Chicago Regional Council of Carpenters Pension Fund et al v. Carlson Constructors Corp. et al
MEMORANDUM Opinion and Order: For the reasons in the accompanying Opinion, Plaintiffs' Motion for Summary Judgment 83 is granted. Defendants' Cross-Motion for Summary Judgment 101 is denied, although the Court finds that there are qu estions of material fact as to whether Plaintiffs are equitably estopped from enforcing the Brothers CBA. Defendants' Motion for Leave to File Supporting Documents under Seal 102 is granted. The parties are directed to submit a status report by 4/21/2021 advising the Court on proposed next steps and advising whether the parties are amenable to a referral to the Magistrate Judge to conduct a settlement conference. Signed by the Honorable Franklin U. Valderrama on 3/31/2021. Mailed notice (axc).
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
CHICAGO REGIONAL COUNCIL OF
CARPENTERS PENSION FUND,
Judge Franklin U. Valderrama
CARLSON CONSTRUCTORS CORP.,
MEMORANDUM OPINION AND ORDER
Plaintiffs, the Chicago Regional Counsel of Carpenters Pension Fund (Pension
Fund), the Chicago Regional Council of Carpenters Welfare Fund (Welfare Fund), the
Chicago and Northeast Illinois Regional Counsel of Carpenters Apprentice and
Trainee Program (Trainee Fund), and the Labor/Management Union Carpentry
Cooperation Promotion Fund (Labor/Management Fund), and their respective
trustees (collectively, the Trust Fund), filed suit against Carlson Constructors Corp.
(Constructors), Carlson Brothers, Inc. (Brothers) and CB Industries, Inc. (Industries)
(collectively, the Companies) under the Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. § 1001, et seq. R. 22, Am. Compl. 1 The Trust Funds are multiemployer funded benefit funds governed by federal law, and collect and manage
to the docket are indicated by “R.” followed by the docket number or filing name,
and where necessary, a page or paragraph citation.
contributions from employers pursuant to collective bargaining agreements made
between employers and the Chicago and Northeast Illinois District Council of
Carpenters, successor of the Chicago District Council of Carpenters (the Union). The
Trust Funds assert that all of the Companies are bound by the collective bargaining
agreements with the Union based on the single-employer and alter-ego doctrines, and
thus are all required to contribute to the Trust Funds based upon hours worked by
employees and/or subcontractors. Before the Court are the parties’ motions for
summary judgment. R. 83, Pls.’ Mot. Summ. J.; R. 101, Defs.’ Cross-Mot. Summ. J. 2
For the reasons discussed below, Plaintiffs’ Motion for Summary Judgment is
granted. The Court finds that the contract between Brothers and the Union signed in
1994 (Brothers CBA) did not terminate until 2019. The Court also finds that
Defendants are a single employer. Defendants’ Cross-Motion is denied, although the
Court finds that there is a question of material fact as to whether Plaintiffs are
equitably estopped from enforcing the Brothers CBA.
The facts herein are undisputed unless otherwise specified. In deciding crossmotions for summary judgment, the Court views the facts in the light most favorable
to the respective non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986); Hanners v. Trent, 674 F.3d 683, 691 (7th Cir. 2012).
So, when the Court evaluates Plaintiffs’ motion for summary judgment, Defendants
the briefs, Local Rule 56.1 statements and responses, and evidence filed in
support, consist of more than 2,800 pages. A comprehensive opinion was necessary in light of
the voluminous record.
get the benefit of reasonable inferences; conversely, when evaluating Defendants’
motion, the Court gives Plaintiffs the benefit of the doubt. On summary judgment,
the Court assumes the truth of the facts presented by the parties, but does not vouch
for them. Arroyo v. Volvo Grp. N. Am., LLC, 805 F.3d 278, 281 (7th Cir. 2015).
Plaintiffs are multi-employer funded benefit funds that provide pension,
health, and other benefits to Union members and their families. R. 103, Defs.’ Resp.
PSOF ¶ 1. 3 Plaintiffs collect and manage fringe benefit contributions from employers
bound by the Area Agreement with the Union. Id. ¶¶ 2–6.
Brothers was formed by brothers Mark Carlson (Mark) and Robb Carlson
(Robb), who are each 50% owners. R. 103, Defs.’ Resp. PSOF ¶¶ 14–15. Brothers is a
general contractor/project manager for governmental and private sector construction
projects. Id. ¶¶ 28–30, 32. Mark and Robb operated Brothers; Mark was responsible
for business development and Robb oversaw work on the construction projects. Id.
¶¶ 76, 77. On August 25, 1994, Brothers signed an agreement with the Union
(Brothers CBA). Id. ¶ 71. In 2000, Brothers and Plaintiffs reached a settlement
to the parties’ Local Rule 56.1 Statements of Fact will be identified as follows: “R.
93, PSOF” for the public, redacted Plaintiffs’ statement of facts [“R. 87 (Sealed), PSOF” for
the unredacted version]; “R. 103, Defs.’ Resp. PSOF” for the public, redacted Plaintiffs’
response to the Defendants’ statement of facts; “R. 107, DSOAF” for the public, redacted
Defendants’ statement of additional facts; [“R. 108 (Sealed), DSOAF” for the unredacted
version]; “R. 117, Pls.’ Resp. DSOAF” for the public, redacted Plaintiffs’ Response to
Defendants’ statement of additional facts; “R. 105, DSOF” for the public, redacted
Defendants’ statement of facts in support of their motion for summary judgment [“R. 106
(Sealed), DSOF” for the unredacted version]; “R. 116 (Sealed), Pls.’ Resp. DSOF” for the
unredacted Plaintiffs’ response to the Defendants’ statement of facts [no redacted version
was filed]; “R. 116 (Sealed), Pls.’ SOAF” for the unredacted Plaintiffs’ statement of additional
facts [no redacted version was filed]; and “R. 121, Defs.’ Resp. Pls.’ SOAF” for the public,
redacted Defendants’ response to the Plaintiffs’ statement of additional facts.
related to an audit conducted by Plaintiffs. R. 105, DSOF ¶ 15; see also R. 116
(Sealed), Pls.’ Resp. DSOF ¶ 15. The recitals to the settlement agreement (drafted by
Plaintiffs’ prior counsel) stated that the Brothers CBA terminated on May 31, 1998.”
R. 105, DSOF ¶ 16 (citing R. 106-3 (Sealed) at 18 (Termination Recital)). After
receiving additional documents from Brothers as part of the audit, Plaintiffs’ auditor
submitted a report dated September 22, 1999 that stated that the Brothers CBA
terminated as of May 31, 1998. Id. ¶ 12 (citing R. 106-3 (Sealed) at 23 (Audit Report)).
Plaintiffs requested to conduct audits of Brothers in 2002 and again in 2008. Id.
¶¶ 19, 25; see also R. 116 (Sealed), Pls.’ Resp. ¶¶ 19, 25. Each time, Defendants
informed Plaintiffs’ auditor that the Brothers CBA had terminated, and never heard
back from Plaintiffs or their auditors about pursuing the audits. R. 105, DSOF ¶¶ 20,
25; see also R. 116 (Sealed), Pls.’ Resp. ¶¶ 20, 25. Brothers believed that it was not
subject to the Area Agreement and had no obligation to submit to an audit by
Plaintiffs. R. 105, DSOF ¶ 22. Plaintiffs’ internal systems show that Brothers was
bound by the Area Agreements, but that in 2002 and 2008 it was not performing work
within the jurisdiction of the Union. R. 105, DSOF ¶¶ 12, 22, 25, 27; R. 116 (Sealed),
PSOAF ¶¶ 3–4.
Mark and Robb formed Constructors in 2000 because they wanted to pursue
projects that offered preferences to women-owned businesses. R. 103, Defs.’ Resp.
PSOF ¶¶ 19–20. On May 29, 2001, Constructors signed an agreement with the Union
at Mark and Robb’s direction. Id. ¶ 73. In the beginning, Mark and Robb decided to
use Constructors as a payroll company for Brothers. Id. ¶ 24. In approximately 2011,
Constructors received its first project so Mark and Robb made the decision to have
Industries begin acting as the payroll company for Constructors and Brothers. Id.
Like Brothers, Constructors started operating as a general contractor/project
manager for governmental and private sector construction projects. Id. ¶¶ 28–31. On
paper, Mark’s wife (Nancy Carlson (Nancy)) and Robb’s wife (Laurel Carlson
(Laurel)) each owned 50% of Constructors. Id. ¶ 20.
Although Nancy and Laurel were Constructors’ president and secretary,
respectively, for a period of time, it was Mark and Robb who controlled Constructors,
with Mark responsible for business development and Robb responsible for overseeing
work on the projects. R. 103, Defs.’ Resp. PSOF ¶¶ 76, 80. When Mark and Robb had
an interest in bidding on projects offering a preference to minority woman-owned
businesses, they made Rosalia Turner (Defendants’ Latina controller) the new
president of Constructors. Id. ¶¶ 66, 79. From the time Constructors was formed until
her deposition in 2019, no one reported to Laurel what Constructors was doing nor
did she know who ran the day-to-day operations of the business. Id. ¶ 21. Laurel was
given corporate resolutions to sign but had no understanding of what those
documents were. Id. ¶ 22. Likewise, Nancy had no control over Constructors; instead,
she performed the same bookkeeping-type work for Constructors that she performed
for Brothers. Id. ¶ 25. Robb acquired Nancy’s 50% interest in Constructors in 2015.
Id. ¶ 20. Robb supervised Defendants’ project managers regardless of whether the
project was contracted for Brothers or Constructors, and Mark bid on projects for both
Brothers and Constructors. Id. ¶ 80. Mark decided whether a project would become a
“Brothers project” or a “Constructors project.” Id. Mark and Robb were also
responsible for hiring and firing employees such as project managers and the
Companies’ controller. Id. ¶¶ 66, 74. However, site superintendents and quality
supervisors hired employees for various projects. R. 117, Pls.’ Resp. DSOAF ¶ 22.
Mark and Robb formed Industries in 1998. Although Industries was originally
formed to act as a general contractor, Industries became the captive payroll company
for Brothers and Constructors in 2011. R. 103, Defs.’ Resp. PSOF ¶¶17, 18. Since that
time, the hours worked by the project managers, superintendents, comptroller, and
the other employees who performed work for Constructors and Brothers were
reported to Industries, which then issued payroll checks to Defendants’ employees.
Id. ¶¶ 62, 63.
Defendants use a common website (wwww.carlson-construction.net) to market
themselves. R. 103, Defs.’ Resp. PSOF ¶¶ 28–33. Defendants work out of the same
office space, have a shared in-house controller, and work with a shared receptionist.
Id. ¶¶ 54, 63, 66. Defendants also share the same computers, server, and cell phone
plan, and the employees use the same vehicles regardless of whether the project is
through Constructors or Brothers. Id. ¶¶ 26, 55. Defendants had combined financial
statements, were all borrowers on the same loan agreements, and maintained a
common line of credit. Id. ¶¶ 56–58, 70. Mark, Robb and Nancy were authorized
signors on the accounts for Brothers, Constructors, and Industries. Id. ¶ 49.
Defendants were all insured and bonded through common insurance policies. See id.
¶ 38. Finally, the Companies all had common professional service providers,
(including shared registered agents, shared attorneys, shared accountants, shared
insurance brokers), and the Companies banked at the same banks. Id. ¶¶ 37, 47, 65,
Plaintiffs completed an audit of Defendants for the period July 1, 2014 through
December 31, 2017 (the Audit Period). R. 103, Defs.’ Resp. PSOF ¶¶ 5–9, 12, 13
Plaintiffs now seek to hold all Defendants liable for allegedly breaching the Area
Agreement by subcontracting bargaining unit work to non-union subcontractors. Id.
In 2014, Constructors bid its last job, located at Ft. McCoy in Wisconsin (Ft.
McCoy Project). R. 117, Pls.’ Resp. DSOAF ¶ 5. By September 2014, Constructors’ only
active project was the Ft. McCoy Project. Id. ¶ 9. Around July 3, 2017, Constructors
received the substantial completion notification from the government. Id. Thereafter,
Constructors completed a few unfinished items and 14 hours of warranty work. Id.
Neither Constructors nor Brothers employed bargaining unit personnel during the
Audit Period. R. 105, DSOF ¶ 40; see also R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 40.
Standard of Review
Summary judgment must be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” FED. R. CIV. P. 56(a). The party seeking summary judgment has the
initial burden of showing that there is no genuine dispute and that they are entitled
to judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 451, 460
(7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v.
Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party
must then “set forth specific facts showing that there is a genuine issue for trial.”
Anderson, 477 U.S. at 256. A genuine issue of material fact exists if “the evidence is
such that a reasonable jury could return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summary judgment
motions, courts must view the facts and draw reasonable inferences in the light most
favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). The court
may not weigh conflicting evidence or make credibility determinations, Omnicare,
Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must consider
only evidence that can “be presented in a form that would be admissible in evidence.”
FED. R. CIV. P. 56(c)(2).
ERISA was enacted “to protect employee pension plans from underfunding.”
Loc. 705 Int’l Bhd. of Teamsters Pension Fund v. Gradei’s Express Co., 2020 WL
1530737, at *3 (N.D. Ill. Mar. 31, 2020) (citing Cent. States. Se. & Sw. Areas Pension
Fund v. Midwest Motor Exp., Inc., 181 F.3d 799, 803 (7th Cir. 1999)). As amended by
the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381
et seq., ERISA “requires an employer to make contributions to a multiemployer
pension plan ‘in accordance with the terms and conditions of such a plan.’” Bd. of Trs.
v. 6516 Ogden Ave, LLC, 170 F. Supp. 3d 1179, 1182 (N.D. Ill. 2016) (quoting 29
U.S.C. § 1145). ERISA defines a multi-employer pension plan as a plan “(i) to which
more than one employer is required to contribute, [and] (ii) which is maintained
pursuant to one or more collective bargaining agreements between one or more
employee organizations and more than one employer . . . .” 29 U.S.C.A. § 1002(37)(A).
Motion to Strike
When “a party moves for summary judgment in the Northern District of
Illinois, it must submit a memorandum of law, a short statement of undisputed
material facts [(L.R. 56.1 Statement)], and copies of documents (and other materials)
that demonstrate the existence of those facts.” ABC Acquisition Co., LLC v. AIP Prod.
Corp., 2020 WL 4607247, at *7 (N.D. Ill. Aug. 11, 2020) (citing N.D. Ill. Local R.
56.1(a)). The L.R. 56.1 statement must cite to specific pages or paragraphs of the
documents and materials in the record. Id. (citing Ammons v. Aramark Unif. Servs.,
Inc., 368 F.3d 809, 818 (7th Cir. 2004)). Under Local Rule 56.1(b)(3), the nonmovant
must counter with a response to the separate statement of facts, and either admit
each fact, or, “in the case of any disagreement, specific references to the affidavits,
parts of the record, and other supporting materials relied upon.” N.D. Ill. Local R.
56.1(b)(3)(B). The nonmoving party may also present a separate statement of
additional facts “consisting of short numbered paragraphs, of any additional facts
that require the denial of summary judgment, including references to the affidavits,
parts of the record, and other supporting materials relied upon.” N.D. Ill. Local R.
56.1(b)(3)(C). “All material facts set forth in the statement required of the moving
party will be deemed to be admitted unless controverted by the statement of the
opposing party.” Id.; see also Daniels v. Janca, 2019 WL 2772525, at *1–2 (N.D. Ill.
July 2, 2019). Similarly, “[i]f additional material facts are submitted by the opposing
party . . ., the moving party may submit a concise reply in the form prescribed in that
section for a response.” N.D. Ill. Local R 56.1(a). If the movant fails to respond
properly to the opposing party’s statement of additional facts, those facts will be
deemed admitted. Id. District courts have discretion to enforce strict compliance with
Local Rule 56.1’s requirements. Curtis v. Costco Wholesale Corp., 807 F.3d 215, 219
(7th Cir. 2015); see also Hanover Ins. Co. v. House Call Physicians of Ill., 2016 WL
1588507, at *2 (N.D. Ill. Apr. 19, 2016) (collecting cases).
Defendants move to strike portions of Plaintiffs’ Response to Defendants’
Statement of Facts (R. 116) and of Plaintiffs’ Response to Defendants’ Statement of
Additional Facts (R. 117), contending that Plaintiffs improperly engage in argument
in violation of Local Rule 56.1. R. 122, Defs.’ Reply at 2. Defendants are correct that
“[l]egal arguments do not go in the separate statements of fact.” ABC Acquisition,
2020 WL 4607247, at *7 (citing Judson Atkinson Candies, Inc. v. Latini-Hohberger
Dhimantec, 529 F.3d 371, 382 n.2 (7th Cir. 2008) (“[i]t is inappropriate to make legal
arguments in a Rule 56.1 statement of facts”); Rivera v. Guevara, 319 F. Supp. 3d
1004, 1017–18 (N.D. Ill. 2018)). True, some of Plaintiffs’ Local Rule 56.1 statements
and responses include legal arguments, as well as arguments about what inferences
should be drawn from facts. But so too do some of Defendants’ Local Rule 56.1
statements and responses. The Court will not consider the portions of the parties’
Local Rule 56.1 submissions that make legal arguments and assert legal conclusions.
See Rivera, 319 F. Supp. 3d at 1018 (collecting cases disregarding or affirming the
decision to disregard argumentative statements of fact). But the Court declines to
strike the noncompliant paragraphs, “as doing so would in some cases throw out a
properly supported assertion along with a legal argument or conclusion.” Id. Rather,
the Court will consider the properly supported factual assertion but disregards the
portion of any factual statement that contains legal arguments or conclusions. See id.
(citing Minn. Life Ins. Co. v. Kagan, 847 F. Supp. 2d 1088, 1093 (N.D. Ill. 2012)
(denying motion to strike portions of Local Rule 56.1 statements containing legal
conclusions but disregarding conclusions); Phillips v. Quality Terminal Servs., LLC,
855 F. Supp. 2d 764, 771–72 (N.D. Ill. 2012) (same)). Where any such facts are
material to the Court’s analysis, the Court notes them within this Opinion.
Additionally, Defendants ask the Court to strike several of Plaintiffs’
Statements of Additional Facts submitted in support of Plaintiffs’ Response to
Defendants’ Summary Judgment Motion, arguing that they support Plaintiffs’ own
Summary Judgment Motion rather than their Response to Defendants’ Motion. Defs.’
Reply at 3–4. The Court agrees. Courts should not “deny a party a chance to respond
to new arguments or facts raised for the first time in a reply brief in support of a
motion for summary judgment.” Physicians Healthsource, Inc. v. A-S Medication
Sols., LLC, 950 F.3d 959, 968 (7th Cir. 2020). Although Local Rule 56.1(b)(3)(C)
allows the nonmovant to submit a statement of additional facts in opposition to a
summary judgment motion, Local Rule 56.1 does not allow the movant to submit
additional facts as part of their reply in support of their own motion. Doing so would
deny the nonmovant the opportunity to respond to those additional facts. Although
parsing which statements support a party’s own motion versus its response can be
complicated when the parties cross-move for summary judgment, in this instance, it
is clear that some of Plaintiffs’ statements of additional facts are included and relied
upon in support of their own motion, rather than in their response to Defendants’
motion. See R. 118, Pls.’ Resp. at 11, 15, 17–18, 20–21, 23 (citing R. 116 (Sealed),
PSOAF ¶¶ 9–13, 18–20). The Court disregards any new material included in
Plaintiffs’ Statement of Additional Fact that supports Plaintiffs’ Reply. See ABC
Acquisition, 2020 WL 4607247, at *7 (citing Narducci v. Moore, 572 F.3d 313, 324
(7th Cir. 2009); Physicians Healthsource, 950 F.3d at 968 (7th Cir. 2020)).
Finally, Plaintiffs also take issue with Defendants’ Local Rule 56.1
submissions. Specifically, Plaintiffs argue that the Court should deem admitted a
number of Plaintiffs’ Rule 56.1 Statements because Defendants “merely deny the
statement of fact (or sometimes just a portion of it) without any supporting authority.”
Pls.’ Resp. at 10. As discussed above, the Local Rules require the nonmovant to cite
to record evidence when disputing any statement of fact. N.D. Ill. Local R.
56.1(b)(3)(B). As discussed above, courts in this District routinely deem facts
admitted where the nonmovant fails to cite to admissible record evidence in support
of the denial. See Curtis, 807 F.3d at 218–19 (affirming district court’s discretion in
deeming facts admitted where opposing party “failed to admit or deny facts and
provided only boilerplate objections, such as ‘relevance’ . . . [and m]ost
importantly, . . . failed to provide citation to any admissible evidence in support of his
denials” in violation of Local Rule 56.1(b)(3)(B)); see also Daniels, 2019 WL 2772525,
at *1–2 (N.D. Ill. July 2, 2019) (collecting Seventh Circuit cases affirming district
courts’ discretion to deem statements admitted when nonmovant fails to comply with
Local Rule 56.1(b)(3)(B)). Plaintiffs contend that the Court should deem admitted
statements where Defendants cite not to record evidence, but rather to Defendants’
Statement of Additional Facts (R. 107) or to its Statement of Facts in Support of
Summary Judgment (R. 105) rather than to the record evidence. Pls.’ Resp. at 10 n.5.
The Court agrees with Plaintiffs. “Local Rule 56.1 requires citations to the record
evidence rather than cross reference to a reference to a citation; using a cross
reference saves counsel time but offloads on the court the burden of identifying what
is factually disputed and whether the dispute is material.” Rivera, 319 F. Supp. 3d at
1019 (citing Schlessinger v. Chicago Hous. Auth., 130 F. Supp. 3d 1226, 1228 (N.D.
Ill. 2015)). Therefore, to the extent either party disputes a statement of fact but fails
to cite to record evidence (including where they include only a cross-reference to
another Local Rule 56.1 filing), the Court disregards the denials and deems those
statements admitted. Where any such facts are material to the Court’s analysis, the
Court notes them within this Opinion.
Plaintiffs’ Motion: Brothers CBA
Plaintiffs argue that the Court should grant partial summary judgment in
favor of Plaintiffs, finding that Brothers is bound by the CBA between it and the
Union (Brothers CBA) because Brothers is a signatory to the Brothers CBA. R. 86,
Pls.’ Br. at 9 (citing R. 93, PSOF ¶ 71). Defendants counter that the Brothers CBA
terminated on May 31, 1998, and therefore the Court must deny Plaintiffs’ summary
judgment motion. R. 110, Defs.’ Resp. at 2 (citing R. 105, DSOF ¶¶ 9, 12–16).
Alternatively, Defendants argue that the doctrine of equitable estoppel warrants
summary judgment in their favor as to Brothers. R. 101, Defs.’ Mot. Summ. J. at 2.
Termination of the CBA
It is undisputed that Brothers signed a CBA with the Union on August 25,
1994 (Brothers CBA). R. 103, Defs.’ Resp. PSOF ¶ 71. However, the parties disagree
as to whether the record evidence demonstrates that the CBA terminated in 1998 or
in 2017. See Defs.’ Resp. at 2; Pls.’ Resp. at 2–3. The Court agrees with Plaintiffs that
Defendants are barred from pursuing a 1998 termination defense because
Defendants have failed to establish “incontestable evidence” in support of
Termination of a contract is not presumed, so Defendants bear the burden of
establishing that the CBA was terminated. Cent. States, Se. & Sw. Areas Pension
Fund v. Sara Lee Bakery Grp., Inc., 2010 WL 6614902, at *5 (N.D. Ill. July 12,
2010), report and recommendation adopted sub nom. Cent. States v. Sara Lee Bakery
Grp., Inc., 2011 WL 862040 (N.D. Ill. Mar. 10, 2011). What’s more, as Plaintiffs
correctly point out, Section 515 of ERISA limits an employer’s contract defenses, and
multiple courts in this District “have held that a contract termination defense is only
available if the termination is incontestable, and when the evidence of termination is
not definitive, § 515 of ERISA bars consideration of the termination defense.” Id.;
Cent. States, Se. & Sw. Areas Pension Fund v. Kabbes Trucking Co., 2004 WL
2644515, at *18 (N.D. Ill. Nov. 18, 2004); Chicago Dist. Council of Carpenters Pension
Fund v. Royal Components, Inc., 1995 WL 470270, at *2 (N.D. Ill. Aug. 4, 1995); see
also Carpenters Health & Welfare Trust v. Bla–Delco Const. Inc., 8 F.3d 1365, 1369
(9th Cir. 1993); Residential Reroofers Loc. 30-B Health & Welfare Fund of
Philadelphia & Vicinity v. A & B Metal & Roofing, Inc., 976 F. Supp. 341, 348 (E.D.
Moreover, Plaintiffs are also correct that pension trusts typically are not
themselves parties to collective bargaining agreements but are rather third-party
beneficiaries to such agreements. Royal Components, 1995 WL 470270, at *1 (citing
Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148
(7th Cir. 1989)). Usually, when there is a flaw in contract formation, a third-party
beneficiary gets nothing, just like the parties. Gerber Truck, 870 F.2d at 1151. But
“unlike most third-party beneficiaries, pension trusts do not take contracts as they
find them.” Royal Components, 1995 WL 470270, at *1 (citing Gerber Truck, 870 F.2d
at 1151) (emphasis in original). Rather, in a trust fund action, “if the employer simply
points to a defect in the formation of the contribution agreement—such as fraud in
the inducement, illegality, oral promises to disregard the text, or effective
termination—the employer is still bound by its promise to the pension trusts.” Id.
(emphasis in original); see also Gerber Truck, 870 F.2d at 1149) (a pension fund is
entitled to “enforce the writing without regard to the understandings or defenses
applicable to the original parties”). Contract defenses are restricted in trust fund
collection actions because “millions of workers depend upon the employee benefit
trust funds for their retirement security.” Royal Components, 1995 WL 470270, at *1
(internal citations omitted). Allowing employers to avoid payments to pension plans
based on defects in the contract would “saddle the plans with unfunded obligations.”
Gerber Truck, 870 F.2d at 1153.
Here, Defendants argue that the CBA with Brothers terminated as of May 31,
1998. As noted above, Defendants can only pursue this defense if the termination is
incontestable based on the contract. The Agreement, signed by Brothers and the
Union on August 25, 1994, states:
EMPLOYER and the UNION hereby agree to be bound by the Area
Agreements negotiated between the Chicago and Northeast Illinois District
Council of Carpenters and the various Employer Associations for the period
beginning with the expiration date of the several Agreements referred to in
numbered paragraph 3 thereof and ending on the expiration dates of any
successor Agreements thereto from year to year thereafter unless the
Employer gives written notice to the UNION of a desire to amend or terminate
any such Agreements at least three calendar months prior to the expiration of
such Agreement or Agreements.
R. 93 at 291 (Brothers CBA ¶ 4). Language like in paragraph 4 of the Brothers CBA
(Termination Clause) “indicates that the contract will continue in effect from year to
year after a specified earliest possible expiration date absent a written notice of
termination [and] is known as an ‘Evergreen Clause.’” Kabbes Trucking, 2004 WL
2644515, at *2; see also R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 13 (citing Conklin Dep.
at 42:3–19 (“A company signs a contract with the union saying they’re going to be
signatory, and they’ll remain a signatory until they give notice, and it has to be within
a certain timeframe. And then they’re saying they’re going to be – they’re going to
agree to the area bargaining agreement until they do that. So area bargaining
agreements can term and be renegotiated, but they’re still going to be signatory under
the next one until they decide to actually become non-signatory.”)).
Brothers did not send written notice to the Union terminating the Brothers
CBA, as required by the Termination Clause, until May 1, 2017. R. 93 at 499
(Brothers Termination Letter) (disputing that any CBA between Brothers and the
Union was in effect and indicating that, to the extent Brothers continued to be a party
to such agreement, it wished to terminate the CBA). But Defendants contend that
documents provided to Brothers in 1999 from Plaintiffs’ prior attorneys and auditor
“at least raise the inference that the [Brothers CBA] was terminated” as of May 31,
1998. R. 103, Defs.’ Resp. PSOF ¶ 71; Defs.’ Resp. at 2 (citing R. 105, DSOF ¶¶ 9, 12–
Again, it is Defendants’ burden to establish “incontestable evidence” in support
of termination. Sara Lee Bakery Group, 2010 WL 6614902, at *5. Defendants’
admission that their documentary evidence “raise[s] the inference” of termination in
1998 clearly does not constitute “incontestable evidence.” R. 103, Defs.’ Resp. PSOF
¶ 71. The Court accordingly finds that Defendants have not met their burden and
could end the termination defense analysis here. However, for the sake of
completeness, the Court more closely examines the evidence of termination on which
Brothers’ termination defense rests.
Defendants contend that two documents support termination of the Brothers
CBA in 1998: (1) a September 22, 1999 report from Plaintiffs’ auditor stating that,
“[s]ince [Brothers’] agreement with the Trust Fund terminated as of May 31, 1998,
[the auditor’s] review ended as of that date.” R. 105, DSOF ¶ 12 (citing R. 106-3
(Sealed) at 23 (Audit Report)); and (2) the recitals to the settlement agreement
drafted by Plaintiffs’ prior counsel and signed by Robb and Plaintiffs, stating that
Brothers “was signatory to a Collective Bargaining Agreement . . . with the Chicago
and Northeast Illinois District Council of Carpenters [ ], which terminated on May
31, 1998.” R. 105, DSOF ¶ 16 (citing R. 112-3 at 18 (Termination Recital)).
True, the language in both the Audit Report and Termination Recital is clear
on its face. But neither document satisfies the clear prerequisite for termination set
forth in the Brothers’ CBA Termination Clause: Brothers must give written notice to
the Union of its desire to terminate the CBA. R. 93 at 497. The Audit Report clearly
does not constitute notice from Brothers, but rather the auditor’s understanding of
the status of the Brother CBA. The Seventh Circuit has held that a misunderstanding
of a labor agreement’s termination date by a pension trust is irrelevant when the
contract language is clear, so a potential misunderstanding by the pension trust’s
auditor matters even less. Kabbes Trucking, 2004 WL 2644515, at *19 (citing Illinois
Conference of Teamsters Welfare Fund v. Mrowicki, 44 F.3d 451, 459–60 (7th Cir.
1994)). And Brothers provides no documents that form the basis for the auditor’s
Because Robb, acting as the employer, signed the Settlement Agreement, it
arguably could be considered “written notice from the employer.” However, the
Settlement Agreement also does not save Defendants’ termination argument. As
Plaintiffs point out, recitals typically “will not, of themselves, be considered binding
obligations on the parties or an effective part of their agreement unless referred to in
the operative portion of their agreement.” Pls.’ Resp. at 3–4 (citing First Bank & Tr.
Co. of Illinois v. Vill. of Orland Hills, 787 N.E.2d 300, 308 (Ill. App. Ct. 2003)). 4 The
Termination Recital is not incorporated into the substance of the Settlement
Agreement. But even if the Termination Recital could be considered binding, the
Settlement Agreement is between Brothers and the Plaintiff Funds, not the Union.
And although it may be reasonable to infer that the Settlement Agreement was
provided to the Union, Defendants do not present any evidence that Brothers sent
the Settlement Agreement to the Union.
In short, neither the Audit Report nor the Termination Recital clearly satisfy
the intent to terminate notice required by the Termination Clause of the Brothers
CBA. And really, Defendants’ arguments regarding termination are the sort that
should be litigated between Brothers and the Union, rather than Brothers and
Plaintiffs. See, e.g., Royal Components, 1995 WL 470270, at *1. At bottom, a 1998
termination has not been clearly established, so Section 515 of ERISA bars
Defendants’ termination defense. The indisputable evidence establishes instead that
Brothers terminated the Agreement on May 1, 2017, and that the termination became
effective on May 31, 2019. 5
argue that ERISA preempts state law rules of interpretation and applies federal
common law, which interprets agreements in an ordinary and popular sense as would a
person of average intelligence. Defs.’ Reply at 7 n.3 (citing Phillips v. Lincoln Nat. Life Ins.
Co., 978 F.2d 302, 307–08 (7th Cir. 1992)). But importantly, Phillips holds only that the Court
must apply federal common law rules of contract interpretation when resolving ambiguities
in “ERISA plans and insurance policies.” Id. at 307. The Settlement Agreement between
Plaintiffs and Defendants is neither.
Brothers sent notice of termination to the Union on May 1, 2017, pursuant to the
Termination Clause, once the employer sends notice, the CBA will terminate concurrently
with the expiration of the accompanying Area Agreement. The relevant Area Agreement was
Alternatively, Defendants argue that the CBA is still not effective, because it
lapsed between 1998 and the filing of Plaintiffs’ Complaint. R. 110, Defs.’ Resp. at
12–13. In support, Defendants cite Chicago Dist. Council of Carpenters Pension Fund
v. Hunter Alliance Corp., 1998 WL 155928, at *3 (N. D. Ill. 1998)). In Hunter, Hunter
Alliance Corporation (Hunter), the employer, executed an agreement in 1975 under
which it agreed to be bound by the then-in-effect CBA between the union and the
Mid-America Regional Bargaining Association (MARBA). Id. at *1. The agreement,
which contained an automatic renewal clause (also known as an “evergreen clause”),
also obligated Hunter to make contributions to certain funds. Id. at *2–3. Hunter
made a number of payments to the funds at first, but stopped doing so in 1976 when
it ceased operations. Id. at *1. Neither the union nor the funds took any action against
Hunter. Thirteen years later, the son of the original owner, a developer, decided to
“resurrect” Hunter, unaware of the 1975 CBA. Id. When the union filed an unfair
labor practice charge with the National Labor Relations Board (NLRB) against
Hunter in 1994—claiming that Hunter had repudiated the 1975 agreement and
unilaterally changed the terms and conditions of employment—the NLRB
determined that the CBA had lapsed. Id. at *2. The NLRB emphasized that such a
result was warranted due to the absence of bargaining unit employees and the lack
of communication between the parties during the 16-year period from 1976–1994. Id.
at *2–3. The district court likewise concluded that Hunter was not bound to the 1975
CBA. Id. at *4. The court explained that the funds were attempting to revive an
in place for the period June 1, 2014 through May 31, 2019. R. 103, Defs.’ Resp. PSOF ¶ 3; R.
93 at 497, 499.
agreement that at some point, in the absence of employee and operations, ceased to
exist. Id. at *4.
“Generally, however, the Seventh Circuit routinely upholds the validity of
automatic rollover clauses when the CBA includes clear termination clauses and the
essential termination procedures have not been properly followed.” Vulcan Constr.
Materials, LP v. Int’l Union No. 150, 2009 WL 5251889, *7 (N.D. Ill. Nov. 25, 2009).
See, e.g., Office & Prof’l Employees Int’l Union, Local 95 v. Wood County Tel. Co., 408
F.3d 314, 315 (7th Cir. 2005) (“Allowing an agreement to persist is the point of an
evergreen clause.”); Contempo Design, Inc. v. Chi. and Northeast Ill. Dist. Council of
Carpenters, 226 F.3d 535, 546 (7th Cir. 2000) (determining that a union and employer
were bound to a CBA that included an automatic renewal clause because terms of the
termination clause were not correctly followed, stating that “[t]he terms of a [CBA]
are to be enforced strictly when they are unambiguous.”); see also Cent. States, Se. &
Sw. Areas Pension Fund v. Sara Lee Bakery Grp., Inc., 660 F. Supp. 2d 900, 917 (N.D.
Ill. 2009) (“A contract containing an evergreen clause binds an employer to
subsequent CBAs until the contract is properly terminated.”).
Hunter is distinguishable from these cases because in Hunter, the employer
ceased operations and did not have any employees for a significant amount of time.
Hunter Alliance Corp., 1998 WL 155928, at *3 (“[T]he cause of the lapse was rooted
in the long absence of bargaining unit employees.”). In the instant case, on the other
hand, the record does not demonstrate that Brothers ceased operations for any period
of time. Therefore, the automatic renewal clause of the Brothers CBA must be
“strictly construed,” and thus, according to its terms, binding on Brothers until
Brothers terminates the Brothers CBA. Contempo Design, 226 F.3d at 546.
Accordingly, the Court finds that the Brothers CBA has not lapsed.
All in all, the Court finds (rejecting Defendants’ 1998 termination defense) that
the Brothers CBA did not terminate until 2019 and has not lapsed. Accordingly, the
Court further finds that Brothers is bound by the Brothers CBA.
Plaintiffs’ Motion: Single Employer and Alter Ego
The parties agree that Constructors agreed to be bound by the Union’s Area
Agreement in 2001 and was a party to that Agreement (Constructors CBA) until May
31, 2019. R. 103, Defs.’ Resp. PSOF ¶¶ 3, 73; R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 4.
Plaintiffs argue that Industries and Brothers are also bound to the Constructors CBA
under the single-employer and/or alter-ego doctrines. Pls.’ Br. at 9, 15.
Waiver as to Industries
Plaintiffs contend that Defendants have waived any argument that Industries
is bound by the Constructors CBA under the single-employer or alter-ego theories by
failing to address Industries in their Response. Pls.’ Resp. at 2. The Court agrees.
Defendants’ Response not only fails to argue why Industries is not bound to the
Constructors CBA, but also specifies throughout that “[t]he dispute is whether th[e
Constructors] CBA applied to Brothers.” Defs.’ Resp. at 1; see also id. at 4 (arguing
that Brothers’ lacked the intent to evade necessary for alter-ego theory); id. at 5–7
(appropriate timeframe for single-employer analysis is the period during which
Brothers allegedly violated the Constructors CBA); id. at 7–12 (analyzing the single-
employer doctrine factors as they apply to Brothers). Because Defendants fail to
respond to Plaintiffs’ contention that Industries is bound to the Constructors CBA
under the single-employer doctrine, Defendants have waived any such argument. 6
See Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) (“Failure to respond
to an argument . . . results in waiver.”). What’s more, Defendants do not dispute the
facts relied upon by Plaintiffs to establish that Industries is bound to the
Constructors CBA under the single-employer doctrine. See generally Pls.’ Br.; R. 103,
Defs.’ Resp. PSOF ¶¶ 16, 18, 24–25, 27–32, 34–41, 43–44, 48–49, 54–58, 63–67, 69,
73; see also R. 107, Defs.’ SOAF ¶¶ 25, 27, 28. Nor have Defendants presented facts
in their Additional Statement of Facts that create a genuine dispute that a singleemployer relationship existed between Industries and Constructors. See generally R.
107, DSOAF. Therefore, the Court grants summary judgment to Plaintiffs as to
in their Reply in Support of Defendants’ Motion for Summary Judgment do Defendants
dispute whether Industries is bound to the Constructors’ CBA via the single-employer
doctrine. See Defs.’ Reply at 2–3 n.2. But without leave of Court, Defendants cannot include
argument that in fact constitutes a sur-response opposing Plaintiffs’ Summary Judgment
Motion in what is limited to a Reply in support of Defendants’ Summary Judgment Motion.
See, e.g., Physicians Healthsource, 950 F.3d at 968. In fact, in the same Section, Defendants
argue that Plaintiffs’ Statements of Additional Fact which support Plaintiffs’ own summary
judgment motion rather than oppose Defendants’ motion must be disregarded. Defs.’ Reply
at 2–4. As discussed above, the Court agrees with Defendants on that point. See supra Section
I. The same principle limits Defendants’ arguments here to those in support of their motion
rather than in response to Plaintiffs’ arguments. No matter, as Plaintiffs have met their
burden of establishing that a single-employer relationship exists between Constructors and
Industries. The facts supporting each single-employer factor are the same or similar to those
that apply to Brothers and Constructors and are analyzed below. See infra Section III.B.3.
Industries, finding that the undisputed facts establish that Industries is subject to
the Constructors CBA under the single-employer doctrine beginning in 2011.
Single Employer Analysis
Setting Industries aside, the Court now addresses whether Brothers is bound
to the Constructors CBA under the single-employer and/or alter-ego doctrines. The
Court begins with the single-employer analysis.
1. Relevant Time Period
At the outset, the Court must determine whether it can consider facts outside
of the limited time period during which Plaintiffs conducted an audit of Constructors,
July 1, 2014 through December 31, 2017 7 (the Audit Period) when evaluating the
single-employer relationship between Brothers and Constructors. Defendants
contend that the Court is limited to facts underlying the relationship only during the
Audit Period, which is the period Plaintiffs claim that Defendants violated the Area
Agreements (for purposes of the single-employer analysis, via the Constructors CBA).
Defs.’ Resp. at 2, 5–7; see also Am. Compl. ¶ 1 (defining the Audit Period as July 1,
2014 through June 30, 2016). Plaintiffs, on the other hand, argue that they did not
limit their claims regarding the single-employer relationship to the Audit Period, so
contend that although the audit occurred between July 1, 2014 and December
31, 2017, because Constructors began winding down its business as of July 3, 2017, the
relevant period for the Court to evaluate (in determining whether Brothers is bound to the
Constructors CBA via the single-employer doctrine) is July 1, 2014 through July 3, 2017.
Defs.’ Resp. at 6–7. The Court separately analyzes this argument below. See infra Section
the Court should consider facts establishing the single-employer relationship as early
as 2001, when Constructors signed the Constructors CBA. Pls.’ Resp. at 10–12.
Plaintiffs claim that Defendants violated the Area Agreement by failing to
comply with their obligations to contribute to the Trust Funds during the Audit
Period by failing to pay amounts owed based upon the hours worked by employees
and/or subcontractors performing work within the jurisdiction of the Union. See Am.
Compl. ¶¶ 1, 36–37, 44–45, 52–53, 60–61 (defining the Audit Period as July 1, 2014
through June 30, 2016 8 and incorporating that time period into each Count claiming
that Defendants breached the Area Agreement by failing to produce records to the
auditors allowing them to determine whether Defendants complied with their
contribution obligations to each plaintiff). But they dispute Defendants’ contention
that simply because their claims against Defendants are relegated to that time period
means that the Court cannot consider facts preceding it to determine whether
Defendants constitute a single employer. Pls.’ Resp. at 10.
Both parties miss the mark and advance positions that are too extreme as to
what the Court may or may not consider. The Court agrees with Defendants that the
most important facts supporting a single-employer determination are those in
existence at the time of the alleged violation. But as Plaintiffs argue—and Defendants
the Amended Complaint alleges that the Audit Period ended as of June 2016, the
undisputed evidence submitted by the parties establishes that the Audit Period ended on
December 31, 2017, and the parties accept that date in their briefs. See Pls.’ Br. at 9; Defs.’
Resp. at 6; R. 103, Defs.’ Resp. PSOF ¶ 9; R. 113-1 at 6, Decl. of R. Carlson ¶ 18. As such, the
Court considers the Audit Period to have ended on December 30, 2017. (As discussed herein,
the parties dispute whether the Court should consider the period between July 3, 2017 and
December 30, 2017 when determining whether a single-employer relationship existed.)
in fact concede—facts predating the period of alleged violations are relevant “to the
extent that [they] cast light on the[ entities’] subsequent relationship” during the
relevant period. Pls.’ Resp. at 11; Defs.’ Resp. at 5–6 (both citing Cimato Bros., Inc. &
Cimato Bros. Constr., Inc. & Int’l Union of Operating Engineers, Loc. Union No. 17,
352 NLRB 797, 799 (2008)). Cimato Bros. offers an example of this principle.
In Cimato Bros., the National Labor Relations Board (NLRB) overturned the
administrative law judge’s finding that two companies were a simple employer, and
in so doing, stated that “[t]he test for single-employer status therefore applies only to
the relationship between the [entities] on and after [the date of the alleged violation
of the CBA in effect]. . . .” 352 NLRB at 799 (citing Richmond Convalescent Hospital,
Inc., 313 NLRB 1247, 1249–50 (1994)). Plaintiffs argue that Cimato Bros. is
distinguishable because in that case, the plaintiffs themselves “limited their claims
to assert that the parties were a single employer only during a specific time period.”
Pls.’ Resp. at 10–11. 9 But just like Plaintiffs here, the plaintiffs in Cimato Bros.
alleged a violation of the CBA during a specific period but did not allege that the
defendant entities were a single employer only during that limited period. Cimato
Bros., 352 NLRB at 801. In fact, the administrate law judge based his finding of a
single-employer relationship in large part on facts that pre-dated the period of the
alleged CBA violation. Id. at 802. Although the NLRB ultimately found that evidence
insufficient to support a single-employer relationship between the entities, as
attempt to distinguish the cases cited by Defendants in support of limiting the
evidence to be considered, but do not cite to any in support of their position that the Court
should consider the entire course of parties’ relationship, to the extent it is not relevant to
the status of the relationship during the Audit Period.
discussed above, it held that “evidence of their prior relationship would be relevant
only to the extent it cast light on their subsequent relationship.” Id. at 799.
Another case cited by Defendants, Chicago Reg’l Council of Carpenters Pension
Fund v. United Carpet, Inc., 2020 WL 3077541, at *3 (N.D. Ill. June 10, 2020),
supports this same principle. In United Carpet, the court looked to tax returns
evidencing common ownership between two entities during the “relevant years”
during which the alleged CBA violation occurred, but still looked to evidence
presented about the parties relationship prior to the years in question—in the form
of testimony from defendants and their accountant, as well as earlier tax returns—to
the extent that evidence was relevant to the relationship between the parties during
the period of the alleged violation. Id.
For purposes of this Opinion, then, the relevant period of the relationship
between Brother and Constructors is the Audit Period, and evidence regarding their
relationship during that timeframe will more directly support a finding for or against
a single-employer relationship that forms the basis of Plaintiffs’ claims against
Brothers. But the Court will also consider evidence presented by the parties that predates (but is still relevant to) the relationship during the Audit Period. Therefore, to
the extent Defendants dispute statements of fact submitted by Plaintiffs only on the
basis that the facts were outside of the relevant time period and those facts are
supported by admissible and docketed evidence, the Court deems such statements
admitted. 10 See Curtis, 807 F.3d at 219 (affirming district court’s discretion in
deeming facts admitted where opposing party “failed to admit or deny facts and
provided only boilerplate objections, such as ‘relevance’ . . . [and m]ost
importantly, . . . failed to provide citation to any admissible evidence in support of his
denials” in violation of Local Rule 56.1(b)(3)(B)).
2. Winding Down
Next, although the parties agree that the Audit Period is July 1, 2014 through
December 31, 2017 (see Pls.’ Br. at 9; Defs.’ Resp. at 6; R. 103, Defs.’ Resp. PSOF ¶ 9;
R. 113-1 at 6, Decl. of R. Carlson ¶ 18), Defendants contend that the relevant time
period to consider the single-employer relationship ended on July 3, 2017 because
Constructors began “winding down” its business as of that date (Defs.’ Resp. at 6–7
(citing R. 107, DSOAF ¶ 9)). The parties disagree about the meaning of the term
“winding down,” but the Court need not define it here. The parties do not dispute that
on July 3, 2017, Constructors received a substantial completion notice from the
government for the Fort McCoy Project, its only ongoing project. R. 117, Pls.’ Resp.
DSOAF ¶ 9. Nor is it disputed that after July 3, 2017, Constructors completed just a
few unfinished items and about 14 hours of warranty work on the Fort McCoy Project.
Id. Still, Constructors continued to exist as an entity into at least 2018, as did
Brothers. Id. ¶¶ 2, 27 (Constructors and Brothers were incorporated and paid annual
premiums through 2018). The parties agree that Brothers and Constructors were
following statements of fact are deemed admitted, as Plaintiffs properly support them
with admissible evidence as required by Local Rule 56.1(a)(3), and Defendants dispute them
based only on the contention that “only the circumstances as existed during the Audit Period
are relevant.” R. 93, PSOF; R. 103, Defs.’ Resp. PSOF ¶¶ 32, 44–45, 47, 77–78, 80.
respectively incorporated and operated continuously from 1994 and 2000 through
2018. Id.; R. 103, Defs.’ Resp. PSOF ¶¶ 15, 20.
The Court agrees with Plaintiffs that these facts do not support a finding that
Constructors was “winding down” such that the Court cannot consider whether the
single-employer doctrine applied to Brothers and Constructors between July 3, 2017
and December 31, 2017. See Pls.’ Resp. at 13–14. As Plaintiffs correctly point out, the
cases on which Defendants rely support the proposition that the interrelated
operations factor of the single-employer analysis is frustrated when one entity ends—
or is in the process of imminently ending—its operations just as the other entity
begins operations. See Laborers’ Pension Fund v. Innovation Landscape, Inc., 2019
WL 6699190, at *11 (N.D. Ill. Dec. 9, 2019) (single-employer analysis “focuses on
companies that co-exist,” and was less applicable where one company effectively
stopped operating while the other company was just starting operations); Dore &
Assocs. Contracting, Inc. v. Int’l Union of Operating Engineers, Loc. Union No. 150,
2017 WL 3581159, at *10 (N.D. Ill. Aug. 18, 2017) (“[W]hile [entities] technically
existed as corporate forms simultaneously, . . . the fact that [they] never operated
simultaneously means they are not a ‘single integrated enterprise’ as required by the
single employer test.”); Cent. States, Se. & Sw. Areas Pension Fund v. John Clark
Trucking & Rigging Co., 2009 WL 780455, at *5 (N.D. Ill. Mar. 19, 2009) (companies
could not be part of an interrelated entity two-to-three years after they had ended
operations). Here, as noted above, the parties do not dispute that Brothers and
Constructors operated simultaneously between 2001 and December 31, 2017.
Therefore, the Court will consider any evidence relating to the single-employer
analysis through December 31, 2017, the end of the Audit Period.
3. Operation as a Single Employer
Now that the Court has determined what facts it can consider to conduct the
single-employer analysis, it turns to the analysis itself. If the single-employer
doctrine applies, both companies are “equally liable under a collective bargaining
agreement entered on behalf of only one of them.” Board of Trustees of the Pipe Fitters
Retirement Fund, Local 597 v. American Weathermakers, Inc., 150 F. Supp. 3d 897,
905 (N.D. Ill. 2015) (citing Moriarty v. Svec, 164 F.3d 323, 332 (7th Cir. 1998)).
To determine whether multiple employers should be deemed a single employer
for purposes of contributions under a CBA, the Court must examine four factors: “(1)
interrelation of operations, (2) common management, (3) centralized control of labor
relations, and (4) common ownership.” Lippert Tile Co. v. Int’l Union of Bricklayers
& Allied Craftsmen, 724 F.3d 939, 946 (7th Cir. 2013). No single factor controls;
instead, the Court must consider the “totality of the circumstances.” Id. at 946–47.
“[A] single employer finding does not require every factor to be met.” Chicago Reg’l
Council of Carpenters Pension Fund v. TMG Corp., 206 F. Supp. 3d 1351, 1360 (N.D.
Ill. 2016) (internal citations omitted). “Ultimately, single employer status . . . is
characterized by the absence of an arm’s length relationship found among
unintegrated companies.” United Carpet, 2020 WL 3077541, at *3 (quoting Cremation
Society of Ill., Inc. v. Int’l Bhd. of Teamsters Local 727, 869 F.3d 610, 616 (7th Cir.
In examining the first factor, interrelatedness of companies’ operations (i.e.,
“day-to-day operational matters”) are most relevant. TMG Corp., 206 F. Supp. 3d at
1357 (quoting Lippert Tile, 724 F.3d at 947). Among other factors, courts consider
“whether purportedly separate businesses shared the maintenance of their business
records, processed payroll jointly, processed their billing and bank accounts together,
and shared space.” Id. There is significant undisputed evidence in the record that
Brothers and Constructors have a high degree of interrelatedness between their
The Seventh Circuit’s decision in Lippert Tile is instructive here, as the
Seventh Circuit concluded that the operations of three entities (Lippert Tile,
DeanAlan, and Lippert Group) were interrelated under similar circumstances.
Lippert Tile and DeanAlan performed the same type of work in the same region, but
they did so for different customers segments (the union and non-union markets). 724
F.3d at 942, 948. Lippert Tile and DeanAlan companies also had separate bank
accounts, corporate officers, employees, and insurance programs. Id. at 942. Still, the
Seventh Circuit concluded that the companies were a single employer because they
shared certain daily operations that were critical to the smooth functioning of their
work; specifically, they shared office space; and Lippert Group maintained business
records, processed payroll, handled billing, and managed the bank accounts for both
Lippert Tile and DeanAlan. Id. at 942, 947. Lippert Group also decided which
company should bid on which project and, if so, what to bid. Id. at 947.
Similarly here, Defendants share office space; Defendants’ payroll is all run
through Industries; Defendants shared clerical staff such as the receptionist and
controller; and Defendants’ shared outside accountant maintains Defendants’
accounts and prepares combined financial statements. R. 103, Defs.’ Resp. PSOF
¶¶ 25, 54, 66–67, 70. Other courts in this District have found similar facts to be “more
than enough to show that the operations of [two companies] were interrelated.” See
Auto. Mechanics’ Loc. No. 701 Union & Indus. Pension Fund v. Dynamic Garage, Inc.,
2018 WL 4699842, at *5 (N.D. Ill. Sept. 30, 2018). But here, the undisputed evidence
shows even more examples of interrelatedness: Defendants use a common employee
e-mail address, @carlson-construction.net (R. 103, Defs.’ Resp. PSOF ¶ 34); use the
same phone and fax number (id. ¶ 36); use shared computers, office phone system,
software, and cell phone plan (id. ¶ 55); allow employees to use the same company
credit card for expenses for both Brother and Constructors (id. ¶ 59); and share a
401(k) plan (id. ¶ 64). These factors are also persuasive evidence of interrelated
operations. See Bd. of Trustees of the Pipe Fitters Ret. Fund, Loc. 597 v. Am.
Weathermakers, 150 F. Supp. 3d at 906 (citing Central States, Southeast & Southwest
Areas Pension Fund v. George W. Burnett, Inc., 451 F. Supp. 2d 969, 976 (N.D. Ill.
2006); Moriarty, 994 F. Supp. at 969–70; Boudreau v. Gentile, 646 F. Supp. 2d 1016,
1021 (N.D. Ill. 2009) (all finding some of the same factors to be persuasive)). In
addition to sharing the same accountant, Defendants also share the same attorney,
registered agent, common insurance program, banks, and signatories on their
accounts (R. 103, Defs.’ Resp. PSOF ¶¶ 37–40, 49, 56–58, 65), all of which also support
a finding of interrelated operations. See TMG Corp., 206 F. Supp. 3d at 1357.
Moreover, Defendants are all funded from a $5 million joint line of credit that
they maintain at First Midwest Bank. R. 103, Defs.’ Resp. PSOF ¶¶ 56–58.
Defendants promoted themselves as one company: “Carlson Construction.”
Defendants used a single “Carlson Construction” website containing all of their
operations and completed projects, and used a common promoted their operations
and all of their completed projects under a common “Carlson Construction” LinkedIn
page. R. 103, Defs.’ Resp. PSOF ¶¶ 28–32, 34–35.
Defendants, in response, dispute that Brothers and Constructors were engaged
in the same kind of work—they argue that Constructors was a highly specialized
military contractor while Brothers performed more general types of contracting
construction work. Defs.’ Resp. at 7. But the record evidence, including statements of
fact included in Defendants’ Statement of Additional Facts, establish that both
Brothers and Constructors were engaged in similar contracting work in the
construction industry during the Audit Period. See R. 107, DSOAF ¶ 1 (citing R. 1131 at 7–8, Decl. of Robb Carlson ¶ 21 (“Defendant Carlson Constructors Corporation
during 2014 and through July 2017 engaged in general contracting in the
construction industry. . . . Defendant Carlson Brothers during 2014 and to date
engages in general contracting in the construction industry.”). True, during almost
the entire Audit Period (beginning in September 2014 and through December 31,
2017), Constructors’ only project was the Ft. McCoy Project, a military project in
Wisconsin. R. 117, Pls.’ Resp. DSOAF ¶ 9. And Brothers did not perform military
contracting work during the Audit Period. Id. ¶¶ 10–11. Plaintiffs do not dispute that
military regulations imposed different requirements on Constructors, including that
it employs “field supervisors, safety and quality managers which [are] not required
in the work Brothers performed.” Id. ¶ 11. However, the record belies the weight
Defendants give to Constructors’ military work and required “specialized” personnel
in determining whether its operations were interrelated with Brothers’ operations.
First, and importantly, Mark and Robb were responsible for selecting which
company—Brothers or Constructors—would bid on which projects. For instance,
Mark testified during his deposition that he prepared a bid for the Fort McCoy
Projects through Constructors because Constructors, but not Brothers, qualified as a
Woman Business Enterprise. R. 117, Pls.’ Resp. DSOAF ¶ 10 (citing R. 93 at 634–35
(M. Carlson Dep. 81:11–82:17)); see also id. ¶ 12 (citing R. 93 at 627, 634, 654 (M.
Carlson Dep. 80:15–81:18, 52:16–53:6, 159:17–160:9) (testifying that he handled
bidding for Brothers and Constructors)). Lippert Tile held that an important factor
weighing in favor of the interrelated operations was that the same personnel made
“the critical decision” as to which company “should make a bid on a particular project,
and if so, what to bid, as if all three companies were part of the same organizational
chart.” Lippert Tile, 724 F.3d at 947. Second, Brothers’ workers were trained to do
specialized military quality control work for the Fort McCoy Project. R. 117, Pls.’
Resp. DSOAF ¶ 11 (citing R. 94 at 328–331 (E. Kurth Dep. 89:21–92:12) (“A: [W]hen
we picked up some of the government work, we hired individuals that would do that
work. Q: The quality control people? A: Right. And some of the Brothers employees
that we had, we trained them to work for Constructors too, as well, a few of them. Q:
. . . And you had a couple [ ] project superintendent managers and project managers
for Carlson Brothers who did the same work for Carlson Constructors, correct? . . . A:
Right.”). Third, there is no question that before September 2014, Constructor’s bid on
and worked on non-military construction projects. See id. ¶ 8; R. 103, Defs.’ Resp. Pls.’
SOF ¶¶ 31–32 (Brothers and Constructors both worked on fire station projects and
projects for a funeral home). But as discussed above, the relevant time period is the
Audit Period, and the type of work Constructors did before that time is of only slight
relevance to this analysis. Still, given that (1) Constructors’ military contracting work
was generally construction work, (2) Brothers’ workers were trained to work at
Constructors’ military sites, and (3) Mark was in charge of bidding on the projects
worked on by Brothers and Constructors, the Court finds that Constructors’ shift to
military projects during the Audit Period does not create a question material fact as
to whether Defendants’ operations were interrelated.
Defendants argue that there is very little employee interchange during the
Audit Period—just three employees out of over one-hundred employed between
Brothers and Constructors. Defs.’ Resp. at 7–8 (citing R. 107, DSOAF ¶¶ 17–18). As
noted above, the record indicates that at least some Brothers employees were trained
to work in the specialized military qualify control positions needed by Constructors
in or before 2014. But Plaintiffs do not point out how many Brothers employees were
so trained or worked for Constructors during the Audit Period, so that weighs only
slightly in favor of finding interchange between employees. Instead, Plaintiffs point
out that all employees who did work for either Brothers or Constructs were W-2
employees of Industries. 11 Pls.’ Resp. at 14–15 (citing R. 103, Defs.’ Resp. PSOF ¶¶ 18,
60–62); see also R. 117, Pls.’ Resp. DSOAF ¶ 1. Defendants’ controller testified that
when Industries took over payroll in 2011, it also “took over all of the employees. . . .
[E]verybody worked for CB Industries. . . . CB Industries would bill Constructors or
Brothers for their pro rata share of the payroll for the week.” R. 117, Pls.’ Resp.
DSOAF ¶ 1 (citing R. 94 at 202 (R. Turner Dep. 103:11–104:7)). The W-2 Forms for
Brothers and Constructors’ employees also identify “CB Industries, Inc.” as the
employer. R. 117, Pls.’ Resp. DSOAF ¶ 1 (citing R. 116 (Sealed) at 128–132).
Constructors’ Consolidated Financial Statements states, “Employees - The Company
and its affiliates’ main labor force is provided by CB Industries whose owners are
related to the officers of the Company. Labor is provided at cost and billed weekly to
the Company as subcontract labor. Carlson Constructors Corporation also
subcontracts some of their employees to Carlson Brothers, Inc., a related party.” R.
117, Pls.’ Resp. DSOAF ¶ 1 (citing R. 116 (Sealed) at 232).
In their Reply, Defendants dispute the use of the word “employee,” but as noted
above, they should have moved to file a sur-response to Plaintiffs’ Summary
Judgment Motion if they wanted to dispute arguments from Plaintiffs’ Reply. Still,
the evidence does not support that all employees actually performed work for
Industries; clearly they worked for either Brothers, Constructors, or both. But the
above, the Court does not consider Plaintiffs’ Statements of Additional Fact supporting
their own Summary Judgment Motion. R. 116 (Sealed), Pls.’ SOAF ¶¶ 10–13.
Court does agree that the evidence demonstrates that Industries acted as more than
a standard payroll company, which this Court finds weighs in favor of interrelated
operations. See, e.g., Lippert Tile, 724 F.3d at 947 (interrelated operations where
Lippert Group “maintains business records, processes payroll, handles billing, and
manages bank accounts for both companies, and these shared, daily operations are
critical to the smooth functioning of the project-by-project nature of both companies’
work.”); see also Am. Weathermakers, Inc., 150 F. Supp. 3d at 906–07 (interrelated
operations even where no employees shared).
Finally, Defendants point to the fact that they maintained separate bank
accounts and filed separate tax returns, maintained separate financial records, and
paid their subcontractors separately. Defs.’ Resp. at 8. True enough, but the Court
agrees with Plaintiffs that such evidence “only serves to show that Companies are
nominally separate entities, which is the starting point for single-employer analysis.”
Pls.’ Resp. at 17 (citing American Weathermakers, 150 F. Supp. 3d at 905–07) (finding
maintained separate accounts and financial records, filed separate tax returns, did
not co-mingle funds or share employees because defendants “leverage[d] their
combined purchasing power and economies of scale, share[d] the same benefit plans,
infrastructure, office space and third-party outside services”). Altogether, the Court
finds that the facts demonstrate integration between Brothers and Companies, and
as such, the first factor weighs in favor of Plaintiffs.
Common Management and Centralized Control of Labor Relations
Courts consider similar facts when determining the next two factors—common
management and centralized control of labor relations. See Auto. Mechanics’ Loc. No.
701 Union & Indus. Pension Fund v. Dynamic Garage, Inc., 2018 WL 4699842, at *6
(N.D. Ill. Sept. 30, 2018). In analyzing whether two entities share common
management, the Seventh Circuit has focused on common control over hiring and
firing of employees, as well as other daily management decisions. Id. (citing N.L.R.B.
v. Emsing’s Supermarket, Inc., 872 F.2d 1279, 1288–89 (7th Cir. 1989)). Similarly,
when determining control over labor relations, courts consider, among other things,
the person or entity who was responsible for the day-to-day labor decisions like
setting wages, hiring, and firing. Lippert Tile Co., 724 F.3d at 947.
Defendants do not dispute that Mark and Robb were responsible for hiring and
firing key management employees for Defendants. R. 103, Defs.’ Resp. PSOF ¶ 74.
Rather, they contend that Mark and Robb were not the only people who had hiring
authority, and that they did not hire every employee. Id.; see also R. 117, Pls.’ Resp.
DSOAF ¶ 22 (Fort McCoy superintendent was primarily responsible for hiring
temporary labor, and Project’s quality supervisor engaged in hiring labor). Notably,
neither party specifies who had authority for firing employees other than key
management personnel. Nor do the parties identify who was responsible for setting
wages. Nancy, however, testified that whoever hired employees would decide on their
wages. R. 93, PSOF ¶ 74 (citing R. 93 at 698 (N. Carlson Dep. 154:17–155:4)). So this
could be Mark and Robb, or the site superintendent or quality control supervisor.
Defendants point out that the Ft. McCoy superintendents and project managers
“managed the daily labor and production matters,” including “not[ing] the work each
[contractor] performed on a given day and adjusted any issues with the contractors.”
R. 117, Pls.’ Resp. DSOAF ¶ 21. Superintendents approved weekly time sheets for
Constructors’ employees at the Ft. McCoy Project and submitted those timesheets to
Constructors’ office personnel for processing by CB Industries for payroll purposes.
Id. ¶ 24.
On the other hand, Plaintiffs emphasize that Robb supervised the project
managers of both Brothers and Constructors jobs, including managing day-to-day
workloads and managing construction projects at a very high level. R. 93, PSOF ¶ 76
(citing R. 94 at 182 (J. Swartz Dep. 21:23–22:6)). Defendants deny that Robb’s
responsibilities included such management. R. 103, Defs.’ Resp. PSOF ¶ 76. However,
Defendants’ response does not cite to any record evidence as required by the Local
Rules, but rather cites to their own Statement of Additional Facts. Id. (citing R. 107,
DSOAF ¶¶ 21–24). As indicated above, such citations do not comply with Local Rule
56.1 and the Court deems Plaintiffs’ statement admitted. But even considering the
cross-referenced additional statements does not create a material dispute of facts
here. Defendants’ statements of additional fact detail the responsibilities of the Ft.
McCoy superintendents and project managers. R. 107, DSOAF ¶¶ 21–24. Plaintiffs
do not dispute those duties, but the fact that the superintendents and project
managers had day-to-day supervision over employees at the Ft. McCoy site does not
foreclose Robb from supervising project managers and managing construction
projects “at a very high level.”
Plaintiffs also point to Mark’s responsibility to bid on projects for Brothers and
Constructors, including determining whether a project would become a Brothers or
Constructors Project. Pls.’ Resp. at 18 (citing R. 103, Defs.’ Resp. PSOF ¶ 80).
Plaintiffs accuse Companies of “fabricat[ing] issues of fact” (by arguing that Nancy
submitted the bid for the Fort McCoy Project) and point to testimony from Mark and
Nancy stating that she did not submit the bid. Pls.’ Resp. at 19 (citing Defs.’ Resp. at
9). But the Court agrees with Defendants that the evidence does not support this
accusation. Rather, it shows that although Mark “prepared” the bid, Nancy
“submitted” it. See R. 117, Pls.’ Resp. DSOAF ¶ 6 (citing R. 93 at 634 (M. Carlson
Dep. 80:15–81:18)); R. 108-1 (Sealed) at 25 (form submitted by Constructors to Army
to solicit Contract, signed by Nancy). But the evidence is also clear that while Nancy
may have signed and submitted the bid, she had no role in preparing that bid or any
others on behalf of Constructors. See Pls.’ Resp. at 19–20 (citing R. 117, Pls.’ Resp.
DSOAF ¶ 6 (citing R. 93 at 634 (M. Carlson Dep. 80:15–81:18) (Mark learned about
the opportunity to submit a proposal and prepared the bid for Constructors)), id.
(citing R. 93 at 690–91, 697 (N. Carlson Dep. 125:4–126:7, 153:4–5, 153:22–25)
(denying being involved in the bidding process, including the preparation of bids, for
Constructors’ projects))). Defendants insist that because Nancy submitted the Ft.
McCoy Bid and signed several other documents, including a credit application and
tax returns, separate management exists. Defs.’ Reply at 14–15 (citing Trustees of
Pension, Welfare & Vacation Fringe Ben. Funds of IBEW Loc. 701 v. Favia Elec. Co.,
995 F.2d 785, 788 (7th Cir. 1993)).
In Favia Elec. Co., the court found that nominally separate management
existed where the president of one of the companies “was not simply a figurehead;
instead, she was active in filing annual reports and paying taxes.” 995 F.2d at 788.
Here, as discussed more fully below, Defendants admit that Mark and Robb started
Constructors in 2000 and made Nancy and Laurel the “paper owners” because they
hoped to qualify Constructors as a women-owned business enterprise. R. 103, Defs.’
Resp. PSOF ¶ 19. In reality, Mark and Robb, not Nancy, engaged in all high-level
Although the third and fourth factors are closely related, the Court finds here
that the third factor—common management—weighs in favor of Plaintiffs, while the
fourth factor—labor relations—weighs in favor of Defendants. Based on Robb and
Mark’s role in hiring and firing key management employees, Robb’s engagement in
high-level management, Mark’s involvement in selecting and submitting bids, and
the common management functions such as Industries’ involvement in payroll,
Plaintiffs have satisfied the common management factor. However, the evidence
demonstrates that different people had the ultimate power to, at the very least hire,
employees for Brothers and Constructors’ respective project sites. The record is
unclear on who has the power to terminate these employees or to set their wages,
however. Therefore, the centralized control of labor relations factor weighs slightly in
favor of Defendants. See Am. Weathermakers, Inc., 150 F. Supp. 3d at 907 (finding
the third factor weighed in favor of single-employer finding where one entity was
responsible for accounting, billing, and human resources for two companies, but
finding that the fourth factor weighed against the single-employer analysis because
different people had the ability to hire and fire employees at the two companies).
This leaves the fourth factor. Perhaps stating the obvious, “[c]ommon
ownership typically applies when two companies are owned by the same
individual(s).” United Carpet, 2020 WL 3077541, at *3 (quoting Fox Valley & Vicinity
Construction Workers Welfare Fund v. Morales, 2019 WL 247538, at *3 (N.D. Ill. Jan.
17, 2019)). “‘Financial control,’ can be a proxy for ‘common ownership’ in a singleemployer analysis.” Innovation Landscape, 2019 WL 6699190, at *11 (quoting
Naperville Ready Mix, Inc. v. N.L.R.B., 242 F.3d 744, 752 (7th Cir. 2001)).
The common ownership analysis after August 25, 2015 is easy. Robb acquired
Nancy’s 50% interest in Constructors on that date. R. 103, Defs.’ Resp. PSOF ¶ 20.
And at all relevant times, Robb and Mark each owned a 50% interest in Brothers and
in Industries. Id. ¶¶ 15–16. Therefore, between August 25, 2015 and December 31,
2017, Robb was a common owner of Brothers and Constructors.
The more difficult question is whether common ownership existed between
July 1, 2014 and August 25, 2015, before Robb acquired Nancy’s interest in
Constructors. Nancy and Laurel, Robb and Mark’s spouses, respectively, each owned
a 50% interest in Constructors during that period. R. 103, Defs.’ Resp. PSOF ¶¶ 19–
Defendants correctly point out that, on its own, a husband-wife relationship is
insufficient to establish common ownership. Defs.’ Resp. at 11 (citing United Carpet,
2020 WL 3077541, at *4; Chicago Reg’l Council of Carpenters Pension Fund v. TMG
Corp., 206 F. Supp. 3d 1351, 1360 (N.D. Ill. 2016) (distinguishing alter ego cases and
rejecting proposition that ownership and control of two companies by members of the
same family is evidence of common ownership)). But here, unlike the family members
in United Carpet and TMG Corp., who each owned and actively managed the separate
entities, the facts here establish that Robb and Mark not only were married to
Constructors’ owners but were also the de facto owners of Constructors.
Defendants admit that Mark and Robb started Constructors in 2000 and made
Nancy and Laurel the “paper owners” because they hoped to qualify Constructors as
a women-owned business enterprise. R. 103, Defs.’ Resp. PSOF ¶ 19. Mark and Robb
made all major management decisions for Constructors, including signing the
Constructors CBA, who to hire as Defendants’ controller, and whether Constructors
or Brother would submit bids for which projects. Id. ¶¶ 24, 73–74, 76, 78, 80.
Additionally, Mark signed contracts on behalf of Constructors and Mark and Robb
were signatories on Constructors’ bank accounts. Id. ¶¶ 49, 78. In 2010, Mark and
Robb decided to replace Nancy with Rosalia Turner as the president of Constructors.
Id. ¶ 79. In contrast, Laurel had no active role in Constructors, but rather
occasionally signed documents presented to her that that she admitted she did not
understand. Id. ¶¶ 21–22. She was not authorized to sign on its bank account, and
had no knowledge of Constructors’ past loans or loans in existence at the time of her
2019 deposition. Id. ¶¶ 23, 49. Nancy lived in Florida since 2009 and handled only
credit card reconciliations and payroll for all of the Companies remotely from Florida
until 2015, when she stopped working for any of the Companies. Id. ¶¶ 24–26. Finally,
Brothers and Constructors held themselves out to have common ownership: during
the Audit Period, Brothers and Constructors entered into insurance agreements and
bond programs with major insurance companies that required them to have common
ownership. 12 Id. ¶¶ 40, 44. Together, these facts 13 establish that Laurel and Nancy
were not active managers of Constructors like the defendant family members in
United Carpet and TMG Corp., but rather that Mark and Robb were the de facto
owners of Constructors.
Other courts in this District have held that similar facts could support or have
supported a finding of common ownership in support of the single-employer analysis.
In Sullivan v. Tag Plumbing Co., 2012 WL 3835526, at *4 (N.D. Ill. Sept. 4, 2012),
the court held that common ownership existed for single-business purposes where a
husband and wife each owned an entity; where the husband relinquished the role of
Court does not consider the fact that Mack & Associates prepared combined financial
statements for Brother and Constructors that also required them to have common ownership
(Pls.’ Resp. at 21 (citing R. 116 (Sealed), PSOAF ¶ 9)), as the Court finds that this fact was
improperly included in Plaintiffs’ Statement of Additional Facts in support of Plaintiffs’
Motion for Summary Judgment as opposed to included in opposition to Defendants’ Motion.
See supra Section I.
some of these acts took place before the Audit Period (e.g., Brothers did not bid
on a job after 2014 (R. 103, Defs.’ Resp. PSOF ¶ 79)), the Court finds the facts cited herein to
be relevant to the common ownership over Brothers and Constructors during the Audit
Period (e.g., because Mark and Robb made decisions on which bids for Brothers and
Constructors to make, the decision not to bid after 2014 would have been made by them, as
president in the wife’s company but remained as the company’s treasurer and vice
president; his duties and involvement remained the same after transfer of ownership
to his wife; and the wife’s responsivities were limited to clerical work despite her sole
ownership and role as president. As noted above, in United Carpet, 2020 WL 3077541,
at *4, the court noted that the spousal relationship where each spouse was an active
manager of his/her own company could not form the basis of common ownership. In
so holding, United Carpet distinguished Suhadolnik v. U.S., 2011 WL 2173683, *6
(C.D. Ill. June 2, 2011), where the court held common ownership existed for purposes
of the Internal Revenue Code because the IRS presented evidence showing that the
husband was a de facto owner of his wife’s company for tax purposes because he: had
the authority to collect and pay trust fund taxes; hired employees and determined
their salaries; set the company’s financial policies; led weekly meetings where tax
issues were discussed; reviewed balance sheets and income tax returns; prioritized
expenses; and was a signatory on the company’s bank accounts. As in Sullivan and
Suhadolnik, the facts here support a finding that Mark and Robb were de facto
owners of Constructors for purposes of the common ownership factor. Therefore,
common ownership was present during the entire Audit Period, and the fourth factor
weighs in favor of Plaintiffs.
Altogether, a reasonable factfinder must conclude that Brothers and
Constructors (and Industries) did not have an arm’s-length relationship, and
therefore they comprise a single employer. See Lippert Tile, 724 F.3d at 947. Their
operations are interrelated, and they share the same owners (actual or de facto
depending on the years). Though different people have the ultimate power to hire
employees so the control over labor relations is not centralized, Robb and Mark, along
with Industries, manages the workforce. Even when the evidence is viewed in the
Defendants’ favor, the records establishes that the two companies were a single
employer. See id. at 947–48 (affirming single-employer finding even though
centralized control over labor relations remained disputed); Am. Weathermakers, 150
F. Supp. 3d at 906 (same).
However, just because Defendants have been deemed a single employer does
not automatically mean Brothers and Industries are on the hook for unpaid
contributions—the next question is whether Brothers violated the CBA/Area
Agreement by subcontracting work between July 1, 2014 and December 31, 2017. See,
e.g. Auto. Mechanics’ Loc. No. 701 Union & Indus. Pension Fund v. Dynamic Garage,
Inc., 2018 WL 4699842, at *7 (N.D. Ill. Sept. 30, 2018) (determination that companies
constituted a single employer, court must engage in analysis as to whether the CBA
applied to non-signatory’s employees). Neither party moves for summary judgment
as to whether Brothers—or Industries—violated the CBA/Area Agreement.
Therefore, although this Court determines as a matter of law that Defendants are a
single employer and therefore are bound by the Area Agreement, it does not now
weigh in on whether there was a violation of the Area Agreement by any Defendant.
The Court briefly analyzes Plaintiffs’ alternative basis of liability, that
Brothers was an alter ego of Constructors. “To establish that one company is an alter
ego of another, a plaintiff must demonstrate ‘the existence of a disguised continuance
of a former business entity or [an] attempt to avoid the obligations of a collective
bargaining agreement, such as through a sham transfer of assets.’” TMG Corp., 206
F. Supp. 3d at 1361 (quoting Favia, 995 F.2d at 789). “When attempting to discern
whether a new company is another’s alter ego, courts (or, at trial, finders of fact)
engage in a fact intensive analysis, examining factors like whether the two companies
have ‘substantially identical management, business purpose, operation, equipment,
customers, supervision, and ownership.’” Trs. of Chi. Painters and Decorators Pension
Fund v. John Kny Painting & Decorating, Inc., 2016 WL 406328, at *3 (N.D. Ill, Feb.
3, 2016) (quoting Int’l Union of Operating Eng’rs, Local 150, AFL–CIO v. Rabine, 161
F.3d 427, 433 (7th Cir. 1998)). But the alter-ego analysis differs from the singleemployer doctrine in that “unlawful motive or intent is the most critical factor for
finding alter ego status in the Seventh Circuit.” Id. (noting that motive or intent is
not the keystone in some other circuits). No individual factor is dispositive in
determining whether an alter-ego relationship exists, but “the Seventh Circuit
considers unlawful motive or intent to avoid collective bargaining agreement
obligations to be the critical elements of the inquiry.” Favia, 995 F.2d at 789. Because
the Court addressed the first part of the alter-ego test in its single-employer
discussion (finding in favor of Plaintiffs), the Court now turns to the new issues of
motive and intent.
As Defendants point out, Plaintiffs’ alter-ego argument is not well-developed.
Defs.’ Resp. at 3. Plaintiffs claim that Defendants “attempt to use Constructors as a
means to pay fringe benefit contributions on some of [Defendants’] employees working
on “Brothers” projects while avoiding paying contributions on other employees. Pls.’
Memo. Summ. J. at 15 n.2; Pls.’ Resp. at 23. The Court agrees with Defendants that
it is illogical that Brothers, if it wanted to evade alleged contribution obligations,
caused Constructors to sign the same Area Agreement it wanted to avoid. Defs.’ Resp.
at 4 (citing Architectural Iron Workers Loc. No. 63 Welfare Fund v. United
Contractors, Inc., 46 F. Supp. 2d 769, 789 (N.D. Ill. 1999) (where first-created
company was a signatory to a CBA, the alter-ego theory did not apply to secondcreated company that singed CBA, noting that “far from attempting to evade union
obligations, the defendants, by creating [the second company] and allowing it to
become a union shop, were responsible for benefit fund contributions that would not
have otherwise been made”)). Although the Court has held that the Brothers CBA
had not terminated in 1998, and thus was in effect when Constructors was formed in
2000, Defendants’ choice to sign the Constructors CBA is still illogical if their intent
was to evade the Area Agreement.
The cases cited by Plaintiffs in support of their argument that Constructors
began to “wind down” shortly after Plaintiffs made demands on Defendants and filed
this lawsuit are of no help to Plaintiffs. In Bd. of Trustees of Plumbers & Pipefitters
Loc. No. 172 Welfare Fund v. Matrix Plumbing & Heating, Inc., 2012 WL 1066758, at
*6 (N.D. Ind. Mar. 28, 2012), the court found wrongful intent to defraud where, after
judgment was entered against the defendant company, defendants entered into an
agreement with an individual, providing that individual would not assume the
defendant company’s liabilities. Approximately a month later, the defendant
company’s owner was served with a notice to appear for a debtors’ examination of the
defendant company; one day after that, the individual incorporated a new company.
Haka v. Lincoln Cty., 533 F. Supp. 2d 895, 912 (W.D. Wis. 2008) did not address an
alter-ego theory, but rather the court found wrongful intent from the employer’s
retaliatory actions taken after it received notice of the employee’s participation in a
false claims complaint against the employer.
The facts surrounding Constructors’ “winding down” are nowhere near as
suspect as those at issue in Matrix Plumbing or in Haka. Rather, the evidence
establishes that Constructors received a notice of substantial completion from the
government for the Ft. McCoy Project on July 3, 2017. R. 117, Pls.’ Resp. DSOAF ¶ 9.
Constructors had not actively worked on any projects other than the Ft. McCoy
Project since September 2014. Id. Deciding to close operations when its only project
for the last four years ends is well within the bounds of a reasonable business
decision. The Court cannot infer wrongful intent from the record, and therefore
Plaintiffs’ alter-ego theory fails.
In sum, the Court finds that both Industries and Brothers are also bound to
the Constructors CBA under the single-employer analysis. The Court grants partial
summary judgment in favor of Plaintiffs.
Defendants’ Motion: Equitable Affirmative Defenses
Defendants 14 move for summary judgment based on the equitable doctrines of
doctrine equitable estoppel and laches, arguing that even if (1) the Brothers CBA did
not terminate until 2019, and (2) Brothers is bound to the Contractors’ CBA via the
single-employer and/or alter-ego doctrines, Plaintiffs’ actions prevent them from
pursuing their claims against Brothers. As the Court has found that (i) the Brothers’
CBA did not terminate until 2019 and (ii) that Brothers is bound to the Contractors’
CBA via the single-employer theory, it now evaluates Defendants’ affirmative
defenses as they apply to each CBA.
Defendants’ motion for summary judgment presupposes that equitable
estoppel and laches are available defenses in an ERISA action involving a multiemployer pension plan. Defs.’ Reply at 5 (citing Teamsters & Emps. Welfare Tr. of
Illinois v. Gorman Bros. Ready Mix, 283 F.3d 877 (7th Cir. 2002)). Plaintiffs, on the
other hand, contend that equitable estoppel and laches are not available defenses in
cases involving withdrawal liability in multiemployer plans. Pls.’ Resp. at 4 (citing
Kabbes Trucking Co., 2004 WL 2644515). The Court notes that the state of the law is
not so clear.
all Defendants move for summary judgment, their arguments apply only to
Brothers, not to Constructors or to Industries. See generally R. 104, Defs.’ Br.; Defs.’ Reply.
As such, the Court evaluates Defendants’ equitable estoppel and laches defenses only as they
apply to Plaintiffs’ claims against Brothers.
ERISA does not mention any equitable defenses, such as estoppel or laches.
“While the federal courts have the power to create federal common law, this can occur
‘only where the federal statute does not expressly address the issue before the court
[and only if the proposed common law] is consistent with the policies underlying the
federal statute in question.” Kabbes Trucking, 2004 WL 2644515, at *21 (quoting
Nachwalter v. Christie, 805 F.2d 956, 959–60 (11th Cir. 1986)). “The Seventh Circuit
has expressed a ‘real resistance to the use of [equitable estoppel]’ in the ERISA
context due to concerns about a plan’s ‘actuarial soundness.’” Laborers’ Pension Fund
v. W.R. Weis Co., Inc., 180 F. Supp. 3d 540, 555 (N.D. Ill. 2016) (quoting Black v. TIC
Inv. Corp., 900 F.2d 112, 115 (7th Cir. 1990)). True, in Gorman, the Seventh Circuit
held that an employer could assert a laches defense in a multiemployer-plan action,
(although, the employer in that case did not ultimately succeed because it could not
show reliance). 283 F.3d at 883. In Gorman, an audit revealed that the employer had
failed to make pension contributions, but the union promised to make the audit “go
away.” Id. at 880. It is unclear, however, whether Gorman definitively held that
equitable estoppel is a defense in cases involving withdrawal liability in
multiemployer plans, because the case was ultimately about the laches defense in a
Kabbes, the only case cited by Plaintiffs for the proposition that equitable
defenses are not applicable in multiemployer-plan action cases, is distinguishable. As
Defendants correctly point out, unlike Kabbes, here, Plaintiffs do not claim that
allowing an equitable defense will modify any trust fund provision. Defs.’ Reply at 5.
At least one court in this District has allowed the equitable estoppel defense and held
that it barred summary judgment in favor of Plaintiff funds in a multiemployer
withdrawal liability case. See Hancock v. Ill. Cent. Sweeping LLC, 73 F. Supp. 3d 932,
943 (N.D. Ill. 2014) (explaining that “[the Seventh Circuit] has not yet, as far as the
court can tell, explicitly approved [the] use [of equitable estoppel] as an affirmative
defense in an action brought by a multiemployer plan,” but considered the defense
because the plaintiff did not object); see also Trustees of the Michiana Area Elec.
Workers Pension Fund v. La Place’s Elec. Co., Inc., 2017 WL 633847, at *6 (N.D. Ind.
Feb. 15, 2017) (discussing cases).
In the absence of any binding precedent that equitable estoppel or laches are
not available defenses in cases involving withdrawal liability in multiemployer plans,
the Court will proceed as though these equitable defenses are available to
Defendants, to the extent indicated in the analysis below.
A. Equitable Estoppel
In the context of a claim by multi-employer benefit funds seeking contributions
from an employer, “[a]n estoppel arises when one party has made a misleading
representation to another party and the other has reasonably relied to his detriment
on that representation.” Pattern Makers’ Pension Trust Fund v. Production Pattern
Shop, Inc., 1998 WL 173299, at *3 (N.D. Ill. 1998) (citing Black v. TIC Investment
Corp., 900 F.2d 112, 115 (7th Cir. 1990)). The principles of waiver and estoppel
support the notion that a party to a contract may not lull another into a false
assurance that strict compliance with a contractual duty will not be required and
then sue for non-compliance. Saverslak v. Davis Cleaver Produce Co., 606 F.2d 208,
213 (7th Cir. 1979).
Defendants maintain that Plaintiffs are estopped from holding Brothers liable
for contributions based on the Brothers’ CBA because Plaintiffs’ repeated conduct
between 1998 and the filing of the lawsuit led Defendants to reasonably believe that
the Brothers CBA had terminated. 15 Specifically, Defendants point to the settlement
agreement between Plaintiffs and Brothers, drafted by Plaintiffs’ attorneys, in which
the Termination Recital stated that the Brothers CBA had terminated on May 31,
1998. R. 104, Defs.’ Br. at 2. The record establishes that the settlement agreement
containing that Recital was (1) drafted by Plaintiffs’ attorneys, (2) sent to Defendants
by Plaintiffs’ counsel on or about January 5, 2000, and (3) signed by Brothers and
Plaintiffs’ representatives. R. 116 (Sealed), Pls.’ Resp. DSOF ¶¶ 15–16. Plaintiffs
dispute whether the Settlement Agreement, including the termination language, was
drafted solely by Plaintiffs’ attorney, Dan McAnally, without any input or request for
language from Brothers’ attorney. Id.; R. 116 (Sealed), PSOAF ¶ 17. Plaintiffs cite to
McAnally’s declaration, in which he states “that on July 6, 1999, [he] had a telephone
conversation with Robb Carlson related to the Lawsuit. During that conversation Mr.
Carlson told [him] that the Union terminated its agreement with Carlson Brothers
effective May 1998.” R. 116 (Sealed) at 87 (McAnally Decl. ¶ 4). McAnally states that
he included the Termination Recital in the Settlement Agreement pursuant to that
Motion for Summary Judgment focuses its equitable estoppel argument on the
Brothers’ CBA. See Defs.’ Br. at 5–8. To the extent Defendants argue that Plaintiffs are
estopped from asserting that Brothers and Constructors are a single employer, the Court
considers it together with Defendants’ laches argument below.
conversation. Id. Defendants deny that this conversation occurred, and cite to a
declaration from Robb in which he states that he “did not have a discussion with the
Funds’ lawyer regarding the issue of Brothers’ CBA terminating.” R. 121-1 at 3 (R.
Carlson Decl. ¶ 6). The Court cannot weigh the credibility of this conflicting evidence
at summary judgment.
Several years later, in response to Plaintiff’s request to audit Brothers, around
July 30, 2002, Robb informed the auditor that Brothers was not a signatory to a
contract as its agreement with the union terminated on May 31, 1998. R. 116 (Sealed),
Pls.’ Resp. DSOAF ¶ 20. Robb then submitted the signed Settlement Agreement to
the auditor and stated this was the “termination” they discussed. Id. After receiving
the Settlement Agreement, the auditor informed Plaintiffs that Robb had told him
the Brothers’ agreement with the union was terminated as of May 31, 1998, and
asked Plaintiffs to “please advise.” Id. ¶ 21. Robb heard no response from either the
auditors or Plaintiffs, and Plaintiffs did not pursue the audit further against
In 2008, in response to Plaintiffs’ attempt to audit Brothers in connection with
its audit of Constructors, the auditor was told that Plaintiffs did not have the right
to review Brothers’ records, and he conveyed that information to Plaintiffs. R. 116
(Sealed), Pls.’ Resp. DSOAF ¶¶ 24, 25, 27. Plaintiffs ceased further efforts to audit
Brothers. R. 116 (Sealed), Pls.’ Resp. DSOAF. Id. Years later, in May 2014, Plaintiffs
audited Constructors but did not seek to audit Brothers. Id. ¶¶ 32, 35. Then most
relevant here, in May 2014, Plaintiffs initiated an audit of Constructors but did not
request to audit Brothers. Id. ¶¶ 32–37.
Plaintiffs do not dispute any of the above facts, but rather take issue with the
implication that Plaintiffs did not complete the audits because the Brothers CBA had
terminated; rather Plaintiffs point to evidence establishing that the 2002 and 2008
audit requests were dropped because Brothers advised the auditors that it was
performing only asphalt and curb work, which is outside the Union’s jurisdiction. R.
116 (Sealed), Pls. Resp. DSOF ¶¶ 12, 22, 25, 27; R. 116 (Sealed), PSOAF ¶¶ 3–4.
Defendants dispute that the evidence in fact shows that Plaintiffs learned this
information from Brothers, as the records cited by Plaintiffs do not support this. R.
116 at 83, 85.
Plaintiffs’ Audit Department Supervisor, John Conklin (Conklin) submitted a
declaration stating that, “[a]ccording to the Trust Funds’ records, the Trust Funds
concluded the audit of Brothers in 2002 because Brothers advised the auditors that
it was performing asphalt and curb work only.” R. 116 (Sealed) at 52 (Decl. of J.
Conklin ¶ 10). Defendants contests that this statement is inadmissible under Federal
Rule of Evidence 1002 (the Original Writing Rule). Defs.’ Reply at 10 (citing KFC
Corp. v. Iron Horse of Metairie Rd., LLC, 2020 WL 3892989, at *8 (N.D. Ill. July 10,
2020)). But Defendants misunderstand Rule 1002. The Original Writing Rule
requires the parties to rely on “[a]n original writing, recording, or photograph . . . to
prove its content unless [the Federal Rules of Evidence] or a federal statute provides
otherwise.” FED. R. EVID. 1002. The court in KFC Corp. held that parts of an affidavit
violated Rule 1002 because the affiant sought to introduce the content of a competing
contract solely through his affidavit, without attaching the competing contract itself
to the affidavit or otherwise to the summary judgment motion. 2020 WL 3892989, at
*8. Here, the Audit Records—the “original writing” that Conklin interpreted in his
declaration—are part of the record. R. 116 (Sealed) at 83, 85. Conklin also stated that
his job responsibilities included “reviewing the Trust Funds’ files and . . . gathering
documents related to the Trust Funds’ audits of [Constructors] and [Brothers].” R.
116 (Sealed) at 51 (Decl. of J. Conklin ¶ 4). Under Rule 803(6), a “qualified witness,”
meaning “someone who understands the system,” can testify about the contents of a
record kept in the ordinary course of business. See United States v. Keplinger, 776
F.2d 678, 694 (7th Cir. 1985). Based on the record evidence, it appears that Conklin
can testify about the audit records under this Rule. The Court need not decide
whether Conklin’s declaration includes the necessary foundation, as “[t]o be
considered on summary judgment, evidence must be admissible at trial, though the
form produced at summary judgment need not be admissible.” Cairel v. Alderden, 821
F.3d 823, 830 (7th Cir. 2016) (internal citations omitted).
But Conklin’s statement is disputed, as Robb’s declaration again contains
competing facts. R. 121-1 at 4–5 (R. Carlson Decl. ¶ 12) (“After July 30, 2002, Brothers
heard nothing from the Funds related to collective bargaining until February 2008.
This included no discussion of the type of work Brothers performed prior to, during
or after 2002.”). Again, it is not the Court’s role at summary judgment to weigh the
credibility of competing evidence. Although Plaintiffs produce no evidence that they
communicated the reasons for not pursuing the audits to Defendants in 2002 or 2008,
Defendants’ alleged statements about Brothers’ work is material to the extent that
Defendants understood such statements to be relevant to an audit and therefore
indicated that Defendants were aware that the Brothers CBA had not—or may have
not—terminated in 1998.
Since receiving the Settlement Agreement containing the Termination clause
in 2000, Brothers states that it understood that the Brothers CBA was terminated,
and as such, it had no obligations pursuant to the Brothers CBA. R. 116 (Sealed), Pls.’
Resp. DSOF ¶ 17. Brothers interpreted Plaintiffs and their auditors’ silence in 2002
and 2008 as confirmation that it was not subject to the Brothers CBA and had no
obligations to submit to an audit by Plaintiffs, and proceeded with its business
accordingly. Id. ¶ 22. In 2014, Defendants were aware of the audit of Constructors,
and understood that because Plaintiffs did not seek to audit Brothers, Brothers had
no obligations under the Area Agreement. Id. ¶ 37.
Finally, Defendants argue that their reliance on Plaintiffs’ conduct harmed
Defendants because the Area Agreement at issue requires employers who employ
subcontractors to either (i) require the subcontractor to become a signatory to the
Area Agreement, or (ii) the employer shall maintain daily records of the employees
who perform the work and then pay the requisite fringe benefit contributions for the
work performed by those employees. Defs.’ Reply at 12 (citing R. 103, Defs.’ Resp.
PSOF ¶ 8). Defendants posit that if Brothers had known that it was bound to the
Area Agreement, it could have either required subcontractors to sign the Area
Agreement, hired only subcontractors bound by the CBA, or demanded daily records
of subcontractor hours worked. Id. To the extent the CBA imposed greater costs on
the subcontractor, which it passed to Brothers, Brothers could have adjusted its
pricing to its customers. Id. But now, after the Audit Period has ended, Brothers
cannot pass along costs to its customers nor can it comply with the CBA by
maintaining hours of records worked. Compare Am. Weathermakers, 150 F. Supp. 3d
at 909 (defendants were not harmed because the only steps they could have taken if
they had known of plaintiffs’ claim sooner would be to make the contributions that
were in dispute).
On the summary judgment record, a reasonable factfinder could conclude that
Plaintiffs’ conduct was misleading, and that Defendants’ reasonably relied on that
conduct to their detriment in determining that the Brothers CBA had terminated in
1998. Therefore, questions of material fact exist as to the equitable estoppel defense,
precluding the Court from granting summary judgment in Defendants’ favor.
However, this finding also necessarily precludes entry of summary judgment in
Plaintiffs’ favor as to whether Brothers is bound to the Brothers CBA after 1998.
The Court now turns to Defendants’ motion for summary judgment based on
laches. “Laches and equitable estoppel are interchangeable” because “conduct
claimed to create an estoppel consists mainly of delay that gives the defense a laches
flavor, since laches means delay.” Gorman Bros., 283 F.3d at 882.
In order to succeed under the doctrine of laches, Defendants must show that:
(1) Plaintiffs unreasonably delayed in asserting their rights, and (2) the delay harmed
Brothers. Am. Weathermakers, 150 F. Supp. 3d at 908 (citing Gorman Bros., 283 F.3d
at 880). To show an unreasonable delay, the Court begins by determining when
Plaintiffs first knew, or reasonably could have known, that they had a singleemployer cause of action. Id. The Court should not stretch the reasonable boundaries
of knowledge to conclude that a fund knew it had a cause of action. Id. (citing Cent.
States, Se. & Sw. Areas Pension Fund v. The Kroger Co., 2004 WL 2452737, at *12
(N.D. Ill. Nov. 1, 2004)). Additionally, as a general matter, laches is not a defense to
an action filed within the applicable statute of limitations. U.S. v. Mack, 295 U.S.
480, 489 (1935). The applicable statute of limitations to an ERISA contribution action
is ten years. Cent. Illinois Carpenters Health & Welfare Tr. Fund v. S&S Fashion
Floors Inc., 2008 WL 11366276, at *2 (C.D. Ill. Apr. 29, 2008) (citing Central States,
Southeast and Southwest Areas Pension Fund v. Jordan, 873 F.2d 149, 154 (7th Cir.
Although multiple courts in this District have held that the doctrine of laches
can apply to contribution claims brought under ERISA, see, e.g., Dore & Assocs.
Contracting, 2017 WL 3581159, at *11; Cent. States, Se. & Sw. Areas Pension Fund
v. The Kroger Co., 2004 WL 2452737, at *12 (N.D. Ill. Nov. 1, 2004), Defendants cite
only one case—and the Court is aware of only one—that applies the doctrine of laches
to a single-employer claim forming the basis for a claim for contribution. See Am.
Weathermakers, 150 F. Supp. 3d at 909.
In Am. Weathermakers, the court did not definitively decide whether laches is
available as a defense, because it held that the defense failed on the merits. Id. at
908. The court held that the Plaintiffs had not unreasonably delayed bringing a
single-employer claim where Plaintiffs learned during an earlier audit that the two
companies shared an owner and provided similar services—“[w]ithout more, this
knowledge, let alone Plaintiffs knowing only the name [of the Company], would not
have supplied a reasonable basis for bringing suit.” Id. at 909. The Court is not
convinced the defense is appropriately applied to single-employer claims on their
own—even if a fund had a reasonable basis for believing two employers are a single
employer, that relationship in itself is not a reasonable basis for a fund to bring suit
against the two companies—rather, the fund would need additional information
related to a potential violation of the CBA by one or more of the companies forming
the single employer.
But here, Defendants provide more evidence of Plaintiff’s pre-suit knowledge
of a potential single-employer relationship than the plaintiffs in Am. Weathermakers.
Defendants point to evidence that during a 2002 audit of Brothers, Plaintiffs noted to
their auditor that Constructors and Brothers are associated accounts, and Plaintiffs
suspected that Industries is an alter ego of Brothers, so the auditor should prioritize
its review. Defs.’ Reply at 8 (citing R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 19 (citing R.
116 (Sealed) at 78 (audit request); R. 112-2 at 25–26 (A. Conklin Dep. 95:11–98:1))).
Additionally, they point out that Plaintiffs’ audit procedures identify an “alter
ego/single employer” audit, which describe what factors and records to review. Id. at
8–9 (citing R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 23). In 2008, Plaintiffs sought to audit
Brothers because it was “associated” with Constructors; although Plaintiffs did not
pursue the audit, they obtained a report about Brothers showing Brothers’ address,
officers, financial data. Id. at 9 (citing R. 116 (Sealed), Pls.’ Resp. DSOF ¶¶ 25–26)).
The evidence also shows that in 2014, Plaintiffs initiated an audit of Brothers because
it may have a connection to a “newly discovered company, ‘Carlson Construction,’”
which is different than Carlson Constructors. R. 116 (Sealed), Pls.’ Resp. DSOF ¶ 33
(citing R. 116 (Sealed) at 98). In 2014, Plaintiffs’ auditor completed its audit of
Constructors for the period of January 1, 2013 through June 30, 2014. Id. ¶ 34.
Given Plaintiffs’ and their auditors’ access to information, including the 2008
report showing many factors that establish a single-employer relationship, it is
reasonable that Plaintiffs should have known as early as 2008 that a single-employer
relationship existed between Brothers and Constructors. But simply knowing that
Defendants constituted a single employer still would not have been a reasonable basis
for Plaintiffs to bring suit at that time. In fact, the evidence establishes that Plaintiffs
understood both Brother and Constructors to be bound to the Area Agreement at all
times between 2001 and 2019, and that its internal records reflected that Brothers
was not engaged in work within the Union’s jurisdiction when it made audit requests
in 2002 and 2008. See R. 116 (Sealed), Pls. Resp. DSOF ¶¶ 12, 22, 25, 27; R. 116
(Sealed), PSOAF ¶¶ 3–4.
In sum, based on the information possessed by Plaintiffs from 2008 through
2014 when they initiated the audit of all Defendants, there would have been no
reasonable basis for Plaintiffs to bring suit on a single-employer theory or otherwise.
Therefore, the Court rejects Defendants’ laches argument and concludes that
Defendant is not entitled to summary judgment on this defense.
For the reasons given above, Plaintiffs’ Motion for Summary Judgment  is
granted. Defendants’ Cross-Motion for Summary Judgment  is denied, although
the Court finds that there are questions of material fact as to whether Plaintiffs are
equitably estopped from enforcing the Brothers CBA. Defendants’ Motion for Leave
to File Supporting Documents under Seal  is granted. 16 The parties are directed
to submit a status report by April 21, 2021 advising the Court on proposed next steps
and advising whether the parties are amenable to a referral to the Magistrate Judge
to conduct a settlement conference.
Dated: March 31, 2021
United States District Judge
Franklin U. Valderrama
moved to file documents under seal in support of their Statement of Additional
Facts under Local Rule 56.1(b)(3)(C). Before the Court could rule on the Motion for Leave to
File under Seal (R. 102), Defendants filed their Local Rule 56.1(b)(3)(C) statement, with
supporting documents, under seal (R. 108) (Sealed), DSOAF). The Court has considered the
sealed documents when evaluating the parties’ cross-motions for summary judgment. Still,
to avoid confusion, the Court now grants the motion after the fact.
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