Union Builders, Inc. v. National Labor Relations Board

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-1294

UNION BUILDERS, INC.,
Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,
Respondent.

DISTRICT COUNCIL 94, UNITED BROTHERHOOD OF
CARPENTERS AND JOINERS OF AMERICA, AFL-CIO,
Intervenor.

ON PETITION FOR REVIEW AND CROSS-APPLICATION
FOR ENFORCEMENT OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD

Before

Torruella, Chief Judge,

Aldrich and Coffin, Senior Circuit Judges.

Andrew B. Prescott, with whom Donald P. Rothschild and

Tillinghast Collins & Graham were on brief for petitioner.

Joseph A. Oertel, Senior Litigation Attorney, National Labor

Relations Board, with whom Frederick L. Feinstein, General

Counsel, Linda Sher, Acting Associate General Counsel, Aileen A.

Armstrong, Deputy Associate General Counsel, and Charles

Donnelly, Supervisory Attorney, National Labor Relations Board,

were on brief for respondent.

October 20, 1995

TORRUELLA, Chief Judge. The petitioner, Union
TORRUELLA, Chief Judge.

Builders, Inc. ("UBI") seeks review of the decision of the

respondent, the National Labor Relations Board ("the Board" or

"the NLRB"), ordering UBI to supply requested information to

District Council 94, United Brotherhood of Carpenters and Joiners

of America, AFL-CIO (the "Union"). The NLRB cross-applies, under

10(e) of the National Labor Relations Act ("the Act"), 29

U.S.C. 160(e), for enforcement of its order against UBI. The

Board has ordered UBI to cease and desist from violating

8(a)(5) and (1) of the Act, 29 U.S.C. 158(a)(1) and (a)(5),

furnish the Union with the information it requested, and post

appropriate notices. For the following reasons, we affirm the

Board's Decision and Order.

I. BACKGROUND
I. BACKGROUND

In 1989, a Rhode Island company called O. Ahlborg &

Sons ("O. Ahlborg") executed a three-year collective bargaining

agreement ("CBA") with the Union. On or about March 24, 1992,

O. Ahlborg notified the Union that it planned to terminate the

agreement as of May 31, 1992, as was O. Ahlborg's contractual

right. As a result of collective bargaining with the Union's

then business manager (Herbert F. Holmes), O. Ahlborg reached an

agreement (the "Holmes-Ahlborg Agreement") with the Union

(confirmed by a letter dated May 29, 1992) whereby a new employer

entity, UBI, would be formed. Under the Holmes-Ahlborg

Agreement, UBI would enter into a collective bargaining agreement

(the "new CBA") with the Union and would continue all union

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bargaining unit work performed at that time by O. Ahlborg. The

Board found that the Holmes-Ahlborg Agreement also provided that,

as between UBI and O. Ahlborg, UBI would be allotted all

prevailing rate jobs.

Additionally, under the Holmes-Ahlborg Agreement, UBI

would assume all employees currently performing union bargaining

unit work for O. Ahlborg, and there would be no interruption in

production, employment or wages of union members despite the

termination of the O. Ahlborg-Union CBA. Shortly thereafter, UBI

and the Union entered into the new CBA, which provided that

[UBI] will not subcontract any work
covered by the terms of this agreement
which is to be performed at the jobsite
except to a contractor who holds an
agreement with the United Brotherhood of
Carpenters and Joiners of America, or one
of its subordinate bodies, or, who
agrees, in writing, prior to or at the
time of the execution of the sub-
contract, to be bound by the terms of
this agreement.

The new CBA covered the period from June 1, 1992 to June 4, 1995.

On December 8, 1993, David F. Palmisciano, who had

replaced Holmes as union business representative, sent a letter

to UBI's chief executive Eric Ahlborg, expressing concern that

UBI was "operating a second company" as "an alter ego." The

letter also requested that Eric Ahlborg fill out and return an

enclosed questionnaire. Eric Ahlborg refused to reply to the

questionnaire.

Subsequently, the matter came before an administrative

law judge ("ALJ") on the NLRB General Counsel's complaint

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alleging that UBI violated 8(a)(5) and 8(a)(1) of the Act by

refusing to furnish information that the Union alleged was

necessary for, and relevant to, the performance of its duties as

the exclusive collective-bargaining representative of unit

employees. Palmisciano testified before an ALJ that, during

three previous onsite inspections, he saw evidence that UBI had

violated his interpretation of the Holmes-Ahlborg Agreement: that

as between O. Ahlborg and UBI, UBI would garner all state,

Federal and other work with high wage rates, particularly

"prevailing rates," and that such work would all go to union

carpenters.

The ALJ concluded that the Union reasonably believed

that UBI was operating O. Ahlborg as an "alter ego" and

subcontracting in a manner that violated the Holmes-Ahlborg

Agreement's award of prevailing rate jobs to UBI and its union

member employees only.1 Thus, the ALJ concluded that the

Union's reasonable belief justified the request for information,

and ordered UBI to comply. The Board affirmed the ALJ's rulings,

findings and conclusions, and adopted his recommended Order. UBI

seeks review of the Board's decision, and the Board cross-applies

for enforcement of its order against UBI.

1 UBI was organized as a Rhode Island corporation on June 1,
1992, to engage in the business of building construction and
related activities. UBI's officers are related to, and overlap
substantially with, those of O. Ahlborg. For example, UBI's
chief executive, Eric Ahlborg, is the son of O. Ahlborg's chief
executive; UBI's vice president is the daughter of O. Ahlborg's
chief executive; and UBI's chief financial officer, who holds the
same position at O. Ahlborg, is another son of O. Ahlborg's chief
executive.

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II. STANDARD OF REVIEW
II. STANDARD OF REVIEW

We will enforce a Board order if the Board correctly

applied the law and if substantial evidence on the record

supports the Board's factual findings. Penntech Papers, Inc. v.

NLRB, 706 F.2d 18, 22-23 (1st Cir. 1983), cited in NLRB v. Acme

Tile and Terrazo, Co., 984 F.2d 555, 556 (1st Cir. 1993). We

uphold the Board's findings of a violation as long as substantial

evidence on the record as a whole supports them, even if we would

have reached a different conclusion. 29 U.S.C. 160(e) and

(f); 3-E Co., Inc. v. NLRB, 26 F.3d 1,3 (1st Cir. 1994);

Cumberland Farms, Inc. v. NLRB, 984 F.2d 556, 559 (1st Cir.

1993).

III. DISCUSSION
III. DISCUSSION

As part of the 8(a)(5) duty to bargain, an employer

must furnish all information requested by a union that is

necessary to the union in order to fulfill its obligation as

representative of bargaining unit employees. NLRB v. Acme

Industrial Co., 385 U.S. 432, 435-36 (1967); NLRB v. New England

Newspapers, Inc., 856 F.2d 409, 413 (1st Cir. 1988). Thus, an

employer must produce information that is "relevant to [the

bargaining representative's] duties," including information

necessary to police the CBA. New England Newspapers, Inc., 856

F.2d at 413. Because the duty to bargain "unquestionably extends

beyond the period of contract negotiations and applies to labor-

management relations during the term of an agreement," NLRB v.

Acme Industrial Co., 385 U.S. at 436, the Union could have

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requested the information simply because of its relevance to its

ongoing agreement with UBI. In this regard, we note that the

Board may determine that the employer has a duty to provide

information if it finds even "a probability that the information

is relevant and that it will be of use to the union in carrying

out its statutory duties." NLRB v. Pfizer, Inc., 763 F.2d 887,

889 (7th Cir. 1985) (emphasis added). See also General Electric

Co. v. NLRB, 916 F.2d 1163, 1168 (7th Cir. 1990) (relevance is

most often viewed liberally to allow for broad disclosure of

information).

As an initial matter, we reject UBI's argument that,

via the Holmes-Ahlborg Agreement, the Union approved the

coexistence of O. Ahlborg and UBI, and thereby waived its right

to challenge O. Ahlborg as UBI's alter ego. UBI has cited

neither legal authority nor requisite factual evidence to support

its waiver argument. Furthermore, nothing in the Holmes-Ahlborg

Agreement shows an unequivocal waiver by the Union of its right

to investigate the alleged diversion to O. Ahlborg of prevailing

rate jobs. Communication Workers of America AFL-CIO, Local 1051

v. NLRB, 644 F.2d 923, 927 (1st Cir. 1981) ("the union may

relinquish a statutory right only by 'clear and unmistakable'

waiver") (quoting NLRB v. Perkins Machine Co., 326 F.2d 488, 489

(1st Cir. 1964)). Finally, the ALJ specifically rejected UBI's

waiver argument based on the facts presented.

The ALJ correctly distinguished the issue of whether

UBI must supply the requested information from the issue of

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whether O. Ahlborg and UBI are in fact intertwined in an alter

ego relationship. We agree that only the information issue bears

on this case. With respect to this issue, we are persuaded that

we should apply a "discovery-type" standard so that the Union may

gather "'a broad range of potentially useful information . . .

for the purpose of effectuating the bargaining process'." NLRB

v. Illinois-American Water Co., 933 F.2d 1368, 1378 (7th Cir.

1991) (quoting Procter & Gamble Manufacturing Co. v. NLRB, 603

F.2d 1310, 1315 (8th Cir. 1979)). In particular, the Supreme

Court has stressed that the Board should apply a more liberal

standard of relevance to information requests under the duty to

bargain in good faith than would be appropriate at trial. NLRB

v. Acme Industrial Co., 385 U.S. 432, 437 & n.6 (1967). Thus,

the Union cannot be required to prove that UBI is in breach of

its CBA or that O. Ahlborg is UBI's alter ego before the Union

can receive information that could help prove such allegations.

In deciding to apply such a standard, the ALJ correctly noted

that such information does not only benefit unions. In fact,

requiring employers to divulge information of even merely

potential relevance improves the efficiency of the arbitration

system as a whole, since otherwise, unions might be forced "to

take grievances all the way through to arbitration without [] the

opportunity to evaluate the merits of the claim." Id. at 438.

As a policy matter, employers as a whole may also benefit, since

the information they supply may generally aid unions in filtering

out meritless cases. Id.

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Substantial evidence on the record supports the ALJ's

conclusion, adopted by the NLRB, that the Union supplied

sufficient objective evidence to show that its belief in

requesting the information was reasonable. The record supports

the finding that Palmisciano reasonably believed that the purpose

of the Holmes-Ahlborg Agreement was to permit O. Ahlborg to bid

nonunion work and to award all "prevailing rate" jobs to UBI.

Furthermore, the Union had entered the new CBA with UBI. Thus,

the ALJ and the Board correctly concluded that the questionnaire,

with its inquiries into UBI's ownership, corporate directors,

suppliers and relationship to an alleged nonunion employer,

sought information necessary to Palmisciano's collective

bargaining duties.

The ALJ heard testimony from Palmisciano regarding the

latter's observations at three different job sites. Palmisciano

testified that at the three sites, all with O. Ahlborg as general

contractor and paying prevailing rates, he had seen Union member

UBI employees supervising nonunion employees doing unit work, and

he had seen both Union member UBI employees and nonunion workers

doing unit work for subcontractors. Additionally, the ALJ

questioned Palmisciano regarding the meaning of the Holmes-

Ahlborg Agreement, especially with respect to the allotment of

work between O. Ahlborg and UBI. Furthermore, the ALJ questioned

Palmisciano regarding O. Ahlborg's responses to Palmisciano's

demands that O. Ahlborg use union subcontractors on carpentry

work at the three job sites.

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While UBI takes offense at the ALJ's refusal to hear

Eric Ahlborg's testimony to show that UBI and O. Ahlborg had a

different understanding of the Holmes-Ahlborg Agreement, the

issue before the ALJ was whether Palmisciano could supply

objective evidence supporting a reasonable belief that made his

information request relevant to his collective bargaining duties.

Naturally, the ALJ drew his conclusions primarily from the

testimony of Palmisciano, since the chief issue was whether or

not Palmisciano's beliefs were reasonable given objective facts.

UBI also argues that because objective facts show that

it is not operating an alter ego, Palmisciano could not have had

a reasonable belief that would render the requested information

relevant. The proposition that a union's information request may

be denied if the company in question can show that objective

facts render the union's concerns untenable appears logical.

See, e.g., San Diego Newspaper Guild v. NLRB, 548 F.2d 863, 867

(9th Cir. 1977) ("If the information requested has no relevance

to any legitimate union collective bargaining need, a refusal to

furnish it could not be an unfair labor practice."). However, in

the instant case, the issue is moot, since even if this

proposition were settled law applicable here, UBI has not made

the required showing.

In the course of this argument, UBI relies on the fact

that the relationship between it and O. Ahlborg is not the

classic alter ego situation of "a disguised continuance of the

old employer." Therefore, runs the argument, because O. Ahlborg

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is not UBI's alter ego, the Union cannot demonstrate reasonable

belief necessary to support its request for information.

However, this argument must fail for two reasons.

First, UBI argues that this Court has previously used

the existence of a motive to evade labor law responsibilities in

corporate organization as a factor in identifying an alter ego,

NLRB v. Hospital San Rafael, Inc., 42 F.3d 45, 50 (1st Cir.

1994), and that no "disguise" or motive existed here, since the

Union knew and agreed to the creation of UBI from O. Ahlborg.

However, in Hospital San Rafael, the Court also called cases that

involve formation of new entities with direct evasionary intent

only "the easiest example[s]" of alter egos. Id. Presumably

there are also harder examples, as the Union may show here.

Additionally, even if the issue before us here were

whether O. Ahlborg constituted UBI's alter ego, the paper

relationship between the two corporations would not be

dispositive, since the alter ego doctrine looks behind the

corporate form to determine whether nominally distinct

corporations are "in truth . . . but divisions or departments of

a 'single enterprise.'" NLRB v. Deena Artware, Inc., 361 US 398,

402 (1960). Note that this Court has previously upheld the

Board's finding of an alter ego "where the companies were not

successors but rather parallel operations." C.E.K. Industrial

Mechanical Contractors, Inc. v. NLRB, 921 F.2d 350, 354-55 (1st

Cir. 1990) (denying enforcement of the Board's order on other

grounds). Thus, the fact that O. Ahlborg did not succeed UBI

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does not, by itself, render the alter ego doctrine inapplicable

and Palmisciano's belief unreasonable.

Thus, the ALJ correctly avoided turning the hearing

into an inquiry into the agreement's ultimate meaning, since such

a decision was beyond the scope of the only issue before him:

whether or not to compel information disclosure. With respect to

testimony directed at this question, an ALJ's credibility

determinations are entitled to great weight because the ALJ saw

and heard the witnesses testify. Holyoke Visiting Nurses Ass'n

v. NLRB, 11 F.3d 302, 308 (1st Cir. 1993), cited in 3-E Co., Inc.

v. NLRB, 26 F.3d 1, 3 (1st Cir. 1994). We will set aside

findings only if we believe the ALJ overstepped the bounds of

reason. Id. Here, we find no such transgression.

IV. CONCLUSION
IV. CONCLUSION

The ALJ's findings, adopted by the Board, are supported

by substantial evidence on the record as a whole and stand

without error. UBI's request for review is denied, and the

Board's request for enforcement of its order is granted. Costs

to respondent.

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