United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 96-2548 No. 96-2766

___________ Package Service Company, Inc., * * Petitioner/Cross-Respondent, * * v. * * Appeals from the National National Labor Relations Board, * Labor Relations Board. * Respondent/Cross-Petitioner, * * United Steelworkers of America, * * Intervenor. *

___________ Submitted: January 13, 1997 Filed: May 14, 1997

___________ Before LOKEN, BRIGHT, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

___________ LOKEN, Circuit Judge. This ap peal concerns the back pay remedy under the National Labor Relations Ac t, 29 U.S.C. §§ 151 et seq . Kansas City-based Package Service Company, Inc

. ("PSC"), purchased the assets of a distressed Pittsburgh printing company and-2-

transferredthem to a newly-formed subsidiary. In attempting to revive the business, PSC’s s ubsidiary committed several unfair labor practices. The National Labo r Relations Board (the "Board") ordered back pay for adversely affected workers. In a subsequent proceeding, after the acquired business had ceased operations, the Board imposed back pay liability on PSC, the surviving parent. PSC appeals. We conclude that pare ntal liability is appropriate on the facts of this case and therefore grant th e Board’s petition to enforce.

I. PSC’s subsidiary, Allegheny Graphics, Inc. (“Graphics”), acquired the assets of Allegheny La

bel, Inc., hoping to turn around the business in part by making Graphics
a non-union employer. Graphics refused to bargain with the United Steelworkers o f Amer ica, the collective bargaining representative of Allegheny Label’s work force

. The union filed unfair labor practice charge s, and the Board issued a complaint against Graphics. The charges were tried in Pittsburgh in March 1991. Graphics permanently closed the Allegheny Label facility in March 1992 fo r business re asons. Three months later, the Board issued its decision, holding tha t Graphics as Allegheny Label’s succes sor violated §§ 8(a)(3) and 8(a)(5) of the NLRA by setting terms of employment without consulting the union, by informing jo b applicants that Graphics was a non-union employer that would not hire unio n supporters, and by refusing to hire thirteen Allegheny Label em ployees because of their union affiliation. The Board ordered G raphics to reinstate the thirteen employees with ba ck pay; it ordered additional back pay to compensate all employees at the level s prescribed in Allegheny Label’s collective ba rgaining agreement until Graphics ceased operations. The Third Circuit enforce d that order. NLRB v. Allegheny Graphics , 993 F.2d 878 (3d Cir. 1993)(Table).-3-

When the parties failed to settle back pay issues, the Board issued a back pay specification, alleging that PSC should be liable for all back pay awarded because PSC and Graphics “constitute a single integrated business enterprise and a single employer and/or joint employer within the meaning of the [NLRA].” After an evidentiary hearing, the administrative law judge issued a supplemental decision ho lding PSC liable for the back pay awarded because PSC and Graphics were a "single employer." The Board affirmed, ordering PSC and Graphics to pay $318,287 in back pay. PS C appeals, challenging only the Board's single employer decision.

II. Because businesses have gre at organizational flexibility, it is often necessary to determine whether the “em ployer,” for NLRA purposes, is simply the legal entity that pays wages an d benefits to the employees in question. In a variety of contexts th e Board is called upon to determine whether multiple faciliti es owned by one corporation
or by two or more affiliated corporations should be considered a single employer, an issue on whi ch the general definition in 29 U.S.C. § 152(2) casts little light. Fo r example, in Radio & T.V. Broad. Technicians Local 1264 v. Broadcast Serv. o f Mobile, Inc. , 380 U.S. 255 (1965), commonly owned broadc asting stations were found to be a single employer whose revenues could be combined for purpose s of the Board’s jurisdictio n; that in turn resulted in the preemption of state court litigation. Mor e commonl y, the single employer issue arises in bargaining disputes -- if the Boar d determ ines that separate corporations or facilities are a single employer whos e employees may be placed in the same collective bargaining unit, it then must resolve the ultimate issue

whether those employees are in fact an appropriate unit. See South Prair ie Constr. Co. v. Local No. 627, IUOE , 425 U.S. 800, 802-03 (1976); Marin e Welding & Repair Works, Inc. v. NLRB , 439 F.2d 395, 397 (8th Cir. 1971). In this case, the single employer issue is relevant in determining whether PSC should be liable for the unfair labor practices of its insolvent subsidiary, Graphics.-4-

In resolving single employer issues, the Board has developed a broad and ge neral test:
the bo ard considers whether their total relationship reveals: (1) som e fun ctional interrelation of operations, (2) centralized control of labo r relations, (3) common management, and (4) common ownership o r financial control. While none of these factors, separately viewed, ha[s] been held controlling, stress has normally been laid upon the firs t three . . . .

Pulitzer Pub. Co. v. NLRB , 618 F.2d 1275, 1279 (8t h Cir.), cert. denied , 449 U.S. 875 (1980), quoting Parklane Hosiery Co. , 203 N.L.R.B. 597, 612 (1973). This g eneral test b a sed upon four non-controlling factors is not adequate to resolve a case such as this unless th e Board explains why its single employer finding, without more, is sufficient to decide the ultimate issue of parent corpora tion liability. For example, if the ultimate issue had been whether employees of PSC and Grap hics in Kansas City and Pittsburgh were an appropriate collective bargaining unit, the ALJ’s single employer fi nding would clearly not have been sufficient to decide that issue. See NLRB v. DMR Corp. , 699 F.2d 788, 791-93 (5th Cir.), cert. denied , 464 U.S. 852 (1983); In deciding whether a parent corporation is liable for it s subsidiary’s unfair labor practices, the Board cannot ignore the general principle that “[t]he insulation of a stockho lder

from the debts and obligations of his corporation is the norm, not th e exception. ” NLRB v. Deena Artware, Inc. , 361 U.S. 398, 403 (1960). Yet th e Board’s general single employer test is so b road that it could literally apply in virtually all cases in which affiliated corporations have common ownership and m anagement and significantly integrated operations. Thus, if the Board relies on its determination of the-5-

single employer issue in this kind of case, it must emphasize those factors that mak e it approp riate to impose derivative unfair practice liability on a corporate parent, as it did in Royal Typewriter Co. v. NLRB , 533 F.2d 1030, 1042-43 (8th Cir. 1976). But here, the ALJ simply reviewed the four single employer factors without explaining their relativ e significance. Because this generalized single employer analysis does no t satisfactorily explain why PSC is liable for Graphics’s unfair labor practices, we must examine more closely whether the Board properly overrode normal principl es of limited liability in assessing back pay against PSC.

III.
Corporate law recognizes situations in which it is appropriate to “ pierce the veil” of separate affilia

tes. See, e.g. , H.J., Inc. v. International Tel. & Tel. Corp. , 867 F.2d 1531, 1549 ( 8th Cir. 1989). It is well settled that the Board in applying the federa l labor laws ma

y do likewise. Deena Artware reflects one such situation, where assets and jobs w ere transferred among affiliates to frustrate an outstanding back pa y obligation. See 361 U.S. at 413-14 (Frankfurter, J., concurring). In this case, ther e
wa s no such duplicity. It is undisputed that Graphics closed because of economi c adversity, not to evade its unfair labor practic e obligations. Thus, the basis for holding PSC liable must be found in the nature of those unfair practices when committed.

A number of circuit court cases, dating from the early years of the NLRA, have held that a corporate owner who controls and directs labor relations without regard to the corp orate entity may be liable for remedying the corporation’s unfair labo r practices. See NLRB v. International Measurement & Control Co. , 978 F.2d 334, 340-6-

(7th Cir. 1992) (“perhaps the ‘employer’ is he who calls the tune, and not just whoever pays the p iper”); Great Chinese Amer. Sewing Co. v. NLRB , 578 F.2d 251, 255 (9th Cir. 1978); NLRB v. Condenser Corp. , 128 F.2d 67, 71 (3d Cir. 1942) (“[w]hat i s important . . . is the degree of control over the la bor relations”); NLRB v. Swift & Co. , 127 F.2d 30, 32 (6th Cir. 1942); NLRB v. Lund , 103 F.2d 815, 818 (8th Cir. 1939).

In Royal Typewriter , for example, a subsidiary of Litton Industries committed unfair l abor practices by refusing to bargain about the effects of a contemplated plant closing. Invoking the single employer doctrine, t he Board ordered Litton to participate in p rospective relief such as preferential hiring because Litton made the decision t o close the pla

nt and controlled the labor negotiations that surrounded that decision. In enforcing this order, we stated:

We do not think that a conglomerate can act in negotiations as a single employer and then expect to avoid t he consequences if unfair labor practice charges result from such conduct.

533 F.2d at 1043. Here, PSC’s acquisition strategy included making Graphics a nonunion e mployer, and key executives of PSC personally implemented that strategy , committ ing in the process the unfair labor practices underlying this back pay award

. PSC argues that it did not co ntrol day-to-day labor relations after the Graphics facility

was initially staffed. But PSC’s control over its subsidiary’s conduct in committin g unf air labor practices is the critical factor. See Penntech Papers, Inc. v. NLRB , 70 6 F.2d 18, 26 (1st Cir.), cert. denied , 464 U.S. 892 (1983).-7-

Unless the back pay remedy is used punitively, “[t]he Board’s broad remedial power to order compensation for lost pay [may be] exercised not only to remedy the consequences of an unfair labor practice, but also in aid of the Board’s authority t o deter unfair labor practices.” NLRB v. United Marine Di v., Local 333, Nat’l Maritime Union , 417 F.2d 865, 868 (2d Cir. 1969), cert. denied , 397 U.S. 1008 (1970). Here, th e back pay provides a compensatory remedy to workers adversely affected by th e
un fair labor practices. In addition, making PSC liable for that back pay place s responsibility for the remedy on the party actually responsible for the unlawful conduct, thereby helping to deter corporate owners who might otherwise implement an unlawful labor relations strategy t

hrough a newly-formed, undercapitalized subsidiary. So long as the Board l imits imposition of this kind of derivative liability to situations in which the c orporate parent has “exercise[d] direct control over a specific transaction, ” Esmark, Inc. v. NLRB , 887 F.2d 739, 757 (7th Cir. 1989), its remedial order shoul d be enforced.

The re cord contains substantial evidence of a single employer relationshi p between PSC and Graphics justifying the Board’s decision to hold PSC derivativel y li able. See Allegheny Graphics, Inc. , 320 N.L.R.B. No. 146 at 2-4 (Apr. 15, 1996)

. We deny PSC’s petition for review and grant the Board’s cross-petition to enforce.
A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.