National Labor Relations Board v. Kodiak Electric Co.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
NATIONAL LABOR RELATIONS BOARD, 
Petitioner,
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, LOCAL 24,
AFL-CIO,
Intervenor,  No. 02-2047
v.
KODIAK ELECTRIC COMPANY,
INCORPORATED; KODIAK LINE
COMPANY, INCORPORATED,
Respondents.

On Application for Enforcement of an Order
of the National Labor Relations Board.
(5-CA-28319)
Argued: April 1, 2003
Decided: July 2, 2003
Before TRAXLER and SHEDD, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Enforcement granted by unpublished per curiam opinion.
COUNSEL
ARGUED: Andrew Martin Croll, SCARLETT & CROLL, P.A., Bal-
timore, Maryland, for Kodiak Electric and Kodiak Line. Siobhan
2 NLRB v. KODIAK ELECTRIC
Mashariki Kelly, NATIONAL LABOR RELATIONS BOARD,
Washington, D.C., for Board. Gabriel Antonio Terrasa, ALBERTINI,
SINGLETON, GENDLER & DARBY, L.L.P., Owings Mills, Mary-
land, for Intervenor. ON BRIEF: Robert B. Scarlett, SCARLETT &
CROLL, P.A., Baltimore, Maryland, for Kodiak Electric and Kodiak
Line. Arthur F. Rosenfeld, General Counsel, John E. Higgins, Jr.,
Deputy General Counsel, John H. Ferguson, Associate General Coun-
sel, Aileen A. Armstrong, Deputy Associate General Counsel, Charles
Donnelly, Supervisory Attorney, NATIONAL LABOR RELATIONS
BOARD, Washington, D.C., for Board.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
The National Labor Relations Board petitions for enforcement of
an order issued against Kodiak Electric Co., Inc., and Kodiak Line
Co., Inc. The underlying issue is whether substantial evidence sup-
ports the Board’s conclusion that Kodiak Line is the alter ego of
Kodiak Electric, and, on this basis, whether substantial evidence sup-
ports the Board’s finding that the company violated Sections 8(a)(1)
and (5) of the National Labor Relations Act, see 29 U.S.C.A.
§§ 158(a)(1) and (5) (West 1998), by refusing to recognize the Inter-
national Brotherhood of Electrical Workers, Local 24, AFL-CIO (the
"Union"), or to apply the terms of the applicable collective-bargaining
agreements to unit employees. The Board’s findings are substantially
supported by evidence in the record; consequently, we enforce the
Board’s order in full.
I.
Kodiak Electric, a Maryland corporation formed in 1991 with an
office and place of business in Baltimore, Maryland, performs interior
NLRB v. KODIAK ELECTRIC 3
electrical work in the construction industry. Interior electrical work is
any electrical work, whether outside or inside a building, that is
located within the customer’s property lines. Timothy Demski, a mas-
ter electrician licensed by the state of Maryland, served as president,
secretary, and sole stockholder of Kodiak Electric. As president, he
had sole responsibility for formulating its labor policies and making
hiring decisions. Additionally, he helped run Kodiak Electric’s day-
to-day operations and acted as a field electrician at various job sites.
Prior to 1997, Kodiak Electric operated as a non-union contractor,
filling its manpower needs through advertisements in the newspaper.
Union representative Robert Kulp encouraged Timothy Demski to
enter into a bargaining relationship with the Union. On August 27,
1997, Kodiak Electric recognized the Union, and signed a letter of
assent by which it agreed to be bound by the then-current collective-
bargaining agreement, as well as subsequent agreements, between the
Union and the Baltimore Division, Maryland Chapter, of the National
Electrical Contractors Association, Inc. ("NECA"). The contract then
in force, as adopted, covered Kodiak Electric’s inside journeymen-
wiremen, technicians, and apprentices, and ran from April 1, 1996, to
March 31, 1999. It provided that the collective-bargaining agreement
could be terminated "by the undersigned employer giving written
notice at least one hundred fifty (150) days prior to the then current
anniversary date of the applicable approved labor agreement." J.A. 38
(internal alteration omitted). The contract further provided that, after
March 31, 1999, it "shall continue in effect from year to year thereaf-
ter unless changed or terminated." J.A. 38 (internal alteration omit-
ted). A successor agreement ran for the period April 4, 1999, to
March 31, 2002. Kodiak Electric never signed or expressly adopted
the subsequent agreement, but the agreement nevertheless went into
effect through the default mechanism.
Kodiak Electric was required under the agreement to make pay-
ments on behalf of its unit employees to a fringe benefit fund jointly
administered by the Union and NECA, and to furnish a surety bond
of $25,000 to secure payment of amounts due under the agreement.
Beginning in February 1998, however, Kodiak Electric stopped mak-
ing payments to the fringe benefit fund. Notwithstanding Kodiak
Electric’s refusal to make these payments, the Union continued to
4 NLRB v. KODIAK ELECTRIC
send employees to Kodiak Electric upon request through its referral
procedure.
Also in 1998, Nikki Demski, Timothy Demski’s wife, incorporated
Kodiak Line. Since its incorporation, Kodiak Line has operated as a
non-union contractor. Kodiak Line was ostensibly created to perform
outside line work — that is, work outside property boundaries — pri-
marily for Baltimore Gas and Electric Company. Although she is not
an electrician nor is she knowledgeable about electrical work, Nikki
Demski became president and sole stockholder of Kodiak Line. Timo-
thy Demski served as both vice president and operations manager,
through which roles he oversaw Kodiak Line’s equipment, employ-
ees, and day-to-day operations.
Kodiak Electric and Kodiak Line kept separate federal employer
identification numbers, filed separate tax returns, and signed separate
leases. They also maintained separate books, vehicles, professional
licenses, and insurance policies. However, the entities operated from
a shared facility and shared a fax number in Baltimore. Kodiak Elec-
tric made loans to Kodiak Line that Kodiak Line did not repay.
Kodiak Line repeatedly paid for goods and services supplied and
billed to Kodiak Electric. The entities shared the services of office
employees, and they also shared the services of employees who occu-
pied supervisory and field positions within both entities.
In 1998, Kodiak Electric contracted to perform interior electrical
work on four projects. The first was for Porter Construction Manage-
ment ("Porter") at the Kenwood High School job site. Union Agent
Gary Griffin received Kodiak Electric’s requests for labor and
referred approximately twenty to thirty electricians. Some time
between January 20 and March 19, 1999, Kodiak Line began per-
forming the work, although Porter had originally contracted with
Kodiak Electric. No new contract was executed between Kodiak Line
and Porter when Kodiak Line took over the project. Porter also
awarded Kodiak Electric a second contract for interior electrical work
at the Rockview Elementary School. Late in the year, Porter began to
notice that the Rockview project was not properly manned and so
contacted Timothy Demski to discuss the problem. Subsequently, a
Kodiak Electric electrician observed that three non-union employees
were doing inside electrical work on the site. When Union agent Grif-
NLRB v. KODIAK ELECTRIC 5
fin called Timothy Demski to discuss the situation, Demski told Grif-
fin that he was using Kodiak Line employees because union-referred
employees were not showing up for work. Demski did not request
more labor from the hiring hall, but instead placed an advertisement
in the newspaper soliciting electricians for the project. The advertise-
ment requested applicants to fax their resumes to the number shared
by Kodiak Electric and Kodiak Line.
In March of 1999, Timothy Demski and a Porter project manager,
Peter Robey, discussed manpower problems on the Kodiak Line proj-
ects. Demski asked Robey to "write the dirtiest, nastiest letter that
[Porter] could" to terminate the contract with Kodiak Electric. J.A.
39. He also told Robey that Kodiak Electric had a "sister company"
that did not have the same manpower constraints and could easily
absorb the workload that Kodiak Electric had proved unable to han-
dle. J.A. 39. On March 17, Robey sent a letter to Kodiak Electric ter-
minating its contract for the work at the Rockview project. That same
day, Porter contracted with Kodiak Line to complete the remainder of
the electrical work at a price that reflected the balance of the original
contract with Kodiak Electric.
In November 1998, Kodiak Electric bid on two additional interior
electrical projects. On November 12, Kodiak Electric submitted a bid
to Tech Contracting Company, but subsequently Kodiak Line per-
formed the work. On November 12, Orfanos Construction, Inc., con-
tracted with Kodiak Line to perform interior electrical work, even
though Kodiak Electric had submitted the proposal. In March 1999,
Kodiak Line informed a supplier for the Tech Contracting Company
project that "Kodiak Electric, Kodiak Welding and Kodiak Line have
been reorganized under one company — Kodiak Line Corporation,
Inc." J.A. 40. Two months later, Kodiak Line informed another ven-
dor that "Kodiak Electric Company has changed its name to Kodiak
Line Corporation." J.A. 40.
The case came before the Board on a complaint issued by the
NLRB General Counsel following the filing of unfair labor practice
charges by the Union. Based on these facts, the Board agreed with the
reviewing administrative law judge that an alter ego relationship
existed between Kodiak Electric and Kodiak Line because they
shared substantially identical management, business purpose, opera-
6 NLRB v. KODIAK ELECTRIC
tions, equipment, customers, and supervision. The Board found that
the company had violated Sections 8(a)(1) and (5) of the National
Labor Relations Act, 29 U.S.C.A. §§ 158(a)(1) and (5), by refusing
to apply the terms of the collective-bargaining agreement with the
Union to unit employees, by failing to honor the agreement’s referral
procedures, by repudiating its recognition of the Union, and by caus-
ing unit work obtained by Kodiak Electric to be performed by Kodiak
Line. The Board’s order required the company to cease and desist
from the unfair labor practices found, and from interfering with,
restraining, or coercing employees in the exercise of their rights guar-
anteed by the Act. The Board’s order also required the Company to
honor and abide by the terms and conditions of its agreements with
the Union and to make whole those employees represented by the
Union who suffered as a result of the company’s actions.
The Board now seeks enforcement of the order. The only issue
before the Court is whether Kodiak Line is the alter ego of Kodiak
Electric.
II.
Respondents’ contention on appeal is that the Board’s finding of
alter ego status is not supported by substantial evidence. In particular,
they point to the separate ownership of the two entities and a lack of
evidence that Kodiak Line was formed to avoid Kodiak Electric’s
obligations under the Union contract. In Alkire v. NLRB, 716 F.2d
1014 (4th Cir. 1983), we set forth the test for determining alter ego
status:
When business operations are transferred, the initial ques-
tion is whether substantially the same entity controls both
the old and new employer. If this control exists, then the
inquiry must turn to whether the transfer resulted in an
expected or reasonably foreseeable benefit to the old
employer related to the elimination of its labor obligations.
Id. at 1020. Thus, "the focal criteria of alter-ego analysis are the ensu-
ing degree of control that the employer exerts over the operations of
the new employing entity and the foreseeable ensuing benefit it
NLRB v. KODIAK ELECTRIC 7
secures as a result of purging its labor commitments." NLRB v.
McAllister Bros., Inc., 819 F.2d 439, 444 (4th Cir. 1987). As to
respondents’ reliance on the "legal formalities of separate incorpora-
tion and distinct equity ownership" to avoid alter ego status, these dis-
tinctions "cannot conceal their inextricable relationship." Id. at 445.
On the issue of control, the Board found substantial evidence that
both Kodiak Electric and Kodiak Line were managed and overseen by
Timothy Demski, who obtained and orchestrated work for each entity.
Although corporate ownership was not strictly identical in that Timo-
thy’s wife, Nikki, held the shares of Kodiak Line, the overlapping
control of both entities by Timothy Demski satisfies the control crite-
rion. See Industrial Turnaround Corp. v. NLRB, 115 F.3d 248, 250-52
(4th Cir. 1997); see also Goodman Piping Prods., Inc. v. NLRB, 741
F.2d 10, 11-12 (2d Cir. 1984) (per curiam) (common ownership found
where husband and sole owner of one company managed daily opera-
tions and made all employment decisions for his wife’s company);
NLRB v. Amateyus, Ltd., 817 F.2d 996, 998-99 (2d Cir. 1987) (per
curiam) (alter ego found where brothers separately owned two com-
panies, but only one managed and operated both). The evidence indi-
cates that most of the Kodiak Line supervisors came from the ranks
of Kodiak Electric and all of them answered to Timothy Demski.
Although the two entities kept separate books, utilized separate equip-
ment, and served a certain number of separate customers, the record
provides ample evidence that in reality they operated in tandem, shar-
ing common space, equipment, and employees. Significantly, they
also explicitly held themselves out to customers and suppliers as a
single entity, and Kodiak Line performed a considerable part of the
interior electrical work for the customers obtained by Kodiak Electric.
As to the benefits secured by Kodiak Electric’s avoidance of its
labor obligations, the record supports the Board’s finding that Timo-
thy Demski diverted the bargaining unit work of Kodiak Electric to
the newer, nonunion Kodiak Line and that he eventually did not apply
the labor agreement, at all, to the work of either entity. There is evi-
dence that by 1998 he had made clear his dissatisfaction with Kodiak
Electric’s contract with the Union and what he viewed as its excessive
wage cost provisions. He ceased to make required fringe benefit con-
tributions, transmit union dues, or use the contractual referral provi-
sions. The record thus supports the finding that Kodiak Line served,
8 NLRB v. KODIAK ELECTRIC
in substantial part, to permit Timothy Demski to avoid obligations
incurred under Kodiak Electric’s contract with the Union and to
secure benefits by purging the labor commitments established there-
under. Consequently, we conclude that substantial evidence supports
the Board’s finding that Kodiak Electric and Kodiak Line are alter
egos of one another and that Kodiak Electric abrogated its collective-
bargaining relationship with the Union.
III.
For the foregoing reasons, we enforce the Board’s order in its
entirety.
ENFORCEMENT GRANTED