United States District Court, E.D. New York
TRUSTEES OF THE MOSAIC AND TERRAZZO WELFARE, PENSION, ANNUITY AND VACATION FUNDS, and TRUSTEES OF THE BRICKLAYERS & TROWEL TRADES INTERNATIONAL PENSION FUND, Plaintiffs,
HIGH PERFORMANCE FLOORS, INC., a New York Corporation, HIGH PERFORMANCE FLOORS, INC., a New Jersey Corporation, HPF, INC., 2 MAIN STREET, L.L.C, and 40 PARK PLACE LLC, Defendants.
MEMORANDUM & ORDER
M. GOLD United States Magistrate Judge.
Trustees of the Mosaic and Terrazzo Welfare, Pension, Annuity
and Vacation Funds and Trustees of the Bricklayers &
Trowel Trades International Pension Fund (the
“Funds”), bring this action pursuant to Section
502(a)(3) of the Employee Retirement Income Security Act of
1974 (“ERISA”), as amended 29 U.S.C. §
1132(a)(3), and Section 3401 of the Labor Management
Relations Act of 1947 (“LMRA”), as amended 29
U.S.C. § 185. Plaintiffs seek to collect employer
contributions they contend are owed to a group of employee
benefit funds for covered work performed by employees of
defendant HPF, Inc. (“HPF”).
High Performance Floors, Inc., a New Jersey corporation, and
High Performance Floors, Inc., a New York corporation
(collectively “High Performance”), are
signatories to a collective bargaining agreement (the
“CBA”) that requires contributions to the
plaintiff Funds. Plaintiffs contend that HPF is an alter ego
of, or single employer with, High Performance, that the labor
performed by HPF is as a result governed by the CBA, and that
contributions to the Funds are therefore due and owing for
the covered work performed by HPF employees.
parties consented to the assignment of this case to a
magistrate judge for all purposes pursuant to 28 U.S.C.
§ 636(c) and Federal Rule of Civil Procedure 73. Docket
Entry 34. A non-jury trial limited to the question of
liability was held over the course of three days in October
2016. The Court's findings of fact and conclusions of law
pursuant to Federal Rule of Civil Procedure 52 are set forth
in narrative form below. See 9 Moore's
Federal Practice § 52.13.
are trustees of the Mosaic and Terrazzo Welfare, Pension,
Annuity and Vacation Funds and the Bricklayers and Trowel
Trades International Pension Fund. Compl. ¶¶ 4-5,
Docket Entry 1. These funds were established pursuant to the
terms of collective bargaining agreements entered into
between the Mosaic, Terrazzo and Chemical Product Decorative
Finisher Masons Workers Association Local No. 7 of New York,
New Jersey & Vicinity (“Local 7”) and various
employers. Compl. ¶ 14. Local 7 is a union whose members
are tile, marble, and terrazzo workers. Tr.
Balzano, the principal of High Performance, founded the
company in December 1991. Tr. 361:5-9. High Performance is in
the business of floor installation, and its primary contract
is with Stonhard, Inc. (“Stonhard”), a resinous
floor vendor that engages companies like High Performance to
install its products. Tr. 361:10-362:9. High Performance is a
signatory to the CBA that requires contributions to the
plaintiff Funds for covered work.
defines covered work as, among other things, various types of
tile, ceramic, and resinous flooring installation performed
in specified counties of New York and New Jersey. Pls.'
Trial Ex. V, at Arts. II and IV. A schedule attached to the
CBA provides that, at least from 2009-2010, employers who are
signatories were required to contribute $28.06 per hour of
covered work to the plaintiff Funds. Pls.' Trial Ex. V, at
31-32. Balzano testified that he understood the CBA to
require benefit fund contributions for all covered work
performed by High Performance, regardless of whether the
owner or general contractor for a particular job required
that the work be performed with union labor. Tr. 383:6-384:9.
principal of defendant HPF, at least in name, is Harold
Sofield, who opened the company in May of 2012. Tr. 233:8-16.
HPF is not a signatory to the CBA. Plaintiffs, though,
contend that HPF was in fact formed by Balzano as a vehicle
for performing covered work for owners or general contractors
who did not require union labor, without making the benefit
fund contributions that would otherwise be required by the
CBA. Plaintiffs further argue that High Performance and HPF
are alter egos and constitute a single employer, and that
they are as a result jointly and severally liable to pay
contributions for covered work, even if that work was
performed through HPF.
Alter Ego Liability
alter ego doctrine “is designed to defeat attempts to
avoid a company's union obligations through a sham
transaction or technical change in operations.”
Local One, Amalgamated Lithographers of Am. v. Stearns
& Beale, Inc., 812 F.2d 763, 772 (2d Cir. 1987). If
entities are determined to be alter egos of each other,
“‘then each is bound by the collective bargaining
agreements signed by the other, ' and ‘thereby
obligated to honor the pension [and welfare benefit]
contributions terms' of the agreement.”
Plumbers, Pipefitters and Apprentices Local Union No. 112
Pension, Health and Educational and Apprenticeship Plans v.
Mauro's Plumbing, Heating and Fire Suppression, Inc.
(“Mauro's Plumbing”), 84 F.Supp.2d
344, 349 (N.D.N.Y. 2000) (quoting Lihli Fashions Corp.,
Inc. v. N.L.R.B., 80 F.3d 743, 748 (2d Cir. 1996)). To
determine whether two companies are alter egos, courts
“focus on commonality of (i) management, (ii)
business purpose, (iii) operations, (iv) equipment, (v)
customers, and (vi) supervision and ownership” between
the subject entities. N.Y. State Teamsters Conference
Pens. & Ret. Fund v. Express Servs., Inc., 426 F.3d
640, 649 (2d Cir. 2005), (quoting Newspaper Guild of N.Y.
v. N.L.R.B., 261 F.3d 291, 294 (2d Cir. 2001)); see
also Local One Amalgamated Lithographers of Am., 812
F.2d at 772.
Single Employer Liability
N.L.R.B. developed the single employer doctrine, “which
treats two nominally independent enterprises as a single
employer, in order to protect the collective bargaining
rights of employees.” Murray v. Miner, 74 F.3d
402, 404 (2d Cir. 1996). An entity that has signed a CBA and
one that has not will be held jointly and severally liable
for the signatory's obligations under the CBA if the
single employer test is satisfied and the two entities
“together  represent an appropriate employee
bargaining unit.” Lihli Fashions Corp., 80
F.3d at 747.
alter ego and single employer doctrines “are
‘conceptually distinct.' The focus of the alter ego
doctrine, unlike that of the single employer doctrine, is on
‘the existence of a disguised continuance or an attempt
to avoid the obligations of a collective bargaining agreement
through a sham transaction or technical change in
operations.'” Lihli Fashions Corp., 80
F.3d at 748. The single employer doctrine, in contrast,
focuses on determining if the entities “are part of a
single integrated enterprise, ” and is
“characterized by absence of an arm's length
relationship found among unintegrated companies.”
Id. at 747 (internal quotation marks omitted).
two entities constitute a “single employer” is
determined by four factors enumerated by the Supreme Court:
(1) interrelation of operations, (2) common management, (3)
centralized control of labor relations, and (4) common
ownership. United Union of Roofers, Waterproofers, Allied
Workers, Local No. 210, AFL-CIO v. A.W. Farrell & Son,
Inc. (“United Union of Roofers”),
2012 WL 4092598, at *9 (W.D.N.Y. Sept. 10, 2012) (citing
Radio & Television Broad. Technicians Local Union
1264 v. Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256
(1965) (per curiam)). See also South Prairie Constr. v.
Local No. 627, Intern. Union of Operating Eng'rs,
AFL-CIO, 425 U.S. 800, 802-803 (1976) (per curiam)). The
Second Circuit has held that two additional factors are
properly considered as well: (5) use of common office
facilities and equipment and (6) family connections between
or among the various enterprises. United Union of
Roofers, Waterproofers, and Allied Workers Local No. 210,
AFL-CIO v. A.W. Farrell & Son, Inc. (“A.W.
Farrell & Son, Inc.”), 547 Fed.Appx. 17, 19
(2d Cir. 2013) (quoting Lihli Fashions Corp., 80
F.3d at 747).
single employer status depends on all the circumstances of
the case;” no one factor is dispositive and not all
factors must be present. Lihli Fashions Corp., 80
F.3d at 747 (quoting N.L.R.B. v. Al Bryant, Inc.,
711 F.2d 543, 551 (3d Cir. 1983)). Control of labor
relations, however, is “central.” A.W.
Farrell & Son, Inc., 547 Fed.Appx. at 19 (quoting
Murray, 74 F.3d at 404). See also Trs. of Empire
State Carpenters v. Dykeman Carpentry, Inc., 2014 WL
976822, at *3 (E.D.N.Y. Mar. 12, 2014).
Single Bargaining Unit
finding that two entities constitute a single employer is a
necessary but not a sufficient condition for imposing joint
and several liability. In addition, the employees of the two
entities must constitute a single bargaining unit. See
Brown v. Sandimo Materials, 250 F.3d 120, 128 n.2 (2d
Cir. 2001); Lihli Fashions Corp., 80 F.3d at
747-748; Local One Amalgamated Lithographers of Am.,
812 F.2d at 769.
analyzing whether the employees of two different entities
constitute a single bargaining unit, consideration
“shifts from the control, structure and ownership of
the employer to the community of interests of the
employees.” Ferrara v. Oakfield Leasing Inc.,
904 F.Supp.2d 249, 264 (E.D.N.Y. 2012) (quoting Cuyahoga
Wrecking Corp. v. Laborers Int'l Union of North Am.,
Local Union # 210, 644 F.Supp. 878, 882 (W.D.N.Y.
1986)). Courts “look for a ‘community of
interests' among the relevant employees, and
‘factors such as bargaining history, operational
integration, geographic proximity, common supervision,
similarity in job function and degree of employee
interchange.'” Sandimo Materials, 250 F.3d
at 128 n.2 (citations omitted).
in this district have found that employees comprise a single
bargaining unit where the “contributions sought [were]
for the same job classification . . . and for the same type
of work, ” Bourgal v. Robco Contracting
Enterprises, Ltd., 969 F. Supp. 854, 863
(E.D.N.Y. 1997), and where that same type of work is
performed in the same geographical area, Ferrara,
904 F.Supp.2d at 264. A single appropriate bargaining unit
may also be found where “the companies exchanged
employees, the working conditions were the same at both
companies, and the employees performed the same job” at
both companies. LaBarbera v. C. Volante Corp., 164
F.Supp.2d 321, 326 (E.D.N.Y. 2001).
Burden of Proof
argue that plaintiffs must prove the elements of alter ego
and single employer status by clear and convincing evidence,
because each in essence involves an allegation of fraud.
Defendants' Pretrial Memorandum (“Defs.'
Mem.”) at 7-9, Docket Entry 42. While defendants
concede they have uncovered no Second Circuit case law on the
issue, they rely upon a decision of the Third Circuit holding
that because “alter ego is akin to and has elements of
fraud, ” it “must be shown by clear and
convincing evidence.” See Kaplan v. First
Options, 19 F.3d 1503, 1522 (3d Cir. 1994). See also
Trustees of Nat. Elevator Industry Pension, Health Benefit
and Educational Funds v. Lutyk, 332 F.3d 188, 194 (3d
Cir. 2003) (quoting Kaplan, 19 F.3d at
precedents on which defendants rely are at least arguably
distinguishable, because each involves the more commonplace
question of whether a court should “pierce the
corporate veil” and hold an individual accountable for
the debts of a corporation. Although similar, the alter ego
doctrine invoked by plaintiffs here differs from traditional
“veil-piercing” analysis in that it revolves
around the avoidance of obligations imposed by a CBA. See
Ret. Plan of the UNITE HERE Nat'l Ret. Fund v. Kombassan
Holdings A.S., 629 F.3d 282, 288 (2d Cir. 2010).
precedent from within the Second Circuit suggests that only a
preponderance of the evidence is required to establish alter
ego or single employer status. In one case involving
defendants alleged to be both alter egos and a single
employer for the purposes of evading union obligations, a
bench trial was held and the court, in rejecting single
employer liability, noted that “plaintiffs have failed
to establish by a preponderance of the evidence that
RCS is the alter ego of AWF, or that AWF and RCS constitute a
single employer.” United Union of Roofers,
2012 WL 4092598, at *16 (emphasis added). The Second Circuit
affirmed, noting in dicta that, “plaintiffs do not
dispute that they bore the [preponderance of the evidence]
burden of proof at trial.” A.W. Farrell & Son,
Inc., 547 Fed. App'x. at n.2.
required to decide, I would conclude that plaintiffs may
establish alter ego or single employer status by a
preponderance of the evidence. I reach this conclusion
because the public policy concerns underlying ERISA are
substantial, leading courts to adopt a “test of alter
ego status [that] is flexible, allowing courts to weigh the
circumstances of the individual case.” Gesualdi v.
Juda Constr., Ltd., 2011 WL 5075438, at *8, (S.D.N.Y.
Oct. 25, 2011) (quoting Kombassan Holding A.S., 629
F.3d at 288). This flexibility is available so that courts
may “observe a general federal policy of piercing the
corporate veil when necessary” to protect employee
benefits. Kombassan Holding A.S., 629 F.3d at 288
(quotation marks and citations omitted). Thus,
“[c]ourts have without difficulty disregarded form for
substance where ERISA's effectiveness would otherwise be
undermined.” Lowen v. Tower Management, Inc.,
829 F.2d 1209, 1220 (2d Cir. 1987). Moreover, when
determining either alter ego or single employer status, no
one factor is ...