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Under the test for determining whether owners of operators of a corporation are personally liable for the unfair labor practices of the corporation, the corporate veil may be pierced when: (1) there is such unity of interest, and lack of respect given to the separate identity of the corporation by its shareholders, that the personalities and assets of the corporation and the individuals are indistinct, and (2) adherence to the corporate form would sanction a fraud, promote injustice, or lead to an evasion of legal obligations.
Respondents Carole Ann and Paul Paolicelli owned West Dixie Enterprises, Inc, an electrical contracting corporation. After the corporation refused to hire job applicants because of their union membership and after it was discovered that the corporation engaged in other discriminatory practices against current employees who were union members, the National Labor Relations Board (NLRB) found respondents, as alter egos of the corporation, liable for violating the National Labor Relations Act, 29 U.S.C.S. §§ 158(a)(1) and 158(a)(3). Respondents appealed, raising only the jurisdictional and alter ego issues.
The court affirmed, holding that the NLRB had jurisdiction over the action, because Congress had bestowed upon it jurisdiction to prevent persons from engaging in any unfair labor practice which affected commerce. The court further found that respondents could be held personally liable for the corporation's unfair labor practices, because they commingled their personalties and assets with those of the corporation and refusing to find personal liability would sanction a fraud, promote injustice or lead to an evasion of legal obligations.