Custom Manufacturing Company

National Labor Relations Board - Board Decisions

Dec 10, 1981

259 N.L.R.B. 614 (N.L.R.B. 1981)

614 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Custom Manufacturing Company (Successor to Zion business purpose, organization, and operation of the
Industries, Inc.-Curtain and Drapery Divi- companies involved in this proceeding. Only limit-
sion); Bobbe Drapery Products Co., Inc.; Con- ed exceptions have been filed to the Administrative
cepts in Drapery Design, Inc.; and Their Agents Law Judge's factual findings. 4 It would serve no
Frank Florence and Roberta Florence; and Inte- purpose to repeat or, in view of the extensive and
rior Concepts, Inc., and Its Agents Terry Ster- detailed nature of such evidence, to attempt to
ling, Frank Florence, and Roberta Florence and aie ti e at the outset o this eci
The International Chemical Workers Union, i l i l s i , summarize this evidence at the outset of this Deci-
Local 665. Cases 13-CA-13630, 13-CA-13796, sion and Order. The gravamen of this case is
and 13-CA-13998 whether such evidence shows that Interior is an
alter ego of Custom, Bobbe, and Concepts. Re-
December 10, 1981 spondents urged and the Administrative Law
SECOND SUPPLEMENTAL DECISION Judge found the evidence fails to establish such
AND ORDER alter ego status. The General Counsel excepts to
the Administrative Law Judge's findings and con-
BY MEMBERS FANNING, JENKINS, AND tends that the credited record evidence supports a
ZIMMERMAN legal conclusion that Interior is an alter ego of
On April 2, 1981, Administrative Law Judge Custom, Bobbe, and Concepts. We agree with theOn April 2, 1981, AdministJudge GeneraltCounsel.
Nancy M. Sherman issued the attached Decision in General Counsel
this proceeding. Thereafter, the General Counsel The Administrative Law Judge found that the
filed exceptions and a supporting brief. Respondent record evidence satisfied various indicia of alter egofiled exceptions and a supporting brief. Respondent . S t AmnsrteLw
status. Significantly, the Administrative Law JudgeInterior Concepts, Inc., filed limited cross-excep- sttus. S cantly, the Adinistratie aw de
tions and an answering brief to the General Coun- fon substantially den ownerhip n
sel's„~ exceptions~. -substant ally identical management in the four cor-sel's exceptions.
Pursuant to the provisions of Section 3(b) of the porations. Thus, she found that, at the time Interior
National Labor Relations Act, as amended, the Na- began operations in January 1976, 75 percent of its
tional Labor Relations Board has delegated its au- stock was owned b Roberta Flornce, who
thority in this proceeding to a three-member panel. owned all of the stock of Bobbe and Concepts and
The Board has considered the record and the at- whose husband owned half of Custom's stock.
tached Decision in light of the exceptions and With respect to the management of the four corpo-
briefs, and has decided to affirm the rulings, find- rations, the Administrative Law Judge found that
ings, and conclusions of the Administrative Law Frank Florence was an officer of all four compa-
Judge only to the extent consistent herewith. nies, and that he managed the first three corpora-
The extensive prior litigation in this proceeding tions on a day-to-day basis, performed selling func-
is described in considerable detail in section I of tions for all four corporations, incorporated Interi-
the Administrative Law Judge's Decision. It suf- or, and by the end of 1979 was receiving the same
fices for our purposes here that the Board found salary from Interior as Interior's president, Terry
that the named Respondents in the earlier proceed- Sterling. Similarly, Sterling, who served as salaried
ings violated Section 8(a)(1), (3), and (5) by various controller and office manager for Custom, obbe,
conduct and that the Board ordered those Re- and Concepts, continues to perform or supervise at
spondents to make whole the Union and the em- least some of the functions he performed for the
ployee discriminatees in accordance with the earlier three companies in his position as Interior's
Board's Order. Both the Board's Decision and president.
Order' and its Supplemental Decision and Order2 Other indicia of Interior's alter ego status found
were enforced by the United States Court of Ap- by the Administrative Law Judge included evi-
peals for the Seventh Circuit.3 dence that Sterling and Frank Florence solicited
The sole issue before the Board now involves and obtained business for Interior while they were
whether Respondent Interior is an alter ego of the still on the payroll of Concepts and before Interior
named Respondents in the earlier proceedings and formally began operations. Furthermore, one of In-
thus liable on the judgments in such proceedings terior's first customers was Benjamin Brothers,
The Administrative Law Judge has provided a which had been a customer of Custom and a major
comprehensive review of the record evidence in-c eluding, inter alia, the ownf the record evidence in- Respondent Interior has excepted to the Administrative Law Judge's
cluding, inter alia, the ownership, management, finding that Sterling and Frank Florence were spending a substantial
amount of time soliciting business for Interior while they were still on the
220 NLRB 1256 (1975). payroll of Concepts in early 1975 and to her finding that there is a sub-
230 NLRB 691 (1977). stantial identity of ownership and management between Interior and the
' Unpublished decision 96 LRRM 2394 (1976), and judgment of April other three named Respondents. The record supports these findings by
20, 1979. the Administrative Law Judge.
259 NLRB No. 66
.--
' t l fi i s. It l r
l r t r t r, i i f t e te si e a
rior oncepts, I c., and It A ent s T e ter - t il t r i ,
lin, Frank Florence, and Roberta Florence summarize this evidence t t ts t f t i D i-
t national kers ,
,
J u d f u d
r e
n pril , , i i i
i r l .
. ni ,. - . - -°
, , . * , T *;. , ,- ., ., ' ministratve.L Judg, " ' . . . „ . „ i ^found both substantially identical ownership and
ifu ,btsbtni nripa
sel's exceptions. substantially
ti
T h u s sh e f o u n d t h e t i m e I n t e r io r
l t i r , t f it
l
st o c k w a s o w n e d R o b e r t a l ,
i i l
o w n e d a o f t h e t
i w h
o se h u sb an d o w n ed h a l f o f C u st o m 's st o c k .
t i ti
i f r
a t io n s h e t t
i
ra n k F l o r en c e w a s a n o fi c e r o f a f o u r c o m p a -
l i t i
e s a n d t h a t h e t i t
i ti i i ll
ri i l t il ti
o n s f o r a l l f o u r at io n s, i
i i i . t f- i i
o m I n t e o r ' i
rli - i il rl , rl r l ri
ti )(l t ll i f t , B ,
r
le st so m o f t h e
i rli i
' ' i i t.
l t l i ' t
t t h e i i l i
l i 'dence rl li
a n d i
t t till r ll t f I t i
rli i ll ti .
i ,. t e r o r ' r st c u st o m e rs i
w h c h h a d b e e n a j
i ---ompr hnsive rview the i encen ' t i t t t i istr ti a J e's
, i , t, finding that Sterling and Frank Florence ere spending a substantial
till
'2 0 . l t fi i t t t r i -
'230 . t i
,
v .
n s
.o
CUSTOM MANUFACTURING COMPANY 615
customer of Bobbe and Concepts, and to which In- the transformation from a manufacturer to a broker
terior provided substantially the same services of draperies materials and goods.
(except fabrication) which Benjamin Brothers had When viewed against the background of the
received from the other three corporations. Also, changes in business operations from Custom to
Roberta Florence handled all of the billing func- Concepts, the changes from Concepts to Interior
tions for both Concepts in Drapery and Interior. do not represent an abrupt shift but another step in
Finally, the Administrative Law Judge found that the evolution of the drapery business from manu-
the Florences, Sterling, and two installers, who facturer to broker and from residential to institu-
constituted the entire final payroll of Concepts, tional customers. In each instance, the principals of
were transferred to Interior's payroll without any all four corporations applied their expertise in the
break in their employment. drapery business to the economic conditions availa-
Despite the Administrative Law Judge's finding ble to them. There was no real hiatus between
that the foregoing evidence satisfied various indicia Concepts and Interior, which was consistent with
of alter ego status, she nevertheless relied on other the pattern of discontinuing one drapery business
"countervailing considerations" to conclude that and commencing a new scaled-down operation in
Interior was not an alter ego of the other three cor- the earlier three corporations. 6 In short, although
porations. In so concluding, the Administrative Interior downplays the scope and effect of the
Law Judge found that Interior differed from the foregoing record evidence showing both a connec-
other three corporations because Interior never em- tion between, and carryover from, the business op-
ployed production employees, Interior's facilities erations of Concepts and Interior, the point remains
were much smaller and at a different location, and that it was a spinoff of the former businesses tem-
Interior's customers (except for Benjamin Brothers) pered by the economic resources available to the
and its suppliers are different. Further, the Admin- principals at each given time. Thus, the changes in
istrative Law Judge pointed out that the principal business operations revealed by this record can be
business shifted from manufacturing drapes to be characterized fairly as having:
used in private residences to sales to institutions . . . amounted essentially to evolutions, exten-
and commercial establishments of products manu- sions and developments merely, such as could
factured by others. In short, the Administrative characteristically be expected to occur in the
Law Judge relied on changes in business operations particular business field and in the economic
to find that Interior is not an alter ego of the other era involved, without having so changed the
three corporations. 5 nature of the enterprise and its job situations as
In assessing the changes in business operations to cause it to be outside the bounds of legiti-
for the purpose of determining Interior's status as mate remedial area in respect to the discrimin-
an alter ego of Custom, Bobbe, and Concepts, it atees.7
must be taken into account that a substantial por- In sum, we find that Interior is an alter ego of
tion of these changes took place in Custom's suc- Custom, Bobbe, and Concepts. As such, we find
cessor alter egos, Bobbe and Concepts. Thus, that Interior is derivatively liable to provide the
Custom manufactured draperies from its own mate- remedies ordered by the Board including backpay
rials for residential customers and marketed the due the discriminatees. 8
product through department stores. When Custom
was no longer in an economic position to carry an I Custom's operations were discontinued in August 1974, the same
month that Bobbe was incorporated. Similarly, Bobbe went out of busi-
inventory of materials, Bobbe was incorporated ness and Concepts commenced operations, both in February 1975. As
and continued the business by manufacturing drap- more fully discussed by the Administrative Law Judge, Concepts was
eris fm customers' materials. A consequence of winding down its business at the same time Interior was being incorporat-
eries from customers' materials. A consequence of ed in August 1975. We also note that, just as the change from Bobbe to
this change was a loss of residential business and a Concepts in February 1975 coincided with the issuance of one of the
shift to institutional customers which was contin- complaints and the filing of the charges that resulted in another of the
ued by Concepts. An th r coe of t e complaints here, Concepts was ceasing business and Interior was formed
ued by Concepts. Another consequence of these while these cases were before the Board.
changes in business operations from Custom to 'N.LR.B. v. Ozark Hardwood Company, 282 F.2d 1, 6 (8th Cir. 1960).
Concepts-and carried forward in Interior-was The only reasons offered by Interior for the changes in the corporate
entity were the need for a fresh start and Continental Bank's concern that
its interest might be affected by other creditors. But there is no conten-
The Administrative Law Judge also found that the evidence failed to tion, or evidence to show, that such changes could not have been han-
establish that Interior was set up for the purpose of evading the Act and died within the framework of Concepts. The absence of such evidence,
that there was no transfer of assets. Although she acknowledged that coupled with the substantial identity of ownership and management of
these two factors were not necessary elements to find alter ego status, she the corporations, undermines Interior's contention that it is not an alter
nevertheless weighed them along with the other changes described above ego.
in reaching her conclusion that Interior was not an alter ego of the other ' Custom Manufacturing Company (successor to Zion Industries, Inc.-
three named corporations. We find the Administrative Law Judge's reli- Curtain and Drapery Division): Bobbe Drapery Products Co., Inc., and Con-
ance on these factors to be misplaced. Continued

.
*

c a u s e
7
ue 8
product through depart ent stores. hen usto ------
was no longer in an economic position to carry an^month that Bobbe was incorporated. Similarly, Bobbe went out of busi-
i ls, W te
Co ti ing m o r e '
erie„ <*-„- „..„*„-„_' _.,*__-i . rf aterials. st
Cha W
S Cust W i W r
,ed .y Concepts. , .onsequence ., „ ,.e .
Chang Operatio s ,N.L .
c ts-- Car i terior- as l c ff r I t ri r f r t changes in the corporateConcepts-and carried forward in Interior-was '
.
, t , t t l t
.
( t i I t i . I .-
r ;
'l
616 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF LAW 13-CA-13630, which alleged, inter alia, that "the above-
named employer" had "discriminated against Union
1. Interior Concepts, Inc., is an employer en- members and officers." On November 20, 1974, a corn-
gaged in commerce within the meaning of Section plaint bearing this docket number was issued against
2(6) and (7) of the Act. Custom. The complaint contained no allegations that
2. Interior Concepts, Inc., is an alter ego. Custom had unlawfully terminated employees or failed
3. As the alter ego of Custom Manufacturing to make contractually required payments, but did allege,
Company (Successor to Zion Industries, Inc.,- inter alia, that at all material times "Frank Florence oc-
Curtains and Drapery Division); Bobbe Drapery cupied the position of President of [Custom], and has
Products Co., Inc.; and Concepts in Drapery been and is now an agent and supervisor of' Custom.
Design, Inc., Interior Concepts, Inc., is derivatively On November 27, 1974, the Union filed against
liable for backpay due discriminatees as part of the Custom another charge, which was docketed as Case 13-
Board's remedy for unfair labor practices as set CA-13796. The charge alleged, inter alia, that "the Em-
forth in 220 NLRB 1256 (1975) and 230 NLRB 691 ployer" had "through its agents and officers unilaterally
terminated the Accident & Insurance Plan, the Life In-
(1977). surance Plan, and the Pension Plan." On February 6,
ORDER 1975, a complaint with the docket number 13-CA-13796
was issued against Custom. The complaint alleged, inter
Pursuant to Section 10(c) of the National Labor alia, that at all material times Frank Florence "occupied
Relations Act, as amended, the National Labor Re- the position of president of the Respondent, and has been
lations Board hereby orders that Interior Concepts, and is now an agent and supervisor of Respondent,
Inc., Chicago, Illinois, its officers, agents, succes- acting on its behalf" The complaint further alleged that
sors, and assigns, as an alter ego of Custom Manu- Custom had violated Section 8(a)(5) and (1) of the Na-
facturing Company (Successor to Zion Industries, tional Labor Relations Act, as amended (the Act) by uni-
Inc.-Curtain and Drapery Division); Bobbe Drap- laterally changing existing wage rates, benefits, and con-
erInc.-CurtaiC andCi Drapery Division); Bobbe ditions of employment by failing and/or ceasing to make
ery Products, Co., Inc.; and Concepts in Drapery payments and contributions into and discontinuing the
Design, Inc., shall make whole the discriminatees pension plan described in a collective-bargaining agree-
named in the Board's Supplemental Decision and ment between the Union and Custom.
Order set forth at 230 NLRB 691, 692, in the On February 13, 1975, the Union filed a charge, dock-
amount and manner described therein. eted as Case 13-CA-13998, against Custom and Bobbe
Drapery Products (Bobbe). The charge alleged that "the
cepts in Drapery Design, Inc., Southeastern Envelope Co., Inc. and South- above-named Employer, through its officers and agents,"
eastern Expandvelope. Inc. (Diversified Assembly, Inc.), 246 NLRB 423 had unlawfully transferred and/or closed down "its"
~~~~~~~~~~~(1979). Zion, Illinois, facility. On April 22, 1975, the Union filed
DECISION an amended charge in Case 13-CA-13998, against
Custom, Bobbe, Concepts in Drapery Design, Inc. (Con-
NANCY M. SHERMAN, Administrative Law Judge: This cepts in Drapery), Frank Florence, and Roberta Flor-
case was heard before me in Chicago, Illinois, on No- ence. The amended charge alleged, inter alia, that "the
vember 17, 1980, pursuant to a backpay specification and above-named Employer, through its officers and agents,"
notice of hearing issued on May 16, 1980. The backpay had unlawfully transferred and/or closed down "its"
specification alleges that Interior Concepts, Inc. (Interior Zion, Illinois, facility. That same day, the Union filed an
Concepts), is an alter ego of other corporations which are amended charge in Case 13-CA-13796 against Custom,
named in the specification and which in April 1979 were Bobbe, Concepts in Drapery, Frank Florence, and Ro-
judicially directed to pay certain sums required by a berta Florence, alleging, inter alia, that "the Employer
Supplemental Decision and Order of the Board issued in has through its agents and officers unilaterally terminated
July 1977. the Accident & Insurance Plan, and Life Insurance Plan,
Upon the entire record, including the demeanor of the and the Pension Plan." On April 24, 1975, the Union
witnesses, and after due consideration of the briefs filed filed a first amended charge in Case 13-CA-13630
by counsel for the General Counsel and by counsel for against Custom, Bobbe, Concepts in Drapery, Frank
Interior Concepts and by its agents Terry Sterling, Frank Florence, and Roberta Florence. The charge alleged,
Florence, and Roberta Florence, I hereby make the fol- inter alia, that "the above-named Employer" had "dis-
lowing: criminated against union members and officers."
On April 30, 1975, a complaint was issued with the
FINDINGS OF FACT docket number 13-CA-13998. The caption named
I. THE PRIOR LITIGATION Custom, Bobbe, Concepts in Drapery, "and their agents
Frank Florence and Roberta Florence." The body of the
On October 2, 1974, The International Chemical complaint stated that Custom, Bobbe, Concepts in Drap-
Workers Union, Local 665 (the Union), filed a charge ery, Frank Florence, and Roberta Florence would be re-
against "Custom Manufacturing Co., Successor to Zion ferred to as "Respondents, collectively." The complaint
Industries, Drapery Div." (Custom), docketed as Case alleged, inter alia, that the initial charge had been served
, , m
.
.,-
n , , t i fil a ai st
i t t
u st o m a no t h e r c h ar g e , w h i c h w as docketed as Case 13-
oard's r y f r f ir l r r ti as t - . r ll , i t r li , t t t -
forthin 2 NLRB1256 75)
forth in 220 NLRB 1256 (1975) and 230 NLRB 691 ~ rminated t i t
i r
197 5 , a l i t
w i th t e
ting i t s l ." l i t f rt r ll t t
i t
u st o m h ad v i o la te ec t io n 5 an d 1) o f t h e
o na l L ab o r l ti i
Inc.-Curtain and rapery ivision); obbe r -
l ater a l ly c h a ng in g e isti
r a t es , f i ts , an d n -
ery Products, o., Inc.; and Concepts in Drapery iti f l t f ili / r i t
r r t , ., I c.; and oncepts in rapery pay ents and contributions into and discontinuing the

rein,.eted
i i , ., t t .. . t ,
t n l e. I . ( iv rsified l , I .), l f ll tr f rr / l its
i , ilit . i
a n a m e e , i t

ril , , a l i t s iss it t

1. I I I I t , , t i , t i t

t apery , I t rn l . l i i t
.
t r i t
CUSTOM MANUFACTURING COMPANY 617
on "Respondent Custom" and "Respondent Bobbe"; that Custom, Bobbe, Concepts in Drapery, "and their agents
the first amended charge had been served on "Respond- Frank Florence and Roberta Florence," and is signed by
ents"; that Bobbe was the alter ego to Custom; that Con- counsel as "[t]heir" attorney. By letter to the Regional
cepts in Drapery was an alter ego to Custom and Bobbe; Director dated June 24, 1975, counsel stated, inter alia,
and that Custom, Bobbe, and Concepts in Design were "On behalf of the Respondents ... we hereby withdraw
"employers" within the meaning of the Act. The com- the 'Respondent's Answer to Complaint."' On June 30,
plaint further alleged that at all material times Frank 1975, William G. Kocol, counsel for the General Coun-
Florence was president of Custom and was an agent and sel, filed a motion for an order transferring the proceed-
supervisor of Custom, Bobbe, and Concepts in Drapery; ing to the Board and for summary judgment. The motion
and that Roberta Florence was at all material times presi- stated, inter alia, that "the Respondent" had filed and
dent and an agent of Bobbe and Concepts in Drapery. then withdrawn an answer, and that, if the Board issued
Also, the complaint alleged that "Respondents" had vio- an order transferring the case to itself, Kocol intended to
lated the Act by unilaterally terminating a collective-bar- file a supplemental brief as to an appropriate remedy.
gaining agreement between Custom and the Union, and On July 8, 1975, the Board issued an order transferring
by terminating "all its [sic] employees employed at its the proceeding to itself and a Notice To Show Cause
Zion, Illinois, facility, and thereafter [failing] and [refus- why the Motion for Summary Judgment should not be
ing] to offer employment to those employees at its Chi- granted. The order stated that the complaints alleged
cago, Illinois, facility."' unfair labor practices by "Respondents," that an answer
Also on April 30, 1975, the Regional Director issued a had been filed by "Respondents," and that "Respond-
pleading whose caption named Custom, Bobbe, Concepts ents" had subsequently withdrawn "their" answer. The
in Drapery, "and their agents Frank Florence and Ro- affidavit of service of this document states, inter alia, that
berta Florence." The docket numbers on the pleading copies were served by regular mail on Custom, Bobbe,
were 13-CA-13640 and 13-CA-13796 and it was enti- copies were served by regular mail on Custom, Bobbe,
wted "Amended Consolidated 13-Complai and Notice os Concepts in Drapery, Frank Florence, and Roberta Flor-tled "Amended Consolidated Complaints and Notice of. ence, respectively. No party filed a response to theHearing." The body of the complaint stated that the cor- Nce To Show Case. Koco filed a e hh soe
porations named in the caption "[A]nd Their Agents N o t lc e T o h o w a e K o c fi l e a bef which someporations named in the caption .[Aind Their Agents times referred to the opposing party as "Respondents"
Frank Florence and Roberta Florence" were "hereint one point referred to "the doubtful continued via-
called Respondent Custom, Respondent Bobbe, Respond- bity of epondent' nes oertn ere t ti i
ent Concepts, Respondent Frank Florence, and Respond-pondents business operation were it to
ent Roberta Florence, respectively, and Respondents co ncur certain additional expenses, and requested thatent Roberta Flo..r.., respectively, andRespondentsl- "the Board order Respondents to offer employment at itslectively." The complaint alleged, inter alia, that the first the Board order Respondents to offer employment at its
amended charges in both cases had been served "on Re- [sic] Chicago, Illinois, facility to those employees who
spondent Custom; Respondent Bobbe; Respondent Con- were employed at the Zion, Illinois, facility, and to pay
cepts [in Drapery]; Respondent Frank Florence and Re- backpay until such offer of reinstatement." The certifi-
spondent Roberta Florence." The complaint further al- cate of service attached to this brief avers that copies
leged that Bobbe was an alter ego to Custom; Concepts were mailed to inter alia Custom, Bobbe, Concepts in
in Drapery was an alter ego to Bobbe and Custom; and Drapery, Frank Florence, and Roberta Florence, respec-
"Respondents" Custom, Bobbe, and Concepts in Drap- ively.
ery were "employers" engaged in commerce within the On October 14, 1975, the Board issued a Decision and
meaning of the Act. Also, the complaint alleged that at Order, reported at 220 NLRB 1256, in these three cases.
all material times Frank Florence was president of "Re- The Decision initially stated that Custom, Bobbe, Con-
spondent" Custom and an agent and supervisor of "Re- cepts in Drapery, "and their agents Frank Florence and
spondents" Custom, Bobbe, and Concepts in Drapery; Roberta Florence [are] herein called the Respondent."
and that at all material times Roberta Florence was presi- The Decision went on to state that the complaints al-
dent of and an agent and supervisor of "Respondents" leged unfair labor practices by "Respondent." The Board
Bobbe and Concepts in Drapery. The complaint further then stated that the action of "Respondent" in withdraw-
alleged that "the Respondents" had violated the Act by, ing its answer meant that the allegations of the complaint
inter alia, unilaterally changing existing wage rates, bene- must be deemed admitted. Part I of the Board's "Find-
fits, and conditions of employment by failing and/or ings of Fact," headed "The Business of the Respondent,"
ceasing to make payments into, and discontinuing, the refers by name to Custom, Bobbe, and Concepts in
pension and insurance plans described in a collective-bar- Drapery, but does not refer by name to Frank Florence
gaining agreement between Custom and the Union. or Roberta Florence. Nor are the Florences referred to
About May 23, 1975, a single answer was filed to both by name in any of the other findings of fact, which usu-
April 30 complaints. This answer was captioned "Re- ally refer to "Respondent" in the singular but sometimes
spondent's Answer to Complaint"; stated that Custom, use the plural. Part V of the Decision, entitled "The
Bobbe, Concepts in Drapery, "and their agents Frank Remedy," states, inter alia, that backpay and contribu-
Florence and Roberta Florence" would be collectively tions to the pension and insurance plans are to be paid by
referred to as "Respondent"; and contained averments "Respondent." The Board's Conclusions of Law state
ascribed to "Respondent." The end of the answer names that Custom, Bobbe, Concepts in Drapery, "and their
agents Frank Florence and Roberta Florence, is an em-
'The word "its" is used as a pronoun for "Respondents' in other por- ployer engaged in commerce within the meaning of' the
tions of the complaint as well. Act. These Conclusions of Law further state that "Re-
t
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l t t t il t ll t i ti ll ti
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i , Illi i , f ilit , t r ft r [f ili ] [r f - t ti f t l
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l ril , , t i l ir t r i fil " R esp o n d en t s ," t h at " s -
pleading hose c ti st , , t eentl t Th
in rapery, "and their agents rank lorence and - ffi vit f s rvic f t is c t states, i t r li , t t
t pe esre rglrmi CsoBbe
were 13-CA-13640 and 13-CA-13796. and it was enti-
c o l s w r e v d b e u m ' » c s o ' B b e
were13-C-1340 ad CA-3796 an it as eti- ts i r r , r l r , t
i en li l i en c e, respectavely Frty Fled a Ronerto the
ri ." l i t t t e nc e, r es p ec hiv el y. N o part. n ed VT sonet, t eHearng. Th boy o th coplant tatd tat he or- Notice To Show Cause. Kocol filed a brief which some-
poration na ed i t c ti "[ ] ir ts ti e r o th e opoi party a "Responden e
r l r rt l r r r i btaees ref rred to the opposing party as "Respondents-
ll t t , t , s - b u ti at o n e p o net r ferred to "the doubtful continued via-
t c ts, s t r k l r c , and espond- ib ul cty . o f aespondent's business operation ere it to
ent oberta lorence, respectively, and espondents col- "hBc u r d c ert aon Rdditional expenses and requested that
l ti l ." l i t ll , i t r li . t t t fir t [scth e Co ar d r r t t ofser l t t its
c r s i t cases been served " e- w[ s rc ] ic . Illi i , f ilit t those e ployees
s t usto ; espondent obbe; espondent on- w er e e ployed at the Zionf Illinois, facility, and to pay
cepts [in rapery]; Respondent Frank Florence and Re- catep o seric s c f f r f reinstatement." The certifi-
spondent Roberta Florence." The complaint further al- wt e d t t t c C brief avers that copies
leged t t obbe as an alter ego to usto ; oncepts Dw ere m a l l ed to i n t er a l iao usto , obbe, oncepts in
i lt t t ; ndDraper r l r , rt l r , r -
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ached
618 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
spondent" had engaged in certain unfair labor practices the United States Court of Appeals for the Seventh Cir-
which included refusal to make payments to the pension cuit entered the judgment proposed by Board counsel.
2
and insurance plan as provided in the collective-bargain- On February 17, 1977, the Regional Director issued a
ing agreement with the Union and the termination of and document entitled "Backpay Specifications and Notice of
failure and refusal to offer reinstatement to employees. Hearing" bearing all three Board docket numbers, and
The Board's Order states, in part: naming in the caption Custom, Bobbe, Concepts in Drap-
ery, "and their agents Frank Florence and Roberta Flor-
Respondent, Custom . . . Bobbe . . . Concepts in ence." The document recited that a Board Order had
Drapery . . . its officers, agents, including Frank been issued against Custom "et a.," and that the court of
Florence and Roberta Florence, successors, and as- appeals had "enforced in full the backpay provisions of
signs, shall: the Board's Order." The document contained certain al-
legations regarding the amount due from "Respondent,"
including allegations regarding the amount owed to each
discriminatee and to the Union's pension and welfare
[2](d) Pay into the pension plan and insurance fund. The total amount claimed was S35,791.90, plus in-
plan all due and owing payments and contributions terest. So far as relevant here, the affidavit of service
as provided in the collective-bargaining agreement states that the "Backpay Specifications" was served
with the Union. solely on "Custom Manufacturing Company c/o Frank
(e) Offer all employees in the appropriate unit Florence & Roberta Florence," and on a member of the
who were terminated at its Zion, Illinois, facility law firm Goodman and Goodman, Ltd. By letter dated
employment at its Chicago, Illinois, facility, paying February 18, 1977, which recited the docket numbers of
their travel and moving expenses if they accept the all three cases, this law firm advised the Regional Direc-
offer of employment, and make said employees tor that it did not represent "the Respondent." By tele-
whole for any losses they incurred by reason of the gram dated March 18, 1977, counsel for the General
discrimination against them in accordance with the Counsel advised Frank and Roberta Florence that an
section of this Decision entitled "The Remedy." answer to the backpay specifications had been due on
March 8, 1977, and that failure to file an answer immedi-
Paragraphs 2(g) and (h) of the Order required the post- ately would necessitate the filing of a Motion for Sum-
ing and mailing of notices. Each notice was to bear the mary Judgment. 3 By letter dated March 22, 1977, to
typewritten names of Custom, Bobbe, Concepts in Drap- "Frank Florence & Roberta Florence/Frank Florence &
ery, "and their agents Frank Florence and Roberta Flor- Associates . . . Dear Mr. & Mrs. Florence," Carl Tomin-
ence," and contained a blank to be executed by "Repre- berg, counsel for the General Counsel, stated:
sentative" and "Title." The affidavit of service of this
Decision indicates, inter alia, that copies were sent by . . . your answer to the Backpay Specification was
regular mail to Custom, Bobbe, Concepts in Drapery, due on March 8, 1977. Unless you file your Answer
Frank Florence, and Roberta Florence, respectively. immediately I will be forced to move for Summary
On July 19, 1976, the Board, by Deputy Associate Judgment. To the extent that your Answer fails to
General Counsel Elliott Moore, filed with the Court of deny the allegations of the Backpay Specification
Appeals for the Seventh Circuit an "Application for . . . you shall be precluded from introducing any
Summary Entry of a Judgment Enforcing the Board's evidence [controverting such allegations.]
Order." Frank Florence and Roberta Florence were not
named in the caption of the application, which designates No response to the backpay specifications was filed.
Custom, Bobbe, and Concepts in Drapery as "Respond- On April 6, 1977, Tominberg filed with the Board a
ent." The body of the application states that the Board's "Motion To Transfer Proceedings to the Board and
order had been issued against "Respondent, Custom .. Motion for Summary Judgment." The caption of the
Bobbe . . . Concepts in Drapery Design, Inc., and their motion named Custom, Bobbe, Concepts in Drapery,
agents Frank Florence and Roberta Florence, its officers, "and their agents Frank Florence and Roberta Flor-
agents, successors, and assigns." The application request- ence." The body of the motion requested summary judg-
ed a judgment against "Respondent, Custom . . . Bobbe ment, for failure to file an answer to the backpay specifi-
. . . Concepts in Drapery Design, Inc., and their agents cations, against Custom, Bobbe, Concepts in Drapery,
Frank Florence and Roberta Florence, its officers, "and their agents Frank Florence and Roberta Flor-
agents, successors, and assigns." Attached to the applica- ence. So far as relevant here, the affidavit of service
tion were copies of a proposed judgment whose caption
named as "Respondent" (in addition to Custom, Bobbe, to
2
Thereafter, the clerk of the court returned the original appeal record
to the Board. The clerk's covering letter, dated February 25, 1977. states
and Concepts in Drapery) "their agents Frank Florence that the title of the cause is "National Labor Relations Board, Petitioner,
and Roberta Florence," and which called for a judgment Custom Manufacturing Company, etc., et at., Respondents."
against "Respondent, Custom . . . Bobbe . .. Concepts 3 The copy of this telegram in the Board's formal file in Washington,
in Drapery . . . and their agents Frank Florence and Ro- D.C., is almost illegible. My description is based mostly on the descrip-
berta Florence, its officers, agents, successors, and as- tion in the Board's 1977 Supplemental Decision and Order herein (230
signs." The proposed judgment constituted an almost NLRB 691) and on the description in the General Counsel's April 1977
Motion for Summary Judgment. The Board's Decision states that the
verbatim copy of the Board's Order. Apparently, no op- General Counsel "telegraphically advised Respondent's agents, Frank and
position to the application was filed. On August 23, 1976, Roberta Florence."

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. ti t r t r J t. 3 y letter dated arch 22, 1977, to
i r l r erta l re ce/ ra Florence
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ti l ti i N o r es po ns t o th e b ac k pa y s p ec ifications w as file .
n i , 197 7, i fil it t r
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M o t o n f o r ti t
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t h e
signs." The proposed judgment constituted an almost NLRB 691) and on the description in the General Counsel's April 1977
O O '
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CUSTOM MANUFACTURING COMPANY 619
with respect to this motion named only "Custom Manu- make whole the discriminatees by payment to them of
facturing Company c/o Frank Florence and Roberta "the amount following their names and by payment to
Florence." On April 20, 1977, under the same caption the [Union] pension plan . . . the amount following its
and with the same docket numbers as those set forth in name." Also, the application alleged that "the Respond-
the motion, the Board transferred the proceedings to ents" had committed unfair labor practices. The applica-
itself and directed that cause be shown before May 4, tion requested a supplemental judgment summarily en-
1977, why the Motion for Summary Judgment should forcing the Board's 1977 Order, and requiring "Respond-
not be granted. So far as relevant here, the affidavit of ents, Custom . . . Bobbe . . . Concepts in Drapery . . .
service states that the show-cause notice was mailed by and their agents Frank Florence and Roberta Florence"
registered mail to "Custom Manufacturing Company c/o to comply therewith. So far as relevant here, the certifi-
Frank Florence and Roberta Florence" only and by reg- cate of service with respect to this application recites
ular mail to Bobbe and Concepts in Drapery. service on the law firm Dorfman, DeKoven, Cohen, and
No response was filed to the April 20, 1977, show- Laner (described in the certificate of service as counsel
cause notice. On July 7, 1977, the Board issued a Supple- for "Respondents"); Custom "c/o Frank Florence & Ro-
mental Decision under the same caption and with the berta Florence," Bobbe; and Concepts in Drapery. On
same docket numbers as those in the April 6, 1977, April 20, 1979, the Seventh Circuit entered a "Supple-
motion. 230 NLRB 691. The Decision stated, inter li, mental Judgment Enforcing a Supplemental Order of the
that the Board's October 1975 Order had directed that National Labor Relations Board." This judgment, in the
Custom, Bobbe, Concepts in Drapery, "and their agents form requested by Board counsel, named in the caption
Frank Florence and Roberta Florence, herein called theom . . . Bobbe . . . [Concepts] in Drapery . .
Respondents, make whole certain employees and the and thr agents Fran Florce and Roberta Florence,
[Union's] pension and insurance fund." In view of the ab- Respondents" and required Respondents, Custom
sence of any response to the General Counsel's motion Bobbe . . . Concepts in Drapery . . . and their agents
and the Board's show-cause notice, the Board found the Frank Florence and Roberta Florence to make whole
allegations of the backpay specifications to be true.4 The t e dicrinatees naed below, amet t o them o
Board's ruling on the Motion for Summary Judgment the montlloiatees named below, by payment to them of
states, inter alia, that the Board "orders the payment [of t amount following th.r names and by payment to the
the amounts set forth in the Specifications as net backpay [un o n ] p p th e a m o un t f it
and as payments due and owing to the contractual pen- name
sion plan] jointly and severally by Respondents." The. T INSTANT PROCEEDING
Order itself states, in part:
[T]he National Labor Relations Board hereby A. Jurisdiction; Matters Established by the Pleadings
orders that the Respondents, Custom . . . Bobbe , t A R
. . . Concepts in Drapery ... and their agents On May 16, 1980, the Acting Regional Director issued
Frank Florence and Roberta Florence, make whole the backpay specification and notice of hearing which
the discriminatees named below, by payment to gave rise to the proceeding before me. The specification
them of the amount following their names and by alleged, inter alia, that Interior was an alter ego of
payment to the [union] pension plan . . . the Custom, Bobbe, and Concepts in Drapery and was obli-
amount following its name. gated to pay to the employees and the Union funds the
sums specified in the Board's July 1977 Order and the
So far as relevant here, the affidavit of service of this Court's 1979 judgment. On June 2, 1980, Attorneys
Supplemental Decision and Order recites that copies Richard L. Marcus and Irving M. Geslewitz, on Interi-
were served on Custom "c/o Frank Florence & Roberta or's behalf, filed a motion to dismiss the May 1980 back-
Florence," Bobbe, and Concepts in Drapery. pay specification for lack of jurisdiction. Interior assert-
On March 19, 1979, Deputy Associate General Coun- ed that the Court's April 1979 judgment was final and
sel Moore filed on behalf of the Board an application to did not remand the proceedings to the Board, and that
the Seventh Circuit for a supplemental judgment enforc- the Board had failed, before issuing the May 1980 back-
ing the Board's July 1977 Order. The caption named as pay specification, to apply to the court for leave to
"Respondents" Custom, Bobbe, Concepts in Drapery, adduce additional evidence that Interior was an alter ego
and their agents Frank Florence and Roberta Florence." of the other three corporations. Further, the motion as-
The application stated that the 1977 Board Order had serted that the Board's Rules and Regulations do not
been issued against "Respondents, Custom . . . Bobbe provide for a proceeding of the nature described in the
. . . Concepts in Drapery . . . and their agents Frank May 1980 backpay specification. On July 31, 1980, this
Florence and Roberta Florence." Further, the applica- motion was denied by Administrative Law Judge Wil-
tion stated that the Board had ordered "Respondents, liam A. Gershuny on the authority of N.LR.B. v. CCC.
Custom . . . Bobbe . . . Concepts in Drapery . . . and Associates, Inc., 306 F.2d 534 (2d Cir. 1962). See also
their agents Frank Florence and Roberta Florence" to Coast Delivery Service, Inc., 198 NLRB 1026 (1972).
' In the form signed by the Board members, the Supplemental Decision ' The face of this May 1980 backpay specification indicates that efforts
states, inter alia, that "Respondents [sic] counsel's law firm advised that it were made to serve, inter alia. Concepts in Drapery, Custom, and Bobbe
no longer represented the Respondents." (As printed in the Board's "c/o" the Florences, and the Florences individually. None of these was
bound reports, the first word in the quoted material is Respondents'.") named in the certificates of service filed by Interior's counsel in connec-
The letter in fact referred to "the Respondent." tion with his motion and reply memorandum.
f
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620 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The caption of the May 1980 backpay specification set retained a security interest in all of Custom's assets, in-
forth the docket number of all three cases and named cluding its inventory, fixtures, machinery, and accounts
Custom; Bobbe; Concepts in Drapery; "and their agents receivable. The loan was personally guaranteed by
Frank and Roberta Florence"; and "Interior Concepts, Rubin, his wife, and Frank Florence. 7
Inc., and its agents Terry Sterling, Frank and Roberta When operating the plant, Zion Industries had had a
Florence." The backpay specification alleged, inter alia, collective-bargaining agreement with the International
that in October 1975 the Board had ordered "Custom, Chemical Workers Union, Local 665 (the Union) cover-
Bobbe, Concepts [in Drapery], their agents Frank and ing factory and warehouse employees. Custom hired
Roberta Florence, and successors and assigns" to pay about 50 of these former Zion Industries employees, rec-
into the pension plan and the insurance plan all due and ognized the Union, and either assumed the existing col-
owing payments, and to make whole employees who had lective-bargaining contract or executed a new one. The
been discharged from the Zion, Illinois, facility for any Board found in the unfair labor practice proceeding that
losses they incurred as a result of "Respondent's" dis- Custom entered into a collective-bargaining agreement
crimination against them. The backpay specification fur- effective from July 1, 1974, to June 30, 1976 (220 NLRB
ther alleged that the Board's July 1977 Supplemental De- at 1257-58). The unopposed February 1977 backpay
cision and Order ordered "Respondents Custom, Bobbe, specification states that in July 1973 "Respondent
Concepts [in Drapery] and their agents Frank and Ro- ee ain a ents into the Unns penson and
berta Florence" to make payments totalling $35,791.90, ease paye e
plus interest to 10 named employees and the Union's in- weare un
surance and pension funds "for Respondents [sic] viola-Frank Florence was Custom's president and treasurer,
tions" of the Act. In addition, the backpay specification and directed Custom's business on a day-to-day basis. In
alleged that Bobbe and Concepts in Drapery were August 1973, Terry Sterling became Custom's salaried
successive alter egos of Custom, and that "IT]he Flor- controller and office manager, in which capacities he
ences by Roberta Florence and/or by Frank Florence "sat in on most of the labor relations," oversaw the bill-
have been, at all times material herein, shareholders of 50 ing and the invoices, had the orders processed, kept
percent or more of the stock in Custom, Bobbe, and track of making payments on payables, made credit in-
Concepts [in Drapery], and, at all times material herein, formation, and organized the office. He was never an of-
were controlling owners or the owner of Custom, ficer or shareholder in Custom, and is no kin to the
Bobbe, and Concepts [in Drapery]." Attorney Geslewitz Rubins or the Florences.
filed an answer to the backpay specification as Interior's Between 85 and 90 percent of Custom's business con-
attorney, in which answer he admitted all the allegations sisted of manufacturing draperies from its own fabrics to
set forth in this paragraph except the alter ego allega- be hung in private residences. The homeowner would
tions.6 At the hearing before me, Attorney Geslewitz ap- select a fabric from a sample on display at Custom's fac-
peared on behalf of Interior and on behalf of the Flor- tory or (more often) at a retail store. If the selection was
ences in their capacity as its agents. Geslewitz then ad- made at a retail store, a salesperson would take down the
mitted the alter ego allegations set forth in this para- customer's dimension and fabrication specifications and
graph. forward the order to Custom, which would make the
B. Te Business O d by C m, B e, draperies and bill the store. Inferentially, the store had to
he neses pera by Ctom, Bobepay Custom whether the homeowner paid the store or
Concepts in Drapery, and InteriorConcepts in D , ad I r not. If the selection was made at Custom's own factory,
1. Custom someone from Custom's office would take down the
measurements. Custom would then manufacture the
Custom was organized in 1967 and incorporated in draperies and bill the homeowner directly. On occasion,
1969, several years before the marriage of Frank and Ro- Custom's employees would also install the draperies.
berta Florence. Initially, Frank Florence owned all of Custom did not sell raw fabric, but on occasion, if a cus-
Custom's stock. In 1972, one Ben Rubin bought 50 per- tomer wanted a set of draperies and also wanted a few
cent of Custom's shares. Until 1973, Custom was located yards of the drapery material to make something else
on Western Avenue in Chicago, Illinois. During this Custom would include that yardage as part of the sale.
period, Custom was a profitable operation. In July 1973, About 10 to 15 percent of Custom's business came from
Custom leased, and moved its entire operations to, ast l s , it Benjamin Brothers, Custom's only nonretail customer.
Zion, Illinois, plant previously occupied by the drapery Benjamin Brothers is a hotel furnishing supplier which
division of Zion Industries, Inc. Custom did not purchase B B ro t h er s te shin suppier i
the plant building in Zion, about 25 miles from Chicago, puts together packages of furniture, fixtures, draperies,
but did purchase Zion Industries' equipment, sewing and other items whch would go into the roms of a
equipment, inventory, and fixtures. In addition, Custom h o t e l w h i h s being opened up, remodeled, or refur-
moved its Chicago equipment to the Zion plant. In order bished. As described in greater detail infra, section
to obtain capital to purchase and operate the business in IB,4 the fabric for draperies ordered by Benjamin
Zion, Custom borrowed $150,000 from Continental Illi-
nois Bank (Continental). To secure this loan, Continental The Florences were married in 1972. Roberta Florence had receivedmoneys from her former husband, who was killed in an accident, and had
to raise three children from that marriage. Frank Florence told Continen-
' The certificate of service attached to this answer names only the tal that, because of these circumstances, he would not "allow" his wife to
union representative. sign on the loan. Continental agreed.
e
rl ti
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Co sncepss inODrapery ated Iynsteriom, Bobpay st t r t r i t t r r
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i i i f i I tri , I . t i t pe nustg n r t rpa g of a ho t l ure i g li which
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ri ri i
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CUSTOM MANUFACTURING COMPANY 621
Brothers was supplied by it to Custom, which fabricated measure draperies. However, because Bobbe had no
and installed them. money with which to maintain an inventory, Bobbe man-
According to a partly unaudited statement by Cus- ufactured draperies from fabric supplied by the customer.
tom's accountants, between Custom's commencement of Of Bobbe's four suppliers, three had been suppliers of
operations in July 1973 and May 31, 1974, Custom lost Custom. Although Bobbe had fewer customers than
over S117,000.8 About June 1974, Continental asked Custom, practically all Bobbe's customers had also been
Custom to set up a collateral account into which all ac- customers of Custom. Among these retained customers
counts receivable moneys were to be directly deposited, was Benjamin Brothers, which represented a substantial
to discontinue purchasing any more inventory, and to part of Bobbe's business. With the Union's "permission,"
reduce Custom's receivables and inventory. Custom Bobbe recalled on various dates between August 10 and
agreed. Funds were transferred by Continental from this November 2, 1974, about 14 of the approximately 51 unit
collateral account to cover Custom's payroll and other employees laid off by Custom. Also, Bobbe hired one
necessary expenses, but the bulk of the money in this ac- bargaining unit employee (John Popelka, a warehouse
count was retained by Continental to pay Custom's note, employee) who had not been on Custom's payroll when
mostly the interest. Frank Florence testified that, at the it shut down; recalled two installers (Trinidad Soria,
end of June 1974, 50 percent shareholder Rubin, who is who is Frank Florence's son-in-law, and Steven Scalf)
no kin to either of the Florences, "skipped out ... he who had worked for Custom in nonunit jobs; and re-
just took off like a bird. . . I could kill him." called as a supervisor Mildred Popelka, who had been a
About this same time, Continental said that, because of supervisor for Custom. The Board in effect found in the
the amount of money which Custom owed to its land- unfair labor practice proceeding that Bobbe was bound
lord, to Zion Industries, and to others, it would be best by the July 1974 collective-bargaining agreement; but the
to continue operating as a newly formed corporation. In specification alleged
July or August 1974, Custom as such went out of busi- tat while Bobbe was in operation, no payments were
ness, and all the employees were "let go." On an undis- mae into the ontratay e e p n wel-
closed subsequent date, Custom was dissolved as an Illi- made into the contractually described pension and wel-
nois corporation.t d , C m ws d d a a fare funds. As previously noted, the November 1974
During the calendar year 1974, Custom lost more than charge herein names Custom and complains of the failureDuring the calendar year 1974, Custom lost more than
$200,000. During that calendar year, Frank Florence, tomake such payments.
who devoted his full time to the business, and Rubin, Bobbe's operations lost money. Continental asked the
who according to Custom's tax return also did so, re- Florences to sell off whatever equipment they could and
ceived as salaries from Custom $12,287 and $12,000, re- to move operations from Zion to a smaller space. As
spectively. proffered reasons for this request, Continental expressed
fear that Bobbe's landlord would distrain Custom's
2. Bobbe equipment, in which Continental had a security interest,
The new corporation formed because of Continental's for nonpayment of rent, and further said that unneces-
request (and, according to Frank Florence, because "we sary utility expenses were being incurred because the
felt it was maybe a way to start up new business") was Zion plant was much larger than was needed for the cur-
Bobbe. Because of Custom's losses and Frank Florence's tailed manufacturing operation. Much of the remaining
personal guarantee of Custom's debt to Continental, he equipment was sold, and, with Continentals permission,
had no money and all of Bobbe's capitalization was pro- the unsold equipment was moved to a plant on Schubert
vided by his wife, Roberta, who incorporated Bobbe and Avenue in Chicago. In February 1975, Bobbe surren-
owned all the stock. Roberta Florence was Bobbe's dered its corporate charter to the State of Illinois.
president but took no active role in the business. Frank During the 6 months Bobbe was i business as such,
Florence was Bobbe's vice president and secretary and Frank Florence received S13,605 and Roberta Florence
managed it on a daily basis. Sterling was Bobbe's salaried received nothing. Roberta Florence had invested SS,000
controller and office manager, in which capacities he in the business, and its losses amounted to about $4,300.
performed the same duties, including labor relations 3. Concepts in Drapery
duties, which he had performed for Custom. He was
never an officer of Bobbe. Bobbe operated from the When operations were moved from Zion at Continen-
same plant in Zion as Custom had, and, with Continen- tal's request, a new corporation, Concepts in Drapery,
tal's permission, used machinery which had been pledged was set up in February 1975 to operate the business
by Custom but had not yet been sold. Bobbe, like while it was located on Schubert Avenue. Roberta Flor-
Custom, manufactured and sometimes installed made-to- ence furnished all the capital, owned all the stock, was
the corporate president, took an active management role,
Interor's brief attributes Custom's losses "primarily" to the difficulty and worked parttime preparing all the invoices and han-
in training the former Zion employees to operate the automatic equip- dling all the billing functions. Frank Florence was vice
ment brought over to Zion. While Custom did have such difficulties in
connection with training employees, the record fails to show the extent president and secretary or treasurer, ran the factory, and
to which such training problems contributed to Custom's losses over a did selling on the telephone. Sterling was the salaried
period of 10 months. controller and office manager, and performed the same
I This wa not the termination action found unlawful in the unfair
labor practice case. Further, because the amount due to the union funds
is based upon hours worked, no part of the required payments into these on Custom's and Bobbe's payrolls. In addition, he helped
funds is attributable to the period covered by this 1974 separation. run the factory and sell off the pledged equipment. He
.

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t i t i i i it l ( l , a r s
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l i pervis ff t
t t i t i l f l r i
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t ti r ti l ti . u F 1 b cifi ti l
l r t , t t i tat il ti
ness, ll t l y s r l t ." i - i t c d a el
l t t , t i l s Illi fm a d e t o t h eAs previo sly d escdt b ed Novmbe an d w1
nois corporation. f r e f u n d s nA s p Customand n o te d . the November 1974
i l r to mae such" es s t o m complains of the failure
, . l r r, t o m a k e su c h ^^ts.
l , i B o b b e 's ti l t . ti t l t
r i ' ll i l
i l ti i ll . s
cti l . t l
ti f o r n o n a m
en t o f r en t, f t i t t -
r t ( , r i
w er e b
l " l r r t f r t r-
' r ta l ed ti . f t r i i
l ' l
w as so l d an d , w th i t l' i i ,
ll ' it li ti t h e u n s ol d t l t rt
A v e nu e n
ll ' d er e d t s t t t t t f Illi i .
i ti 6 m o n t h s a n i
' i r t r F r an k i $ l
il i rl ' l ri i l i t $5,
t l it i n t h e , .
f i i l i .
3. ^"^pts i 1 Drapery
ti
t ti
i i r r
l rt
l i ll it l, ll
* ior' i tt i t t ' l i il t t iffi lt rtti i ll t i i -
)i;_ 1 »i, i;ir r »*,, !;. i, rn
d l n a the billing functions. Frank Florence was vice
nths,.controller
I s
. labor relations an
d other duties he had performed when
O '

10 aitedo

"^pf
t
r '
622 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
owned no stock in and was not an officer of Concepts in 1975, all of Custom's collectible accounts receivable
Drapery. Nor did he perform any selling for that corpo- were collected, and the amounts so collected were so re-
ration. Installers Scalf and Soria, both nonunit personnel, mitted to Continental. After that time, no payments were
moved from Bobbe's to Concepts in Drapery's payroll, made to Continental on the outstanding debt, which as of
as did Supervisors Mildred Popelka and Ella Stewart and August 1975 totalled about $110,000, including interest.
warehouseman John Popelka. This warehouseman was The orders which remained unfilled when Concepts in
the only unit employee who was moved between these Drapery stopped manufacturing were given to Drape-
payrolls. In February and March 1975, Concepts in master, a competitor, which billed the customers directly
Drapery hired eight factory workers who had never and paid Concepts in Drapery nothing for the business.10
worked in the Zion plant. The Board found in the unfair Concepts in Drapery never made any profits. After its
labor practice case that Section 8(a)(3) and (1) had been February 1975 formation, Frank Florence received from
violated since February 1, 1975, by the termination of it a total of 9,000 and Roberta Florence received from
the Zion employees and by the failure and refusal to it a total of about 3,000.
offer them employment in the facility on Schubert
Avenue in Chicago. 220 NLRB at 1258, 1259. The unop- 4. Interior
posed February 1977 backpay specification alleged that
eight named employees (all of whom had been on Cus- I is unclear from the record whether the corporate
tom's payroll and four of whom had been on Bobbe's charter of Concepts in Drapery ever actually lapsed. On
payroll) would have accepted employment at the Schu- August 19, 1975 (2 months after the withdrawal of the
bert Avenue facility. The Board's judicially enforced answer to the unfair labor practice complaint against
backpay order specifies their names and the amounts due Custom, Bobbe, Concepts in Drapery, "and their agents"
them. the Florences and 18 days after Concepts in Drapery
Concepts in Drapery, like Bobbe, manufactured drap- ceased manufacturing operations), the Illinois secretary
eries from the customer's own fabric and sometimes in- of state, at Frank Florence's request, issued a corporate
stalled them. Practically all of its customers, including charter to Interior. The articles of incorporation do not
Benjamin Brothers (a major customer), had been custom- state that the corporation's purposes include any kind of
ers of Custom and/or Bobbe. Most of the suppliers of manufacturing, but do state that such purposes include,
Concepts in Drapery had also been suppliers of Custom, "To sell and supply, at wholesale or retail, all kinds and
and all of them had been suppliers of Bobbe. descriptions of material, fabrics and all other related
As previously noted, in April 1975 the Regional Di- products incidental to the decorating of hotels, motels,
rector issued complaints against Custom, Bobbe, Con- residential properties, commercial and office properties."
cepts in Drapery, "and their agents" the Florences, alleg- The Florences, Sterling, and installers Soria and Scalf
ing, inter alia, that employees at the Zion plant had been remained on Concepts in Drapery's payroll until the end
unlawfully terminated and that economic provisions in a of its last payroll period, December 29, 1975, on which
collective-bargaining agreement had been unlawfully dis- date they were the only persons still working for that
honored. On July 8, 1975, these complaints were sus- corporation. Interior's first payroll period did not begin
tained by the Board, which ordered that the laid-off em- until January 4, 1976, on which date its entire work
ployees and the pension and insurance plans be made force consisted solely of the five persons who had been
whole. By letter dated July 17, 1975, to Custom "c/o on the payroll of Concepts in Drapery until the end of
Concepts, Inc.," Continental formally demanded pay- December 1975.1 Moreover, Interior's acquisition of a
ment in full of all of Custom's remaining obligations to lease at its first location, on Peterson Avenue in Chicago,
Continental. The amount owed consisted of more than did not take place until sometime in January 1976.
$110,000, plus interest. After receiving this demand However, before January 1976, Concepts in Drapery
letter, Concepts in Drapery's management proceeded to personnel who were still on that corporation's payroll
finish off, deliver, and install orders which were in proc- solicited orders and performed work for Interior. Thus,
ess. On August 1, 1975, manufacturing operations were Frank Florence, who appeared to be in his fifties, testi-
discontinued, and on or before August 4 all bargaining fled that the only thing he had ever done in his life was
unit employees were permanently laid off. The unop- to manufacture or sell draperies; that, with the early
posed February 1977 backpay specification sets forth the August 1975 sale of the last of Custom's pledged machin-
August 1 date as the date when amounts due as backpay ery, he knew that he would have no equipment to manu-
and as payments into the pension and welfare funds facture draperies; that by the time Interior was incorpo-
ceased to accrue. However, after August 1, installers
Scalf and Soria remained on the payroll; they installed Frank Florence and Sterling testified that they wanted to arrange for
draperies which had been manufactured by Concepts in the satisfactory completion and installation of all draperies on order,
Drapery, corrected some errors in installation, and did partly to avoid being sued and partly to make sure of collecting the full
some repair work. Sterling and the Florences tried to amounts due from customers to whom only partial deliveries had been
made before Continental's demand and the cessation of manufacturingcollect all of Concepts in Drapery's remaining receiv- operations.
ables, out of which they and the installers received their "These two installers continued to work for Interior until July 1980, a
salaries, and also tried to collect Custom's remaining re- month or two after the issuance of the instant May 1980 backpay specifi-
ceivables. The remaining equipment was sold on or cation. Trereafter, they began to work for a firm called Complete Drap-
ery Service, which Frank Florence testimonially described as "the new
before August 4, 1975, and the proceeds were remitted company." The record contains no other information about Complete
to Continental via the collateral account. By October Drapery Service.
, ,
"
.
, l i
i , , t t r i ti f i a t t l f $9,000 a oberta lorence received fro
t il r f s l t it tot l of about $3,000.
rt
t is t t
'

"
,
t i r r ' t r t ers el ere still on that corporation's payroll
, li , i t ll r r i r i r - s licite r ers and perfor ed ork for Interior. hus,
. t , , t i ti
i ti , t ll i i i t t t t i i
it l r r tl lai ff. e unop- to anufacture or sell draperies; that, ith the early
i i ti t t t t l t l t t ' l i
t t t t t , t t l i t t
t t , i stallers
lf ri r i t r ll; t i t ll Frank Florence and Sterling testified that they wanted to arrange for
to void i ue d a nd to
ll. , iir<-' t * r\ > ** * ~~~~~made f r ti t l'
ti .
1 These
Sal ri
i l . ac
»,-<*„- August i. A 97, i A tLe jroceeds *..e remitte ery Service, hich rank l re ce testi iall ri , , t W r r itt c a ." e rec r c tai s no other infor ation about o plete
a a
CUSTOM MANUFACTURING COMPANY 623
rated in mid-August, he knew it was going to be a selling controlling interest in the corporation until 1981, and
company in the drapery business; that obtaining the kind would not have acquired all the stock until about 1989.
of business handled by Interior takes about 6 to 8 In June 1980, after the issuance of the instant backpay
months; and that he and Sterling began looking for such specification seeking to render Interior liable for the
business "probably [in] September, October, November." more than $35,000 in question, Sterling purchased all of
In addition, Interior's records reflect that Benjamin Roberta Florence's remaining stock, which was there-
Brothers was billed on December 3, 1975, for certain upon put in escrow for her inferentially until Sterling
services, and that, ordinarily, this customer would not be paid for it. Also in June 1980, Frank and Roberta Flor-
billed until after the services were performed. 2 Also, In- ence withdrew from their corporate offices as Interior's
terior's records show that Slater Company, an office treasurer (possibly) and vice president, respectively. Ster-
supply company, was billed for various amounts on De- ling has at all times been president of Interior, and also
cember 4 and 9, 1975, and on January 7 and 13, 1976; performs selling functions for it. As president, he takes
and that it would have been billed before services were care of all credit arrangements for jobs, checks the con-
performed. 1 Further, Interior's records disclose two ad- tracts, verifies estimates, makes collections, and makes
ditional orders, billed respectively on November 3, and sure the job orders are processed to the salesmen. Frank
December 3, 1975, for customers who would ordinarily Florence has at all times worked for Interior as a sales-
have been billed before services were performed. These man. His 1976 salary was $26,000, substantially more
were Interior's only orders billed before January 1976. than he had received during his last year on Custom's
However, Frank Florence testified that in late 1975 he payroll or when he was on the payroll of Bobbe or Con-
"probably" solicited orders for Interior from some pros- cepts in Drapery. By the end of 1979, Frank Florence
pective customers who did not order anything. Further- was being paid at the rate of $44,800 a year (the same
more, Frank Florence testified, and Interior's brief states Sterling) and Roberta Florence, who took no
(pp. 12-13), that by October 1975 all of Custom's collect- management re n but has at all times worked
ible accounts receivable had been colletd AsFmanagement role in Interior but has at all times workedible accounts receivable had been collected. Also, Frank in Interior's office, was being paid at the rate of $12,600
Florence testified that the process of winding down thes Nvembe 1 Iteis ae aeaed
orders received by Concepts in Drapery was "pretty a year. As of November 1980, Interior's sales averagedorders received by Concepts in Drapery was "pretty 150,000 a month.
well finished by October" 1975. In view of the foregoing $150,000 a month.
testimony by Frank Florence and the largely documen- Interior has never manufactured draperies or any other
tary evidence regarding Interior's billings between early product, employs no production or maintenance employ-
November 1975 and early January 1976, and for demea- ees and has never had any factory or workshop area nor
nor reasons, I do not accept Frank Florence's testimony any space for establishing such an area. The only ma-
that in November and December 1975 Sterling and the chinery owned by Interor is office machinery and its
Florences were "basically" collecting receivables for only nonmanagerial personnel are salespersons, office
Custom and Concepts in Drapery, or Sterling's testimo- workers, and installers. Interior is a contractor and sub-
ny that, from the time Concepts in Drapery ceased pro- contractor which receives orders from varous commer-
duction until the end of 1975, Frank Florence simply cial enterprises and fills such orders by obtaining prod-
collected all the remaining accounts receivable. For simi- ucts manufactured by others. As of the November 1980
lar reasons, I do not accept Sterling's testimony that, for hearing, about 30 percent of Interior's total volume con-
5 to 6 months before Interior was started up, "pretty sisted of the sale and installation of draperies and an ad-
much" all his working time was taken up by collecting ditional 30 percent consisted of the sale and (inferential-
receivables; taking down, moving, and setting up the ly) installation of what Interior President Sterling de-
equipment which had been sold; doing "paper work"; scribed as "related products"-that is, such products as
and packing and moving records. 4 Rather, I find that at blinds, shades, and woven woods. As of that date, the re-
least by early October, while still on the payroll of Con- maining 40 percent of Interior's volume consisted of
cepts in Drapery, Sterling (who admittedly did selling building specialty products-for example, washroom
for Interior) and Frank Florence were spending a sub- equipment sold to general contractors; projection screens
stantial amount of time in soliciting business for Interior. sold to schools and audio visual areas; grab bars and
At the time of Interior's incorporation, Roberta Flor- "I.V." and cubicle tracks sold to hospitals; and ashtray
ence owned 75 percent of Interior's stock and Sterling urns, medicine cabinets, and mailboxes sold to the con-
owned 25 percent. Thereafter, Sterling annually acquired struction industry. In addition, Interior sells to some of
from Roberta Florence 6 percent of the outstanding its customers, at a profit, raw fabric which Interior has
stock; at this rate, Sterling would not have acquired a purchased from other firms. Advertising distributed by
Interior to its customers does not name any manufactur-
" The first page of Interior's accounts receivable ledger for Benjamin ers or suppliers of draperies, but does name the manufac-
Brothers ets forth amounts due from Benjamin Brothers to Concepts in turers or suppliers of a number of building specialty
Drapery for September and October 1975 billings.products available through Interior. Where the products
" Sterling testified that Interior stopped doing business with Slater be- . Whee te
cause of credit problems, and eventually wrote off what Slater still ordered from Interior consist of draperies, Interior cus-
owedas a bad debt. The ledger shows that Interior obtained business tomarily measures the job; orders the drapery rods; se-
from Slater between early December 1975 and August 1977, during lects a fabric and a fabric supplier; orders the desired
which period Slater paid Interior about $19,730. The bad debt, written fabric sent to a drapery fabricator, which fabricates the
off in February 1978, amounted to about S448.
" The records of Custom, Bobbe, and Concepts in Drapery were draperies; schedules the installation; takes the rods and
stored on Interior's premises. draperies out to the jobsite; and installs them. Interior's

." '
,
3 t - t t , rifi s sti t s, a es c llecti s, and akes
.
ll ti t i l -
'

ti t r i t t i . i i
r
' ole i Interior
in I o being paid at the rate of $12,600
l r t tifi t t t i i t a y ovemb r 980, nterior's s les veraged
tt $
ll i i t . I h n r d e or a oh
testi ra l re ce and t e largely docu en- I n t eu o r h a s n e v e r anufactured drapeoes or any other
t r i r r i I t ri r's illi s et ee rl ees 0 ^, an a ee n o Pr cti r ai te a ce e ploy-
, e e s a n d h a s n e v e resal sutc oa n s r
r r , I t t r l r ' t ti hiros ac e f r st lis i s a area. l a-
c h ine r o w n e d n
, i
n
ill t i i r -

' l

"
,
so ld

,
t i
O S
s O S S
r r f r e te er and ctober 1975 billings. products available through Interior. here the products
q
S Or
which period Slater paid Interior about $19, 3 . ba , wri en t to a drapery rica r, ic i t es
'<
t bls a
t i i it later be-
624 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
profit is obtained from putting this "package" together. petitors of Custom, Bobbe, and Concepts in Drapery;
Sterling testified that the number of draperies specified one of these former competitors was Drapemaster, to
on a single order handled by Interior is much larger than which Concepts in Drapery had transferred some of its
the number specified on a single order filled by Custom, orders without cost.
Bobbe, and Concepts in Drapery; an Interior order No assets were ever transferred from Custom, Bobbe,
might call for 150 or 200 pairs of draperies all the same or Concepts in Drapery to Interior or the Florences.
size, while a single order filled by Custom, Bobbe, and
Concepts in Drapery would amount to draperies for a C. Analysis and Conclusions
single private home or a single room in such a home. As
to the number of draperies called for by an order han- "To determine whether one legal entity is the alter ego
died by the old corporations, Sterling did not specifically of another, the Board looks to the ownership, manage-
except Benjamin Brothers; but, because Benjamin Broth- ment, business purpose, operation, equipment, customers,
ers is a hotel supply firm, I infer that at least on occasion and supervision of the two businesses. Where some of
it ordered many more draperies than would be specified these listed indicia are 'substantially identical,' the Board
on an order proceeding from a homeowner. will find an alter ego status. However, not all of these
Whereas the customers of Custom, Bobbe, and Con- standards have to be satisfied; centralized control of
cepts in Drapery were mainly large department stores labor relations or identical corporate ownership is not
and other retail outlets, Interior's customers are largely crucial to the finding of an alter ego." Blake Construction
commercial and institutional users, such as construction Co. Inc /M & S Building Supplies, Inc., 245 NLRB 630,
companies, office buildings, hospitals, universities, and 634 (1979). See also, Crawford Door Sales Co., Inc., and
government agencies. Of Interior's approximately 74 cus- Cordes Door Company, Inc., 226 NLRB 1144 (1976);
tomers (about 25 of which it acquired before July 1976), NL.R.B. v. Tricor Products, Inc. and/or C & J Pattern
only one, Benjamin Brothers, had been a customer of Co., 636 F.2d 266 (10th Cir. 1980).
Custom, Bobbe, or Concepts in Drapery. As of Novem- The Board has held that a finding of alter ego status
ber 1980, Benjamin Brothers provided Interior with 10 requires the presence of substantially identical ownership
percent of Interior's business. When doing business with between the enterprises in question. Clinton Foods, Inc.,
Custom (which ordinarily manufactured draperies from d/b/a Morton's I.G.A. Foodliner, 240 NLRB 1246, fn. 2
its own fabrics) as well as Bobbe and Concepts in Drap- (1979), affd. in this respect 663 F.2d 223 (D.C. Cir.
ery (both of which always manufactured draperies from 1980). I agree with the General Counsel that this owner-
fabric supplied by the customer), Benjamin Brothers had ship criterion is met here. Thus, at the time Interior
provided the material for the draperies. When doing began operations in January 1976, 75 percent of its stock
business with Benjamin Brothers, Custom, Bobbe, or was owned by Roberta Florence, who owned all of the
Concepts in Drapery would measure the windows, deter- stock of Bobbe and Concepts in Drapery and whose hus-
mine whether new rods were required, and advise Benja- band owned half of Custom's stock. Interior does not
min Brothers of the yardage requirements. Then Benja- appear to dispute that it met the "substantially identical
min Brothers would order the material and send it to ownership" criterion as of January 1976. Blake Construc-
Custom, Bobbe, or Concepts in Drapery for fabrication tion, supra; Crawford, supra; Sturdevant Sheet Metal &
and installation. When doing business with Interior, Roofing Co., Inc., et al, 238 NLRB 186, 187-188 (1978).
whose business with Benjamin Brothers as of November Interior does contend that the effect of Roberta Flor-
1980 had been limited to draperies, Benjamin Brothers ence's stock ownership on Interior's status with respect
orders the material (at least sometimes from the source to the other three corporations has been nullified by
recommended by Interior) and sends it to a fabricator Sterling's purchase, after Interior received the instant
(usually and perhaps always the fabricator recommended May 1980 backpay specification seeking to hold it an-
by Interior), which fabricator bills Benjamin Brothers di- swerable for the sums owed by the old corporations, of
rectly for fabrication. Interior's responsibility is to make all the stock still owned by her. Further, Interior points
sure that the job is completed and acceptable to Benja- out that even before this purchase, Sterling already
min Brothers' hotel customer. Interior's responsibilities owned 44 percent of Interior's stock. However, assuming
include the installation of the draperies, which had also that when it began operations Interior was answerable
been done by Custom, Bobbe, and Concepts in Drapery for the backpay and union fund payments which were
when they did business with Benjamin Brothers. owed by the old corporations and which had been tolled
Of Interior's approximately 59 suppliers, about 6, in- before Interior's incorporation, Interior would not be ab-
cluding Benjamin Brothers, had been suppliers for solved of liability because of subsequent changes in the
Custom, Bobbe, and/or Concepts in Drapery. Kirsch, identity of its stockholders. Gateway Service Co., 209
one of these six, is one of the largest curtain rod manu- NLRB 1166 (1974); Topinka's Country House, Inc., 235
facturers in the country, and the kinds of curtain rods NLRB 72, 73-74 (1978); Miller Trucking Service, Inc.,
purchased from it by Interior are different from the kinds and/or Miller Trucking Service, Inc., a Subsidiary of Tulsa
purchased from it by Custom, Bobbe, and Concepts in Crude Oil Purchasing Company, 176 NLRB 556 (1969),
Drapery. Draperies purchased by Interior are made of approved in this respect 445 F.2d 927, 930 (10th Cir.
materials which meet commercial code fire retardance 1971). Moreover, if Sterling fails to pay for the stock, its
standards; whereas draperies manufactured by Custom, ownership will revert to Roberta Florence.
Bobbe, and Concepts in Drapery were made of decora- Furthermore, there has been substantial identity of
tive materials. Four of Interior's suppliers had been com- management in the four corporations. Frank Florence
,.

,

. T o
o f t l t t r i , -
t, i , r ti , i t, c st ers,
a n i i t t si ss s. ere so e of
th e se l is te d i n d ic ia a r e 's st ti ll i e tical,' the oard
f d
i ti l r r t r i is t
lt . l t ti
o , In c - M & S il i li , I ., ,
634 197 9 .
., ( );
.L. . .
6 36 6 6 t h
.
,
, ).
.

); ,
,
,
),

.
CUSTOM MANUFACTURING COMPANY 625
was an officer in Custom, Bobbe, Concepts in Drapery, rior has never employed any production employees, the
and (for a period which ended after the 1980 issuance of kind of employees with respect to whom the other three
the instant backpay specification) Interior. He managed corporations' unfair labor practices were committed.
the first three corporations on a day-to-day basis; per- Moreover, Interior's facilities are much smaller than and
formed selling functions for all four corporations;' 5 in- have a location different from those of the other corpo-
corporated Interior; and, by the end of 1979, was receiv- rations. In addition, except for Benjamin Brothers, Interi-
ing the same salary from Interior as did Interior Presi- or's customers are all different from the other three cor-
dent Sterling. Moreover, when serving as salaried con- porations' customers and are all in different kinds of busi-
troller and office manager for Custom, Bobbe, and Con- nesses; and most of Interior's suppliers are different from
cepts in Drapery, Sterling had duties which included sit- the suppliers of the other three corporations and many
ting in on most of the labor relations, overseeing the bill- are in different kinds of businesses. Finally, while the
ing, having orders processed, keeping track of making principal business of the other three corporations was the
payments on payables, collecting receivables, making manufacture of draperies to be used in private residences
credit collection information, and organizing the office. (which business included their sale and installation), Inte-
While it is true that he performed selling functions for rior's business consists of the sale to institutions and com-
Interior but had not done so for Concepts in Drapery or mercial establishments of products manufactured by
(so far as the record shows) the other two corporations, percent of its volume consisting of
the record directly shows that as Interior's president he these an intaation o raperie an about 30 perce
continues to make collections and takes care of all credit the sale and stallaon of draperies and about 30 percent
arrangements for jobs; and I infer that as Interiors presi consisting of the sale and installation of related products.arrangements for jobs; and I infer that as Interior's presi- Cf. Co-Op Trucking Co. Inc. and C & E Warehouse nc
dent he continues to perform or supervise at least some Cf. Co- Trucking Co., Incand C &E Warehouse, Inc.
of the other functions he previously performed as the and S S Trucking C a artnership, 209 NLRB 289
other corporations' controller and office manager.830-831(1974).
Furthermore, Sterling and Frank Florence solicited The General Counsel's able brief seeks to minimize the
and obtained business for Interior while they were still significance of the differences between Interior's business
on the payroll of Concepts in Drapery and before Interi- and the business of the other three corporations on the
or formally began operations. Also, one of Interior's first ground that Interior "is today the business enterprise that
customers was Benjamin Brothers, which had been a Custom would have become if there had been no techni-
customer of Custom and a major customer of Bobbe and cal changes in corporate form . .. the change from Con-
Concepts in Drapery, and to which Interior provided cepts [in Drapery] as a seller of labor to Interior as a
substantially the same services (except fabrication) which broker of other companies' materials was . . . dictated
Benjamin Brothers had received from the other three by Continental Bank's demands . . . resulting in the sale
corporations. In addition, Roberta Florence handled all of all the remaining manufacturing equipment. All that
the billing functions for Concepts in Drapery and then Concepts [in Drapery] had left went to Interior-busi-
for Interior. Moreover, the Florences, Sterling, and the ness knowledge, expertise in the drapery products field,
two installers, who constituted the entire final payroll of an important customer-Benjamin Brothers-to begin in
Concepts in Drapery, were transferred to Interior's pay- the commercial area of the drapery products field, and a
roll without any break in their employment. few months of time and payroll to begin development of
However, countervailing considerations lead me to this new aspect of the drapery business. The changes in
conclude that the record fails preponderantly to show business operations that . . . finally resulted in Interior's
that Interior occupies alter ego status with respect to the business operations would have occurred regardless of
other three corporations. Thus, the evidence fails to any changes in corporate form and could have been han-
show that Interior was set up for a purpose of evading died within the corporate framework of Custom, Bobbe,
the labor law responsibilities of Custom, Bobbe, and or Concepts" in Drapery." However, almost any small
Concepts in Drapery.'" Further, there was no transfer of corporate owner who has lost all his assets in a prior un-
assets from Concepts in Drapery to Interior. " Also, Inte- fortunate corporate venture will seek to improve his eco-
nomic future by taking advantage of his previously ac-' The record directly shows this for Concepts in Drapery and Interior quired exertise and business contacts and of any time
only. However, from his testimony in this connection and the probabil-
ities of the situation, I infer that he also performed at least some selling left over from winding down the affairs of his failed
functions for Custom and Bobbe. business. In the circumstances of this case, I conclude
" However, I do not agree with Interior that such a showing is essen- that such activities by Frank Florence did not render In-
tial to an alter ego finding. Howard Johnson Ca, Inc v. Detroit Local Joint
Executive Board. Hotel d Restaurant Employees & Bartenders International
Union. AFL-CIO, 417 U.S. 249, 259, fn. 5 (alter ego cases involve "a mere
technical change in the structure or identity of the employing entity, fre- NLRB 421, 426 (1977); Marquis Printing Corporation and Mutual Litho-
quently to avoid the effect of the labor laws, without any substantial graph Company, 213 NLRB 394, 401 (1974). If such a transfer were nec-
change in its ownership or management"; (emphasis supplied)); Tricor, essary, it is difficult to see why Interior admitted that Bobbe and Con-
supra at 270. 1 need not and do not determine whether the issuance of the cepts in Drapery occupied alter ego status with respect to each other and
1980 backpay specification, more than 3 years after Interior's incorpora- Custom.
tion, motivated the Florences' resignation from their corporate offices " Bobbe returned its corporate charter to the State about 6 months
and the agreement for immediate sale to Sterling of Roberta Florence's before Interior's incorporation, and Custom's formal dissolution may also
stock. None of the parties to these transactions testified to the reasons have occurred before Interior's incorporation. Further, the record fails to
therefor. show whether the kind of business engaged in by Interior was wholly
" However, I do not agree with Interior that such a transfer is essen- within the scope of any of the other three corporations' corporate
tial to an alter ego status. See, e.g., Dee Cee Floor Covering Inc., et a., 232 charters.
"
t t r t r r r ti a
il it is tr t t e erf r e selling functions for rior's business consists of the sale to institutions and com-
I t ri r t t
( f r t r r t ohr , w t
t r r ir tl t t I t ri r' r i t t i d nt
ct h e sa l e iinstllation e ies
' C . o thk sale and o rehou , s.
t ti t rf r r r i t l t C fan C od O p T r u c k ing Co., I n ca a n d sc i ,E 2 re Lo use I nc.
i l 5 7? ^ a P a r t n er s ht p' 2 W N LR B 28 98
t l ager.830-831 (1974)
h e

.
. '
t t it t t t si ss r ti s l have occurred regardless of
.
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qure expertise and busincss contacts and of any time
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626 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cases cited by the General Counsel in this connection do gested that the Board Orders and Court judgments previ-
not call for a different result. In Southeastern Envelope ously issued in these cases might render the Florences
Co.., Inc, 246 NLRB 423, 425-428 (1979), a large part of personally liable for the required payments. Arly W. Eg-
the new corporation's work consisted of manufacturing gertsen, counsel for the General Counsel, replied nega-
the same product in the same way for the same customer tively. While counsel is an able attorney, I am doubtful
as the old corporation. In Watson Meat Co., d/b/a Ideal whether his assertions in this respect would preclude the
Meat Co., Inc., 234 NLRB 1115 (1978), both corporations Board and the court from otherwise interpreting their
boned meat, although the old corporation owned the own Orders and judgments, respectively. For reasons
meat and also made sausage, whereas the new corpora- which are unclear to me, Attorney Geslewitz has chosen
tion boned meat owned by its customers. 19 In Rushton & in his brief to urge that the Florences are not personally
Mercier Woodworking Co, Inc., and Rand & Co., Inc., 203 liable.22 It is true that corporate officers and agents are
NLRB 123 (1973), enfd. 502 F.2d 1160 (Ist Cir. 1974), not ordinarily liable for backpay or other monetary rem-
cert. denied 419 U.S. 996 (1974), both corporations man- edies. However, under some circumstances they are so
ufactured the same products, although the old corpora- liable. See, e.g., Wayne Electric, Inc.; and Electrical In-
tion manufactured on a volume basis and the new corpo- stallation and Service, 241 NLRB 1056 (1979), and cases
ration manufactured custom orders. The Board's and the therein cited. Further, at least if the 1975-1979 Orders
court's opinions do not reveal the exact nature of the and judgments unambiguously impose monetary liability
"changes, additions, expenditures, task-adaptations, etc. on the Florences personally, such a requirement could
which came to exist in N.LR.B. v. Ozark Hardwood Co., not be negated by any failure of the 1980 record to show
282 F.2d 1, 6 (8th Cir. 1960). However, I do not believe such liability. The 1980 record fails to show that no
that the differences between Interior and the other cor- monetary orders and judgments should have been en-
porations can be fairly described, in the court's words, as tered against the Florences; and, in any event, at this
"essentially. . . evolutions, extensions and developments point in the proceedings even such a showing might do
merely, such as could characteristically be expected to the Florences no good. See Wayne Electric, supra. I ex-
occur in the particular business field and in the economic press no views as to whether the prior orders and judg-
era involved, without having so changed the nature of ments do impose monetary liability on the Florences per-
the enterprise and its job situations as to cause it to be sonally.23 I have referred to the issue, and have set forth
outside the bounds of legitimate remedial area in respect procedural facts which I regard as possibly relevant to
to the discriminatees." 20 its disposition, only because the Board's interpretation of
If eventually affirmed, my conclusion that Interior is its own Orders might speed up the final disposition of
not the alter ego of the other three corporations means this 6-year-old proceeding.
that the Union and the unlawfully discharged employees
will as a practical matter be unable to collect anything CONCLUSIONS OF LAW
from any of them."2 At the outset of the hearing, I sug- Interior Concepts, Inc., is not the alter ego of C tom
Manufacturing Company (Successor to Zion Industries,
9 This change is remarkably similar to the change between Custom's Inc.-Curtain and Drapery Division) Bobbe Drapery
operations and those of its admitted alter egos Bobbe and Concepts in
Drapery. Custom manufactured draperies primarily from its own materi- Products Co., Inc.; or Concepts in Drapery Design, Inc.
als, whereas the other two corporctions manufactured draperies from [Recommended Order for dismissal omitted from pub-
customers' materials. ication.]
o However, as previously noted, the backpay period terminated with
the cessation (not claimed to be unlawful) of manufacturing operations
and before Interior's incorporation. No contention is made that Interior Geslewitz appeared on behalf of Interior and Sterling and the Flor-
should be required to offer reinstatement to the discriminatees or to bar- ences as Interior's agents. A determination that the Florences are person-
gain with the Union. ally liable could not be adverse to Interior's interests, and, indeed, might
" In any event, a fnding that Interior is an alter ego to Custom might well benefit Interior if it were found liable for the amounts in question.
render Interior liable for Custom's debt to Continental, a sum which " As a practical matter, any such liability would probablv have to be
likely exceeds the sums due under the Board's Order. discharged by Roberta Florence. See fn. 7 and attached text supr.
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