Moore et al v. Advantage Office Services, Inc. et al
Filing
40
ORDER denying 21 Plaintiffs' Amended Motion for Summary Judgment. The parties are ordered to hold a settlement conference with Magistrate Judge Keyes within 60 days. (Written Opinion). Signed by Judge Susan Richard Nelson on 06/06/11. (MJC)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
James E. Moore, as Trustee of the
Carpenters and Joiners Welfare
Fund, Twin City Carpenters Pension
Master Trust Fund, and Twin City
Carpenters Vacation Fund; Tim
McGough, as Trustee of the
Carpenters & Joiners Welfare Fund,
Twin City Carpenters Pension Master
Trust Fund, and Twin City Carpenters
Vacation Fund; and James E. Moore,
as Trustee of the Carpenters and
Joiners Apprenticeship and Journeyman
Training Trust Fund; and each of
their successors;
Civil No. 09-CV-2463 (SRN/JJK)
MEMORANDUM AND ORDER
Plaintiffs,
v.
Advantage Office Services, Inc.;
American Office Installations,
Inc; and Gregory J. Dodge,
individually;
Defendants.
Amanda R. Cefalu, Katrina E. Joseph, and Pamela Hodges Nissen, Anderson Helgen Davis &
Nissen, LLC, 150 South Fifth Street, Suite 3100, Minneapolis, Minnesota 55402, for Plaintiffs.
Mark V. Steffeson, Henningson & Snoxell, Ltd., 6900 Wedgwood Road, Suite 200, Maple
Grove, Minnesota 55311, for Defendants.
_____________________________________________________________________________
SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Plaintiffs’ Amended Motion for Summary Judgment.
[Doc. No. 21]. As stated at the hearing, and for the reasons that follow, the Motion is denied.
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I.
BACKGROUND
Plaintiffs are the trustees of several multi-employer fringe benefit funds. Two of the
Defendants are companies that assemble and install commercial office furniture, American
Office Installations, Inc. (“American”), and Advantage Office Services, Inc. (“Advantage”). The
third Defendant, Gregory Dodge, is half-owner of both companies. He serves as President of
American, and Vice President and Secretary-Treasurer of Advantage.
In 1997, Advantage agreed to be bound by the collective bargaining agreement (“CBA”)
between the Lakes and Plains Regional Council of Carpenters and Joiners of the United
Brotherhood of Carpenters and Joiners of America (the “Union”) and the Carpentry Contractors
Association and Minnesota Drywall and Plaster Association. (Wolf Aff Ex. A (CBA); Ex. B
(Agreement between Advantage and the Union).) In the Agreement, Advantage “specifically
agree[d] to be bound by all provisions with regard to fringe benefits . . . .” (Id. Ex. B at 1.)
Further, by signing the Agreement on behalf of Advantage, Dodge agreed “to be bound
individually to the full and faithful performance of all the terms and provisions” of the
Agreement. (Id. at 2.)
Dodge formed Advantage and American within days of each other in 1988. He contends
that, since the beginning, these companies were intended to be “double-breasted” companies: at
a customer’s behest, one could perform union work and the other could perform non-union
work.1 In 2005, Dodge’s companies merged with two “double-breasted” companies owned by
1
A double-breasted operation occurs when the same owner owns
both a union and a non-union company. The non-union company
bids on jobs that do not require a union contractor, while the union
company bids on union jobs. Both companies can thus bid more
competitively in their respective markets. Double-breasted
2
Matthew McKay and McKay became half owner of both Advantage and American. McKay is
the President of Advantage and the Vice President and Secretary-Treasurer of American. He is
not a signatory to the Agreement at issue and is not named as a Defendant in the Complaint.
At the heart of Plaintiffs’ allegations is their contention that Dodge formed the two
separate companies to avoid his and Advantage’s obligations under the CBA, and that the two
companies are alter egos of each other, so that Advantage is liable for the hours worked by
American’s employees. Plaintiffs contend that an audit of the two companies’ time records
reveals that Advantage owes more than $1.5 million in unpaid fringe benefit contributions to the
funds. They ask the Court to determine that, as a matter of law, the companies owe the funds
$1,578,502.32 in unpaid fringe benefit contributions, plus liquidated damages of 10% of this
amount and/or prejudgment interest,2 plus attorney’s fees and costs in an amount to be
determined.
Defendants dispute that American and Advantage are alter egos. They also argue that, if
the Court does find that the companies are alter egos so that Advantage must make fringe benefit
contributions on behalf of American, the Court should decline to grant summary judgment on the
precise amounts owed. According to Defendants, Plaintiffs’ calculations were untimely
disclosed and do not take into account that some supervisory and administrative employees were
not covered by the CBA.
operations in the construction industry are not inherently illegal
under the NLRA.
C.E.K. Indus. Mech. Contractors, Inc., v. N.L.R.B., 921 F.2d 350, 352 n.3 (1st Cir. 1990).
2
The heading of this section of Plaintiffs’ brief also requests “double interest” but the
discussion does not mention double interest. (Pls.’ Am. Supp. Mem. at 15 [Doc. No. 22].)
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II.
DISCUSSION
A.
Standard of Review
Summary judgment is proper if there are no disputed issues of material fact and the
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The Court must
view the evidence and the inferences that may be reasonably drawn from the evidence in the
light most favorable to the nonmoving party. Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th
Cir. 1996). However, “summary judgment procedure is properly regarded not as a disfavored
procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are
designed to secure the just, speedy, and inexpensive determination of every action.” Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986).
The moving party bears the burden of showing that there is no genuine issue of material
fact and that it is entitled to judgment as a matter of law. Id. at 323; Enter. Bank, 92 F.3d at 747.
A party opposing a properly supported motion for summary judgment may not rest on mere
allegations or denials, but must set forth specific facts in the record showing that there is a
genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
B.
Alter Ego
If American and Advantage are alter egos, then both companies are bound by the CBA
and Advantage must pay fringe-benefit contributions on behalf of American’s employees. See
Trustees of the Graphic Commc’ns Int’l Union Upper Midwest Local 1M Health & Welfare Plan
v. Bjorkedal, 516 F.3d 719, 727 (8th Cir. 2008) (noting that only the signing party can be bound
to collective bargaining agreement unless the corporate law doctrine of alter ego applies). To
determine whether American and Advantage are alter egos the Court examines whether one of
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the companies “(1) is controlled by another to the extent that it has independent existence in
form only and (2) is used as a subterfuge to defeat public convenience, to justify wrong, or to
perpetuate a fraud.” Greater Kansas City Laborers Pension Fund v. Superior Gen. Contractors,
Inc., 104 F.3d 1050, 1055 (8th Cir. 1997).3
Plaintiffs contend that American and Advantage had no independent existence. The two
companies operated out of the same office, the ownership of the companies was the same, and
they used the same person to assign and schedule employees. But other facts belie the allegedly
intertwined nature of the two companies. The companies maintained separate books, paid
employees separately, paid separate taxes, maintained separate mailing addresses and checking
accounts, did not share tools or supplies, and performed different types of services, albeit in the
same general industry.
The cases on which Plaintiffs rely for their argument on the first prong of the alter-ego
test are factually distinguishable. In one, the non-union company was formed years after the
union company, and the union company very shortly thereafter ceased doing business.
Operating Eng’rs Local No. 101 Pension Fund v. K.C. Excavating & Grading, Inc., No. 01-87,
2002 WL 1492103 (W.D. Mo. Mar. 11, 2002). In another, the two companies were covered by a
single insurance company, had a single checking account, paid wages and fringe benefit
contributions from the single checking account, reported combined wage and tax totals for the
two companies to the IRS in quarterly filings, and maintained a loan financing agreement
3
Advantage urges the Court to apply Minnesota law on piercing the corporate veil in
determining whether Advantage and American are alter egos. It is clear, however, that the Court
should apply “general ‘corporate law principles to determine employer liability under
ERISA . . . .’” Bjorkedal, 516 F.3d at 727 (quoting Superior Gen., 104 F.3d at 1050).
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whereby one company loaned the other company all of its operating funds. Brady v. Borchart
Indus., Inc., Civ. No. 05-1386, 2006 WL 3043138, at *1-2 (D. Minn. Oct. 25, 2006)
(Montgomery, J.). Similarly, in another case, two companies were alter egos for the purposes of
fringe benefit contributions under a CBA when they functioned as a single entity, loans from the
owner of one business to the other business were accounted for as loans from an officer or
shareholder, the companies “leased” employees to each other but had no written agreement to
support that arrangement, and the companies shared a bookkeeper, office space, employees, and
equipment, with no record of one company billing the other for these resources. Seipel v.
Arrowhead Indus. Serv., Inc., Civ. No. 07-3864, 2010 WL 605722, at *2-3 (D. Minn. Feb. 11,
2010) (Schiltz, J.).
Conversely, in a case more factually similar to the instant matter, disputes of fact as to
whether two companies were alter egos of each other precluded summary judgment on that issue.
Seipel v. John Heinlein Constr., Inc., Civ. No. 07-4643, 2009 WL 1405223 (D. Minn. May 18,
2009) (Frank, J.). In Heinlein Construction, the two companies used the same office space, with
one “renting” the space from the other in exchange for the use of the other company’s
bookkeeper, and the companies shared equipment and vehicles. But the companies made
separate purchases of materials, separately bid and entered into contracts, and had separate bank
accounts, insurance policies, and tax returns. Id. at *2. Defendants in that case argued, as
Defendants do here, that the parties were “‘double-breasted’ legal entities with different
focuses[:]” one company used union labor for commercial projects and one used non-union labor
for decorative residential projects. Id. at *4.
Although the parties cross-moved for summary judgment, Judge Frank determined that
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the record revealed issues of material facts that made summary judgment inappropriate. Id. at
*5. Those same sorts of issues of material facts exist in this case. The evidence shows that
Advantage typically handles larger commercial projects and American handles smaller projects,
and that Advantage and American pay their employees separately and issue separate W-2s for
their respective employees, in addition to the other facts mentioned above.
Plaintiffs contend that Defendants admitted that American lends Advantage money with
no written agreement, but in fact the deposition testimony only shows that it would be possible
for Advantage to use American’s line of credit, not that Advantage has ever done so. (Cefalu
Aff. Ex. F at 30 (Ries Dep.).) Plaintiffs also argue that Dodge admitted that he determines
whether the job will be union and done by Advantage or non-union and handled by American.
But this is contradicted by Dodge’s deposition testimony. Indeed, Dodge testified unequivocally
that the individual customer determines whether the job must be union or non-union (id. Ex. A at
11 (Dodge Dep.)), and every other American and Advantage employee testified the same way.
There are genuine issues of fact as to whether American and Advantage were alter egos.
Those factual issues preclude summary judgment, and Plaintiffs’ Motion must be denied.
C.
Remaining Issues
Because the Court declines to grant summary judgment on the issue of alter ego liability,
the issues of the amounts due, attorney’s fees, and laches are not ripe for consideration.
Summary judgment on these issues is likewise denied.
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III.
CONCLUSION
Genuine issues of material fact remain for resolution as to whether the Defendant
companies are alter egos.
THEREFORE, IT IS HEREBY ORDERED THAT:
1.
2.
Dated:
Plaintiffs’ Amended Motion for Summary Judgment [Doc. No. 21] is DENIED;
and
The parties are ORDERED to hold a settlement conference with Magistrate
Judge Keyes within 60 days.
June 6, 2011
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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