Opinion ID: 270059
Heading Depth: 1
Heading Rank: 3

Heading: The Merger Question

Text: 35 On May 18, 1962, after the Board's first back pay order had issued, respondents merged into Mastro Industries, Inc., pursuant to Section 85 of the New York Stock Corporation Law, McKinney's Consol.Laws, c. 59, (now N.Y. Bus. Corp. Law, McKinney's Consol. Laws, c. 4, § 905). This short form merger statute requires that the parent corporation own at least 95% of the merged subsidiary's stock; Mastro has admitted that on May 18, 1962, it wholly owned the two subsidiaries. 36 It is settled that remedial orders of the Board may be enforced against the successors and assigns of one who has violated the N.L.R.A. See Regal Knitwear Co. v. N. L. R. B., 324 U.S. 9, 65 S.Ct. 478, 89 L.Ed. 661 (1945); N. L. R. B. v. Ozark Hardwood Co., 282 F.2d 1 (8 Cir. 1960). Whether a successor corporation is liable is a question of fact which turns on whether, for example, it is the alter ego of the original respondent or whether it has participated in an attempted evasion of obligations imposed by the Board. See N. L. R. B. v. Deena Artwear, Inc., 361 U.S. 398, 80 S.Ct. 441, 4 L.Ed.2d 400 (1960); Southport Petroleum Co. v. N. L. R. B., 315 U.S. 100, 106, 62 S.Ct. 452, 86 L.Ed. 718 (1942). 37 Mastro argues that the back pay orders may not be enforced against it at this time because the Board has not held a hearing to determine whether it may properly be held as a successor. While in many cases a hearing may be necessary to determine whether a new owner participated in or had sufficient knowledge of an unfair labor practice to be held responsible, cf. N. L. R. B. v. C. C. C. Associates, Inc., 306 F.2d 534 (2 Cir. 1962), where, as here, the evidence before the reviewing court demonstrates beyond doubt that a successor may and should be held liable for outstanding obligations arising out of orders of the Board, we see no reason to require the Board to hold an additional hearing. As we said in Fay v. Douds, 172 F.2d 720, 725 (2 Cir. 1949): 38 The Constitution protects procedural regularity, not as an end in itself, but as a means of defending substantive interests. Every summary judgment denies a trial upon issues formally valid. Where, as here, the evidence on one side is unanswerable, and the other side offers nothing to match or qualify it, the denial of a trial invades no constitutional privilege. These considerations are particularly appropriate when we consider that the Board must conduct its duties in a summary way; not, we hasten to add, without observing all the essentials of fair administration, but with as much dispatch as is consistent with those. 39 Mastro may at this time be charged as a successor corporation. Mastro has admitted that it owned both respondents at the time of the merger. Under Section 85 of the Stock Corporation Law, the resulting corporation of such a merger must be authorized to engage in business similar or incidental to the business in which the merged corporations engaged; moreover, the resultant succeeds to all of the estate, property, rights, privileges and franchises of such other corporation    subject to all liabilities and obligations of such other corporation and the rights of all creditors thereof. Mastro has not contended on this appeal that the officers of Mastro Industries, Inc., had no knowledge of or played no part in the original unfair labor practice. In fact, Mastro has made no factual arguments that would support its contention that a hearing is necessary. Under these circumstances, there is no need for a further hearing. 40 The circumstances which triggered the discriminatory discharge in this case occurred on November 11, 1950. Reinstatement of most of the discriminatees occurred on March 9, 1956; all the discriminatees had been offered reinstatement by late 1958. Thus, the back pay here awarded has been due for at least seven and in part up to fifteen years. It is regrettable that the enforcement of fairly standard remedies in a case which, except for the original appeal to the Supreme Court, involved no unusual circumstances should be fraught with such delays. Certainly to the discriminatees, a delay of this magnitude must render the back pay award a wholly inadequate and unsatisfactory remedy for their wrongful discharge. Although the Board began awarding interest on back pay awards subsequent to its decision here, see Isis Plumbing & Heating Co., 138 NLRB 716 (1962), even this could not undo the economic hardship caused by many years of undeservedly substandard earnings. Moreover, the substantial delay in enforcing the back pay remedy significantly undermines its usefulness in fulfilling the public policy of promoting full production and employment. 41 This is not a case where the Board has intentionally acted in a manner contrary to its duty 9 to proceed with reasonable dispatch to conclude any matter presented to it. Compare Deering Milliken, Inc. v. Johnston, 295 F.2d 856 (4 Cir. 1961). Rather, the delay has stemmed from the inherently time-consuming nature of the back pay remedy, complicated by a serious and protracted shortage of Board personnel capable of preparing the specification. 42 At the request of this court, the Board's General Counsel has supplied a chronology of these proceedings and an explanatory letter. The letter reveals that the task of obtaining compliance with the Board's original order fell to the Regional Office for the Second Region. During 1956 and the years immediately following, the staff of this office fell to its lowest point in recent years while the number of cases rose to such a volume that the Region was eventually divided into three new regions. 43 The Regional Office made a preliminary estimate of the back pay due the discriminatees while it was processing the reinstatement complaints during the 1956-1958 period. When informal back pay negotiations broke down and a formal specification became necessary, this task proved too great for the Region's personnel and it was referred to the Board's Industrial Analysis Branch in Washington in the spring of 1957. The staff of this branch, however, had been reduced from six analysts to two, and one of these two left the Board shortly thereafter. Thus, the Mastro specification was relegated to the one remaining analyst, who was unable to complete it until early 1960. 44 In addition to the three years required to prepare the specification, other delays caused by the Board's overall case-load 10 are revealed. It took the Board nine months (June 1952-March 1953) to issue its decision adopting the trial examiner's recommendations in the original proceeding. Thirty months elapsed after respondents offered reinstatement to the bulk of the discriminatees before the Board instituted contempt proceedings to have the remaining persons reinstated. And nearly one year elapsed (May 2, 1961-April 24, 1962) before the Board adopted the first supplemental back pay report. To these delays must be added those incident to obtaining appellate review on four different occasions. 45 The activities and jurisdiction of the National Labor Relations Board require efficient resolution of adjudicative disputes. The efficacy of the Board's remedies almost always depends upon the extent to which they can return the parties to a status quo ante. Otherwise, collective bargaining cannot be revived on a meaningful and equitable basis and the potential economic costs of unionizing rise to a point where employees are discouraged from that endeavor. Therefore, remedial action must be speedy in order to be effective. We can only hope that those in the executive and legislative branches of our government who are charged with the duty to effectuate the policies of our federal scheme of labor legislation will note the unfortunate and protracted delays which bedeviled these proceedings so that such delays can be avoided in other cases. 46 The Board's petition to enforce its supplemental orders is granted with respect to all discriminatees except Isiah Smith.