and paid for by their guests but not transmitted to
the Ristorante. Therefore, they say rent and license payments
were not necessary and simply amounted to bookkeeping en-
tries against one another. However, they offered no docu-
mentation to support that claim.
IV. ANALYSIS AND CONCLUSIONS
Although the General Counsel has offered two alternative
theories regarding the manner in which Respondent(s) have
violated the Act, the evidence clearly leads to the alter ego
theory, not the successorship theory. That conclusion is
based on my assessment of the business relationship between
RD and SC as controlled by Rossi and to some extent based
on my mistrust of both Rossi and Brown’s testimony.
To start with, I simply do not understand, from a business
point of view, why Rossi, controlling RD, would sell it for
only $41,000. It is a four-star restaurant regarded by many
as the best Italian restaurant in San Francisco. It is located
in the city’s downtown theater district, just one block off
Union Square. Surely its value as an ongoing business is far
greater than that sum. It does appear that the Restaurant was
in debt, but there has been no showing that in the summer
of 1990 it owed so much that its equity value had become
only $41,000. Even its salvage value would seem to exceed
that amount. Furthermore, the purchase seems to have been
too good to be true. Neither cash nor notes were originally
put into the business. Indeed, there has been no showing that
the principal shareholder ever put any cash into the business.
(I recognize Brown said he did, but there is no confirmation
of that fact and no showing of the amount.) The only person
to put value into the purchase money was Rossi’s son Pat-
rick, and he only put in a note for $12,000 from which he
was later released. Finally, the sale was never consummated,
but held in escrow for over 2 years, a circumstance which
put a buffer between RD and outside creditors, including the
Union and/or the fringe benefit trust funds, all of whom were
put on hold, hoping for something positive to occur.
Brown, therefore, seems to have been a strawman from the
very beginning insofar as this transaction is concerned. Cred-
iting both his and Rossi’s testimony that they were longtime
business friends, Brown’s appearance on the scene was fortu-
699RISTORANTE DONATELLO
itous in the sense that Rossi had come to believe that labor
costs were preventing the restaurant from financial success
and he had conceived a scheme by which he could escape
the strictures of the collective-bargaining contract. Having
failed to convince the Union or his union-member employees
that lower wages and changed benefit contributions were ap-
propriate to the Ristorante’s success, he sought to contrive a
means by which he could once again set the wages. To do
that, he had to convince the Union that the purchase was by
a new owner, someone who could take advantage of the
Burns rule permitting a new owner to establish the initial
terms and conditions under which he would offer employ-
ment. Brown was the perfect shield to hide behind.
The other thing which Rossi had to do was replace the ac-
tivist employees who had forced him to sign the contract in
April. By substituting an apparently new employer and by re-
leasing the union members, Rossi was free to reestablish the
full profit base which he thought he should have.
Rossi had tried a similar scheme earlier, one which was
lawful but which had resulted in raucous labor demonstra-
tions to the detriment of the business. That stratagem was to
declare an impasse and to impose a last offer. In carrying
that plan out, Rossi either miscalculated the relative labor
costs or miscalculated the Union’s perseverance in asking for
wage parity with the other restaurants in the area. When he
realized his mistake, he still had to deal with the labor cost
situation. Yet, from his point of view, the hourly wage and
fringe benefit costs remained well out of hand. In making
that observation, I only point to Rossi’s perspective; I do not
suggest or find that the negotiated wage and fringe levels
were objectively out of the ordinary insofar as the industry
is concerned. There has been no factual showing one way or
the other. Moreover, even if his assessment is accurate, it is
legally immaterial, for inability to pay is not a justification
for abrogating a collective-bargaining agreement. Oak Cliff-
Golman Baking Co., 202 NLRB 614 (1973).
Rossi therefore had a strong motive for concealing his true
control over SC. Furthermore, he had a ready foil available
in Brown. It was therefore relatively easy to create a sham
corporation/purchaser such as SC to deceive the employees,
their union, and the fringe benefit plans. He had threatened
to take the action a year earlier, but held off until he realized
he could not evade the Union’s demands and/or insistence on
maintaining the contract terms any longer.
That this entire scheme was a sham cannot be doubted.
The purchase was never an arm’s-length transaction, it was
not adequately funded and it had no chance of succeeding on
its own. It needed Rossi from the get-go. That is why Patrick
was installed as an officer and that is why Brown believed
he knew it was not a problem for him if he walked away
from it.
As I have earlier observed, the Board’s test for determin-
ing whether or not one employer is the alter ego of another
is set forth in Fugazy Continental Corp., 265 NLRB 1301.
The test requires an examination of the following factors:
1. Ownership; do the employers have common manage-
ment and ownership?
2. Do they have a common business purpose?
3. How does the nature of their operation and supervision
compare?
4. Do they have customers in common; i.e., is it the same
business in the same market?
5. What is the nature and extent of the negotiations and
formalities surrounding the transaction?
6. Was the putative alter ego created for legitimate reasons
or was it to evade responsibilities under the Act?
None of these factors standing alone is controlling. They
are to be taken as a whole and a determination of alter ego
status is to be made based on the totality of the answers.
In going down that checklist, and considering all of the
factors, it is apparent that the General Counsel has easily
proven that SC is the alter ego of RD under the Act. First,
although there is a document showing that Brown has an
ownership interest in SC, he walked away from the purchase.
Indeed, he never put any cash whatsoever into that corpora-
tion. The only person shown to have invested anything was
Patrick, Cal Rossi’s son, and that was a note which was later
forgiven or ignored. At the time, Patrick was a college stu-
dent; later he became a firefighter. There is no showing that
he ever did anything but his father’s bidding when it came
to the Ristorante. At his father’s request, he even signed doc-
uments withdrawing SC’s liquor license application at a time
when he was no longer associated with SC and after Brown
had walked away. The only real owner was Rossi. He con-
trolled the hiring of the new chef and his wife/manager, the
Paganinis. He even went to London to interview them. A
nonowner does not do such a thing.
Clearly the Ristorante, under RD or SC had the same busi-
ness purpose. They both operated a first-rate Italian res-
taurant in the Hotel Donatello. Furthermore, they use(d) the
same premises and the same equipment. The daily operation
was basically the same. The chef was in charge of the kitch-
en and the manager ran the front end. Financial matters were
taken care of by an accountant or controller officer in the
hotel. In both situations, the person to whom these individ-
uals reported was Rossi. Brown’s involvement ranged from
minimal to nonexistent. The customers are, in generic terms,
the same. The Ristorante caters to Hotel Donatello guests,
Club Donatello members, and the general public who seek
fine Italian cuisine.
As previously noted this sale was not an arm’s-length
transaction. Rossi has kept his fingers on the Ristorante’s
pulse ever since it was turned over to SC. Yet it is true that
certain formalities have been observed. For example, SC
signed a sublease with RD who held the lease with 501 Post.
SC also signed a licensing agreement with Rossi personally
to use the Donatello name. Yet no payments have ever been
made under the terms of those agreements. And, the Rossi-
Brown claim that bookkeeping entries were made to account
for those transactions has not been substantiated. Further-
more, Rossi seems to have had control of the SC checking
account, for he directed certain payments be made from it.
Indeed, SC has paid a significant number of RD’s accounts
payable. There has been no explanation for that practice. In
a very real sense, SC has been used by Rossi in the same
fashion RD would have been used had SC not been created.
SC’s liquor license never was finalized. In fact, when that
application was withdrawn, Rossi’s own liquor license was
immediately available. The formalities of this transaction
most be viewed as tissue thin. Indeed, the failure of the es-
crow to close and the actual reversion to RD demonstrates
that Rossi was at all times in control.
Finally, I have previously observed that the entire trans-
action appears to have been designed to allow RD to evade
700 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
13 To qualify for reimbursement, such a fund must be a mandatory
subject of bargaining. See Fox Painting Co., 263 NLRB 437 (1982),
enfd. 732 F.2d 554 (6th Cir. 1984).
14 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.
its responsibilities under the Act. This transaction clearly had
no other purpose.
In these circumstances, there is no doubt that SC is RD’s
alter ego within the meaning of Fugazy Continental Corp.,
supra. In that event, both RD and SC are jointly and sever-
ally liable to remedy the unfair labor practices. Specifically,
I find that Respondents have violated Section 8(a)(1), (3),
and (5) of the Act by discharging the employees listed in the
footnote, supra. In addition, I find Respondents have violated
Section 8(a)(1) and (5) of the Act by repudiating the collec-
tive-bargaining agreement which it signed on April 3, 1991,
and thereby unlawfully withdrew recognition of the Union.
REMEDY
Having found that Respondents have engaged in certain
unfair labor practices, I find that they must be ordered to
cease and desist therefrom and to take certain affirmative ac-
tion designed to effectuate the policies of the Act. The af-
firmative action shall include orders requiring them to recog-
nize the Union as the 9(a) representative of their employees
in the bargaining unit described in the collective-bargaining
agreement of April 3, 1991; pay the employees it has em-
ployed since August 6, 1991, the difference between the
wage rates it actually paid them and the wage rates as re-
quired by the collective-bargaining contract. See Ogle Pro-
tection Service, 183 NLRB 682 (1970). Interest on the dif-
ference shall be calculated pursuant to the requirements of
the Board’s decision in New Horizons for the Retarded, 283
NLRB 1173 (1987). It shall also pay to the trust funds the
contractually required fringe benefit contributions on behalf
of those employees hired since August 6, 1991.
The affirmative order shall also require Respondents im-
mediately to offer reinstatement to their former jobs to those
employees it unlawfully discharged on August 6, 1991 (if
necessary, dismissing any replacement employees), and to
make them whole for any loss of earnings, including fringe
benefits,13 they may have suffered from the date of their dis-
charge to the date a proper offer of reinstatement was made.
Backpay for these employees shall be computed on a quar-
terly basis, less interim earnings, as prescribed by F. W.
Woolworth Co., 90 NLRB 289 (1950), plus interest as set
forth in New Horizons for the Retarded, supra. It shall also
include an order requiring Respondents to remove from its
records any reference to the unlawful discharge of those em-
ployees and shall require Respondents to notify the employ-
ees in writing that they have done so and that the discharges
will not be used against them in any way. Sterling Sugars,
261 NLRB 472 (1982).
Furthermore, because Respondents have engaged in egre-
gious conduct, including a mass discharge of employees and
a total rejection of the bargaining obligation, thereby dem-
onstrating a general disregard for the employees’ statutory
rights, a broad cease-and-desist order is appropriate.
Hickmott Foods, 242 NLRB 1357 (1979)
Based on the foregoing findings of fact, analysis, and the
record as a whole, I make the following
CONCLUSIONS OF LAW
1. Respondents Ristorante Donatello and Stanford-Carlton
Hotel Restaurant Company are employers engaged in com-
merce within the meaning of Section 2(2), (6), and (7) of the
Act.
2. Local 2, Hotel & Restaurant Employees Union, Hotel
& Restaurant Employees International Union, AFL–CIO is a
labor organization within the meaning of Section 2(5) of the
Act.
3. Beginning on August 6, 1991, and continuing thereafter,
Respondents Ristorante Donatello and Stanford-Carlton Hotel
Restaurant Company have been alter egos within the mean-
ing of the Act.
4. As alter egos, Respondents Ristorante Donatello and
Stanford-Carlton are and have been since August 6, 1991,
obligated to continue to recognize the Union as the 9(a) rep-
resentative of their employees in the bargaining unit de-
scribed in the collective-bargaining contract which Ristorante
Donatello signed on April 3, 1991, and are bound by that
same contract.
5. On or about August 6, 1991, Respondents violated Sec-
tion 8(a)(5) and (1) by withdrawing recognition of the Union
and by repudiating the collective-bargaining contract of April
3, 1991.
6. On or about August 6, 1991, Respondents discharged
the following employees in violation of Section 8(a)(5), (3),
and (1) of the Act because the discharges were for the pur-
pose of evading its/their obligation to continue to recognize
and bargain with the Union and because of their union mem-
bership and union activities.
Hendrik Johannes
Bouwens Shahbaz Ilami
Armando Cachapero Johnny Lam
Mario Canizales Carol Lee
Saulo Diaz Jiam Lee
Roberto Donaire Erick Mendez
Daniel Erman Raymon Ortiz
Cesar Evangelista Oscar Platero
Clothilde Fernando Antonio Portugal
Sing Hui Steven Troung
Howard Huynk Claudio Vietti
7. Since August 6, 1991, Respondents have violated Sec-
tion 8(a)(5) and (1) by paying its bargaining unit employees
wages which were not in accordance with the collective-bar-
gaining contract and by failing to meet its/their obligations
to pay the appropriate contributions to the fringe benefit trust
funds as established by the collective-bargaining contract of
April 3, 1991.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended14
ORDER
The Respondents, Ristorante Donatello and the Stanford-
Carlton Hotel Restaurant Company, San Francisco, Cali-
fornia, their officers, agents, successors, and assigns, shall
701RISTORANTE DONATELLO
15 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.’’
1. Cease and desist from
(a) Withdrawing recognition from and repudiating the col-
lective-bargaining contract with Local 2, Hotel & Restaurant
Employees Union, Hotel & Restaurant Employees Inter-
national Union, AFL–CIO.
(b) Discharging employees in order to evade the obligation
to bargain with that labor organization and because the em-
ployees were members of and had engaged in activities on
behalf of that labor organization.
(c) Failing to pay wages to its employees and fringe ben-
efit contributions on their behalf in accordance with the
terms and conditions of employment as established by the
collective-bargaining contract of April 3, 1991.
(d) In any other manner interfering with, restraining, or co-
ercing employees in the exercise of the rights guaranteed
them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Immediately recognize and bargain in good faith with
Local 2, Hotel & Restaurant Employees Union, Hotel & Res-
taurant Employees International Union, AFL–CIO as the ex-
clusive collective-bargaining representative of the employees
employed in the appropriate bargaining unit and reestab-
lishing the collective-bargaining contract of April 3, 1991.
(b) Offer the following employees reinstatement to their
former jobs or, if those jobs no longer exist, to substantially
equivalent positions, without prejudice to their seniority or
any other rights or privileges previously enjoyed (if nec-
essary, dismissing any replacement employees) and make
them whole for any loss of earnings and other benefits suf-
fered as a result of the discrimination against them in the
manner set forth in the remedy section of the decision.
Hendrik Johannes
Bouwens Shahbaz Ilami
Armando Cachapero Johnny Lam
Mario Canizales Carol Lee
Saulo Diaz Jiam Lee
Roberto Donaire Erick Mendez
Daniel Erman Raymon Ortiz
Cesar Evangelista Oscar Platero
Clothilde Fernando Antonio Portugal
Sing Hui Steven Troung
Howard Huynk Claudio Vietti
(c) Make whole those employees who have suffered wage
and fringe benefit losses since August 6, 1991, in the manner
set forth in the remedy section of this decision.
(d) Remove from its files any reference to the unlawful
discharges and notify the employees in writing that this has
been done and that the discharges will not be used against
them in any way.
(e) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of backpay due under the terms of this Order.
(f) Post at its restaurant in San Francisco, California, cop-
ies of the attached notice marked ‘‘Appendix.’’15 Copies of
the notice, on forms provided by the Regional Director for
Region 20, after being signed by Respondents’ authorized
representative, shall be posted by Respondents immediately
upon receipt and maintained for 60 consecutive days in con-
spicuous places including all places where notices to employ-
ees are customarily posted. Reasonable steps shall be taken
by Respondents to ensure that the notices are not altered, de-
faced, or covered by any other material.
(g) Notify the Regional Director in writing within 20 days
from the date of this Order what steps Respondents have
taken to comply.