## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 18 1998 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

_________________________ NATIONAL LABOR RELATIONS BOARD, Petitioner, v. I.W.G., INC.; CON-BRU, INC., doing business as AAA FIRE SPRINKLER, INC.; ROBERT B. GORDON, an individual; and ARLENE, INC., doing business as AAA FIRE SUPPRESSION, INC., Respondents.
ROAD SPRINKLER FITTERS LOCAL UNION 669, U.A., AFL-CIO,
Intervenor.

_______________________________ ROBERT B. GORDON, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
ROAD SPRINKLER FITTERS LOCAL UNION 669, U.A., AFL-CIO,
Intervenor. No. 96-9548

No. 96-9550-2-

APPLICATION FOR ENFORCEMENT OF AN ORDER OF THE

NATIONAL LABOR RELATIONS BOARD (Nos. 27-CA-11771 and 27 CA-11870 for Case No. 96-9548) and PETITION FOR REVIEW OF AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD (322 NLRB No. 12 for Case No. 96-9550)

James W. Bain (Peter A. Gergely with him on Petitio ner Gordon’s Opening Brief), Brega & Winters P.C., Denver, Colorado, forRobert B. Gordon. Vincent J. Falvo, Jr., Attorney (Frederick L. Feins tein, General Counsel; Linda Sher, Associate General Counsel; Aileen A. Armstron g, Deputy Associate General Counsel; Charles Donnelly, Supervisory Attorney; an d Robert J. Englehart, Attorney, on the brief), National Labor Relations B oard, Washington, D.C., for National Labor Relations Board. William W. Osborne, Jr. (Robert H. Morsilli with hi m on the brief), Osborne Law Offices, P.C., Washington, D.C., for Intervenor Roa d Sprinkler Fitters Local Union No. 669, U.A., AFL-CIO.

Before PORFILIO, McKAY, andLUCERO, Circuit Judges.

McKAY, Circuit Judge.

The National Labor Relations Board [NLRB or Board] petitions this court for enforcement of its order against Robert B. Gordon, I.W.G., Inc. [I.W.G.], Con-Bru, Inc. [Con-Bru], and Arlene, Inc. [Arlene]. Respondent, Mr. Gordon, cross-petitions this court for review of the Board’ s decision. The case came1 I.W.G., Con-Bru, and Arlene all failed to file ex ceptions with the Board

to the ALJ’s recommended decision and order againstthem. None of them filed an answer to the Board’s application for enforcement of its order. Since the Arlene alter ego issue was never pled, we will not enter a default judgment on that issue. In all other respects, we grant the Bo ard’s Motion for Entry of Default Judgment against those corporate respondents. See Fed. R. App. P. 15(b); NLRB v. Bell Co. , 561 F.2d 1264, 1266 n.2 (7th Cir. 1977). -3- before the Board on a complaint issued by the Gener al Counsel, following an investigation of charges filed by Road Sprinkler Fi tters Local Union No. 669, U.A., AFL-CIO [the Union]. After an administrative law judge [ALJ] conducted a hearing on the charges set forth in the Board’s c omplaint, the Board adopted the ALJ’s decision with a slight modification. The Board essentially decided that Respondent “abandoned and subsequently created” sev eral corporations, namely, I.W.G., Con-Bru, and Arlene, “primarily to avoid paying his employees pursuant to an extant collective-bargaining agreement and to evade a statutory obligation to bargain with the Union over the terms and conditions of employment.” I.W.G.,
Inc. , 322 N.L.R.B. No. 12, 1997-1998 NLRB Dec. (CCH) ¶ 16,108, at 33,441 (Aug. 27, 1996). We assume jurisdiction pursuant to 29 U.S.C. § 160 (f). Respondent claims that there is a procedural impedi ment to the Board’s conclusion that Arlene was an alter ego of I.W.G. and Con-Bru. 1 He contends that because the unfair labor practice complaint fi led September 2, 1993, did not allege that Arlene was an alter ego, he was not giv en notice sufficient to adequately prepare and present a defense to a charg e that Arlene was an alter ego-4-

of I.W.G. and Con-Bru, and that Respondent was pers onally liable for Arlene’s unfair labor practices. The Board urges us to holdthat, regardless of whether the Arlene alter ego issue was specifically pled, it wa s properly decided by the Board because it was fully and fairly litigated. See NLRB Br. at 26-28; Facet Enters.,
Inc. v. NLRB , 907 F.2d 963, 972 (10th Cir. 1990); NLRB v. Tricor Prods., Inc. , 636 F.2d 266, 271 (10th Cir. 1980); NLRB v. Thompson Transp. Co. , 421 F.2d 154, 155 (10th Cir. 1970). As we explained in Facet Enterprises , “variation between an unfair labor practice charged in the complaint and one found by the Board does not deprive a respondent of due process where it is clear that the respondent ‘understood the issue and was afforded f ull opportunity to justify [its actions].’” Facet Enters. , 907 F.2d at 972 (quoting NLRB v. MacKay Radio & Tel. Co. , 304 U.S. 333, 350 (1938)). After reviewing the record and the Board’s contenti ons, we hold that Respondent was not accorded his due process rights as to the Arlene alter ego claim. In its Decision and Order, the NLRB found that the Arlene alter ego claim had a sufficient connection to the complaint for Re spondent to anticipate the Arlene alter ego issue. See I.W.G., Inc. , 1997-1998 NLRB Dec. (CCH) at 33,443. The Board articulated two reasons for its decision: (1) Arlene was named as a respondent in the proceeding along with I.W.G., Con -Bru, and Respondent Mr. Gordon; and (2) “the gravamen of the General Counse l’s complaint is that Gordon-5-

created and abandoned corporate entities in order t o evade I.W.G.’s contractual and statutory obligations to its employees and the Union.” Id. The Board’s summary of the complaint is inaccurate; nowhere doe s the complaint allege Respondent “created and abandoned” Arlene. Id. We agree with the Board’s dissenting opinion that the General Counsel’s compl aint drew a clear distinction between (1) I.W.G. and Con-Bru and (2) Arlene. Id. at 33,448 (Member Cohen, dissenting). The complaint alleged that Con-Bru, I .W.G., and Respondent were a single employer or alter egos. See Petitioner’s App., Vol. I at 165 (Order Revoking Settlement Agreement and Amended Consolidated Complaint and Notice of Hearing at 2(d)). Arlene was only allege d to be a successor to I.W.G./Con-Bru with notice of their potential liabi lity to remedy unfair labor practices, i.e., a Golden State successor. See id. at 2(e)-(g); Golden State Bottling
Co. v. NLRB , 414 U.S. 168, 184-85 (1973). Our review of the r ecord leads us to conclude that Respondent read the complaint to meanwhat it said; the complaint did not give Respondent notice of an implied and un alleged theory of creating and abandoning multiple corporate entities. The Board’s second articulated basis for concluding Respondent had notice was the naming of Arlene in the complaint. The fac t that Arlene was named in the complaint does not by itself provide a sufficie ntly close connection to the alter ego claim to warrant adequate notice of that unalle ged claim against Arlene. Our-6-

review of the facts of this case convinces us that Respondent was unaware that the Arlene alter ego claim was raised in the procee ding. Even during the course of the evidentiary hearing, Respondent received no notice of the claim that Arlene was an alter ego. Although the General Counsel ame nded the complaint to dismiss Connie Gordon as a party, see Petitioner’s App., Vol. I at 196, he intentionally did not amend the complaint to add th e Arlene alter ego claim. See Petitioner’s App., Vol. II at 687; NLRB v. Tamper, Inc. , 522 F.2d 781, 788 n.9 (4th Cir. 1975). The ALJ never advised the parties that he would consider an alter ego claim against Arlene. As in NLRB v. Peps i-Cola Bottling Co. of Topeka, Inc. , 613 F.2d 267, 274 (10th Cir. 1980), the “case was complex and confusing . . . [with] not only a number of charges but [] change[s] of ownership.” Like the respondent in Pepsi , Respondent tried to resolve the confusion about the General Counsel’s litigation theories. See id. at 273. Respondent’s counsel specifically asked “if in the brief we have to addr ess an alter ego claim between I.W.G., Con-Bru, and Arlene, or just a successorshi p claim against Arlene.” Petitioner’s App., Vol. II at 689. The ALJ respond ed, “[T]he Board cases are clear -- you look to the pleadings.” Id. Because Respondent never received notice of the Arlene alter ego claim through the pl eadings, the first time Respondent was informed that an alter ego claim was alleged against Arlene was in the Union’s posthearing brief filed prior to the ALJ’s decision. Cf. Stokely--7-

Van Camp, Inc. v. NLRB , 722 F.2d 1324, 1331 (7th Cir. 1983) (identical co nduct held to be a “clear violation of [Respondent’s] due process rights”). Although the ALJ indicated that he would only address the claims in the pleadings, he recommended liability against Respondent on a claimunalleged in the complaint. Clearly, the Arlene alter ego theory was not fully and fairly litigated. The NLRB asserted in its order that the Arlene claim wa s fully and fairly litigated because “considerable evidence” relevant to the Arl ene alter ego claim was presented and challenged at the hearing. I.W.G., I nc. , 1997-1998 NLRB Dec. (CCH) at 33,443. “But the simple presentation of e vidence important to an alternative claim does not satisfy the requirement that any claim at variance from the complaint be ‘fully and fairly litigated’ in or der for the Board to decide the issue without transgressing [Respondent’s] due proc ess rights.” NLRB v. Quality C.A.T.V., Inc. , 824 F.2d 542, 547 (7th Cir. 1987) (quoting Pepsi- Cola Bottling
Co. , 613 F.2d at 274); see Conair Corp. v. NLRB , 721 F.2d 1355, 1372 (D.C. Cir. 1983) (“‘[T]he introduction of evidence relevant to an issue already in the case may not be used to show consent to trial of a new i ssue absent a clear indication that the party who introduced the evidence was atte mpting to raise a new issue.’”) (quoting Cioffe v. Morris , 676 F.2d 539, 542 (11th Cir. 1982)), cert. deniedsub

nom. Local 222, Int’l Ladies’ Garment Workers’ Union, A FL-CIO v. NLRB , 467 U.S. 1241 (1984); Montgomery Ward & Co. v. NLRB , 385 F.2d 760, 763 (8th2We recognize that NLRB v. Jordan Bus Co. , 380 F.2d 219, 223-24 (10th

Cir. 1967), appears to stand for a contrary view. However, we note that the issue of whether due process was accorded is heavily depe ndent upon the circumstances of each case. See Pergament United Sales, Inc. v. NLRB , 920 F.2d 130, 136 (2d Cir. 1990) (“[W]hether a charge has been fully and fairly litigated is so peculiarly fact-bound as to make every case unique; a determin ation of whether there has been full and fair litigation must therefore be mad e on the record in each case.”). -8- Cir. 1967) (“‘Evidence without a supporting allegat ion cannot serve as the basis of a determination of an unfair labor practice.’”) (quoting Engineers & Fabricators, Inc. v. NLRB , 376 F.2d 482, 485 (5th Cir. 1967)). This court h as stated, “Failure to clearly define the issues and a dvise an employer charged with a violation of the law of the specific complaint he m ust meet and provide a full hearing upon the issue presented is, of course, to deny procedural due process of law.” J.C. Penney Co. v. NLRB , 384 F.2d 479, 483 (10th Cir. 1967). From the facts of this case, we think it is clear the Board made a finding which was neither charged in the complaint nor litigated at the heari ng. The Board contends that even if Respondent was deni ed due process, the remedy of another hearing is unnecessary because Re spondent has not identified specific, unconsidered evidence that contravenes th e Arlene alter ego theory. See NLRB Br. at 32. We disagree. In his brief, Respon dent articulates unconsidered evidence with sufficient specificity to merit a hea ring that adequately comports with procedural due process. See Robert B. Gordon’s Opening Br. at 30-31. Under the facts of this case, 2we agree with our sister circuits that “[s]peculat ionIn Jordan Bus Co. , we concluded that the respondent had received a m eaningful

opportunity to prepare and present its case. See Jordan Bus Co. , 380 F.2d at 224. In that case, unlike this one, the respondent was a fforded actual notice in time to present evidence on the issue at the evidentiary he aring. See id. at 223. Because the respondent had actual notice prior to the evide ntiary hearing, we proceeded to determine whether the evidentiary record was comple te with regard to the challenged issue and whether any prejudice to the r espondent resulted. In the case at bar, however, Respondent never had any chan ce to present evidence because he never received notice of the unalleged c laim until after the close of the evidentiary hearing. -9- by reviewing courts regarding whether additional ev idence might exist is a chancy endeavor at best, and it is one we refuse to undert ake where the complete lack of notice entirely disabled [Respondent’s] counsel fro m taking any steps at the evidentiary hearing to defend against the unannounc ed claim.” Quality C.A.T.V.,
Inc. , 824 F.2d at 548; accordDrug Package, Inc. v. NLRB , 570 F.2d 1340, 1345 (8th Cir. 1978) (due process violation merits new h earing if company “ might have litigated the matter differently”) (emphasis added) ; Rodale Press, Inc. v. F.T.C. , 407 F.2d 1252, 1257 (D.C. Cir. 1968) (“The evil . . . is not remedied by observing that the outcome would perhaps or even likely have been the same. It is the opportunityto present argument under the new theory of violat ion, which must be supplied.”) (emphasis added). But see NLRB v. Jordan Bus Co. , 380 F.2d 219, 223-24 (10th Cir. 1967). The Board pierced the corporate veils of each of th e three corporate respondents to find Respondent Mr. Gordon personall y liable. Whether a-10-

corporate veil ought to be pierced is a question of law, and we give “great weight” to the Board’s determination that the situation justified piercing and uphold that determination if it is within “reasonab le bounds.” NLRB v. Greater Kansas City Roofing , 2 F.3d 1047, 1051 (10th Cir. 1993) (internal quot ations omitted). The factual findings of the Board are co nclusive “if supported by substantial evidence on the record considered as a whole.” 29 U.S.C. § 160(e). It is impossible for us to accurately review the Bo ard’s veil-piercing analysis because it is based in substantial part onthe unlitigated conclusion that Arlene is a single employer/alter ego of I.W.G. andCon-Bru. The two-prong analysis provided by Greater Kansas City Roofing for veil piercing was not applied to each corporate respondent individually; rather, evidence of the operations of I.W.G., Con-Bru, and Arlene was combi ned to support the Board’s conclusion that the situation justified piercing. See I.W.G., Inc. , 1997-1998 NLRB Dec. (CCH) at 33,446. We therefore remand the issue of Respondent’s personal liability to the Board to be analyzed in l ight of this opinion. In his petition for review, Respondent Mr. Gordon c omplains that there was no specific allegation in the complaint addressing the failure of Con-Bru and Arlene to apply the union contract terms to their n on-union employees. In his Decision, the ALJ acknowledged that this issue was not specifically alleged by the Board. Attach. to Robert B. Gordon’s Opening B r. (I.W.G., Inc. , 322 NLRB3We are not persuaded by, and do not discuss at le ngth, Respondent’s

argument that the Board engaged in misconduct justi fying an equity court in refusing relief because of bad faith or unclean han ds. See Robert B. Gordon’s Reply Br. at 19. -11- No. 12, at 23-24). However, since none of the resp ondents, including Respondent Mr. Gordon, filed exceptions with the Board asserti ng a due process violation,

see R., Vol. VI, Doc. 10, at 40-45, we will not reviewRespondent Mr. Gordon’s due process contentions on appeal. See Micheli v. Director, Office of Workers’ Compensation Programs , 846 F.2d 632, 635 (10th Cir. 1988). Additionally , because neither Con-Bru nor Arlene filed exceptions with the Board or filed an answer to the Board’s application for an enforcement order, we will not review the Board’s reasoning for applying the “make whole” remedy to the Con-Bru and Arlene employees.
We deny Respondent’s Motion to Strike the Union-Intervenor ’s Brief. We also deny Respondent’s Motion to Supplement the Record with his Post-Hearing Brief to the ALJ because that brief was unnecessaryto our determination of this case. We hold that, based on the record on appeal, the notice to Respondent and Arlene with respect to the Arlene alter ego claim w as insufficient to satisfy due process standards and that this issue was not fairl y and fully litigated. 3 The Board’s order is enforced in part and denied in part , in accordance with the-12-

views expressed in this opinion. We remand for proceedings consistent with this opinion.