NATIONAL LABOR RELATIONS BOARD, Plaintiff-Appellee,
v.
C. C. C. ASSOCIATES, INC., John E. Wilson, Ira Conklin, Charles Conklin, W. H. Conklin, W. C. Conklin and Ira Conklin, Jr., Respondents-Appellants.
NATIONAL LABOR RELATIONS BOARD, Appellant,
v.
John J. HARRIS, Appellee.
No. 246.
No. 302.
Docket 27254.
Docket 27313.
United States Court of Appeals Second Circuit.
Argued May 23, 1962.
Decided July 30, 1962.
Stephen B. Goldberg, National Labor Relations Board, Washington, D. C., (Stuart Rothman, General Counsel, Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel and Mary Louise Griffin, on the brief), for National Labor Relations Board.
Charles R. Katz, New York City (Katz & Wolchok, New York City, on the brief), for C. C. C. Associates, Inc., et al.
James V. Altieri, New York City, for John J. Harris.
Before LUMBARD, Chief Judge, and SMITH and MARSHALL, Circuit Judges.
LUMBARD, Chief Judge.
These two appeals, bоth from orders of the United States District Court for the Southern District of New York, were argued together and raise a common major question: whether, after a court of appeals has ordered enforcement of an order of the N.L.R.B. requiring the payment of back pay to employees, the Board may proceed to conduct an inquiry as to alter ego and successor responsibility for compliance with the order, or whether it must apply to the court of appeals for authority so to inquire. We sustain the Board's power to proceed without further application to the court of appeals. Accordingly, we affirm Judge Metzner's order under § 11(2) of the National Labor Relations Act, 29 U.S. C.A. § 161(2) which enforced the Board's subpoenas demanding the appearance of the appellants in the C. C. C. Associates case at a hearing inquiring into their sucessorshiр to and relations with Cousins Associates, Inc., and reverse Judge Herlands' refusal to enforce a similar subpoena demanding Harris' appearance at a hearing to determine whether certain corporations owned by him are the alter egos of Marlo Offset Printing Corporation.
N. L. R. B. v. C. C. C. Associates et al. — On October 21, 1960 this court entered a decree enforcing the Board's order of November 12, 1959,
Cousins filed аn answer denying most of the Board's allegations and alleging that Cousins had ceased to operate on December 14, 1959 "solely because of economic considerations" and that any back pay should not extend beyond that date.
The Board then issued and served, pursuant to § 11(1) of the N.L.R.A., 29 U.S.C.A. § 161(1), subpoenas returnable June 6, 1961, seven subpoenas duces tecum addressed to C. C. C., Wilson and the five Conklins,1 and three subpoenas ad testificandum to Ira Conklin, Charles Conklin and John E. Wilson. On June 6 all those subpoenaed appeared speciаlly by their attorney and asked the Trial Examiner to revoke the subpoenas, claiming that the Board had no jurisdiction in a back-pay proceeding to inquire into successor liability or personal liability for prevention of compliance by Cousins. The Trial Examiner held that the matter was properly before the Board, and denied the petition. The Board granted the appellants' "application for special permission to аppeal" and sustained the Trial Examiner. Since the appellants indicated that they still would not comply, the General Counsel of the Board thereupon petitioned the district court, pursuant to § 11(2) of the N.L.R.A., 29 U.S.C. § 161(2), for enforcement of the subpoenas. On September 12, 1961 Judge Metzner granted the Board's petition, in an opinion which is reported at D.C.,
N. L. R. B. v. John J. Harris — On August 21, 1957, this court entered a consent decree enforcing the Board's order of August 19, 1955,
Meanwhile, Harris had been served with a subpoena and his motion to revoke it was denied by the Trial Examiner on February 16, 1961. Harris' refusal to appear resulted in an enforcement order by the district court on April 11, 1961, which, however, left open Harris' objeсtions to the subject of the inquiry until specific questions should be asked. A hearing was held on April 27, at which Harris refused to answer any questions concerning the relationship between Marlo and the Associated Companies, claiming — as did the appellants in the C. C. C. Associates case — that the Board lacked authority to determine the derivative liability of new parties in a back pay proceeding. In this case, however, Judge Herlands, on Octobеr 6, 1961, denied the Board's application for enforcement of the subpoena,
In N. L. R. B. v. C. C. C. Associates et al., Judge Metzner held that the order of this court, in directing compliance by the "officers, agents, successors and assigns" of Cousins Associates, thereby authorized the Board to pursue the investigation into successor liability and prevention of performance by officers, and thus to issue the subpoenas there in question. In N. L. R. B. v. Harris, Judge Herlands found no authorization in these words for an inquiry into alter ego liability, and therefore held that it was necessary for the Board, before starting such an inquiry, to obtain the permission of this court under § 10(e) of the N.L.R.A., 29 U.S.C.A. § 160(e), to adduce additional evidence on the subject of derivative responsibility; he held that the provision of § 10(e) making the jurisdiction of the court of appeals "exclusive" upon the filing of the record with it in the proceedings for the enforcement of the order ousted the Board of jurisdiction to investigate derivative liability.2
On the view which we take of these appeals, the two cases are indistinguishable and raise an identical question, since we hold that the "exclusive" jurisdiction of the court of appeals is not such as to require its authorization for investigation into derivative liability. In addition to this argument from the "exclusiveness" of our prior jurisdiction, two other major arguments are raised to suрport the proposition that the Board improperly issued the subpoenas involved in these two cases. First, it is argued that the additional parties named in the back pay specifications could not be proceeded against by the Board without being served with charges of unfair labor practices under the provisions of § 10(b) of the N.L.R.A., 29 U.S.C.A. § 160(b); in other words, the contention is that an order of the N.L.R.B. cannot be enforced against persons not sеrved in the proceedings resulting in the order or served with charges in new proceedings. Second, it is contended that the Board's rules pertaining to back pay proceedings (Rules and Regulations of the N.L.R.B. Series 8 1959 §§ 102.52-59, 24 Fed. Reg. 9108-9109) do not permit such matters as the liability of successors, alter egos and persons frustrating performance to be inquired into in such proceedings, which are limited by § 102.52 to the determination of "a controversy between the Boаrd and a respondent concerning the amount of back pay due."
Since these proceedings deal with nothing more than applications by the Board for enforcement of its subpoenas, it is necessary to consider first the scope of permissible judicial inquiry in deciding whether such an application should be granted or denied. Such inquiry is extremely limited. No defense relating to the merits of the administrative proceedings may be raised, nor need the agency even make any showing of probable cause to believe that the law has been violated. Endicott Johnson Corp. v. Perkins,
Thus it is not open to us — nor was it to the district court — to consider the particularities of the allegations of derivative liability in these cases. The question before us is only whether, if the Board's General Counsel alleges that someone other than the respondent against whom an order has been issued and enforced is responsible for compliance with that order, the Boаrd may consider the allegations in the kind of proceeding it has begun in these cases.
The argument that it is a violation of the Board's own rules of procedure to consider these allegations is what is designated a "back pay proceeding" is equally inapropos as a defense to compliance with its subpoenas. There is no denial that the Board, if properly authorized, could under some procedural rubric consider thе matter of derivative liability, see N. L. R. B. v. Ozark Hardwood Co.,
The question is properly raised whether under the N.L.R.A. the Board is empowered to consider derivative liability of new parties without beginning a new unfair-labor-practice proсeeding against them under § 10(b), 29 U.S.C.A. § 160 (b). We find that it is so empowered. The Board in the present proceedings is not charging the new parties with any unfair labor practice of their own or participation in those of the original respondents; rather, it alleges only that they bear such relationships to parties already determined to be guilty that they share with them the already adjudicated financial obligation to make certain employees whоle for lost pay. Thus these are not primary actions to determine violations of law, as are provided for in § 10(b), but rather ancillary enforcement proceedings. We interpret N. L. R. B. v. Deena Artware, Inc.,
The question remaining for decision is whether, after this court had enforced the original unfair-labor-practice orders, it was open to the Board on its own to begin proceedings to determine derivative liability, rather than petitioning the enforcing court to hold the new parties in contempt, as it did in such cases as N. L. R. B. v. Deena Artware, Inc., supra, or requesting its permission to conduct supplementary proceedings, as it did in N. L. R. B. v. Ozark Hardwood Co., supra. We hold that it was open to the Board to alter its former approach to the determination of derivative liability and to proceed as it did in the two cases at bar.
The Board would have had unquestionable jurisdiction to inquire into the questions of derivative liability in its original proceedings on the unfair-labor-practice charges, if it had chosen to do so, and its findings on that subject would have had the same force as any other findings in its original order. E. g., N. L. R. B. v. Adel Clay Prods. Co.,
It is now beyond question that it is permissible and proper so to defer consideration of the amount of back pay owed and the detаils of reinstatement of improperly discharged employees. "It is obviously convenient to wait until the question of unlawful discrimination has been definitively settled either by an order of the court or otherwise, before the Board takes up the amount of back pay, for its decision will turn out to be moot so far as its order is reversed. * * * [T]he same reasons * * * apply with equal force to reinstatement." N. L. R. B. v. New York Merchandise Co.,
In its supplementary heаring on back pay and reinstatement, the Board has the same power it would have had if it had gone into the questions on its initial hearing, and its conclusions are subject to the same judicial review. It considers these questions "not as part of a proceeding for contempt, but as part of the Board's duty to complete, or make final, what it very properly left undecided in its first order." N. L. R. B. v. New York Merchandise Corp., supra,
It follows from this analysis that it is not necessary for the Board to apply to the court of appeals which has enforced its initial order for permission to conduct a supplementary hearing on back pay or reinstatement. Indeed, some courts have rebuffed the Board's attempts to secure such permission as unnecessary. Home Beneficial Life Ins. Co. v. N. L. R. B.,
It thus being clear that the Board may seek enforcement of an interlocutory determination that the N.L.R.A. has been violated and then proceed without special judicial permission to conduct proceedings leading up to the issuancе of an order dealing with the remedial details of back pay and reinstatement, we see no reason why it should not similarly be permitted to defer its consideration of the remedial detail whether its order can be directed derivately against parties other than the employer actually found guilty of the unfair labor practice in question. Considerations of convenience, both to the Board and to its adversaries, militate in favor of the same result. The problems of untangling intercorporate relationships for this purpose may be complex, and the parties should not be compelled to embark upon such an inquiry before it is determined whether the outcome of the basic dispute on the merits will make the inquiry moot. As in the case of back pay and reinstatement, agreement between the parties may make it unnecessary to litigate the question of derivative rеsponsibility. If the party primarily charged is in fact able to comply with the order against it, it will be unnecessary to consider derivative responsibility at all. Moreover, the questions involved in determining whether derivative responsibility exists may to a substantial extent overlap those involved in determining the amount of back pay due and the feasibility of reinstatement; since these latter questions may be deferred, it seems most reasonable that the former should be considered along with them in the supplementary proceeding. Accordingly, we conclude that the Board was authorized to conduct further hearings in these two cases, and therefore that, under the circumstances, its subpoenas should be enforced.
The order of the district court in N. L. R. B. v. C. C. C. Associates, Inc. et al., is affirmed, and that in N. L. R. B. v. John J. Harris is reversed.
Notes:
Notes
The two additional Conklins, W. H. and W. C., are stockholders, directors and officers (together with Ira and Irа, Jr.) of C. C. C. Associates. The Board made no charges against them, and seeks only to secure their testimony
Section 10(e) provides, in pertinent part, as follows:
"The Board shall have power to petition any court of appeals of the United States, * * * within any circuit * * * wherein the unfair labor practice in question occurred or wherein such person resides or transacts business, for the enforcement of such order and for appropriate temporary relief or restraining order, and shall file in the court the record in the proceedings, as provided in section 2112 of Title 28. [United States Code]. Upon the filing of such petition, the court shall cause notice thereof to be served upon such person, and thereupon shall have jurisdiction of the proceeding and of the question determined therein, and shall have power to grant such temporary relief or restraining order as it deems just and proper, and to make аnd enter a decree enforcing, modifying, and enforcing as so modified, or setting aside in whole or in part the order of the Board. * * * If either party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearings before the Boаrd, its member, agent, or agency, the court may order such additional evidence to be taken before the Board, its member, agent, or agency, and to be made a part of the record. * * * Upon the filing of the record with it the jurisdiction of the court shall be exclusive and its judgment and decree shall be final, except that the same shall be subject to review by the * * * Supreme Court of the United States upon writ of certiorari or certification as provided in section 1254 of title 28."