Domsey Trading Corp.

National Labor Relations Board - Administrative Judge Opinions

Feb 14, 2011

29-CA-014548 (N.L.R.B. Feb. 14, 2011)

JD(NY)–05–11
Brooklyn, NY
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
NEW YORK BRANCH OFFICE
DOMSEY TRADING COPRORATION,
DOMSEY FIBER CORPORATION AND
DOMSEY INTERNATIONAL SALES
CORPORATION, A SINGLE EMPLOYER
Respondents
Case Nos. 29-CA-14548
29-CA-14619
ARTHUR SALM and FORTUNA EDERY, 29-CA-14681
individually and as Executrix of the 29-CA-14735
Estate of Albert Edery, deceased 1 29-CA-14845
Additional Respondents 29-CA-14853
29-CA-14896
and 29-CA-14983
29-CA-15012
INTERNATIONAL LADIES’ GARMENT 29-CA-15119
WORKERS’ UNION, AFL-CIO 29-CA-15124
29-CA-15137
LOCAL 99, INTERNATINOAL LADIES’ 29-CA-15147
GARMENT WORKERS’ UNION, AFL-CIO 29-CA-15323
29-CA-15324
29-CA-15325
29-CA-15332
29-CA-15393
29-CA-15413
29-CA-15447
29-CA-15685
Aggie Kapelman, Esq. and Elias Feuer, Esq.,
Counsel for the General Counsel
Philip Pierce, Esq. and Errol F. Margolin, Esq.
for Arthur Salm
John P. Gibbons Jr., Esq. and Peter S. Trentacoste, Esq.
for Fortuna Edery and the Estate of Albert Edery
Scott Markowitz, Esq. for David Salm 2

1 The Caption is modified to reflect the amendments made at the trial. See General Counsel Exhibit
2.
2 I permitted Mr. Markowitz to intervene over the objection of the General Counsel. In this regard, the
parties agree that David and Peter Salm entered into a settlement of this case whereby they paid a
certain sum of money in escrow to satisfy some portion of the back pay claim. As a consequence, the
General Counsel moved to amend the Notice of Hearing so as to remove their names from the Caption
and from all of the allegations. However, the parties also agree that the distribution of any monies from
the escrow account can only be made if it is ultimately concluded that Arthur Salm is personally liable.
Thus, their obligation to make the payments was conditioned on the outcome of this case and therefore
Continued
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THIRD SUPPLEMENTAL DECISION
Raymond P. Green, Administrative Law Judge. I heard this case in Brooklyn, New York
on November 10, 2010. The issue here is whether Arthur Salm and Albert Edery, as the
principle shareholders of the Respondent corporations, but who were not named as
Respondents in the original complaint nor in any of the supplemental proceedings, can be held
to be personally liable for the backpay amounts owed to the discriminatees. 3
In her Brief, the General Counsel makes the following contentions, one of which was
expressed at the hearing and one which was not:
1. That the corporate veil of the Respondent should be pierced under the rationale of
White Oak Coal Co., 318 NLRB 732, 735 (1995), enfd., 81 F.3d 150 (4th Cir. 1996) and
therefore the corporate shareholders, Arthur Salm and Albert Edery, should be held personally
liable.
2. That when the real property of the Respondent was sold, the recipients of that money,
(Arthur Salm and Albert Edery), held it as constructive trustees for the benefit of the National
Labor Relations Board as a creditor and therefore those recipients should be held to be
derivatively liable for satisfying the debt to the Board.
I note here that the theories about constructive trusts were not plead in the Notice of
Hearing and were not articulated at the hearing. The Respondents were therefore not put on
notice that these contentions were being made. Further, I am not aware of any Board case law
which has ever utilized such a theory to conclude that individuals who were not named in the
underlying Complaint could be held personally liable for the debts of a corporation. Nor am I
aware of any Board precedent that would rely on state law to find that individuals could be held
personally liable for the obligations of a corporation.
Based on the record as a whole including my observation of the witnesses and after
considering the Briefs filed I hereby make the following
Findings and Conclusions 4
The history of this case started in 1989 when the Union commenced an organizing drive
among the employees of Domsey Trading. In 1990 about 200 employees went out on strike
and when they made an unconditional offer to return to work on August 10, 1990, the Company
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the findings and conclusions herein will have a substantially monetary impact on these two individuals.
Therefore, in accordance with Section 102.29 I permitted Markowitz to intervene on their behalf. See
Camay Drilling Co., 239 NLRB 997, 998 (1978).
3 The Notice of Hearing also claimed that Fortuna Edery, the widow of Albert Edery, should be held to
be personally liable as the executrix of his estate or alternatively as the recipient of the money that Albert
Edery derived from the sale of the Respondent’s real property. After the close of the hearing the General
Counsel and counsel for Fortuna Edery entered into an agreement whereby she would pay his portion of
the backpay liability in the event that it was concluded that he was personally liable. As such, the General
Counsel asked me to sever that portion of the case involving Fortuna Edery and remand those matters to
the Regional Director. I did so by Order dated February 1, 1011. In this regard, the General Counsel, in
response to my inquiry, stated: “Thus in your decision, there would be no need for you to make findings of
facts or conclusions of law concerning Fortuna Edery.”
4 I note that there are no credibility issues and no disputed issues of fact.
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failed to reinstate them. Since then there have been numerous legal proceedings which will be
summarized below.
As found by Administrative Judge Ben Schlesinger in an opinion issued on November 1,
1991, Domsey Trading Corporation and Domsey Fiber Corporation were New York
corporations located in Brooklyn, New York where they were engaged in the grading, packing,
and shipping of used clothing for export. The Judge also found that a third corporation called
Domsey International Sales Corporation was located at the same address where it sold used
clothing and textiles and related goods in a retail facility located next to the plant of the Trading
and Fiber Corporations. He concluded that the three corporations were affiliated business
enterprises with common officers, ownership, directors, management, and supervision and
constituted a single integrated business enterprise and a single employer within the meaning of
the Act. The Respondent’s premises were located at 431 Kent Avenue, Brooklyn, New York.
There is no dispute that the principle owners of the corporations were Arthur Salm and
Albert Edery. 5 The Judge also concluded that the day-to-day operation of the plant was
entrusted to Arthur Salm’s three sons, Peter, Clifford and David. There is no evidence to
contradict the testimony of Fortuna Edery that she had nothing to do with the operations of the
business.
On March 23, 1993, the Board issued a Decision at 310 NLRB 777, finding inter alia,
that after the Union made an unconditional offer to return unfair labor practice strikers to work
on August 10, 1990, the Respondent did not make a valid reinstatement offer until Aug. 20,
1991. (A little more than one year later). Therefore, the Board ordered the Respondent to
reinstate approximately 200 employees and make them whole for any loss of earnings caused
by the illegal refusal to reinstate the strikers. 6 The backpay for these individuals has been
litigated in subsequent proceedings and what is at issue in this proceeding is who should be
responsible for paying the money. As the General Counsel believes that there is zero or
insufficient funds available from the corporate entities comprising the Respondent, she is
making a claim for money from individuals who were not named as Respondents either in the
original unfair labor practice case or in the subsequent backpay proceedings.
On February 18, 1994, the United States Court of Appeals for the Second
Circuit entered a judgment which enforced, in full, the first Board Order issued against Domsey,
their officers, agents, successors, and assigns.
On October 27, 1997, a backpay hearing opened and this was presided over by Judge
Michael Marcionese. During the course of the hearing the Judge refused to require the Board’s
Regional Office to reimburse the Respondent for the costs of an interpreter. The Respondent
filed an interim appeal which resulted in a decision on March 28, 1998 by the Board at 325
NLRB 429 which sustained the Judge’s ruling.

5 According to the tax returns put in evidence as General Counsel Exhibits 4 and 5, Arthur Salm held
48% of the shares and Albert Edery held 50% of the shares. Peter and Clifford Salm each held 1% of the
shares.
6 The Board also found numerous other unfair labor practices committed by the Respondent and in
light of the egregious nature of those violations ordered the notice to be read to the employees by Peter
Salm, the Respondent’s manager.
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On October 14, 1999, Judge Marcionese issued his Supplemental Decision and
Recommended Order in which he held that the Respondent owed the employees backpay in the
amount of $1,070,066.67 plus interest.7 (This number was later reduced somewhat).
As far as I know, the Respondent was still engaged in business operations at the time
that it received this Decision.
On January 9, 2002, Domsey Trading sold the property located at 431 Kent Avenue,
Brooklyn, New York. This was almost three years after the ALJ had issued his decision
recommending that the Respondent reimburse employees in the amount of $1,070,066.67 plus
interest. There was no evidence presented by any party as to the reason or reasons why the
property was sold. But absent any other evidence of motivation and given the amount of time
between the ALJ’s decision in October 1999 and the sale of the property in January 2002, it
cannot be said with any certainty that the motivation for the sale was to evade the debts
incurred to the discriminated employees. (At the time of the sale, the ALJ’s decision was on
appeal to the Board). There may be any number of other plausible and legitimate reasons that
the owners of Domsey decided to sell the property and terminate their business.
In any event, in early January 2002, a parcel of property with two buildings located at
431 Kent Street and jointly owned by Domsey Trading Corp. and another entity called Edery-
Salm Associates was sold to a buyer. The closing statement which is General Counsel Exhibit 3
shows that a check in the amount of $9,062,082.26 was issued to Domsey Trading and a check
in the amount of $2,281,750.81 was issued to Edery-Salm Associates. In addition, the closing
statements along with the testimony of Benjamin Weinstock, the attorney for the buyer,
indicates that a payment of approximately $2.6 million was made to a law firm for the benefit of
Domsey Fiber Corporation.
General Counsel Exhibit 6 shows that as of December 31, 2001, Domsey Trading
Corporation had a balance of $848.66 in the North Fork Bank. 8 This bank statement also shows
that from December 31, 2001 through January 22, 2002 a series of deposits and payments
were made in this account. The largest deposit was in the amount of $9,102,429 representing
the proceeds from the sale. The two largest payments were in the amounts of $3,262,966.21
representing a payment to Arthur Salm and $4,555,379.85 representing a payment to Albert
Edery. After accounting for all deposits and payments, the ending balance in this account as of
January 22, 2002 was back to $848.66, exactly where the account stood on December 31,
2001. Thereafter by May 31, 2002 Domsey Trading’s balance at North Fork Bank was $5.66.
As of June 30, 2002, its balance was negative $4.34.
In connection with this sale, Mr. Weinstock testified that in addition to a conveyance of
title, the purchaser received at the closing, a good standing certificate, which is a document
from the New York Department of State confirming that the corporations owning the property

7 In his Decision and the Board’s later rulings on this decision, the amount of interest actually accrued
was never calculated. It appears that internally the Regional Office calculated the interest at over
$1,000,000 but those calculations were not shared with the Respondent. Nevertheless, given the size of
the net backpay calculated by the ALJ and the number of years that had gone by since the original
violations had occurred, the Respondent should reasonably be on notice that the amount of interest
would be substantial.
8 This bank was subsequently merged into Capital One Bank and the exhibits produced by the
General Counsel were authenticated as business records by Wanda Torres, an employee of Capital One
Bank.
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were still validly in existence and had not either been voluntarily or involuntarily dissolved.
Weinstock also testified that he received a resolution from the shareholders indicating approval
for the sale.
Although I do not know exactly when the Respondent ceased operating its business, I
shall conclude that no business operations at this location were conducted by the Respondent
after the sale of the property. 9 There was no evidence as to how the purchaser used this space.
I would surmise based on the bank statements of Domsey Trading that its business operations
at the Kent Avenue site were probably terminated some time before the end of 2001.
The record shows that after the sale and receipt of money, checks were issued to Arthur
Salm and Albert Edery as follows:
A check signed by Arthur Salm drawn on the account of Domsey Trading at North Fork
Bank, dated January 10, 2002 was made out to Arthur Salm in the amount of $3,262,966. This
was deposited into his personal account at the same bank.
A check signed by Arthur Salm drawn on the account of Edery-Salm Associates at North
Fork Bank, dated January 10, 2002 was made out to Arthur Salm in the amount of $1,096,785.
This also was deposited into his personal account.
A check signed by Arthur Salm drawn on the account of Domsey Trading at North Fork
Bank dated January 14, 2002 was made out to Albert Edery in the amount of $4,555,379.85.
This was deposited by Edery into a joint account with his wife Fortuna Edery into an account at
Meryl Lynch.
After receiving and endorsing checks from Domsey Trading and Edery-Salm Associates,
Arthur Salm and Albert Edery went on to make further transfers as follows:
On January 14, 2002, Arthur Salm made out a check in the amount of $4,000,000, which
he deposited into his brokerage account at Meryl Lynch.
On or about March 5, 2005, Arthur Salm transferred money and stocks held in one of his
Meryl Lynch accounts to another Meryl Lynch Account.
On or about December 5, 2002, Arthur Salm transferred the assets in his Meryl Lynch
account to another Meryl Lynch account in the name of his wife, Carla Salm.
On or about June 12, 2003, the assets previously transferred to his wife were transferred
back to an account in the name of Arthur Salm.
As noted above, the check received by Albert Edery was deposited into a joint account
with his wife at Meryl Lynch. When he died on February 15, 2006, the money and assets in the
account automatically passed to his wife and she became the sole surviving owner of the
account. 10

9 In his Answer to the Notice of Hearing, Counsel for Arthur Salm admitted that Domsey Trading,
Domsey Fiber and Domsey International ceased operating on January 31, 2002.
10 The estate of Albert Edery was probated in New York and Fortuna Edery was the estates’
executrix. Letters Testamentary were issued by the Surrogate’s Court in 2006 and she was thereby
authorized by the Court to dispose of and distribute any other property owned by Albert Edery in
Continued
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Needless to say, neither Domsey Trading, Edery-Salm Associates, the other affiliated
corporate entities, Arthur Salm nor Albert Edery, (or his wife upon his death), made any
arrangements to reserve money for or pay off the backpay amounts that likely were owing to the
discriminated against employees. Nor was any notice given to the Board.
While all of this was going on the Board’s backpay case was proceeding in its own
interesting way.
On September 30, 2007, the Board at 351 NLRB 824, issued a decision in the backpay
case that had been heard back in 1997 and in which the Judge issued a decision and
recommended order on October 14, 1999. The Board sustained the Judge’s findings in part
and reversed in part. Among other things, the Board held that strike benefits paid to the
employees in the particular circumstances of the case should be construed as interim earnings.
Additionally, in the hiatus between the ALJ’s decision and the Board’s decision, the Supreme
Court decided that undocumented aliens may be denied backpay in certain circumstances.
Hoffman Plastics Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), As a consequence, the
Board remanded the case to the Region to recalculate the amount of backpay for about 160
individuals and remanded to the Judge the question of backpay for six discriminates under
Hoffman.
On Sept. 25, 2008, a two member Board issued a Second Supplemental Decision in the
backpay case. The Board ordered the Respondent to pay the recalculated backpay awards set
out by the Region. The decision also ordered that the backpay claims of two discriminatees
remanded to the judge be withdrawn and that the Respondent pay certain other discriminatees
the amounts set out in his second supplemental decision. Finally, the Board adopted the
judge’s recommendation to place in escrow the backpay award for one discriminatee whom the
General Counsel could not locate.
On August 16, 2010, and after the Supreme Court had concluded that the Board could
not issue decisions without at least a three member quorum, the Board issued another decision
in the backpay case. Without going into all the details, the Board basically affirmed the second
supplemental opinion of the Administrative Law Judge. However, the total backpay liability was
modified and set at $914,784.37 plus interest.
At some point after August 16, 2010, the Board filed with the United States Circuit Court,
(Second Circuit), a petition to enforce the Board’s backpay decision. That matter is currently
pending before the Circuit Court. In addition, the Board has sought and obtained from the Court
some kind of order freezing the personal assets of Arthur Salm.
And so this case came to me.
Analysis
Let me state at the outset that my entire sympathy lies with the employees who suffered
losses as a result of the Respondent’s unlawful conduct against them. These people and their
families have not been paid after almost 20 years of litigation notwithstanding the fact they were
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accordance with the terms of a will. It is unknown by me as to whether there was any other property,
money or assets that were owned by Albert Edery at the time of his death..
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the victims of unlawful conduct. The owners of the Respondent companies committed unfair
labor practices and but for the creation of a fictional person called a corporation, would be liable
to recompense the victims of their unlawful actions and/or the unlawful actions of their agents.
Paying these workers is the morally correct thing to do. The issue here is whether that
moral obligation is coextensive with a legal obligation.
The invention of the limited liability corporation, with the concept that the enterprise had
a separate legal identity from its owners concomitantly gave rise to the concept that the owners
did not incur personal liability for the actions or debts of the enterprise. This idea arose at a time
of economic and industrial expansion in the United States and the public policy was to
encourage people to invest their money and take risks. That is, the losses that might be
incurred by tort victims or by vendors and lenders to a corporation were deemed to be
outweighed by the benefits that would be derived by society at large by limiting risk and
encouraging development. As pointed out in NLRB v. Greater Kansas City Roofing, 2 F. 3d
1047, 1051 (10th Cir. 1993);
The corporate structure is an artificial construct of the law, a substantial purpose
of which is to create an incentive for investment by limiting exposure to personal
liability. “The insulation of a stockholder from the debts and obligations of his
corporation is the norm, not the exception.” NLRB v. Deena Artware, Inc., 361
U.S. 398, 402-03, (1960). 11 In extreme circumstances, however, the corporate
form will be disregarded and the personal assets of a controlling shareholder or
shareholders may be attached in order to satisfy the debts and liabilities of the
corporation. However, the corporate veil should be pierced only reluctantly and
cautiously. Cascade Energy and Metals Corp. v. Banks, 896 F.2d 1557, 1576
(10th Cir.), cert. denied, 498 U.S. 849. Piercing the corporate veil is an equitable
action and as such is reserved for situations where some impropriety or injustice
is evident.
For a very long time, the Board’s case law dealing with the question of individual or
personal liability of corporate shareholders was enunciated in Riley Aeronautics Corp., 178
NLRB 494 (1969). In that case the Board stated:
[T]he corporate veil will be pierced whenever it is employed to perpetrate a fraud,
evade existing obligations, or circumvent a statute…. Thus, in the field of labor
relations, the courts and Board have looked beyond organizational form where
an individual or corporate employer was no more than an alter ego or a
“disguised continuance of the old employer”…; or was in active concert or
participation n a scheme or plan of evasion…; or siphoned off assets for the
purpose of rendering insolvent and frustrating a monetary obligation such as

11 Interestingly enough, NLRB v. Deena Artware, Inc., does not have that much to say about the
corporate veil doctrine and its holding was quite limited. Essentially, the NLRB had petitioned the Court
for a contempt order which had enforced the Board original holding that the Respondent had violated the
Act and owed certain employees backpay. It also asked the Court to approve discovery on the grounds
that it believed that the Respondent Deena Artware had transferred its assets to a new corporation and
that the common owner was engaged in a shell game to evade the backpay liability that had not yet been
ascertained by the Board in a supplemental backpay proceeding. In essence the Supreme Court held that
the contempt proceeding was warranted and remanded the case so that the Board could conduct
discovery.
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backpay…; or so integrated or intermingled his assets and affairs that “no
distinct corporate lines are maintained.”
In White Oak Coal Co., 318 NLRB 732, (1995), a unanimous five member Board
reconsidered the Riley standard because they felt that its “multifaceted approach to imposing
personal liability to be unclear and unwieldy.” Instead the Board adopted the 10Th Circuit’s two
pronged approach enunciated in NLRB v. Greater Kansas City Roofing, 2 F.3d 1047 (10th Cir.
1993). The Board further stated that it was reaffirming “that personal liability for remedial
obligations arising from corporate unfair labor practices under the National Labor Relations Act
is a question of federal law because it arises in the context of a Federal labor dispute.” Citing
NLRB v. Fullerton Transfer & Storage, 910 F.2d 331, 335 (6th Cir. 1990) and Textile Workers v.
Lincoln Mills, 353 U.S. 448 (1957). As to the new standard the Board stated as follows:
Under Federal Common law, the corporate veil may be pierced when: (1)
there is such unity of interest and lack of respect given to the separate identify of
the corporation by its shareholders that the personalities and assets of the
corporation and the individuals are indistinct, and (2) adherence to the corporate
structure would sanction a fraud, promote injustice, or lead to an evasion of legal
obligations.
When assessing the first prong to determine whether the shareholders
and the corporation have failed to maintain their separate identities, we will
consider generally (a) the degree to which the corporate legal formalities have
been maintained, and (b) the degree to which individual and corporate funds,
other assets and affairs have been commingled. Among the specific factors we
will consider are: (1) whether the corporation is operated as a separate entity; (2)
the commingling of funds and other assets; (3) the failure to maintain adequate
corporate records; (4) the nature of the corporation’s ownership and control; (5)
the availability and use of corporate assets, the absence of [same] or
undercapitalization; (6) the use of the corporate form as a mere shell,
instrumentality or conduit of an individual or another corporation; (7) disregard of
corporate legal formalities and the failure to maintained arm’s length relationship
among related entities; (8) diversion of the corporate funds or assets to non-
corporate purposes; and in addition, (9) transfer or disposal of corporate assets
without fair consideration.
When assessing the second prong, we must determine whether adhering
to the corporate form and not piercing the corporate veil would permit a fraud,
promote injustice or lead to an evasion of legal obligations. The showing of
inequity necessary to warrant the equitable remedy of piercing the corporate veil
must flow from misuse of the corporate form. Further, the individuals charged
personally with corporate liability must be found to have participated in the fraud,
injustice, or inequity that is found.
To state the obvious, this category of cases would not be litigated if the corporate entity
or entities that had incurred liabilities could pay the debts. It is only when the coffers are empty
that one begins to look elsewhere for payment. And what better place to look than to the
principle shareholders of the corporation where the corporate pockets are empty either because
of normal and adverse business conditions or by the transfer of assets to favored persons.
(Usually the shareholders or their relatives).
The White Oak test is a two pronged test. It is simply not enough that only the second
prong has been met; that it would be unjust not to have access to the shareholder’s assets. The
whole point of a corporation is to shield its shareholders from the corporation’s creditors.
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Therefore, by definition, the doctrine of limited liability is inherently unfair insofar as the
corporation’s creditors are concerned. Inequity is the name of the game, provided of course
that the shareholders observe the prescribed corporate forms. Under current Board law, except
for the limited circumstances described in White Oak and subsequent cases, to say that it would
be unjust to allow the shareholders to escape liability, is simply to state a circumstance which is
insufficient by itself to hold them personally liable.
Since the Decision in White Oak, the Board has issued a number of decisions dealing
with this issue, the most recent of which was Rome Electrical Systems Inc. et al, 356 NLRB No.
38 (November 24, 2010). Other fairly recent cases relied on by the General Counsel and the
Respondents include A.J. Mechanical, 352 NLRB 874 (2008), enfd., 186 LRRM 2224 (11th Cir.
2009); D.L. Baker Inc. t/a Baker Electric, 351 NLRB 515 (2007); Flat Dog Productions Inc., 347
NLRB 1180 (2006); and SRC Painting, LLC, 346 NLRB 7070 (2006). All of these cases, and
others not cited by the parties, involve backpay proceedings with complex factual patterns.
It seems to me that the outcomes in these cases were highly fact specific given the large
number of factors that need to be analyzed under the White Oak standard. And although it is
seems to me that with respect to the first prong that not all of the eight factors need to be
proven, in none of the cases was personal liability found where only one factor was proven.
Even if that factor, (the most important in my opinion), was evidence that personal and
corporate assets had been commingled.
Moreover, in weighing the various factors, the majority opinion in Flat Dog Productions
Inc., 347 NLRB 1180 (2006), stated that “the party asserting that the corporate veil should be
pierced, in this case the General Counsel, has the burden of proof, and that burden is a heavy
one. See Contractors, Laborers, Teamsters & Enitg. v. Hroch, 757 F.2d 184, 190-191 (8th Cir.
1985).”
In the present case the General Counsel has produced evidence as to only a single
element; namely the “commingling” factor listed by the Board in White Oak. She produced no
evidence to contradict the testimony of the Respondent’s CPA that the corporate entities were
adequately funded; that there was no commingling of funds between the shareholders and the
corporations, (other than the final distribution of assets); that they maintained adequate and
separate corporate books and records; and that the corporations and the shareholders filed
separate tax returns.
As noted above, in White Oak the Board stated that “when assessing the first prong to
determine whether the shareholders and the corporation have failed to maintain their separate
identities, we will consider generally (a) the degree to which the corporate legal formalities have
been maintained, and (b) the degree to which individual and corporate funds, other assets and
affairs have been commingled.
And even as to the alleged commingling, I am not so sure that what transpired in
January 2002 fits easily within the definition of commingling as that term has been used in these
types of cases. As I read the cases, the transactions that the Board has described as
“commingling” have typically involved multiple transactions over a period of time whereby the
shareholders typically took money out of the corporation for their own personal use. (On
occasion, shareholders may transfer their own money into the corporation). These types of
transactions, other than normal salaries or authorized dividends, generally have occurred over
an extended period of time during which the corporation was still engaged in its normal business
activities.
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In my opinion, the facts in the present case are somewhat distinguishable and are more
like the situation that would occur when a corporation ceases its business operations and its
assets are then liquidated and distributed to its shareholders. It is difficult to commingle assets
with a de facto defunct corporation, even one which has not yet been officially dissolved. In this
case, the building and property at Kent Avenue was sold in an arm’s length transaction to a third
party for around $12 million. And after the larger portion of that money was deposited in the
accounts of Domsey Trading Corporation and Edery Salm Associates, those same amounts
were transferred to the two principal owners of the Respondent, namely Arthur Salm and Albert
Edery who then transferred the monies to their own personal accounts. (I have no idea what
happened to the money that was paid by the purchaser to Domsey Fiber Corporation). In my
opinion this one time liquidation and distribution of corporate assets, may not be the type of
transactions that the Board has previously found to constitute commingling. 12
In her Brief, the General Counsel offers an alternative theory as to the claim that Arthur
Salm and Albert Edery should be held to be personally liable. As stated by the General Counsel,
although “this case falls within the purview of Board law, it is also a corporate dissolution case
and, as such, New York State Business Corporation Law (BCL) and supporting cases are
applicable.” She asserts that under New York law, the shareholders of a corporation, after a
dissolution, are construed to “hold the assets they received in trust for the benefit of creditors”
and are therefore “jointly and severally liable to existing creditors of the corporation.” Citing
Rodgers v. Logan, 121 A.D. 2d 250, 253; Long Island Light Co. v. Chestnut Sta., Inc., 2010 N.Y.
Misc. Lexis 3476 and Wells v. Ronning, 269 A.D. 2d 690, 692, 702 N.Y.S. 2d 718.
I have a couple of problems with this alternative theory of personal liability.
1. The original Notice of Hearing made no mention of this theory and the General
Counsel asserted at the hearing that the only theory upon which she was asserting personal
liability against the corporate shareholders was the White Oak Coal theory. This alternative
theory was only raised for the first time when the General Counsel filed her brief and the
Respondents were not put on notice that this was being asserted. In my opinion, this theory
cannot be legitimately asserted at this time. See New York Post, 353 NLRB 343, 344 (2008).
2. As noted above, the law regarding “piercing the corporate veil” insofar as NLRB
cases are concerned, has been defined by the Board and reviewing United States Circuit Courts
as being a question of federal law. That means that the laws of the individual states are, in
effect, preempted because of a policy of administering a uniform body of law that governs labor
relations for those employers, their employees and labor organizations that fall within the
Board’s jurisdiction. Thus, to the extent that New York statutes or case law may have a
different standard for holding a corporation’s shareholders personally liable, that standard is not,
in my opinion, applicable to cases litigated as unfair labor practices under the National Labor
Relations Act. As I am aware of no precedent giving me the authority to apply New York law to
this issue, my role as an Administrative Law Judge does not really permit me to establish new
precedent on behalf of the Board.

12 It may be that the Board might decide to modify the White Oak standards so that the single factor
of commingling would be sufficient to establish personal liability. Or it might decide, subject to Court
review, that when there has been a liquidation and substantially complete transfer of corporate assets to
shareholders without notice to creditors, that this type of transaction amounts to a “fraudulent
conveyance” and therefore would be an independent ground for piercing the corporate veil. But as I
understand the cases decided by the Board this is not the current view of the law and I am bound by
existing precedent.
JD(NY)–05–11
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11
Accordingly, for the foregoing reasons and based on the current state of Board law, I am
constrained to find that the General Counsel has not shown that the corporate veil should be
pierced in order to hold the shareholders personally liable. 13
Dated Washington D.C. , February 14, 2011.
_______________________
Raymond P. Green
Administrative Law Judge

13 If no exceptions are filed as provided by Sec. 102.46 of the Board's Rules and Regulations, the
findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed waived for all purposes.