Victor and Josephine Laracca owned and operated a Foodtown supermarket for ten years. Foodtown employees were represented by the UFCW. Shortly after Foodtown closed, Laracca’s son Roberto opened a supermarket named Fantastic a few miles from the shuttered Foodtown.
While Roberto is sole owner of Fantastic, a $400,000 loan was guaranteed by Victor and Josephine and secured by mortgages on properties they owned. Fantastic was also initially stocked with groceries that were purchased using funds from a loan personally guaranteed by Victor and Josephine and secured by a mortgage on property Josephine owned with Roberto’s sister. The UFCW, which had represented Foodtown employees before it closed, argued that Fantastic was an alter ego of Foodtown and thus UFCW was entitled to represent Fantastic employees, too. Fantastic was also largely staffed by Foodtown managers and non-supervisory personnel.
The NLRB finds alter ego status where multiple entities have substantially identical management, business purpose, operations, equipment, customers, supervision, and ownership. More importantly, though, through a legal procedure called a 10(j) injunction, the Board successfully persuaded a federal court to order Fantastic to recognize UFCW as the union representing its employees and bargain with the UFCW for a union contract while the issue of alter ego status was being investigated. Consider the waste of time, energy, and money Fantastic must expend on what could be an exercise in futility. If Fantastic is not an alter ego to Foodtown, then the UFCW does not represent Fantastic employees, so why make Fantastic pretend its employees are unionized? Wouldn’t it be better to wait for the results of the investigation?