NLRB Cases Archive 1960 - 1995, LABOR-RELATIONS 1993-94 CCH-NLRB ¶15,598, DENART COAL CO., INC. AND ITS ALTER EGO, V COAL CO., INC. et al. and MICHAEL VANCE and UNITED MINE WORKERS OF AMERICA, DISTRICT 17., (Dec. 16, 1994), National Labor Relations Board, (Dec 16, 1994)

DENART COAL CO., INC. AND ITS ALTER EGO, V COAL CO., INC. et al. and MICHAEL VANCE and UNITED MINE WORKERS OF AMERICA, DISTRICT 17.

315 NLRB No. 125.Case No. 9-CA-25650. December 16, 1994 Hubert E. Lott, Administrative Law Judge..

Before Stephens, Devaney and Browning.

Gary E. Lindsay, for General Counsel. Daniel McCarthy, for Respondent. Charles Donnelly, for Charging Party.

Affiliated Companies--Control and Ownership--Trucking Company and Mine.--Because there was an absence of an arm’s-length relationship between a mining company and a trucking company, the two companies were a single employer, and both were liable for backpay amounts due under a Board order in an unfair labor case. The companies shared common ownership among family members, possessed a substantial operational and financial interrelationship, and were commonly managed. Moreover, because the trucking company was a proprietorship rather than a corporation, the husband/wife owners were both personally liable with the mining company for remedying the unfair labor practices. Section 2(2).

Back reference: ¶1630.1901.

From Text of Board’s Decision

On October 14, 1992, Administrative Law Judge Hubert E. Lott issued the attached supplemental decision. The General Counsel filed exceptions and a supporting brief. On March 26, 1993, the Board issued an Order remanding the proceeding to the judge. [1] On March 25, 1994, the judge issued the attached second supplemental decision. The General Counsel filed exceptions and a supporting brief and the Respondents filed an answering brief, which was styled as a reply memorandum. [2]

The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel.

The Board has considered the supplemental decision and second supplemental decision and the record in light of the exceptions and briefs and has decided to affirm the judge’s rulings findings, and conclusions only to the extent consistent with this Supplemental Decision and Order.

In his supplemental and second supplemental decisions, Judge Lott found that none of the Respondents involved in the proceeding before him were liable for the backpay remedy the Board ordered in the unfair labor practice proceeding, and he recommended that the compliance specification be dismissed in its entirety. For the reasons set forth below, we find, contrary to the judge, that certain of the Respondents are liable for the backpay amounts due under the Board’s Order in the unfair labor practice case.

I. Procedural History

On August 14, 1989, the Board issued an Order in this proceeding, adopting, in the absence of exceptions, the findings, conclusions, and recommendations of Judge Wallace Nations. [3] Judge Nations found that Respondents Denart Coal Co., Inc. (Denart) and V Coal Co., Inc. (V Coal) violated Section 8(a)(5) and (1) of the Act by refusing to comply with the terms of their applicable collective-bargaining agreement with the Union and failing to supply information to the Union. The judge further found that Denart, majority-owned and controlled by Don Vance, and V Coal, owned by Don Vance’s sons and operated by Don Vance, are alter ego coal mining operations commonly owned and managed by Vance family members. The Board adopted the judge’s recommended Order that Denart/V Coal, inter alia, make employees whole for losses resulting from the unfair labor practices. On March 1, 1990, the United States Court of Appeals for the Fourth Circuit enforced the Board’s Order in full. [4]

On June 4, 1990, the Regional Director issued a compliance specification, alleging, inter alia, that in addition to Denart/V Coal, the following entities (collectively the additional Respondents) are responsible for the backpay due under the terms of the Board’s Order: Laing Enterprises (Laing); Vance Trucking; Delores Vance d/b/a D & J Trucking, a sole proprietorship (D & J); Don Vance, an individual; Don E. Vance, an individual; and Michael Vance, an individual.

On January 28, 1991, the Board granted the General Counsel’s Motion for Partial Summary Judgment against Denart/V Coal for failure to file an answer to the compliance specification, and found that all allegations in the compliance specification were admitted as true against them. The Board, however, remanded for a hearing as to the liability of the additional Respondents. 301 NLRB 391.

In his supplemental decision, Judge Lott found that there was insufficient evidence to establish a single-employer relationship between Denart/V Coal and any of the additional Respondents, and dismissed the compliance specification allegations against all the Respondents. In its remand, the Board directed the judge to explain his finding that Delores Vance’s testimony regarding the ownership and operations of D & J was uncontradicted by the documentary evidence.

In the second supplemental decision, Judge Lott reaffirmed his finding that none of the additional Respondents are a single employer with Denart/V Coal.

For the reasons below, we reverse the judge and find that D & J is a single employer with Denart/V Coal. [5] As such, D & J is liable with Denart/V Coal for remedying the unfair labor practices as set forth in the compliance specification. Finally, because D & J is a proprietorship, not a corporation, its principals (Don and Delores Vance) are personally liable for the obligations incurred by D & J.

II. Analysis

It is well settled that the Board examines the following factors in determining whether two or more employing entities constitute a single employer: (1) common ownership; (2) interrelation of operations; (3) common management; and (4) centralized control of labor relations. Radio Technicians Local 1264 v. Broadcast Service of Mobile, [51 LC ¶19,562] 380 U.S. 255 (1965). [6] Not all of these criteria need be present to establish single-employer status and a significant factor is the absence of an “arm’s length relationship found among unintegrated companies.” Operating Engineers Local 627 v. NLRB, [77 LC ¶11,072] 518 F.2d 1040, 1046 (D.C. Cir. 1975), affd. in pertinent part sub nom. South Prairie Construction Co. v. Operating Engineers Local 627, [78 LC ¶11,424] 425 U.S. 800 (1976). We shall examine each of these factors in turn.

A. Common Ownership

The judge in his first decision found Delores Vance’s testimony that she was D & J’s sole owner to be “uncontradicted.” In his exceptions, the General Counsel referred to a number of documents that on their face contradicted Delores Vance’s testimony that she is the sole owner of D & J and that Don Vance is uninvolved with its operations. In our Order remanding the case to the judge, we stated in pertinent part as follows:

We cannot reconcile the judge’s apparent crediting of Delores Vance with the documentary evidence. We shall therefore remand this proceeding for the judge to explain or reconsider his credibility findings in light of the documentary evidence, which he did not discuss in his supplemental decision.

In his second decision, the judge stated that because the compliance specification did not allege Don Vance to be an owner of D & J, “whether or not Delores Vance is the sole proprietor as she testified, is not relevant to this proceeding.” At the same time, the judge observed that the documentary evidence concerning ownership to which we referred in our remand was inconclusive. He offered little explanation for this assertion.

The judge’s second decision is seriously flawed. First, the judge did not perform the task we specifically assigned him and instead termed “irrelevant” the issue that was the focus or our Order remanding. This was plain error on his part because “it is not for [an administrative law judge] to speculate as to what course the Board should follow ... . On the contrary, it remains the [judge’s] duty to apply established Board precedent.” Insurance Agents, 119 NLRB 768, 773 (1957), revd. on other grounds [39 LC ¶66,239] 361 U.S. 477 (1960). We should not have remanded the case to the judge if we shared his view that the ownership issue was “irrelevant.” The judge should have recognized the legal authority of the Board’s Order and complied with its instructions.

Second, the fact that the compliance specification did not contain a specific allegation that Don Vance owned D & J is immaterial. The specification did allege, inter alia, that there was “common ownership” of D & J Trucking and Denart/V Coal, that D & J is a single employer with Denart/V Coal, that Don and Delores Vance “have held common stock in, have commingled assets with ... and have operated” the single employer, and that Don and Delores Vance are “personally, jointly and severally, liable” with Denart/V Coal for the amounts due under the Board’s Order. Further, the issue of whether Don Vance was a principal of D & J Trucking was fully litigated at the hearing. Finally, the very fact that Denart/V Coal and D & J are alleged as single employers places the question of “common ownership” in issue, because that is one of the criteria for determining single-employer status, a fact that the judge could not have taken into account because of his mischaracterization of those criteria (see fn. 6, above). Under these circumstances, we find, contrary to the judge, that there is no due-process barrier to deciding the ownership question that was the subject of our remand. Cf. Jerry’s United Super, [1987-88 CCH NLRB ¶19,462] 289 NLRB 125 fn. 2 (1988).

Because the judge failed to fulfill his role as fact finder on two occasions, we shall proceed to examine the documentary evidence in the record de novo. See, e.g., Williamson Memorial Hospital, [1986-87 CCH NLRB ¶18,863] 284 NLRB 37 (1987). We recognize that in our Order remanding we stated that the judge “apparent[ly] credit[ed]” Delores Vance’s testimony on the ownership issue, but after carefully reexamining the record and the judge’s first decision in light of his second decision, we now realize that the judge did not, in fact, make a credibility resolution respecting Delores Vance’s testimony. We rest this conclusion on several considerations.

In neither of his decisions did the judge refer even generally to the testimonial demeanor of the witnesses who testified. Nor did the judge make an explicit credibility finding regarding Delores Vance’s testimony. Rather, in his first decision, he stated that her testimony was “uncontradicted,” an error that we brought to the judge’s attention in our Order remanding and that he failed to correct in his second decision. Furthermore, in his second decision, the judge stated that the issue on which Delores Vance testified was “not relevant to this proceeding.” Therefore, instead of crediting and relying upon Delores Vance’s testimony, it appears that the judge viewed the testimony as having no bearing on the outcome of this case. Accordingly, in the absence of a credibility finding by the judge concerning Delores Vance’s testimony, we shall “exercis[e] [our] responsibility to assess the testimony in the light of the record as a whole.” Royal Typewriter Co. v. NLRB, [78 LC ¶11,369] 533 F.2d 1030, 1042-1043 fn. 12 (8th Cir. 1976). [7]

We find that the preponderance of the evidence establishes that D & J is commonly owned by Don Vance, majority owner of Denart, and his wife Delores Vance, an admitted owner of D & J. [8] Thus, on a credit application with a bank for a personal $10,000 loan, Don Vance identified himself as “owner” of D & J and listed D & J’s bank account as his own. On several checks made payable to D & J, Don Vance endorsed them by signing, “D & J Trucking/Don Vance/-Owner.” These checks were for no small amount, totaling approximately $135,000. Contrary to the judge, we find that there is no “multitude of other documents ... listing Delores Vance as sole owner of D & J Trucking” and that the documents in the record do not “cancel each other out.” [9]

D & J was started with money from the joint account of Don and Delores Vance, [10] their joint money was used to fund D & J thereafter, and Don Vance personally guaranteed loans to D & J without any evidence of consideration. [11]

B. Interrelation of Operations

Denart and V Coal were engaged in the business of mining coal. D & J hauled coal for Denart and V Coal as well as other coal mines. D & J also leased equipment to Denart and V Coal.

In addition, the record is replete with evidence establishing a substantial operational and financial interrelationship between D & J and Denart/V Coal and a lack of arms-length dealings between the entities. For example, D & J paid V Coal’s payroll of $20,000, with money Don and Delores Vance borrowed (with interest) from a bank. See Emsing’s Supermarket, supra, 303-304. There was no provision for interest repayments by V Coal to D & J or to Don or Delores Vance. Further, Delores Vance made a no-interest loan of $40,000 to Denart, a loan for which there is no written note or agreement. D & J/Delores Vance made other loans to V Coal for which there is no documentary evidence that interest payments were required or evidence that D & J has demanded full repayment of the loans from V Coal. See Il Progresso Italo Americano Publishing Co., [1989-90 CCH NLRB ¶16,160] 299 NLRB 270, 288 (1990); MIS, Inc., [1987-88 CCH NLRB ¶19,478] 289 NLRB 491, 492 (1988). Additionally, when D & J leased equipment to V Coal, it did not require any insurance or security deposit from V Coal. Finally, D & J paid V Coal’s creditors with money transferred from V Coal to D & J after V Coal ceased operations, to enable V Coal to avoid attachment of its assets by various creditors. [12] In the words of the Board in Emsing’s Supermarket, supra at 304:

These facts, taken as a whole, clearly reveal not only a financial interdependency between [Denart/V Coal] and [D & J], but also a propensity on the part of [Don and Delores Vance] to operate [the companies] in such a manner that the exigencies of one would be met by the other.

This method of operating shows less than an “arm’s length relationship” between [Denart/V Coal] and [D & J].

C. Common Management

It is undisputed that Don Vance managed Denart. There is substantial documentary evidence in the record controverting Delores Vance’s testimony that Don Vance was not involved in the management of D & J. The record shows that Don Vance filed a financial statement with a bank in which he stated that D & J is his “business or occupation.” Also in the record is a credit application in which the Vances held themselves out as jointly doing business as D & J. In another application, Don Vance applied for credit on behalf of D & J. Even the judge found that Don Vance contracted for goods on behalf of D & J by purchasing a truck, an act hardly in keeping with one who is not involved in the Company’s operations.

Don Vance, Delores Vance, and their son, Don E. Vance discussed the businesses of all the entities at weekly informal meetings. Denart/V Coal had no formal board of directors meetings and corporate minutes are not in evidence. The family meetings, the absence of any formal meetings by each entity, and the disregard of the separation between the various entities attest to their common management.

D. Centralized Control of Labor Relations

Evidence of Don Vance’s involvement in D & J’s labor relations is limited but significant. Delores Vance denied that Don Vance was involved in certain aspects of labor relations for D & J--hiring and dealing with employees regarding their wages and terms and conditions of employment. The record shows, however, that Don Vance met with union representatives of United Mine Workers District 17 regarding D & J employees and agreed that Denart would pay the dues of D & J employees. The record also shows that Don Vance represented D & J in a proceeding before the State of West Virginia Department of Energy regarding an employee of D & J who was injured at work. Although not overwhelming, this evidence of Don Vance’s involvement in D & J’s labor relations, in combination with the ample evidence relating to the other factors discussed above, provides additional support for a finding that D & J and Denart/V Coal are a single employer. [13]

E. Conclusion

Under all the circumstances--including common ownership of Denart/V Coal and D & J, the marital relationship between Don and Delores Vance, the financial and operational interrelationship between Denart/V Coal and D & J, Don Vance’s involvement in the labor relations of D & J, and common management--we find that the record establishes an absence of an arm’s-length relationship between Denart/V Coal and D & J and that they therefore constitute a single employer.

III. Remedy

The Respondents’ brief concedes, as it must, that Delores Vance is personally liable if D & J is a single employer with Denart/V Coal, because D & J is a proprietorship, not a corporation. There is no contention that D & J as an entity has limited liability. Given our findings that Denart/V Coal and D & J are a single employer and that Don Vance and Delores Vance jointly own D & J, we conclude that they are both personally liable with Denart/V Coal/D & J for remedying the unfair labor practices.

No issue is presented with respect to the amount of backpay that is due. In its 1991 Decision and Order in this case, the Board granted the General Counsel’s Motion for Summary Judgment against Denart/V Coal for failure to file an answer to the compliance specification. The Board stated that it “deem[ed] all the allegations in the compliance specification to be admitted as true against the Respondents, Denart Coal Co., Inc. and its alter ego, V. Coal Co., Inc.” 301 NLRB at 392. In addition, the Board stated:

If all the Respondents are a single employer, then they are all responsible for, and bound by, the actions of the single employer in this proceeding. That includes the failure of the original, named Respondents to provide an adequate answer here. [Id.]

Accordingly, additional Respondents D & J, Don Vance, and Delores Vance, bound as they are by the actions of the original Respondents, are also liable for payment of the amounts set forth in the compliance specification.