NLRB Cases Archive 1960 - 1995, LABOR-RELATIONS 1993-94 CCH-NLRB ¶15,583, ESMARK, INC. and UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO., (Dec. 16, 1994), National Labor Relations Board, (Dec 16, 1994)

ESMARK, INC. and UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO.

315 NLRB No. 108.Case No. 13-CA-21156-S. December 16, 1994 William F. Jacobs, Administrative Law Judge..

Before Gould, Devaney and Browning.

Jeffrey Wolf, for General Counsel. Peter Woodford and Douglas A. Darch (Seyfarth, Shaw, Fairweather & Geraldson), Chicago, Illinois, for Respondent. Irving M. King (Cotton, Watt, Jones & King), Chicago, Illinois, for Charging Party.

Affiliated Companies--Parent-Subsidiary--Liability for Unfair Practices.--An employer that was the sole owner of a subsidiary corporation was liable to remedy the subsidiary’s unfair labor practices that included a sham closing, discharge of employees and reopening scheme that discriminated against employees at two locations based upon their union activities. The parent company admitted that the subsidiary’s unfair practices were ratified by the parent’s manager as well as the parent employer’s board of directors. Further, a finding of direct participation by the parent in the subsidiary’s unlawful acts was not required because such a policy effectuated fundamental principles of freedom from discrimination against union activities. Section 2(3).

Back reference: ¶1630.36.

Supplemental decision on remand following (CA-7 1989) 113 LC ¶11,546.

From Text of Board’s Decision

The issue in this case, before the Board on remand from the Court of Appeals for the Seventh Circuit, [1] is the liability of a parent corporation for unfair labor practices in which its wholly-owned subsidiary engaged. [2] On June 29, 1988, the Board issued a Decision and Order [3] in which it found, inter alia, that the Respondent Esmark, a holding company, violated Section 9(a)(3) and (1) by virtue of its direct participation in the decision to close two plants [4] of a subsidiary [5] and terminate the unit employees in order to evade contractual obligations and violated Section 8(a)(5) and (1) by its direct participation in the subsidiary’s decision to abrogate the contract at the facilities when they reopened. The Board ordered Esmark, inter alia, to make the employees whole for their losses resulting from the unfair labor practices.

On October 6, 1989, the court of appeals granted Esmark’s petition for review and remanded the case to the Board for “further factual development” of the “direct participation” theory on which the Board had based its finding that Esmark was liable for the violations arising out of the subsidiaries’ closing and reopening of the facilities. Accordingly, the Board remanded the case to the judge, who, after hearing additional testimony and reviewing the prior record, found nothing in the record not considered by the Board or the court and recommended dismissal of the complaint as to Esmark.

We agree in part and disagree in part with the judge. Accepting as the law of the case the court majority’s characterization of the “direct participation” theory, we agree with the judge that the record does not support a finding that Esmark violated Section 8(a)(5) and we adopt his dismissal of the 8(a)(5) allegations. [6] We disagree, however, with the judge’s dismissal of the 8(a)(3) allegations, and, without relying on the direct participation theory, we find that the record contains ample evidence of Esmark’s liability under Section 8(a)(3) and (1) of the Act. Accordingly, we find that Esmark violated Section 8(a)(3) and (1) and we shall order it to take appropriate action to remedy its unfair labor practices. Our reasons follow.

A. The Law of the Case and the Issues Remaining on Remand [7]

1. The alleged violations of Section 8(a)(5)

In its decision, the court unanimously held that the Board’s basis for finding Esmark liable for its subsidiaries’ unfair labor practices, Esmark’s direct participation in the transactions involved, “is a viable theory of intercorporate liability which may be employed by the Board to hold a parent corporation ... liable for the unfair labor practices of a subsidiary corporation.” [8] The court majority, Judges Easterbrook and Flaum, [9] however, found that the Board had failed to make “specific findings that [Esmark’s] power of control [as a stockholder] was exercised through improper means” and to provide adequate factual support of its finding that “Esmark made SIPCO’s decisions for it, without any concern for SIPCO’s separate legal identity,” so as to justify establishing liability under this “limited, transaction-by-transaction theory of piercing the corporate veil.” [10] The court noted that the Board has held a stockholder liable for unfair labor practices “nominally carried out by a corporation” when two elements are present: the shareholder participated actively in the decision to commit the particular wrong and the shareholder’s control was exercised `directly,’ outside the normal channels of corporate decisionmaking.” [11] The court found these holdings consistent with the corporate law principle that, although corporations meeting certain criteria, as Esmark does here, are not customarily held liable for subsidiaries’ wrongful acts, courts will impose liability where the parent directly participates in the wrong. The court emphasized that stock ownership alone is insufficient, but a parent’s disregarding orderly corporate procedures and intermeddling in the transactions of the subsidiary at issue can be a basis for liability. Thus, the court unanimously approved the Board’s policy of finding, in extraordinary cases, that a parent corporation is derivatively liable for a subsidiary’s wrongdoing even where the parent did not directly injure the third party. The court majority, however, found that the Board had failed to show, not just that the parent had actively participated in the transaction, but that its participation was “impermissibly direct,” i.e., that the parent disregarded its subsidiary’s separate legal identity and “decisionmaking ‘paraphernalia.'” [12]

We view the court’s remand of the 8(a)(5) issue under the court majority’s characterization of the “direct participation” theory as requiring a showing that, with respect to the closing and reopening of the Moultrie and Guymon plants, Esmark and its managers actively stepped into the shoes of SIPCO’s board and officers and controlled their actions to the point of bypassing SIPCO’s leadership and ignoring such accepted procedures of corporate administration as the election of a board and appointment of officers; the holding of board meetings and voting on resolutions; and the direction of the subsidiary’s activities by its own officers. The court majority seeks evidence that Esmark officials bypassed the subsidiaries’ corporate structures in an improper manner. This last factor is not present here. The record does not contain sufficient evidence, not already considered by the court, to support a finding under the law of the case that the Esmark officials’ control of the close and reopen scheme was procedurally improper, in the sense of bypassing corporate formalities, so that Esmark would be liable under Section 8(a)(5). Thus, we adopt the judge’s dismissal of that allegation.

2. The alleged violations of Section (a)(3) and (1)

The court also remanded for different reasons the Board’s finding that Esmark violated Section 8(a)(3) by its direct participation in the sham closing and reopening of the Moultrie and Guymon plants. Noting that the language of 8(a)(5), which requires an employer to bargain in good faith with respect to “his employees,” [13] differs from that of Section 8(a)(3), which prohibits discrimination by “an employer,” [14] the court commented:

We recognize that Esmark was also found liable for related violations of [section] 8(a)(3). And it may be that [Section] 8(a)(3) does not narrowly confine liability to one who is the employer of the employees aggrieved by a particular unlawful course of conduct. However, it is unclear whether the Board would have entered the same remedial order in the absence of its finding of a [Section] 8(a)(5) violation, and we therefore assume that, if the [Section] 8(a)(5) finding is improper, a remand to the Board will be necessary to redetermine the extent of Esmark’s liability. [15]

We agree with the court that Section 8(a)(3) permits a finding of liability with respect to employers not standing in a direct employment relationship with affected employees. We note that such a policy comports with settled Board precedent, as our discussion of cases, below, demonstrates. We find no basis in the court’s decision for Esmark’s claim that the court found that Esmark can be liable under Section 8(a)(3) only as a “direct participant.” Rather, we read the court’s comments as stating that, in its view, the limiting language of Section 8(a)(5) requires a factual basis for piercing Esmark’s corporate veil and bypassing Esmark’s shareholder immunity from its subsidiary’s obligations to find it liable for SIPCO’s violation of that provision. The court explicitly allowed for the possibility that Section 8(a)(3) imposes no such requitement, and, as noted above, we agree with the court. We find that under the law of the case, the Board could find that a parent corporation should not be permitted to act through its subsidiaries to the detriment of the subsidiaries’ work force and yet escape liability for acts it has mandated, and that if the Board can demonstrate Esmark’s liability under Section 8(a)(3), the court would be receptive to such findings and enforcement of an order of the appropriate remedial acts. We make such a finding here.

B. Facts

Esmark’s role in transforming employment conditions in the bargaining units at the Moultrie and Guymon plants from those set by the master agreement [16] to terms more favorable to management is well documented in the Board’s 1988 decision. Briefly, to increase the value of its stock, Esmark decided in 1980 to divest some of its assets, including the fresh meats division of its subsidiary Swift & Company, a packer of fresh and processed meats. Accordingly, Esmark divided Swift into two new corporations, the first a processed meat packer, which remained part of Esmark, and the second a fresh meats packer, some stock of which Esmark offered to the public in April 1981 “as an ongoing, self-sufficient enterprise,” [17] and which were respectively christened Swift and SIC/SIPCO/New Sipco (SIPCO). The operative facts arise from the creation of the second entity, the SIPCO sale package. The process of setting up and marketing SIPCO involved many steps, briefly highlighted here, some of which are alleged to have violated the Act.

In April 1980, [18] Esmark President Kelly informed Swift vice president Copeland of the decision to divest Swift of its fresh meats division. Kelly announced that he was appointing a new Swift president, Sullivan, [19] and ordered Copeland to formulate a plan to transform Swift’s fresh meats division into a separate company to be sold by Esmark. Further, Kelly instructed Copeland that henceforth he would report, not to Sullivan, but to Kelly himself. [20] Kelly and Copeland maintained a “very informal type reporting relationship,” but Kelly “expected [Copeland] to keep him posted,” and Copeland testified that he and his team cleared all decision respecting the new company with Kelly or other Esmark executives: “Esmark [sic] we were working hand in glove with them. I was working directly for Don Kelly, and we were trying to put together a company that we were going to offer for sale so you bet. I was there talking to them constantly.” Other Esmark executives were involved in structuring the sale package, most motably Esmark Assistant General Counsel Karl Becker, whose duties included overseeing the divestiture’s financial structuring. Richard Knight, a Swift vice president, later became the new company’s vice president for beef, lamb, and labor. J. Douglas Gray, a former executive in the fresh meats division, also worked with Copeland and later became vice president of SIC.

After the Union rejected Esmark’s proposal for an employee purchase plan of the fresh meats division in June, [21] Kelly and Esmark management decided that the division should close down. [22] Copeland, who had anticipated the ESOP’s failure, had other ideas. He proposed a plan, approved first by Kelly and then by Esmark’s board on June 26, to close or dispose of some fresh meats “facilities of Swift & Company ... and facilities which do not fit into its long-range plans, and the payment of transitional costs .... The remaining units of Swift Fresh Meats Division to become a separate company, to be sold by Esmark with Esmark possibly retaining an ownership position.” [23] As further discussed below, however, Esmark changed its strategy during the latter half of 1980 and determined that a public offering of some of the stock in the new corporation, rather than an outright sale of the business, would provide a greater return on the sale package.

The plants to be closed were viewed as troubled operations whose inclusion in the sale package would detract from its sales appeal. The Moultrie and Guymon plants were to close because they operated under the master agreement, [24] which, in light of their locations and other circumstances, meant that their labor costs were higher than desirable. Copeland soon became convinced that Moultrie and Guymon were viable plants and their inclusion would increase the value of the sales package.

On June 30, Knight told the Union that some plants, including Moultrie and Guymon, would close December 28. In August, however, Union official Anderson was informed that the Moultrie and Guymon plants were suitable for inclusion in SIPCO [25] --except for the high cost of the master agreement. Copeland asked if the Union would modify the agreement and reduce wages and benefits at Moultrie and Guymon; if the Union agreed, the plant would be kept open and retained in the SIPCO package. Anderson refused. [26] In July, in response to Kelly’s directions, Copeland and others prepared a brochure on the fresh meats operation for Kelly to show to European investors. The brochure stated that if the Union would not grant mid-term concessions at the Moultrie and Guymon plants they would be closed, but could be reopened shortly after purchase with lower labor costs. In September, as the Union maintained that the master agreement would not be modified, Copeland and other officials told Anderson that Esmark’s plan was to close the plants; once Esmark sold SIPCO, the plants would be reopened under less costly local agreements. [27]

Although the Union adamantly opposed modifying the master agreement, it did not initially oppose the close and reopen plan, always providing, Anderson cautioned, that the arrangement was lawful. [28] When Knight and Copeland first discussed with the Union their desire to get rid of the master agreement, Esmark had not finally decided to offer its stock to the public. Throughout the summer, Knight, Copeland, and Anderson were apparently discussing a reopening by a successor employer, a purchaser of the business. Knight’s testimony indicates that he had nothing to do with the decision to substitute a stock offering for the sale of the business and that he and Anderson worked on the assumption that the business would be sold. Neither he nor Copeland himself learned for certain until late October that Esmark was planning a public offering of SIPCO stock. Copeland testified that “during the summer, as we were developing final plans for the company that was going to be offered for sale, the Esmark people became more and more impressed ... and a couple of times they said that maybe we ought to talk about this as a public offering.” [29]

Thus, Copeland, Knight, and the SIPCO sale team were attempting to ready the business for sale. Esmark, on the other hand, was acting directly and alone in arranging the financial structuring of the deal that ultimately became the public offering of SIC stock. Esmark Financial Vice President Briggs had authority to approve the deal and worked with outside underwriters to arrive at an offering attractive to investors. The record indicates that appeal to investors was the paramount consideration with respect to every aspect of the arrangements. For example, Esmark based its decision on the debt it would take back from SIPCO on how it would affect SIPCO’s market appeal. Becker testified that “the overriding factor would be [the] load on the new company. We’re attempting to create a company that would be viable. If that company were saddled with ... heavy [debt] ... it would cause problems in trying to market the stock.” Becker also prepared the prospectus used by Esmark for the stock offering. In connection with its preparation, Becker discussed the “labor situation” at the Moultrie and Guiymon plants with Knight. The prospectus, released at the time of the stock sale, reiterated the plan for the Moultrie and Guymon plants, but with a new twist: instead of being reopened by a purchase, the Moultrie and Guymon plants were to be reopened by an Esmark subsidiary:

[L]abor costs at these plants under the Master Agreement ... were significantly higher than those prevailing at many plants in their respective areas. A new subsidiary of the Company intends to open Guymon and Moultrie shortly after completion of this offering with the objective of achieving competitive labor costs at these facilities. [30]

In late October, SIPCO was born; on October 24, Swift’s name was changed to SIPCO; on October 27, Swift’s directors resigned from the SIPCO board and Copeland appointed a new board, including two members designated by Kelly. [31] On October 28, Anderson was told that Moultrie and Guymon would close December 28 but would reopen in January, free of the master agreement, after SIPCO’s stock was sold to the public.

In December, the Union was told that SIPCO had become a separate corporation on October 27 and that the process of making SIPCO “truly independent” of Esmark--for Esmark owned 100 percent of 6-week-old SIPCO--would be completed in Spring 1981. [32] The Union was reminded of the plan to close the Moultrie and Guymon plants in December 1980, all costs paid by Esmark, and to reopen them in early 1981 “as non-master agreement units” and was told that if Esmark’s transforming SIPCO into a “publicly held independent corporation” (i.e., the public offering of SIPCO stock) took longer than expected after the plants were reopened, they would operate under the master agreement for the duration. [33]

SIPCO’s maturation into a “truly independent” corporation continued into 1981. To avoid keeping the plants closed for a long time before they reopened, Knight asked Anderson on December 17, 1980, to agree to reopen the Moultrie and Guymon plants before the stock sale, rescheduled for March. [34] Anderson refused, reiterating that the close and reopen scheme was unlawful. Ultimately, Esmark sold 65 percent of the stock in SIC (the Esmark subsidiary holding the corporations encompassing the fresh meats operations) [35] to the public on April 22, during the week after the Moultrie and Guymon plants were closed and the unit employees discharged on April 17. [36]

The Moultrie and Guymon plants reopened in early May as operations of “New SIPCO,” a wholly owned subsidiary of SIC. For the newly hired “New Sipco” employees, who were vitrually all unit employees discharged by SIPCO, only one aspect of their employment changed after their termination and rehire: they no longer enjoyed the terms of the master agreement. [37] SIC/New SIPCO enjoyed reductions in labor costs by virtue of the new terms of employment of about $4 million annually.

C. Conclusions and Applicable Law

As noted above, our reexamination of the record pursuant to the remand has led us to agree with the judge that the record does not support a finding of a violation of Section 8(a)(5) under the direct participation theory as enunciated by the court majority. However, we have found no basis to disturb our earlier finding that Esmark played a key causal role in the unlawful transactions delineated in our previous decision [38] and that Esmark, through its vigorous and detailed exercise of its right of ownership over Swift’s fresh meats division, violated Section 8(a)(3) and (1) of the Act. As discussed in section A, above, our reaffirmation of our earlier finding is entirely consonant with the court’s discussion of the 8(a)(3) issue. We interpret the court’s remand as requiring the Board to clarify the “extent of Esmark’s liability” by demonstrating (1) a basis in the factual record for a finding that Esmark is liable under the direct participation theory for an 8(a)(5) violation against “his employees,” viz., the unit employees at the Moultrie and Guymon plants and/or (2) the extent of Esmark’s liability under Section 8(a)(3). We pursue the latter course here.

The linchpin of Esmark’s argument that it should not be held liable for the unlawful sham closing is its insistence that it did not close the two plants directly; they were closed by SIC/SIPCO/New Sipco. But that argument will not shield it from liability in light of the facts outlined above; under Board law, Esmark can be liable for discrimination against employees of another employer if under certain circumstances it caused that employer to violate the Act. “The Board has consistently held that an employer under Section 2(3) of the Act may violate Section 8(a) not only with respect to its own employees but also by actions affecting employees who do not stand in such an immediate employer/employee relationship.” [39] In cases where violations of Section 8(a)(3) are alleged, “[a]n employer violates the Act when it directs, instructs, or orders another employer with whom it has business dealings to discharge, layoff, transfer, or otherwise affect the working conditions of the latter’s employees because of the union activities of said employees.” [40] Under this theory, the Board has found liable, e.g., a general contractor for pressuring a subcontractor to discharge union employees, [41] and an employer using contract labor for informing the manpower company that it should not send union members to the employer’s facility. [42]

Imposition of liability on this basis does not require a finding either that Esmark and SIC/SIPCO/New Sipco were single or joint employers or a piercing of the corporate veil to find that Esmark exercised its powers of ownership improperly. Rather, Board precedent specifically acknowledges and accounts for the detrimental effect of the influence on a company’s labor policies of certain “business dealings” by an outside employer on employees’ right to be free from discrimination for their protected activities. In this case, where the business dealings between Esmark and the nascent SIPCO consisted, until April 1981, of Esmark’s right as sole owner to determine the continued existence or demise of the company, and given the nature of those dealings as outlined above, the applicability of such precedent--and the necessity for applying it--are clear.

The frequency with which employers depend on the good will of other employers for survival necessitates imposing liability under Section 8(a)(3) on third-party employers under certain circumstances. A contrary practice of limiting liability to the immediate employer when another employer has caused it to discriminate against its employees would place limitations on employee freedom from discrimination under Section 8(a)(3). The Board has found that the statutory purpose of protecting employees from discrimination is served by holding liable a general contractor for knowingly using economic power to cause other employers to discriminate. [43] It follows that this purpose will be served all the more directly by a finding of liability here, where the unfair labor practices were initiated while the third party, the parent company, was in the process of determining the extent and nature of the direct employer’s continued existence. Indeed, the third party had some involvement in negotiating the abrogated agreement, and it found its net worth significantly and directly enhanced by the unfair labor practices. As the court noted in affirming the Board’s finding that the unlawful conduct in this case was inherently destructive of employee rights: “Workers would wonder ... why collective representation, with its attendant costs, is worthwhile if their employer can manipulate things so easily by selling assets and restructuring the holding company hierarchy.” [44] The Act permits a finding of liability under Section 8(a)(3) outside the direct employer/employee relationship and we find these words especially resonant here in view of the facts summarized above. Thus, in our view, the record and our policy of protecting employees’ Section 7 rights fully justify holding Esmark liable for the sham closure of the Moultrie and Guymon plants and the discharge of the unit employees.

Esmark’s divestiture of Swift’s fresh meats division followed two lines of development that converged at the public offering on April 11: Copeland’s structuring of SIPCO and Esmark’s marketing of the sale package. These lines progressed unevenly over several months, but had the key common purpose of obtaining for Esmark the maximum return for its sale of SIPCO. The abrogation of the master agreement at the Moultrie and Guymon plants was one result of Esmark’s determination to augment the value of the SIPCO sale package and ultimately of its own stock. Esmark stood to benefit by offering purchasers and, as plans changed, investors a company that included the Moultrie and Guymon plants--with the skilled employees, but without their inconvenient statutory and contractual rights. Esmark’s decision to reject selling the fresh meats division as a business in favor of offering SIC’s stock altered the shape and significance of the SIPCO deal. When Esmark perceived that its interests would be better served by a stock sale, the closing of the plants with the intent to reopen them outside the master agreement became a sham, [45] because, as the Board and court held, SIPCO could not be its own successor. [46] Thus, the master agreement was still applicable, and the discharge of the employees for no other reason than that the master agreement had been negotiated, with Esmark’s participation, on their behalf, violated Section 8(a)(3) and (1).

Moreover, Esmark had anticipated the closing of the Moultrie and Guymon plants and the discharge of the employees to get rid of the master agreement for months, as it had involved itself in the sham closing from start to finish on three distinct levels. First, Kelly’s course of conduct enmeshed Esmark. Kelly, Esmark’s president, acting in his official capacity, gave the initial marching orders that resulted in the sham closing, clothed Copeland with the authority to dispose of assets and otherwise to structure the sale package, received reports directly from Copeland regarding the arrangements, and represented to prospective buyers that the Moultrie and Guymon facilities could be closed and then reopened without the master agreement. Indeed, the record demonstrates that Esmark, directly through its president, Kelly, was responsible for the plan to maximize profits on the sale of the Swift fresh meats division and knew that part of the plan involved freeing the Moultrie and Guymon plants from the perceived liability of the master agreement. Although Copeland may have originated and promoted the idea of keeping the Moultrie and Guymon plants in the sale package, his determination that the way to do so was to abrogate the contract was a direct response to the theme played through every aspect of the divestitures: i.e., maximize the package’s market appeal. It was also a mark of his obedience to the explicit orders of his superior and business associate, Kelly, to transform the fresh meats division into an attractive saleable unit. Other options existed but were not ultimately chosen because, as Knight testified, the intentions and desires of SIPCO’s architects were both emphatic and specific. They wanted to augment the sale package with two modern, efficient plants with modest labor costs--but not, however, with the Moultrie and Guymon plants as they actually existed, complete with wage and benefit rates negotiated less than a year before.

Second, the record also demonstrates that Esmark’s executives and its board of directors furthered Esmark’s involvement in the Moultrie and Guymon deal by ratifying decisions made by the SIPCO team, both through official acts and through their course of conduct. Kelly and the Esmark board officially passed on all major decisions to the sales team, as Copeland’s testimony and the minutes of the board meetings demonstrate. Further, as its own written materials show, Esmark had actual knowledge of the close and reopen scheme and openly expressed approval of it, embraced the plan as its own, and used it as a selling point in its efforts to market the fresh meats division, including a discussion of it in the sales brochures Copeland prepared for prospective buyers of the business and Becker prepared for the public offering of SIC stock.

Third, this executive and structural involvement was deepened and focused by the need of Esmark’s executives, in preparing for the stock offering, to know the facts of the SIPCO deal, including the details of the effort to get out from under the master agreement. Esmark, not SIPCO, offered SIC’s stock to the public, and Esmark bore the responsibility under the securities laws of disclosing all facts relevant to the value of the stock. The record shows that when Esmark executives needed to know what was going on with Moultrie and Guymon, they asked, and were fully briefed by Copeland’s team. Becker testified explicitly that he had reviewed the labor situation at the Moultrie and Guymon plants with Knight to prepare for the public offering. [47] Most importantly, Esmark executives knew of and were involved in the deal encompassing the sham closing both before and after the decision to use a stock transfer to market the fresh meats division. Thus, Esmark, more than any other entity involved in the divestiture, was aware of and ultimately controlled both the overall shape of the deal and the details of the close and reopen scheme. It also was the only party that could have acted to avert the sham closings. Whatever reasons Esmark may have had for allowing the close and reopen scheme to continue after the change to a public offering, the record contains no basis for excusing Esmark from responsibility for its pivotal role in the unlawful acts.

In light of this overwhelming evidence, Esmark’s arguments in its defense are unpersuasive. Esmark contends that it had nothing to do with the close and open decision and argues that Kelly accorded Copeland relative freedom of action. We do not accept Esmark’s assessment of the significance of Kelly’s style of management. In Esmark’s view, the relationship between Copeland and Kelly adds up to nothing: no authority, no subordination, no instructions, no reporting. The record, however, belies this view. It indicates, instead, that Kelly clearly clothed Copeland with the authority to act on Esmark’s behalf in preparing the fresh meats operations for sale. Copeland’s authority to create the new company, appoint its directors, and dispose of its assets derived solely and entirely from Kelly’s personal appointment of him to exercise Esmark’s power of ownership over the division. The record further demonstrates that Kelly, having issued a mandate to his experienced and resourceful subordinate, allowed him to carry out his mission without “micromanaging” his activities, but that Kelly was never out of touch with Copeland and maintained an unflagging interest and involvement in exactly what Copeland was doing in structuring SIPCO. Further, Copeland’s own testimony about his relationship with Kelly belies the assertion that Kelly had no responsibility for the SIPCO deal and those aspects of it that were unlawful under 8(a)(3). [48] As Copeland expostulated, it is simply incredible that a chief executive like Kelly would countenance unreviewed and uncoordinated decisionmaking by a subordinate, no matter how capable, in connection with a set of business deals instrumental to the corporation’s plans to restructure and increase its total value. Yet such is Esmark’s theory of the case: Copeland and SIPCO acted on their own, without accountability or connection to Esmark. To the contrary, the evidence shows only that Kelly trusted and respected Copeland’s abilities, not that Copeland acted alone. Finally, Esmark’s arguments are defeated by its own admission that Copeland’s acts were ratified explicitly by both Kelly and the Esmark board--a step without which Copeland’s plans could not have been executed. [49]

Although we emphasize again that a finding of “direct participation” under the court majority’s theory is not necessary to find Esmark liable under Section 8(a)(3), and we do not find that Esmark violated Section 8(a)(5) under the majority’s test, we find the court’s comments in finding that 8(a)(5) liability may be assessed against parent companies under some circumstances relevant to a consideration of Esmark’s 8(a)(3) liability. Thus, the court stated: “The NLRB could permissibly find that a parent corporation should not be permitted to act through its subsidiaries to the detriment of the subsidiaries’ workforce and yet escape liability for the acts which it has mandated.” [50] We conclude that such a policy effectuates fundamental policies of freedom from discrimination on the basis of union activities under Section 8(a)(3) of the Act no less than it furthers the right to collective bargaining under Section 8(a)(5). Thus, we believe that this policy and our finding here that Esmark is liable for the sham closing, discharge, and reopening scheme that discriminated against the employees at Moultrie and Guymon furthers the fundamental purposes of the Act. At the same time our findings are fully consistent with the economic necessity of providing, in most circumstances, corporate shareholders with protection from liability for the acts of the corporation.