Opinion ID: 521923
Heading Depth: 2
Heading Rank: 2

Heading: ESI and RSI Constituted a Single Employer

Text: 32 We turn now to the Board's determination that ESI and RSI constitute a single employer. The ALJ concluded that ESI and RSI did not constitute a single employer. The Board, using the same analysis, arrived at the opposite conclusion.
33 The ALJ cited the four factors that must be considered in a determination of single employer status: 1) interrelation of operations, 2) common management, 3) centralized control of labor relations, and 4) common ownership. Radio & Television Broadcast Technicians, Local 1264 v. Broadcast Serv. of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965) (per curiam). The ALJ noted his belief that the Board has stressed the first three factors, particularly centralized control of labor relations. ALJ Dec. at 15 (citing FEDCO Freightlines, Inc., 273 N.L.R.B. 399 (1984), and Truck & Dock Services, Inc., 272 N.L.R.B. 592 (1984)). 14 34 The last three factors were resolved rather easily by the ALJ. With respect to the second factor, the ALJ found that ESI and RSI had identical management. The ALJ noted that Mr. and Mrs. Emsing made all the important management decisions for both ESI and RSI including determining pricing, product mix, work schedules, hiring, firing, and selecting vendors. Additionally, the only person outside the family who carried any managerial title was Dave Davis who was secretary-treasurer of RSI and designated store manager of Rocky's. Davis was secretary-treasurer of RSI in name only and served in that capacity merely as a convenience for store operations. Under the third factor, the ALJ found, for many of the same reasons that were relevant to the second factor, that at all relevant times the labor relations policies of ESI and RSI were under the centralized control of Mr. and Mrs. Emsing. Mr. Emsing testified that he and his wife jointly established the labor relations policies for ESI and the ALJ found this to be adequate to make his finding. As to the fourth factor, the ALJ found that there was substantially identical ownership despite the retention of some treasury shares of ESI by Mr. Emsing's father as a security for the purchase price of the corporation. 35 The critical factor for the ALJ was the first factor--the interrelation of operations. The ALJ found that Emsing's and Rocky's were not directly integrated by serving a common production or sales goal such as where one firm exists to supply a sister firm with the personnel or equipment the other needs to accomplish the overall corporate goal as in Consolidated Dress Carriers, 259 NLRB 627 (1981) and Malcolm Boring Co., 259 NLRB 597 (1981). ALJ Dec. at 17. The ALJ believed that the proper focus for the inquiry should be the day-to-day operations when both Emsing's and Rocky's were open and operating and not what happened in August when Emsing's was closing.
36 The Board disagreed with the ALJ's conclusion that RSI and ESI did not constitute a single employer. The Board relied on the same four criteria and concluded that the two entities did constitute a single employer. The Board noted that none of the factors alone is controlling and clarified that the fundamental inquiry is whether there exists overall control of the critical matters at the policy level. Emsing's Supermarket, Inc., 284 N.L.R.B. No. 41 (June 18, 1987) [hereinafter Board Dec.]; see Penntech Papers, 706 F.2d at 25. 37 The Board agreed with three of the ALJ's conclusions: that common ownership was undisputed; that Mr. and Mrs. Emsing made all of the management decisions; and that they jointly established the labor relations policies for both stores. The point of departure for the Board was the first factor--interrelation of operations. The Board explained that the ALJ erroneously had considered this first factor dispositive, rather than simply one of four factors to guide the overall inquiry. The Board also believed that the ALJ had erred in his conclusion that functional integration did not exist. In the Board's view, events before and after Emsing's closing were relevant to the determination of ESI's and RSI's single-employer status. The Board emphasized that the single-employer relationship is characterized by the absence of an arm's length relationship. Board Dec. at 6. The Board interpreted the actions of the employers as, in effect, using Rocky's as a captive customer to purchase Emsing's leftover inventory and essentially worthless equipment which would have otherwise remained unliquidated and at risk of seizure. Board Dec. at 7. The Board also noted that funds from RSI had been transferred to ESI to shore up ESI's financial situation. ESI's final payroll was met with RSI funds. A single health insurance policy covered the employees of both stores. The Board also found relevant that Rocky's issued a check to cover a check of Emsing's that had been returned for insufficient funds; and that Mr. and Mrs. Emsing transferred a car, to which Emsing's held title, to Rocky's.
38 The Board's conclusion that nominally separate corporations constitute a 'single employer' is essentially a factual one and 'not to be disturbed provided substantial evidence in the record supports the Board's findings.'  Penntech Papers, 706 F.2d at 24-25 (quoting NLRB v. Pizza Pizzaz, Inc., 646 F.2d 706, 708 (1st Cir.1981)); see also NLRB v. C.K. Smith & Co., 569 F.2d 162, 164 (1st Cir.1977), cert. denied, 436 U.S. 957, 98 S.Ct. 3070, 57 L.Ed.2d 1122 (1978). There is substantial evidence in the record to support the Board's ultimate finding that ESI and RSI constituted a single employer. The Board's findings that there was common ownership, common management, and centralized control of labor relations are clearly supported by substantial evidence on the record as a whole. Mr. and Mrs. Emsing owned all of the stock of both RSI and ESI with the exception of some treasury shares in ESI that Alan's father retained when he sold Mr. Emsing the company. Additionally, it is clear that Mr. and Mrs. Emsing were the sole managers of the two stores. The hiring and firing of employees also clearly fell on Mr. and Mrs. Emsing. Finally, with respect to integration of operations, we must accord great deference to the Board's view that, in order to effectuate the purposes of the Act, events both before and after the closing of Emsing's must be considered. When considering events that occurred both before and after the closing, we must conclude that the Board's decision that ESI and RSI constitute a single employer is supported by substantial evidence on the record as a whole.