Court Opinion

ID: 8917667
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:45:26.897832+00
Date Added: 2024-06-11T17:09:08.538685
License: Public Domain

SPROUSE, Circuit Judge,
dissenting:
I respectfully dissent.
I agree with most of the well-written majority opinion, insofar as it correctly identifies the employer and employee interests which are invariably at loggerheads in alter ego cases. My principal disagreement, however, is with the majority’s conclusion that “employer motivation” is central to determining alter ego status. As the majority concedes, Southport Petroleum Co. v. NLRB, 315 U.S. 100, 62 S.Ct. 452, 86 L.Ed. 718 (1942), does not require the NLRB to show that the employer intended to evade the purposes of the NLRA, in order to find alter ego status. Nor has such a requirement been imposed by the many courts which have discussed Board findings of alter ego status. See, e.g., Amalgamated Meat Cutters & Butcher Workmen, AFL-CIO, Local 576 v. NLRB, 663 F.2d 223, 226-27 (D.C.Cir.1980), citing with approval, Crawford Door Sales Co., 226 N.L.R.B. 1144 (1976); Nelson Electric v. NLRB, 638 F.2d 965, 968 (6th Cir.1981); NLRB v. O’Keefe & Merritt Mfg. Co., 178 F.2d 445, 448-49 (9th Cir.1949); NLRB v. Nat’l Garment Co., 166 F.2d 233, 238 (8th Cir.), cert. denied, 334 U.S. 845, 68 S.Ct. 1513, 92 L.Ed. 1768 (1948). The United States Supreme Court has not decided the question, but it has indicated that alter ego status is not limited to employers who purposefully attempt to evade the effects of the labor laws:
Such [alter ego] cases involve a mere technical change in the structure or identity of the employing entity, frequently to avoid the effect of the labor laws, without any substantial change in its ownership or management. In these circumstances, the courts have had little difficulty holding that the successor is in reality the same employer and is subject to all the legal and contractual obligations of the predecessor.
Howard Johnson Co. v. Detroit Joint Exec. Bd., 417 U.S. 249, 259 n. 5, 94 S.Ct. 2236, 2242 n. 5, 41 L.Ed.2d 46 (1974) (emphasis added). This language identifies the crucial inquiry as whether a substantial change in ownership or management has occurred. Employer motivation may be relevant to this inquiry, but it is certainly not, as the majority apparently believes, determinative.
The guiding rationale in alter ego cases is whether the employer is “merely a disguised continuance of the old employer." Southport Petroleum Co., 315 U.S. at 106, 62 S.Ct. at 455. That rationale, in my mind, *1023requires a finding that Denzil Alkire and Upshur Enterprises were the alter egos of Mountaineer Hauling & Rigging. The evidence, viewed realistically, supports a finding that Alkire simply chose two of his employees to operate his business until such time as he could favorably dispose of it. Alkire was guaranteed the net profits generated by the business under the terms of his lease-purchase agreement with Mountaineer. He was given $400 per week salary for services which actually amounted to managing the business. Additionally, he retained the responsibility for paying all property taxes, license fees, equipment loan payments, insurance premiums and equipment maintenance costs. Significantly, Alkire retained the right to claim the tax advantages of equipment depreciation. His control over the business further was revealed by his payment of Mountaineer’s first month’s payroll and by his later conduct of cosigning a loan agreement for the purchase of ten new trucks. Moreover, he exercised the ultimate act of ownership when he sold the business to H & A Hauling, Inc., after Mountaineer failed to raise the $250,000 purchase price. Throughout the life of the lease purchase agreement, Alkire exercised all the prerogatives of ownership, yet, in the majority’s view, remained free of the responsibilities imposed by the NLRA — a classic case of “having your economic cake and eating it, too.”
Substantial evidence existed to support the Board’s finding of alter ego status and I would enforce its order.