National Labor Relations Board v. Fullerton Transfer & Storage Limited, Inc. Richard E. Mills Carole F. Mills Sllim Real Estate Corporation

entities, Fullerton Inc. and legal WELLFORD, and Before KENNEDY Equipment Inc. Carole Mills con- Fullerton ENGEL, and Senior Judges, Circuit operation’s real estate. tinued to own Judge. Circuit the real es- incorporated later Carole Mills well, form- portion of the business tate KENNEDY, Judge. undisputed this divi- It is Circuit Sllim. occurred in separate corporations sion into Rela- the National Labor In this the assets of the Mills and order to insulate Board) (the to enforce seeks Board tions any unfore- corporation from future each en- entered and originally backpay order by company in- not covered seen liabilities Transfer & Stor- against forced Fullerton incorporated Fullerton The now surance. Transfer), Limited, (Fullerton age Inc. company operating Transfer became owners, and Carole Richard against its into actually hired drivers and entered owned corporation also a related and storage contracts. Carole moving and con- Mills. The Board its approximately Mills received 97% com- and the related the Mills cluded that Full- Mills the and Richard balance. stock (Sllim), Corporation Real Estate pany, Sllim assets, cash than Transfer’s other erton Transfer. of Fullerton egos the alter receivable, limited to were and accounts below, we find the reasons stated For furniture, licenses, incidental office concluding Mills erred operations. moving used in its equipment egos of Fullerton are the alter and Sllim ultimately in 1975 the strike Until the Board’s to enforce Transfer and decline company, brought the demise about against them. primary busi- place Fullerton Transfer’s a terminal warehouse ness was Background after Youngstown, Ohio. Sometime its back strike, Transfer scaled Fullerton order, the decision In a June 1976 more Mills Richard ran operations. Transfer had Fullerton found that his until from home limited prac- of unfair labor a number committed in 1978. ceased business rates, changing pay unilaterally tices also estab- was Equipment Fullerton discontinuing pen- health and unilaterally enterprise’s The title lished in 1960. contributions, process a refusing to sion was transferred fleet of trucks grievance an established under grievance trucks time. These at discharging 11 employees procedure, and to Fullerton back in turn leased were unfair striking protest these were who Equip- extent Fullerton To the Transfer. proceed- subsequent In practices. own, the its ment had liable was found ings, Fullerton Transfer by Richard conducted business was ex- pay, medical backpay, vacation for by Fullerton premises leased contributions, to- pension fund penses, Transfer. that contin- $21,968.81,plus interest taling trans- most other assets Because ues to accrue. corpora- newly established to the liquidated ferred gone out of business has per- Mills continued Carole of this tions none assets buildings real estate and sonally own the satisfied. has ever been award outstanding commercial loan at the Transfer under a written term used as a operations the Mills founded Sllim time Fullerton Transfer ceased lease. holding corporation. Carole guaranteed by estate real by Full- property used Mills transferred lending institution.3 the insistence of outstanding subject to an erton Transfer operations, the After the ceased stock. mortgage to Sllim in return Sllim required begin paying Fuller- Mills were Virtually all of the real estate owned obligation Transfer’s on this loan under ton leased to at the time of the strike was admitted guarantee. Richard Mills also stock has Fullerton Transfer.1 Some of the occasionally personally that he and his wife pur- to the Mills’ children been transferred corporation, loans to the some made small plan. to an estate While suant repaid.4 of which were not deceased, family apparent- is now Mills Fuller- began Mills to wind down Richard activities. ly continues to direct Sllim’s operations in after the ton Transfer’s existence, Fullerton Throughout its practice crippled op- strike its unfair labor paid share- Transfer never dividends to its voluntarily relin- company erations. rarely had income. holders and taxable agreement quished agency with North compa- income from the The Mills received Lines, major a source of American Van ultimately by through salary and reason ny property it had and vacated the the two other payments lease made to Equipment rented Sllim. controlled, they business, selling off the also went out of Nevertheless, Sllim. formerly rented to Fullerton trucks it had paid to did not find that the salaries su- Transfer. Two of Fullerton Transfer’s agreements Mills or the lease with eventually compa- pervisors formed new out of line or Fullerton were ny began moving storage activi- prices.2 prevailing market with the They also re- ties on the same location. to conclude that there is no reason the North American Van Lines ceived manipulated their salaries and leases Mills Fullerton Trans- agency agreement which to maintain Fullerton Transfer relinquished.5 fer had corporation. judgment-proof operations ceased had The Board also found that the Mills outstanding unpaid. many of its debts commingled personal or the assets winding Fullerton Transfer’s af- down with Fullerton Transfer’s assets of Sllim fairs, to raise an Richard Mills able degree of financial assets. There was $50,000 compa- additional from the sale of companies the two interaction between company’s of the ny assets and collection Mills, Although Fullerton however. accounts receivable. Mills used all of to take out short term Transfer was able money satisfy company’s any personal payroll meet without loans to negotiating steep reductions in the difficulty often it had guarantees pay- long company’s debts as a condition for acquiring long term loans. The one doing company occasionally proper- time the ceased business. invested in other 1. Sllim record, dwellings primarily leased suggestion residential There is also some in the but —not ties— to Fullerton Transfer. findings, that Sllim made loans not in the ALJ’s many Equipment. As with to Fullerton (ALJ) Judge Administrative Law found 2. The questions, it was difficult for the other financial salary from Richard Mills increased his positively to determine what loans were Mills years the com- Transfer in the last Fullerton pany’s operations. many repaid loans were since made and what specifically noted The Board company records of the had been the financial rely finding that it did not on this however. damaged during both the strike and after the suggests long term record that earlier 3. The company operations. ceased taken out Fullerton Transfer were also loans ap- guaranteed by the Mills. These loans were party new was not made 5.The paid prior company's parently to the demise in backpay and the action to enforce the Board’s claim that the Mills benefit orders. There is no any company. in the new had interest remarks, appears of these 4. From the context outstanding repaid those that the loans not use this mon- Discussion company did not ment. The outstanding lease pay off ey to company Whether a or individual is Richard owed Sllim. payments responsible obligations for the financial low on the list of these debts considered question another or individual ais Further, there is no evidence priorities. of federal law when arises the context dispute. Although of a federal labor state support a conclusion the record to may provide guidance cases in fashion law money to reduce the any of this Mills used law, they ing the content of federal are not outstanding loan which on the principal binding and thus do not control the out It is unclear how they guaranteed. Contractors, e.g., come of this case. See corpora- Mills decided which Laborers, Engineers Teamsters off. obligations tion’s Hroch, Plan v. Health and Welfare that it was Mills’ intent AU determined (8th Cir.1985); Seymour v. in the com- family’s reputation protect his Engineering, Hull & Moreland 605 F.2d ambiguous. munity, the record is somewhat (9th Cir.1979). 1105, 1109 Thus we do not and Sllim did not It is clear that the Mills respondents’ citations to believe prior guaran- any debts which their assume controlling. law are Ohio Fur- require them to assume. tees did not Nevertheless, law, like state federal law in many creditors undisputed it ther is generally recognizes the limitation of liabil- paid. employees were never addition to the ity adoption that the of a form not file for bank- Fullerton Transfer did stated, Supreme As the has creates. Court Moreover, it did not ruptcy protection. “The of a stockholder from the insulation action, setting such as aside any obligations corporation take is of his debts debts, norm, guar- exception.” would not the NLRB v. money future Inc., 398, 402-03, Artware, 361 U.S. backpay would be Deena the final antee that 441, 443-44, (1960). 4 L.Ed.2d 400 80 S.Ct. backpay specifica- original The satisfied. A similar statement could be made concern- 1977, entered until October tion was not corporation liability of an affiliated however, by this and not enforced Court obligations of its affiliate. for the debts and 26, by the time until March may in at least Exceptions to this rule arise final, company’s proceedings were First, Congress could create ways. three exhausted. assets had been corpora- statutory exception to a explicit an fact, findings of Based on these something liability, it has not tion’s limited Mills and the Board concluded Second, exception broader than done. an Transfer. In egos alter of Fullerton recognized by federal common law ego, an alter finding Sllim to be in order to effectuate Con- could be found the fact that Sllim and primarily relied e.g., First gressional policies. labor See organized in an Transfer were Banco Para el City Bank v. National any future attempt 611, assets from Cuba, to insulate 462 de U.S. Exterior Comercio 2601-02, judgments against 2591, unanticipated 629-30, 77 L.Ed.2d 103 S.Ct. company's (1983); in- Trust Fund not covered Laborers’ Pension Transfer 46 Inc., Homes, liable, 872 Sidney Weinberger finding the Mills v. surance. 702, (6th Cir.1988); Alman v. F.2d 705 primarily on the fact Board relied Cir.1986); 1, (1st Danin, Town 801 F.2d 3 corpora- guaranteed portion 215, Gorsuch, 221 667 Brookline v. debt, corporation loans to the tion’s made (1st Cir.1981). Finally, the more narrow seeking repayment, without exception federal common law the decision that Fullerton applied to allow liability may be limited oper- cease Equipment would and Fullerton corporate form. go Board to behind any pay- did not seek ations. The Board argued because this case parties from Fullerton have ment and non-labor ver without law gone out of business under various labor too had ego alter doctrine. sions assets.

336 management, substantially identical have case does involve in this a strict sense equipment, purpose, operation, ego principles, the label application of alter customers, ownership.” supervision resolving help in the issues itself is of little NLRB, Electric v. 965, Nelson 638 F.2d Rather, determine we must presented. v. All see also NLRB Cir.1981); (6th 968 ego an “alter to as which doctrine referred Inc., 780 F.2d Transfer, coast 579 this case. The term applies to doctrine” Cir.1986). “We also have observed great deal ego” has accumulated a “alter function to ‘strike a balance is the Board’s disputes. in the context of labor baggage the criteria’ set forth among each of commonly ego doctrine is most The alter Transfer, 780 F.2d at above.” Allcoast employer a new cases to bind used labor Electric, 638 F.2d at (quoting Nelson an em- operations old that continues 968).8 In order to effectuate federal em- cases where the new ployer in those Board have policies, the courts and the disguised “merely a continuance ployer is ego applied version of the alter doc Southport Petrole employer.”- of the old relaxed, exacting less fash trine a more NLRB, um, 100, 106, Co. 315 U.S. required federal than under ion would be see also (1942); 452, 456, L.Ed. 718 5.Ct. principles. Although many of common law v. Detroit Local Co. Howard Johnson explained also be under the cases could Bd., Hotel and Restau Executive Joint doctrine, it is not this federal common law Employees, Bartenders Int’l rant sought the courts have standard Union, 417 U.S. 259 n. 94 S.Ct. apply. (1974).6 In n. 41 L.Ed.2d 46 applied to so- creasingly, the term also argues that the relaxed The Board operations to deter applicable called double-breasted double- standard coexisting em disguised mine two or more continu whether breasted are in performing applies the same work us. ployers ance cases to the case before only in separated agree. cursory form.7 Even a exami fact one We cannot instances, has formulat the facts in this case reveals that nation of both very different enterprises Sllim and the Mills have a as “whether the two ed the test Mobile, Inc., U.S. successorship v. Broadcast Serv. 380 doctrine is often confused 1264 6. The of 255, 876, (1965). ego successorship the alter doctrine. The L.Ed.2d 789 If the 85 S.Ct. 13 to determine whether a new jurisdiction doctrine is used employer requirements met in a are obligation bargain when has an jurisdiction require- If the then is established. employing fide sale of the com- there is a bona practice an unfair dis- ments are met in labor pany. fide is found when there is A bona sale companies pute the two has al- where one of change ownership “any or in ... substantial signed bargaining agreement, ready then the a Johnson, management.” 417 U.S. See Howard may by company second be bound same at 2242 n. 5. a at 259 n. 94 S.Ct. agreement. Prairie Constr. Co. v. Local South may required bargain successor at most Operating Eng'rs, 425 U.S. Int’l Union of union, corporation prior a new that is with the 1843-44, 800, 802-04, 48 L.Ed.2d 96 S.Ct. ego employer replaced will be the alter (1976). question of whether the two The prior employer’s agreements held to all of the belong bargaining unit corporations in the same obligations. remains, however. operations arise in those 7. Double-breasted enunciated 8.These factors were first company operating a a with union- cases where Co., Door 226 N.L.R.B. Board in Sales second, Crawford force establishes nonunion- ized work (1976), disguised continuance case in company performing same in the ized work original company was dissolved and a which the market under the same control. same company take formed to its new nonunion operations are also attacked Double-breasted originally place. Although the Board limited using single-enterprise doctrine. This doc- application where the of this test to cases originally developed to determine if trine was operations, original company over had ceased corporations too small to meet the two or more time, began apply the courts the Board and jurisdiction requirements fall within the Board’s original union firm contin- this test where the jurisdiction. A court examines four Board’s Befort, operation. See Labor ued as a viable test, (1) the interrelation of factors under this Employer; A Cri- Law and the Double-Breasted (2) operations, relations, control of labor the centralized Single Ego tique Employer and Alter Doc- (4) (3) management, common of Reformulation, Proposed 1987 Wis. trines and a ownership or control. See Radio & common L.Rev. 91-92. Technicians Local Union Television Broadcast long before the than occurred back- relationship with pay award ordered the Board. in double-breasted egos alter do n the Since Sllim and cases. continuance Unlike disguised or cases, employees that would the al- no have been cover- types of in those egos alter contract companies ed under Teamster’s with Full- here are not egos leged alter Transfer, origi- argued erton it cannot be as the engaged in the same occurred to shift work subject Board’s formation to the nal employees. are, a unionized to nonunionized Rather, they respectively, order. opinion much in its Board concedes as be- in a different business corporation engaged Similarly, to this Court. another low and brief and officers of stockholders separation long occurred before the corporation. subject practices unfair labor relationship, different of this Because of the Board’s actions. The Board con- justify application rationales that changes not made in cedes the antici- double- ego principles in alter more relaxed pation committing or to further the com- disguised continu- operation and breasted practices by Fuller- mission unfair used here. As it is are absent ance cases ton Transfer. disguised operation and in double-breasted cases and commentaries have cases, ego doctrine Other the alter continuance justifications presented two additional employers from developed prevent “was alter merely applying the more relaxed stan- evading obligations under Act showing of intent. dard even altering their absent changing or First, employer asserted that when an at 579. Transfer, 780 F.2d Allcoast form.” enjoys firm establishing a new benefits order or intent to thwart Though board form, change expect it should cri- of a important is an statutory requirement well, regardless required a bear the burdens teria, has not such Circuit NLRB, 716 intent to evade. Alkire v. in order to See employer intent showing Cir.1983) J., (Sprouse, ego standard. apply liberalized Befort, supra, note 8 at Nevertheless, dissenting); justi- we have Id. 581-82. every applied rationalization by Were this is followed position, which fied that form, circuits,9 liability would by change of limited nev- some, all, of the other but not case, a result we do not er exist in a easily too be dis- reasoning that intent can likely that the benefits support. It is more employer who desired guised. “[A]n contemplated by this rationale might tempted benefits obligations avoid union the avoidance of union resulting from obli- by altering the the doctrine to circumvent Here, were no since there union gations. le- on some structure based corporation’s separation the oc- reason, obligations when retaining essen- avoided gitimate corresponding curred, is no benefit utilizing there tially the same ego obligations. trigger alter obli- that would escape the unwanted change to Second, showing of motive can requiring a cir- like other gations.” Id. at 582. expecta- contractual ignore legitimate employ- often cuits, relied on an our Circuit has have entered into tions of who obligations as workers ability thwart union er’s Befort, employer. the first contract with our decision enforce basis required (rejecting a contrast, at 99 Here, supra, note 8 by standard. more relaxed formulating a new showing of motive and multiple separation of the business into (1st Cir.), NLRB, 18 cert Papers, 706 F.2d adopted posi- Inc. v. the same Circuit has The Second 237, Products, denied, S.Ct. 78 L.Ed.2d Piping 104 Circuit. Goodman 464 U.S. tion our Columbia, Cir.1984). NLRB, (2d The (1983). Finally, 10 741 F.2d District of Inc. v. 228 First, Third, proof Eighth require Circuits Fourth, positions adopt Tenth Circuits Express Distribu- motive. Iowa of an Fuga antiunion two extremes. in between the somewhere (8th Cir.), tion, NLRB, cert. F.2d 1305 v. 739 Inc. NLRB, Corp. 725 F.2d 1416 zy Continental denied, L.Ed.2d 105 S.Ct. 83 469 U.S. (D.C.Cir.1984); NLRB 716 1014 Alkire v. Inc., (1984); Bryant, 711 F.2d v. Al 704 NLRB Products, Inc., Cir.1983); (4th v. Tricor NLRB denied, (3d Cir.1983), U.S. cert. 464 543 Cir.1980). F.2d 266 636 (1984); Penntech L.Ed.2d 165 S.Ct. operations applied should be to the facts of this case. double-breasted test for when bound). longstand- Virtually corporations Because of the all are formed for will be purpose limiting liability. Only of asset owner- ing of the division nature case, can attempt liability limit ship challenged in where an is of a employees specific had a contrac- hardly argue type typically involves a at- satis- that the Mills would expectation tempt obligations tual to thwart labor law is the from re- fy Transfer’s debts application ego principles of relaxed alter corporation. The owned justified. sources not does not a case involve Where leasing real owning and estate facts, business of can- such the more relaxed standard trucking integral function is not an apply.11 Many such rent-from businesses business. appear It does not that the Board has strangers. attempted more to bind Mills under the Co., Board, citing Electric The Watt ego applied alter to double- liberal standard pur- (1984), argues the Mills’ N.LR.B. 655 disguised breasted continu- personal liability pose to limit their Nevertheless, ance cases. to the extent of the business from protect the assets argument, reject this is the Board’s we it. contingencies justifies unforeseen future ego appli- Even were liberal alter doctrine of the more relaxed stan- application Sllim, apply operate cable to would not or Initially, we note that dard bind Sllim.10 ego to bind the Mills. The liberal alter prop- does not stand for this Electric Watt businesses, doctrine is used to bind divided very involved a dif- osition. Electric Watt not the individuals own stock in who those case before us. ferent situation Only if businesses. those divided business- holding an asset com- Although there was es are not are the property ego to the alter pany that leased Here, owners bound. end there. In the similarities and the other Transfer' businesses were Electric, the alter was estab- Watt operated by corporate capaci- in a company it succeeded be- lished when ty. Accordingly, the Mills would still be unprofitable because of the union came protection entitled to the afforded original company The dis- wages paid. holdings nature of absent opera- and became an charged its workers pierce some reason to veil to solely to service mort- tion that existed reach them. equipment rent its to the new gages and ego, performed work ap question of what rule does pay union scale. old but did not ply enterprise’s operat in cases where an us, contrast, before the case pur created structure has been for the ownership day-to- bifurcation of asset liability poses limiting remains. As al created to avoid a day operation was not discussed, ready do not we believe long obligation. It was created bargaining overriding Board has identified an federal practice charges unfair labor before policy requires interest that an alter were foreseeable. against corporation the ego recognized rule than that un broader Moreover, Accordingly, do not that der federal common law. the we believe rely liability provides limit Board must on more traditional alter the Mills’ desire ego principles if proposition that the its order is be enforced any support for the However, against alter and the Mills. we more relaxed labor law standard Sllim Essentially Sllim are intermin- asserts that the entire Fullerton Transfer and so the Board companies, gled enterprise company. the three Fullerton enterprise of one as to make the Sllim, Transfer, Equipment, and Fullerton Although corporations were run from the both judgment. the The Board should be liable for office, kept they apparently all of their same recognize appear that even does not under arrangéments separate. be- accounts The lease personal- theory the Mills would still not be always writing ap- and tween the two ly liable for the award. except parently for the failure to adhered to period Fullerton final in which the rent the find, Although is the did not so there Board Transfer was insolvent. concluding that the assets of also no basis for assets, and that the when winding or the on Sllim no basis can find law Transfer’s did federal common down Fullerton not are liable under Though there payment either. the of rents due Sllim of ego standards consider corpo- one governs when high priority. test that is one ego of found to be the alter will be ration provided true that it is Sllim another, Supreme provided Court has under its lease which terminal facilities en- many the tests: summary of good provide Transfer to abled Fullerton truck- Berkey said in Cardozo Mr. Justice [A]s services, storage and we do not believe Co., 244 N.Y. R. v. Third Avenue that that this leads to the conclusion may be so N.E. 61 “Dominion and Fullerton Transfer should be treated obtrusive, that interference so complete, liability purposes. for For this as one con- agency parent general rales of follow, we clusion believe board subsidiary an principal will be must show Fullerton Transfer could that this, is less than agent. Where control operated have in the same fashion not with- honesty to the tests of are remitted we the aid of Such a conclusion is out Sllim.12 complete That is not justice.” supported by not this record. may companies catalogue. The several that was evidence before Board Apart from that as one. represented be suggests paid Transfer rents Fullerton the eco- in fact question whether is pre- to Sllim and Fullerton one, enterprise is nomic case, If vailing rates. this is market arrangements being largely paper forms Transfer could have then Fullerton rented realities. do not reflect Corporations from land trucks company may fact be One owned and controlled the Mills. Al- another; may only a one division though the Board seeks to characterize financed; affairs shell, inadequately perpetually underca- may intermingled that group be so supports opposite pitalized, the record corporate lines main- are no distinct dispute the labor that is conclusion. Until some, though by no tained. These Transfer subject of this Fullerton all, considerations of the relevant means enterprise. It met its awas successful recognize. authorities as the bills, salaries, seemingly pro- paid its 403-04, Artware, 361 U.S. at Deena living. Although its with a vided owners omitted). (footnotes at 443-44 S.Ct. corporation complains that the and Fuller- argues that Sllim The Board dividends, many this is true for paid never “paper arrange- largely Transfer are ton The Mills closely corporations. held reali- reflect the business that do not ments by receiv- corporation living enterprise economic only one ties” salary performed work behalf ing a support proposition, of this exists. no claim corporation. There is three asserts board “[t]he or otherwise inflated these salaries were Transfer, Equipment, [Fullerton inappropriate. together to functioned therefore and Sllim] did not that the Mills Finally, the fact provide enable of rent due Sllim payment consider public, moving trucking and services winding down Fullerton high priority when potential liabil- limiting its assets while understandable. Transfer’s business and others.” The ity to creditors many outstanding bills be There were support is found that further also asserts could not the Mills paid at this time. While Fullerton Transfer was fact that in the the of control demands judgment to make it undercapitalized by the demands they could control corpo- of the was one two proof, Sllim Moreover, if this evi- company. own to hide Fullerton Transfer’s rations used Equipment is rele- regarding Fullerton Evidence vant, Board refers the intent, however, discussion, or as it discloses insofar it unneces- we find in its Trans- in which Fullerton on the under bears manner sary it should be discuss whether liable operated. longer fer or Sllim were ego theory exists. since it no an alter See, side, present. e.g., Operat- it is these factors be support for either provides dence Reed, ing Engineers Richard Mills used his Pension Trust Had for the Mills. (9th Cir.1984); pay rent to Sllim to F.2d Audit Servic- position to corporate es, to other credi- 641 F.2d payments Rolfson, of Inc. v. the exclusion shown, by Cir.1981). tors, creditor controlled When fraud is we do not then Sllim—a unjust always necessary received an might have that it is to show the believe Mills— holding Sllim preference justify Similarly, if both that would the other two factors. corporate liable for the back- injustice respect or the Mills for the and little pay shown, entity award. we do not believe it nec- essary fraud. Where extraordi- to show concluding for Similarly, we see no basis shown, may alone nary injustice is be in the interests should be bound Sllim predicate liability. sufficient is no prevent fraud. There justice of or to into employees were misled claim appear argue does not The Board Transfer owned believing that Fullerton Clearly, case. the present fraud is this Further, there is no the trucks and land. support it. There is no evidence does not paid any that the rents for assertion basis represented showing that the Mills the keep com- manipulated in order to the corpora- anything other than a Accordingly, we can find pany insolvent. sought separate The fact that banks tion. justified the Board was no basis on which specific guarantees from the Mills for ego of holding to be the alter Sllim repayment suggests that oth- the of loans Fullerton Transfer. ers did fact believe corporation. operated as a several factors in The Board cites finding the Mills support of its decision factor, Turning to the first Although there is no one personally liable. reasonably that it could conclude asserts deciding disregard the test for when to given corporate respect that no owner-opera corporate form and bind cites three factors in form. board corporation, closely of a held most tors (1) support position: per- of this the Mills can decided reference to three cases sonally guaranteed of Fullerton some panel enunciated of the factors first debts; (2) placed Transfer’s low Ninth Circuit: priority repayment of these loans on the Viewing jumble of federal deci- affairs; winding up company’s when together, general- find a sort of sions we (3) repayment the Mills did not seek disregard ized federal substantive law outstanding rents due to Sllim when corporate entity which concentrates on of up winding company’s affairs. We do general factors: the amount of re- three support not believe of these factors separate identity given to the spect finding paid respect that the Mills to the shareholders, corporation by its corporate personal guar- formalities. The litigants on the degree injustice visited they gave corpora- antees for some of the entity, by recognition corporate suggest just opposite. tion Al- debts incorpo- and the fraudulent intent though winding up it is true that when rators. company’s affairs the Mills did not rent 1111; place priority F.2d at due Seymour, 605 see also Wein did not on the Homes, they personally guaranteed, 872 F.2d at 704-05.13 Later loans berger suggest have tended to read alone Ninth Circuit decisions does not requiring ignored. that all three form was Nor does this demon- Seymour illegality, honoring factors cited other courts are Most of the formali- ties, merely specific restatements of these corporation merely fact and whether include, specific factors These fact but factors. sham. limited to: are not Homes, Weinberger 872 F.2d at 704-05. corporation, undercapitalization there will be few federal common law alter books, separate separa- the maintenance cases where tests other than this one should be finances, corporate and individual the tion of applied. support corporation to fraud or use of the ness, only supported by the cor- conclusion the financial affairs of strate evidence in the record is that the closure intertwined with those poration were inability pay to debts resulted -from to in the Board’s brief Mills as asserted troubles, Fullerton Transfer’s labor not most, suggests that the At this this Court. any alleged undercapitalization. As demanding satisfy the least Mills failed to out, already pointed appears it that Fuller- creditors, Paying themselves. themselves operated ton Transfer much as ignoring be more indicative of first would company which did not own its own trucks acting in their corporate structure and and warehouse. Since Fullerton Transfer important The most personal interest. in operated could have the same fashion expect to find—the inter- factors one would owning operating without the Mills and the failure to main- mingling of assets Equipment, Sllim and Fullerton then the corporate records—are absent.14 tain operation protect division of the to assets is no The record also contains evidence inherently unjust. not conclusion that an support the Board’s The mere fact that Richard Mills failed to from the failure to injustice would result bankruptcy proceedings institute when The mere fact find the Mills liable. company’s winding up the affairs and ceased without be money pay failed to set aside the still is, course, pay all of its ing able debts backpay contested award is also not evi- injustice contemplated. the sort of not in opinion. dence of unfairness our There Perez, 870 F.2d Scarbrough v. obligation no affirmative on an insolvent is Hroch, Cir.1989); F.2d at also see bankruptcy. Although to file for debtor injustice, if that is the This form of 191. money pay aside the Mills did not set it, every in present case. correct term backpay winding outstanding award when Again the Board relies on number affairs, up Fullerton Transfer’s on the (1) conclusion: support factors to us in this this does not facts before undercapitalized Fuller deliberately Mills appear the sort of that would to be abuse (2) kept judgment proof Transfer and ton disregarding form. justify money to Mills failed to set aside Richard many paid. creditors were not Apparently, obligations and failed to backpay paid apparently agreed to Those that were protect bankruptcy proceedings to institute they Most reduce the debts were owed. creditors; (3) all importantly, at the time the Mills were expenses paid income after little company’s pay- liquidating the assets dividends; (4) acting Richard on be yet Board’s order had not un corporation, committed the half of and had reduced to a certain amount been practices resulted in the fair labor enforced this Court. been (5) personally decid liability; Richard Mills company’s began to wind down the operations; cease Fullerton Transfer’s ed to complet- process that was affairs (6) unity management complete Regional did not ed in 1978. The Director ownership in the Mills is inconsistent specifications un- original backpay his issue corporate form. recognition hearing and ini- After a til October 1977. assertion, there is no As to the first of back- tial determination of the amount suggest that Full- May the record an AU in pay liability evidence undercapitalized. order and issued its erton Transfer was Board reviewed the August as a sol- The final corporation apparently 1979. initial decision included all the healthy corporation for more than of the Board that vent and until March incorporation. Although due was not issued years after its amounts until not enforced this Court meet all of its financial obli- 1980 and unable to the status of back- March 1981. Given ultimately went out of busi- gations when explained. supra See note provide records was Moreover, were able to few specifically refused to records to the Board the time apparently proceedings, once the records any negative inferences from this failure. draw inability provide The Mills' existed. realized, I At same time corporation to enforce. the time the pay obligation out, pointed that “the Judge Kennedy has paying off assets exhausted its Mills, from the debts insulation of a stockholder Richard say impossible to that it is corporation is the obligations of his funds, an and committed act setting aside not norm, exception.” NLRB Deena justify injustice as to of such manifest 398, 402-03, Artware, 80 S.Ct. 361 U.S. liable. holding personally him (1960). 443-44, Thus L.Ed.2d dividends receive Mills did not That premise that analysis begins with our operating Fuller- from profited instead but nothing illegal or immoral with there is receipt of reason- through the ton legal principle that individ- well-established reason- payment of and the able salaries through corporate entities can create uals Equipment and to Fullerton rents able risk of and also to limit which to undertake injustice. Pay- of not evidence is also Sllim private their en- responsibility for personal rent, renting salaries, and paying encourages com- This scheme terprises. accepted prac- and equipment are common trade, it is expansion of and merce and the small, owner-operated busi- among tices find in an institution of such difficult to evil the Mills im- that evidence nesses. Absent standing which finds its lawful long and paid in- assets or siphoned off permissibly accepted encouraged openly and use rents, injustice is salaries or flated I was throughout the world. jurisdictions shown. the Mills by the fact that impressed also explanations ad- final of the four None on organized and to have carried seem ignore reasons to by the Board are vanced singularly in a manner their businesses Instead, they appear corporate form. which ran any ulterior motivation free of small, owner-operat- to reflect a belief general corporate notions of afoul allowed to not be enterprises should ed liability. Par- of law and valid limitations Such owner- corporate form. operate in a vari- ticularly, openness with which the only a com- are not corporations handled, the were ous entities country, in this but structure business mon assets, intermingle taken not to care recognized as a method always been have any fraud most of were the entire absence owner’s limiting of even small corpo- use of the legitimate indicative of Although it is true that liability. personal personal legitimate rate form to achieve likely are more owner-operated businesses liability including insulation of objectives, to find lead courts acts that will to commit importantly, even more achievement liable, liability under owners planning objectives. Equally family estate premised cannot law doctrine a common sepa- the fact that the important to me was status of busi- owner-operated validity the Board rate whose irrelevant itself. Thus ness well sought to had been created override corpo- behalf decisions on in this case the labor difficulties before unity was there ration Nonetheless, initially I inclined was arose. in the Mills. ownership management the Board’s order because to enforce customarily deference which is accorded Conclusion Further, the here Board decisions. reasons, en- stated above all of the plau- For articulated reasons which at least had against of the Board’s forcement supported theory was sibly Mills, and Sllim Real Transfer, Carole of Fullerton an is denied. Corporation deliberately respondents Estate set about corporate structure which create a would Judge, ENGEL, Circuit Senior holdings them protect concurring. liability, including liability from future As the difficulties. son-in-law record as reviewing the entire After daughter the founder of originally and North I had proceedings, in these whole operators and as in a American Van Lines although the conclusion reached highly obliged unionized field close, probably we case

343 fact, mitted trucking them to do. no more has undoubtedly knew proved in labor and cor- in were well-versed been this case than that. Accord- well and Board’s determina- law. porate ingly, I concur. complex corporate the rather

tion that enterprise transfer of the Mills’

structure simply to en- erected and maintained

was liability such as them to evade future

able the National Labor from violations of support holding Act could

Relations egos. in fact alter corporations were agree come to finally I have

Where UNITED STATES of America my realization that majority has been Plaintiff-Appellant, is due to the particular deference to the extent conclusion Board’s v. question beyond of law it answers a CERTAIN REAL PROPERTY LOCATED purely factu- expertise. Unlike the Board’s LANE, AT 2525 LEROY WEST Board, this conclusion al conclusions BLOOMFIELD, MICHIGAN, and Leah appeal. on entitled to deference See is not Marks, Defendants-Appellees. Liza NLRB, 603 F.2d Local 777 v. Seafarers 17, (D.C.Cir.1979) (special n. 872 869 No. 88-2238. legal the Board’s accorded to deference Appeals, States Court of United questions of law under conclusions Sixth Circuit. ex- Relations Act does not National Labor interpretation essentially is an tend to what Argued Sept. agency); common law of see also Aug. Decided Oil, Local and Atomic Workers Chemical NLRB, F.2d 1144 n. 1-547 (9th Cir.1988) (retroactive application of a question under the Act is a

new standard special compe- beyond the Board’s of law review); subject to de novo

tence Corp, Building Supply v. Better

NLRB Cir.1988) (no special interpretation of to the Board’s

deference Code). Bankruptcy that we are free to

I therefore conclude transaction and to de-

examine the entire upon ourselves the record

cide for companies history of the several

corporate operated by respondents

owned with normal proper and in accordance corporation law

precepts of American federal common law

general and the this, I sim- Having recognized

particular. does to conclude that the record

ply have there was an support a conclusion that Any conjec- form.

abuse of undis- the Mills harbored some

ture that advantage out gain a labor

closed intent to far in the fu-

of that structure subjective, and insuffi- speculative,

ture that the re- upset

cient to the conclusion per- precisely what the law

spondents did

Case Details

Case Name: National Labor Relations Board v. Fullerton Transfer & Storage Limited, Inc. Richard E. Mills Carole F. Mills Sllim Real Estate Corporation

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Aug 7, 1990

Citation: 910 F.2d 331

Docket Number: 89-5754

Court Abbreviation: 6th Cir.