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DECISIONS Young’s e-mail address is gyoungnlj.com. granting enforcement of a National Labor Relations Board (NLRB) order, the 5th U.S. Circuit Court of Appeals ruled on July 1 that a corporation’s two stockholders could not avoid the terms of a collective bargaining agreement by setting up a new corporation that was not bound by the agreement. J. Vallery Electric Inc. v. National Labor Relations Bd., No. 02-60030. A husband and wife were the sole shareholders of Valley Electric, an electrical contracting service. Although Valley agreed to be bound by the collective bargaining agreement negotiated with the International Brotherhood of Electrical Workers, it employed nonunion labor at nonunion wages for its residential projects. After many complaints by the union about Valley’s use of nonunion labor, the couple incorporated a new company, J. Vallery Electric Inc., in which they were again the sole shareholders. J. Vallery used the same facility and most of the same employees as Valley. Ownership of Valley was transferred to the husband’s father. J. Vallery did not apply the Valley labor agreement to its employees. After the union filed charges, an NLRB judge found that the two companies were alter egos, that J. Vallery’s disregard of the labor agreement constituted an unfair labor practice and that it must recognize the agreement and bargain with the union. Affirming, the 5th Circuit found substantial evidence that J. Vallery held itself out as a continuation of Valley. Both companies were owned by the same shareholders and did basically the same type of work. Most importantly, the transfers of Valley to the husband’s father and its property to J. Vallery without compensation made it apparent that the two companies were the same.

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