Plumbers and Gasfitters Local 5 Retirement Savings Fund et al v. Engineering Contractors, Inc.
Filing
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MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 10/4/11. (cms, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION
TRUSTEES OF THE HEATING, PIPING
AND REFRIGERATION PENSION FUND,
et al.,
Plaintiffs,
v.
ENGINEERING CONTRACTORS, INC., et
al.,
Defendants.
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Civil Action Nos. 10-cv-01439-AW;
10-cv-01444-AW; and
10-cv-02014-AW
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Memorandum Opinion
Currently pending before the Court are Plaintiffs’ motion to compel discovery, Doc. No.
30 Ex. 9,1 and Plaintiffs’ motion for partial summary judgment, Doc. No. 38. Because the parties
seem to have reached an impasse in the discovery process, the Court has referred this case to a
Magistrate Judge for the resolution of all discovery disputes. Thus, at this juncture the Court will
consider only Plaintiffs’ motion for partial summary judgment. The Court has reviewed the
entire record, as well as the pleadings and exhibits, and finds that no hearing is necessary. See
Local Rule 105.6 (D. Md. 2010). For the reasons set forth below, the Court GRANTS Plaintiffs’
motion for partial summary judgment.
I.
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FACTUAL & PROCEDURAL BACKGROUND
The citations herein refer to Case No. 10-cv-1439-AW, although the parties filed identical motions in 10-cv-01444AW and 10-cv-02014-AW.
The Plaintiffs in this case are Trustees of various employee benefit funds governed by the
Employee Retirement Income Security Act of 1974, as amended. This action was commenced by
Plaintiffs in order to recover delinquent contributions, liquidated damages, interest, attorneys’
fees and costs allegedly owed by Defendants Engineering Contractors, Inc. (“Engineering
Contractors”) and ECI of Washington LLC (“ECI”) pursuant to Sections 502(g) and 515 of
ERISA. 29 U.S.C. §§ 1132(g) and 1145.
Although discovery is not yet complete in this case, Plaintiffs move for partial summary
judgment to establish that Defendant ECI is the alter ego of Defendant Engineering Contractors.
See Doc. No. 38 Ex. 1 at 1. Specifically, Plaintiffs contend that Engineering Contractors, which
ended its operations in early May 2010, continues to operate as ECI. In support of its motion,
Plaintiffs present facts culled from Defendants’ websites and Interrogatory Answers. First,
Plaintiffs note that when Engineering Contractors ended its operations in May 2010, its former
employees began working for ECI. Doc. No. 38 Ex. 2 at 13, Ex. 15, Ex. 21. Steven Griffith, who
was the President and 51% owner of Engineering Contractors, is now the President and 51%
owner of ECI. Similarly, Paul Parker was the Vice President and 49% owner Engineering
Contractors and is now the Vice President and 49% owner of ECI. Doc. No. 38 Exs. 3, 4. Griffith
and Parker’s former responsibilities at Engineering Contractors mirror their present
responsibilities at ECI. Id.
Defendants’ websites and Interrogatory Answers demonstrate that the companies have a
common business purpose and operated in the same geographic area. Doc. No. 38 Exs. 4-7. The
companies share a common name and stylized “ECI” logo. Doc. No. 38 Exs. 6, 8. They also
share employees, Doc. No. 38 Ex. 3 at 69-73, e-mail addresses, Doc. No. 38 Exs. 6, 9, identical
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banking operations, Doc. No. 38 Ex. 3 at 88, and identical computer software, Doc. No. 38 Ex. 2
at 37, 55. Defendants’ representatives also testified that Defendants share common equipment
such as trucks, tools, office computers and printers. Doc. No. 38 Exs. 2, 3. Defendants contend
that Plaintiff relies impermissibly on affidavits that are not made with personal knowledge, rely
extensively on hearsay, and fail to establish that the declarants are competent to testify as to
matters contained within the affidavits. See Doc. No. 43 at 5. However, Defendants do not deny
the accuracy of the information gleaned through Defendants’ websites and Interrogatory
Answers.
II.
STANDARD OF REVIEW
Summary judgment is only appropriate “if the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see Celotex
Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). The Court must “draw all justifiable inferences in
favor of the nonmoving party, including questions of credibility and of the weight to be accorded
to particular evidence.” Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520 (1991) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).
To defeat a motion for summary judgment, the nonmoving party must come forward with
affidavits or other similar evidence to show that a genuine issue of material fact exists. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A disputed fact
presents a genuine issue “if the evidence is such that a reasonable jury could return a verdict for
the non-moving party.” Anderson, 477 U.S. at 248. Although the Court should believe the
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evidence of the nonmoving party and draw all justifiable inferences in his or her favor, a party
cannot create a genuine dispute of material fact “through mere speculation or the building of one
inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985).
III.
ANALYSIS
Plaintiffs argue that ECI is liable as an alter ego for all amounts due to Plaintiffs under
the collective bargaining agreement with Engineering Contractors. The alter ego doctrine was
developed to “prevent employers from evading their obligations under labor laws and collective
bargaining agreements through the device of making a mere technical change in the structure or
identity of the employing entity . . . without any substantial change in its ownership or
management.” Maryland Elec. Indus. Health Fund v. Kodiak Util. Constr., 289 F. Supp. 2d 698,
701-02 (D. Md. 2003) (quoting Mass. Carpenters Ctr. Agency v. Belmont Concrete Corp., 139
F.3d 304, 307 (1st cir. 1998) (internal quotations omitted)).
Courts impose alter ego status based on a variety of factors, including “continuity of
ownership, similarity of the two companies in relation to management, business purpose,
operation, equipment, customers, supervision, and anti-union animus.” Id. (citations omitted). At
its basis, a court must decide whether a successor corporation is “really the predecessor
corporation by another name.” Id. (quoting NLRB v. Allcoast Transfer, Inc., 780 F.2d 576 (6th
Cir. 1986). The Fourth Circuit has articulated a two-part test for determining alter ego status,
based on: (1) “whether substantially the same entity controls both the old and new employer;”
and (2) whether the transfer resulted in an expected or reasonably foreseeable benefit to the old
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employer related to the elimination of its labor obligations.” Alkire v. NLRB, 716, F.2d 1014,
1020 (4th Cir. 1983).
Defendants’ contend that the mere fact that ECI and Engineering Contractors have
similar names is insufficient to find ECI an alter ego, and that the Court cannot rely on certain
affidavits proffered by Plaintiffs which constitute heresy and suffer from other deficiencies. Doc.
No. 43 at 5. Defendants’ contentions ignore the weight of undisputed evidence presented by its
own Interrogatory Answers demonstrating that substantially the same entity controls Engineering
Contractors and ECI in both form and substance. In terms of form, Steven Griffith has controlled
both Engineering Contractors and ECI, as president and 51% owner of both companies. In terms
of substance, Griffith controlled the “post-bidding” operations of Engineering Contractors and
presently controls the “post-bidding” operations of ECI. Similarly, Paul Parker was the VicePresident of Engineering Contractors and owned 49% of the company and is now the VicePresident of ECI and owns 49% of the company. Parker managed the bidding, financial accounts
and payroll operations for both companies.
The circumstances surrounding the transfer of operations from Engineering Contractors
to ECI present many of the factors courts have found persuasive in supporting a finding of alter
ego status, such as the sharing of equipment and employees between the past and present
companies. See Kodiak Electric, 289 F. Supp. at 703. The evidence establishes that Griffith
continued to control operations despite the nominal change from Engineering Contractors to
ECI. The first step of the Alkire test is therefore met.
Regarding the second step, the “expected or reasonably foreseeable benefit” test, this
Court has found that continuity of ownership “suggests that the ability of the owners of the first
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company to evade that company’s debts by switching to a second company financially benefits
them.” Id. There is no dispute here as to continuity of ownership. Engineering Contractors and
ECI were owned and controlled by the same people, Griffith and Parker. By going out of
business as Engineering Contractors and renaming itself ECI, Parker and Griffith were able to
evade obligations under the union contract. Even if the Court ignores the affidavits presented by
Plaintiffs, Engineering Contractors’ own Deposition states that it went out of business due to
“major cost overruns from the union employees.” Doc. No. 38 Ex. 2 at 18. Plaintiffs have failed
to come forward with any “specific facts” refuting this point and showing that there is a “genuine
issue for trial.” Fed. R. Civ. P. 56(e); Bouchat v. Baltimore Ravens Football Club, 346 F.3d 514,
525 (4th Cir. 2003). Because the undisputed facts demonstrate that Engineering Contractors
continues to operate as ECI, the Court finds that ECI is the alter ego of Engineering Contractors
and is thus jointly liable to Plaintiffs for all amounts allegedly owed under the collective
bargaining agreement.
IV.
CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for partial summary judgment is
GRANTED. A separate order will follow.
October 4, 2011
Date
/s/
Alexander Williams, Jr.
United States District Judge
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