DURKIN, Magistrate, Acting as Special Master: --
Before the court is a petition by the National Labor Relations Board (NLRB) for an adjudication in civil contempt and for other and further civil relief against Sally Lyn Fashions, Inc. (Sally Lyn), Hamlin Sportswear, Inc. (Hamlin), Mr. Michael, Inc. (Mr. Michael), Salvatore Farruggia, and 590 Sportswear, Inc. (590, Inc.) (Doc. No. 1);*fn1 a motion by the NLRB to amend the petition for adjudication in civil contempt and for other civil relief (a) to change respondent, "590 Sportswear, Inc.," to "590, Inc.," and (b) to add Farruggia Brothers Electric, Farruggia Brothers Realty Co., and Gioacchino (Steve) Farruggia, as respondents in contempt, jointly and severally liable for compliance with the court's judgments (Doc. No. 18); and a motion by the NLRB to correct the transcript of hearing held before the magistrate. (Doc. No. 21).
By way of background, on April 3, 1981, the NLRB filed a petition for adjudication in civil contempt and for other relief against Sally Lyn, Hamlin, Mr. Michael, Salvatore Farruggia, and 590, Inc. The petition was based upon the failure of these garment manufacturers to comply with the court's judgments of January 3, 1979 (No. 78-2481), and October 1, 1980 (No. 80-2067), to make backpay, offer reinstatment, and take other action with respect to the improper termination of the employment of Loretta Yurgousky and Annabelle Eskra. The court directed the respondents to show cause why the petition should not be granted. Thereafter, some difficulties arose with respect to whether or not the respondents were or would be represented by counsel, and with respect to the obtaining of an answer from the respondents, either on a pro se basis or through counsel. Pursuant to an order of court, the Office of the General Counsel of the NLRB submitted a letter dated June 12, 1981, recommending that Salvatore Farruggia's letter reply filled pro se be treated as a general denial. The NLRB further noted that it had been informed that certain counsel who had tentatively agreed to represent 590, Inc., had indicated that they would not be representing that concern, and that apparently the owner, Steve Farruggia, would also be appearing pro se. The NLRB, therefore, recommended that in view of the pro se appearances, the return date be rescheduled and that the case be referred to a magistrate as a Special Master. (Doc. No. 1, atts).
Pursuant to that recommendation, the court, on June 26, 1981, entered an order permitting Salvatore Farruggia an extension to and including July 15, 1981, to obtain counsel and file an answer, and indicated that no additional extensions would be granted. The court also specifically adopted the other recommendations in the order of the NLRB dated June 12, 1981. Finally, the court in that order referred the case to the magistrate to act as Special Master.(Doc. No. 1, atts.). By letter dated June 30, 1981, and in accordance with directions from the Clerk of the United States Court of Appeals for the Third Circuit, the Office of the General counsel of the NLRB advised Steve Farruggia and Salvator Farruggia of the provisions of the court's order and, in particular, that they had until July 15, 1981, to file an answer. (Doc. No. 3).
By letter dated July 14, 1981, the NLRB informed the magistrate that on June 16, 1981, it had received from Steve Farruggia an attached letter which the NLRB later learned was meant to be the pro se answer of 590, Inc., Sally Lyn, Hamlin, and Mr. Michael, and is to be construed as a general denial pursuant to the court's June 26, 1981, order. The NLRB also advised the magistrate that it had previously received a letter dated May 13, 1981, from Salvatore Farruggia, which was thereafter forwarded to the Court of Appeals, and that the NLRB had been informed that that letter was likewise meant to be Salvatore Farruggia's pro se general denial. The NLRB also indicated that it was attempting to arrange a settlement conference with the respondents. (Doc. No. 5).
Thereafter, the magistrate engaged in a series of correspondence with the NLRB regarding the status of settlement discussions. (Doc. Nos. 6-11). In a letter dated October 5, 1981, the NLRB advised the magistrate that it was awaiting papers from Steve and Salvatore Farruggia to verify certain information submitted to the NLRB during settlement discussion, but that if the magistrate desired to set a hearing date, a date in late November would be agreeable to the NLRB. (Doc. No. 11). By order dated October 14, 1981, the hearing date was set for November 18, 1981.(Doc. No. 12).
The evidentiary hearing was held on November 18, 1981, at which time testimony and documentary evidence were received. At that hearing, William F. Anzalone, Esq., appeared and indicated that although the respondents had contacted him in July, 1981, at no time had he officially represented either Salvatore or Steve Farruggia, or any of the companies with which they may be associated. Mr. Anzalone stated, however, that he had agreed to attend the hearing on their behalf and he wanted the record to reflect that his appearance was very limited in nature and was only for the purposes of the hearing. (TR., pp. 6-7).
At the conclusion of the hearing, however, Mr. Anzalone indicated that he would continue to represent the respondents with respect to completing the record by subsequent submission of the documentary evidence and in the filing of a brief and proposed findings of fact and conclusions of law. The magistrate had indicated that after the record was complete, a briefing schedule would be established. (TR. 238-245; 285-288). However, Mr. Anzalone forwarded certain documents necessary to complete the record,*fn2 and at the same time forwarded proposed findings of fact and conclusions of law, and objections to the NLRB's motion to amend, but no brief. (Doc. No. 19, A-D).
Although the magistrate had contemplated that the NLRB as the moving party would first be required to submit proposed findings, conclusions, and a brief, with respondents given an opportunity to respond and the NLRB an opportunity to reply, the magistrate informed the parties that Mr. Anzalone's premature filing might necessitate a reversal of this procedural plan (Doc. No. 20), and the parties did not object. The NLRB, after being granted an extension (Doc. No. 27). Although Mr. Anzalone specifically requested an opportunity to file a reply brief (Doc. No. 22) and this request was granted (Doc. No. 24), no reply brief was filed.
As noted above, the NLRB filed a motion to correct the transcript, and specifically to correct page 13, line 7, of the transcript of hearing of November 18, 1981, which now reads "March 21, 1981," and should read "March 21, 1979." (Doc. No. 21). The requested amendment is in accordance with the context of the documentary evidence and other matters being inquired of at that point in the transcript. Further, the motion is unopposed. It should, therefore, be granted.
As noted above, the NLRB also filed a motion to amend the petitio for adjudication in civil relief (1) to change respondent, "590 Sportswear, Inc.," to "590, Inc.," and (2) to add Farruggia Brothers Electric, Farruggia Brothers Realty Company, and Gioacchino (Steve) Farruggia as respondents in contempt, jointly and severally liable for compliance with the court's judgment. The court referred the motion to the magistrate as Special Master to conduct a hearing, including the taking of evidence in connection with the motion and any defense thereto which respondents may offer. (Doc. No. 18).
With respect to part (1) of that motion, respondents state they have no objection (Doc. No. 19D), and thus that part of the motion should be granted.
Before discussing the merits of part (2) of the motion, by way of background, at the hearing counsel for the NLRB asked a series of questions concerning the incompleteness of the corporate records of 590, Inc., and on the basis of the answers to these questions, made an oral motion to amend the Board's contempt petition to add as respondent Steve Farruggia for individual liability on the basis of, among other things, Steve Farruggia's failure to maintain the distinction between his corporate personality and his individual personality and his individual personality. (TR. 57-58). Respondents' counsel objected on the basis that Steve Farruggia, an "incorporator" and president of 590, Inc., appeared at the hearing to represent the interests of 590, Inc., and had no advance notice that the NLRB would attempt to add him as a respondent in his individual capacity. (TR. 58). Counsel for the NLRB then stated that he would withdraw the motion for the time being and consider whether or not it would be appropriate to file it some time at the end of the proceeding, "with a continuance for the presentation of the defense," or whether it would be more appropriate to file it as an additional motion or petition before the Court of Appeals. Counsel for respondents then indicated that although 590's corporate records were incomplete, testimony will show that Steve Farruggia is the sole shareholder and president of the entity.
The motion was then formally filed on December 3, 1981, and referred to the magistrate on December 15, 1981 (Doc. No. 18), and included a request not only to add Steve Farruggia as a respondent, but also to add Farruggia Brothers Electric and Farruggia Brothers Realty Co. The NLRB based that motion upon evidence that unfolded at the hearing which would permit a finding that those two entities and Steve Farruggia constituted alter egos, or instruments of evasion, of 590, Inc., Sally Lyn, Hamlin, Mr. Michael, and Salvatore Farruggia. The evidence cited in support of the motion was not only the incompleteness of the corporate records of 590, Inc., but also the common interests and endeavors of Steve and Salvatore Farruggia in the various corporate entities initially named as respondents and other related Farruggia enterprises, and the failure to maintain lines of distinction among the business dealings of the various Farruggia enterprises. In the motion, the NLRB indicated that it did not object to reconvening the hearing to allow the additional respondents to present whatever evidence they desired in defense of these new allegations. (Doc. No. 18).
Respondents filed objections to this proposed amendment. However, the only objection now raised is that any claim against Farruggia Brothers Electric and Farruggia Brothers Realty Co. is barred by the applicable statute of limitations. No mention is made of objection to the joinder of Steve Farruggia, individually. (Doc. No. 19D). Respondents, however, cite no authority in support of their argument that this amendment is barred by the statute of limitations. As the NLRB points out, there is a statute of limitations governing administrative cases before the Board, 29 U.S.C.A. § 160(b), but it does not apply to proceedings under the court's contempt power under 18 U.S.C.A. § 401. See United States v. Fidanian, 5 Cir. 1972, 465 F.2d 755, 757, 20 WH Cases 800. Further, one who aids, abets, or assists, or acts in concert with, a person who has been enjoined in violating an injunction, subjects himself to civil as well as criminal proceedings for contempt, even though he was not named or served with process in the suit or even served with a copy of the injunction. Reich v. United States, 1 Cir. 1957, 239 F.2d 134, 137, cert. denied, 352 U.S. 1004; accord Chase National Bank v. City of Norwalk, 1934, 291 U.S, 431, 436-437. As discussed in more detail, infra, the evidence shows that Steve Farruggia, Farruggia Brothers Realty Co., and Farruggia Brothers Electric, together with Salvatore Farruggia and the other respondents, are part of a single enterprise that has systematically attempted to avoid the court's judgments, and at all times had knowledge of the court's judgments. At this point, however, the question is only whether the amendment should be allowed and the additional respondents have not requested that the hearing be reopened to consider additional evidence relating to the attempt to impose liability upon them. In view of these factors and the fact that additional respondents' specific objection goes only to the attempted assertion of claims against them being barred by the statute of limitations, the amendment should be allowed.
PROPOSED FINDINGS OF FACT
A. The Alter Ego Status of Sally Lyn Fashions, Inc., Salvatore Farruggia, Hamlin Sportswear, Inc., 590, Inc., Steve Farruggia, Farruggia Brothers Realty Co., and Farruggia Brothers Electric; the Successor Status of Mr. Michael, Inc., and 590, Inc.
1. As found in the underlying proceedings, Sally Lyn manufactured women's sportwear at a plant located at Route 590, Hamlin, Pennsylvania. (Doc. No. 14, ALJD, p. 2).*fn3
2. Salvatore Farruggia was the record owner and president of Sally Lyn, was directly responsible for its day-to-day operations, and is individually liable under the October 1, 1980, supplemental judgment. (TR. 65-66, B-11, B-25).
3. Salvatore Farruggia's brother, Steve Farruggia, was second in command Sally Lyn, was actively involved in Sally Lyn's day-to-day operations, and spent the same amount of time at the plant as Salvatore Farriggia. (TR. 66, 83-84, 86, 150).
4. On February 2, 1977, and April 29, 1977, respectively, Loretta Yurgousky and Annabelle Eskra, active supporters of union organizational and recognitory efforts at Sally Lyn, were laid off for lack of work. (Doc. No. 14, ALJD).
5. Thereafter, although several employees were recalled and new employees were hired, Eskra and Yurogousky were not among them. (Doc. No. 14, ALJD).
6. When it was suggested to Salvatore Farruggia that the failure to call Eskra and Yurgousky could constitute discrimination in violation of the union contract and the National Labor Relations Act, Salvatore Farruggia stated in May of 1977 that "[i]f I have to, I can close this shop down and I'll open it under a different name," and that he could "always get someone to cover" for him. (Doc. No. 14, ALJD, p. 7).
7. In July 1977, charges were filed with the National Labor Relations Board, and in September 1977, Sally Lyn ceased its garment manufacturing operations. (TR. 66).
8. In September 1977, Hamlin began manufacturing women's sportswear at the plant formerly operated by Sally Lyn. (TR. 66, 90-91).
9. Hamlin operated the plant with the same employees Sally Lyn had used.(TR. 67).
10. Hamlin operated the plant with the same equipment Sally Lyn had used. (TR. 67).
11. Hamlin sold the women's sportswear it manufactured to the same jobbers to whom Sally Lyn had sold. (TR. 115).
12. Salvatore and Steve Farruggia ran the day-to-day operations of Hamlin just asthey had when Sally Lyn operated the plant. (TR. 66-67, 83-83).
13. Hamlin issued no stock. (TR. 90-91, 101).
14. There was no sales contract between Sally Lyn and Hamlin for the purchase of the former's business. (TR. 90-91).
15. Salvatore Farruggia organized Hamlin and recruited Michael LoPresto to be its president in an effort to avoid problems with unions and his liability to the National Labor Relations Board. (Tr. 89-90).
16. Michael LoPresto knew that Salvatore Farruggia was having "union problems" and agreed to "front" for Salvatore Farruggia in part because Lopresto was anti-union and wanted to "get back at the union." (TR. 90, 117).
17. Michael LoPresto received no salary or other remuneration for serving as Hamlin's president.(TR. 90-91, 116-118).
18. Michael LoPresto had minimal duties in the operation of Hamlin, until the business started losing money, and thereafter he traveled to New York from time to time to get "work." (TR. 90, 102, 116, 118).
19.Michael LoPresto was only the titular president of Hamlin, but in any event, in April 1978 was advised of the ALJ's order and the duty of Hamlin to offer reinstatement to the former employees in question. (TR. 100, B-1).
20. Accordingly, Hamlin is the alter ego of Sally Lyn and Salvatore Farruggia. (Factual conclusion based on findings 1-19).
21. In January 1979, Salvatore Farruggia sold Hamlin's business to Mr. Michael. (Tr. 67-68, 91).
22. Mr. Michael paid only $13,000 of the agreed purchase price of $35,000 for Hamlin's business. (TR 91, 97, 1930.
23. Michael LoPresto owned Mr. Michael, and was responsible for its day-to-day operations. (TR. 67-68, 105-106, B-16).
24. A written sales contract for the purchase of Hamlin's business by Mr. Michael was not prepared because Salvatore Farruggia and Michael LoPresto could not agree on who would bear liability for the backpay due under the National Labor Relations Act. (TR. 92-94).
25. Mr. Michael manufactured women's sportswear at the same plant Sally Lyn and Hamlin had used. (TR. 97, 115).
26. Mr. Michael operated with the same employees Sally Lyn and Hamlin had employed. (TR. 68-69, 108).
27. Mr. Michael used the same equipment Hamlin and Sally Lyn had used. (TR. 95, 106, 109).
28. Mr. Michael sold the women's sportswear it manufactured to basically the same jobbers to whom Sally Lyn and Hamlin had sold. (TR. 115).
29. Mr. Michael was a successor to Hamlin and knew of Hamlin's unfair labor practice liability before taking over Hamlin's business. (Factual conclusion based on findings 15-28).
30. Mr. Michael ceased its garment manufacturing operations in June 1979. (TR 95).
31. In July 1979, Salvatore Farruggia padlocked the plant which had been used by Mr. Michael.(TR 95).
32. In January 1980, 590, Inc., began manufacturing women's sportswear at the plant formerly operated by Mr. Michael. (TR 49, 209, 273).
33. The Articles of Incorporation of 590, Inc., were signed by Matilda Spencer, the floor lady at 590, Inc. (TR. 69, 263-266, B-27).
34. 590, Inc., operates the plant with the same employees Mr. Michael had ...