National Labor Relations Board v. Goodman

90 B.R. 56, 1988 U.S. Dist. LEXIS 10299
CourtDistrict Court, W.D. New York
DecidedAugust 31, 1988
DocketCIV-88-287T
StatusPublished
Cited by4 cases

This text of 90 B.R. 56 (National Labor Relations Board v. Goodman) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Labor Relations Board v. Goodman, 90 B.R. 56, 1988 U.S. Dist. LEXIS 10299 (W.D.N.Y. 1988).

Opinion

DECISION and ORDER

TELESCA, District Judge.

INTRODUCTION

Appellants the National Labor Relations Board (“NLRB”) and the Road Sprinkler Fitters Local 669 (“the Union”) appeal from the January 25,1988 Decision and Order of the United States Bankruptcy Court, Honorable Edward D. Hayes, prohibiting appellants from continued enforcement of the General Counsel’s unfair labor practice complaint against appellees James M. Goodman (“Goodman”) and Goodman Automatic Sprinkler Corporation (“GASC”). Goodman v. NLRB, 81 B.R. 786 (Bankr.W.D.N.Y.1988).

This appeal focuses on the interplay between the National Labor Relations Act (“NLRA”) and the Bankruptcy Code. The question on appeal is whether the bankruptcy court correctly found that Goodman’s personal discharge under Chapter 7 shields both him and GASC from liabilities imposed by the NLRB upon predecessor corporations arising from labor law violations.

FACTS

Goodman and another party formed E.G. Sprinkler Corporation (“EGSC”) in 1973. Goodman subsequently bought out the other party, and became the sole shareholder of EGSC. In 1979, EGSC entered into a collective bargaining agreement (the “CBA”) with the Union, due to expire by its own terms on March 31, 1982.

In May, 1981, Victoria Goodman, Goodman’s wife, formed Goodman Piping Products, Inc. (“GPPI”). On December 31, 1981, EGSC ceased operations and all or substantially all of its assets were liqui *58 dated. GPPI refused to adhere to the CBA negotiated by EGSC, and withdrew recognition from the Union. Based on charges filed by the Union, an Administrative Law Judge of the NLRB found that GPPI was the alter ego of EGSC, that GPPI and EGSC had committed certain unfair labor practices, and that both corporations were liable for the obligations under the CBA. These findings were affirmed by the NLRB, which issued an order requiring GPPI to recognize and bargain with the Union and honor, implement and apply the agreement. E.G. Sprinkler Corp., 268 NLRB 1241 (1984), enf'd Goodman Piping Products, Inc. v. NLRB, 741 F.2d 10 (2d Cir.1984). No charges were filed against Goodman in connection with these proceedings.

The 1984 NLRB order required that EGSC and GPPI: (1) recognize and bargain with the Union; (2) honor and implement all terms .of the CBA entered into by EGSC and the Union in April, 1979; (3) reimburse the Union for any payments due to the union benefit fund or otherwise owing pursuant to the CBA; and (4) make whole Union employees for losses suffered during the period in which GPPI and EGSC did not honor the agreement.

In December, 1984 GPPI ceased operations. Goodman filed an individual voluntary petition for relief under Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. Goodman listed the NLRB as an unsecured creditor for a disputed and undetermined amount of employee wages and benefits. On March 16, 1985, the bankruptcy court entered an Order of Discharge, discharging Goodman of all dis-chargeable debts pursuant to § 523 of the Code.

On April 17, 1985, EGSC and GPPI filed voluntary petitions for relief under Chapter 7 of the Bankruptcy Code. These petitions listed the NLRB as an unsecured creditor for a disputed and undetermined amount of employee wages and benefits. The NLRB filed proofs of claim on May 21, 1985. On July 3, 1985, the NLRB issued an unpublished supplemental Decision and Order assessing backpay and trust fund obligations against EGSC and GPPI, which was enforced by the Second Circuit in 1987. On August 16, 1985, the Bankruptcy Court entered orders closing the estates of EGSC and GPPI, pursuant to the trustees’ reports of no distribution. No discharge was granted since corporations are not entitled to a discharge under Chapter 7. 11 U.S.C. § 727(a)(1).

In June 1985, Goodman formed GASC, and became its sole shareholder. GASC commenced operations in September of 1985. On November 21, 1986, the NLRB issued a complaint and notice of hearing against EGSC, GPPI, Goodman and GASC. The complaint alleges that GPPI, GASC, and Goodman are alter egos of EGSC, and that all of the defendants have and continue to commit unfair labor practices by: (1) failing to comply with the 1984 NLRB Order; (2) failing to apply the terms of the CBA; (3) refusing to bargain with the Union; and (4) failing to produce information requested by the Union. On August 17, 1987, the NLRB amended the complaint to eliminate all pre-petition monetary claims against Goodman arising from the 1984 Board order against EGSC and GPPI.

BANKRUPTCY COURT PROCEEDINGS

On July 20, 1987, Goodman and GASC filed a complaint in bankruptcy court alleging that the NLRB and the Union were engaging in conduct in violation of the Court’s Discharge Order. The complaint seeks: (1) a declaration that the NLRB and the Union are seeking to enforce claims against Goodman and GASC which were discharged in bankruptcy; (2) a declaration that the attempted enforcement violates the Court’s Discharge Order; (3) an order permanently enjoining the NLRB and the Union from commencing or continuing actions to enforce the pre-petition obligations; and (4) sanctions for contempt.

On August 3, 1987, the bankruptcy court issued its Decision and Order with respect to the Union’s motion to dismiss, the NLRB’s motion for summary judgment, and Goodman and GASC’s cross-motion for summary judgment. Judge Hayes found that he could consider Goodman’s claims *59 under the bankruptcy court’s jurisdiction to enforce its discharge orders. While he found that GASC as a non-debtor could not invoke the bankruptcy court’s jurisdiction, he concluded that its claims could be adjudicated derivatively through Goodman’s lawsuit. With respect to the merits, Judge Hayes found that any continuing obligations under the CBA were rejected by the Chapter 7 trustee. While the NLRB appropriately submitted a claim for wage and benefit arrears based on the 1984 NLRB order, the claim submitted did not address the loss occasioned by failure to submit to collective bargaining. Judge Hayes rejected the NLRB’s argument that the loss occasioned by failure to submit to collective bargaining is not a “claim” under the bankruptcy law. He concluded that such a loss should have been included in the NLRB’s claim, and therefore cannot now be asserted against Goodman. He further held that GASC is the manifestation of Goodman’s fresh start in bankruptcy, and therefore the bargaining obligations could not be enforced against GASC.

With respect to the monetary obligations sought to be enforced by the NLRB, Judge Hayes held that the NLRB and the Union are seeking to enforce pre-petition obligations against Goodman and GASC, his after-acquired property. He apparently held that GASC is not the alter-ego of EGSC and GPPI, and refused to enforce the monetary obligations against GASC “in the guise of alter-ego liability”. Judge Hayes further refused to enforce the monetary obligations against Goodman in his capacity as principal of GASC.

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Related

Livecchi v. Gordon
513 B.R. 209 (W.D. New York, 2014)
In Re Goodman
873 F.2d 598 (Second Circuit, 1989)

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Bluebook (online)
90 B.R. 56, 1988 U.S. Dist. LEXIS 10299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-labor-relations-board-v-goodman-nywd-1988.