International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local No. 10 v. Acme Erectors, Inc. et al

Filing 31

ORDER denying 15 Motion to Dismiss for Failure to State a Claim; denying 17 Motion to Dismiss for Failure to State a Claim. Signed on 10/17/16 by Magistrate Judge Robert E. Larsen. (Wilson, Carol)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
INTERNATIONAL ASSOCIATION OF
BRIDGE, STRUCTURAL, ORNAMENTAL
AND REINFORCING IRON WORKERS
LOCAL NO. 10,
Plaintiff,
v.
ACME ERECTORS, INC., and
HCH CONSTRUCTION, INC.,
Defendants.

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ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS
Before the court are motions to dismiss the complaint on the ground that the
complaint fails to include facts to support its conclusory allegations that defendants are
alter egos of each other and are a “single employer” under Section 301 of the Labor
Management Relations Act (“LMRA”) and therefore fails to state a claim for which relief
can be granted. For the reasons stated below, defendants’ motions will be denied.
I.

BACKGROUND
On May 27, 2016, plaintiff filed a complaint against defendants Acme Erectors,

Inc., and HCH Construction, Inc. Plaintiff (“Union”) alleges that a collective bargaining
agreement was entered into by the Union and defendant Acme Erectors, Inc., (“Acme”).
The collective bargaining agreement requires that Acme pay wages to its covered
employees according to the wage rates specified in the collective bargaining agreement
and make fringe benefit contributions to certain employee benefit plans established and
maintained for the purpose of providing retirement, medical, and other benefits for

employees of contractors, such as Acme, who enter into collective bargaining
agreements with the Union. The complaint alleges that defendant HCH Construction,
Inc., (“HCH”) is an alter ego of Acme, that the two are a “single employer” under federal
labor law, and that HCH is bound to the collective bargaining agreement to the same
extent as Acme.
Count One: Alter Ego
8.
Upon information and belief, Defendants Acme and HCH have
shared, and continue to share, substantially identical and/or common
management and/or control of labor relations, business purpose, operations,
equipment, customers and/or types of customers, supervision, ownership, and/or
financial control.
9.
Upon information and belief, Defendant HCH has been operated as
an artifice and a sham so as to avoid the obligations imposed under the
[collective bargaining agreement].
*****
11.
Defendants Acme and HCH are operated without any regard for
their supposed corporate separateness from each other, and are disguised
forms of the same entity. Defendant HCH was formed and/or has been operated
so as to evade the responsibilities imposed under the [collective bargaining
agreement] to which Acme is signatory. As such, Defendants Acme and HCH
are alter egos; Defendant HCH is bound to the [collective bargaining agreement]
to the same extent as is Defendant Acme; and Plaintiff is entitled to pierce the
corporate veils of Defendants and to enforce against Defendant HCH all
obligations imposed under the [collective bargaining agreement], including the
obligations to pay wages to the employees of HCH at the rates established by
the [collective bargaining agreement], and the obligation to remit fringe benefit
contributions to the employee benefit plans specified in the [collective bargaining
agreement].
12.
Defendant HCH has failed to pay all of its employees wages at the
rates established under the [collective bargaining agreement], and further, has
failed to remit fringe benefit contributions to the employee benefit plans specified
in the [collective bargaining agreement]. Accordingly, Defendant HCH, and its
alter ego Defendant Acme, are in breach of the [collective bargaining
agreement].
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Count Two: Single Employer
14.
Defendants Acme and HCH share interrelated operations, common
management, centralized control of labor relations, and/or common ownership or
financial control. As such, Defendants Acme and HCH are single employers
under federal labor law; Defendant HCH is bound to the [collective bargaining
agreement] to the same extent as is Defendant Acme; and Plaintiff is entitled to
enforce against Defendant HCH all obligations imposed under the [collective
bargaining agreement], including the obligations to pay wages to the employees
of HCH at the rates established by the [collective bargaining agreement], and the
obligation to remit fringe benefit contributions to the employee benefit plans
specified in the [collective bargaining agreement].
15.
Defendant HCH has failed to pay all of its employees wages at the
rates established under the [collective bargaining agreement], and further, has
failed to remit fringe benefit contributions to the employee benefit plans specified
in the [collective bargaining agreement]. Accordingly, Defendants HCH and
Acme, as a single employer, are in breach of the [collective bargaining
agreement].
On July 13, 2016, defendant Acme filed a motion to dismiss the complaint
(document number 15) on the ground that the complaint lacks any facts to support its
conclusory allegations and therefore the complaint fails to state a claim against Acme
under Section 301 of the Labor Management Relations Act of 1947 (“LMRA”). On July
19, 2016, defendant HCH filed a motion to dismiss (document number 17), merely
incorporating the motion to dismiss previously filed by defendant Acme. On July 27,
2016, plaintiff filed a response to both motions (document number 18) arguing that the
factual basis in the complaint is incorrectly considered a legal conclusion in defendants’
motions. On August 15, 2016, Acme filed a reply (document number 20) which was
incorporated by reference into a reply filed by HCH the same day (document number
21).

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II.

MOTION TO DISMISS
A motion to dismiss for failure to state a claim should be granted only if it

appears beyond doubt that the plaintiff can prove no set of facts which would entitle it to
relief. Ritchie Capital Management, L.L.C. v. Jeffries, 653 F.3d 755, 764 (8th Cir.
2011); Craig Outdoor Advertising, Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 10231024 (8th Cir. 2008), cert. denied, 555 U.S. 1136 (2009). In ruling a motion to dismiss,
the court is required to view all facts in the complaint as true. CN v. Willmar Public
Schools, 591 F.3d 624, 629 (8th Cir. 2010); Owen v. General Motors Corp., 533 F.3d
913, 918 (8th Cir. 2008). Although a complaint need not include detailed factual
allegations, “a plaintiff’s obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic recitation of the elements of
a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(internal quotations and alteration omitted). Instead, the complaint must set forth
“enough facts to state a claim to relief that is plausible on its face.” Id. at 570.
[A] court considering a motion to dismiss can choose to begin by identifying
pleadings that, because they are no more than conclusions, are not entitled to
the assumption of truth. While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations. When there are
well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “The essential function of a complaint
under the Federal Rules of Civil Procedure is to give the opposing party ‘fair notice of
the nature and basis or grounds for a claim, and a general indication of the type of
litigation involved.’” Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 848 (8th
Cir. 2014) (quoting Hopkins v. Saunders, 199 F.3d 968, 973 (8th Cir. 1999) (quoting
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Redland Ins. Co. v. Shelter Gen. Ins. Cos., 121 F.3d 443, 446 (8th Cir. 1997))). “The
well-pleaded facts alleged in the complaint, not the legal theories of recovery or legal
conclusions identified therein, must be viewed to determine whether the pleading party
provided the necessary notice and thereby stated a claim in the manner contemplated
by the federal rules.” Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d at 848
(quoting Parkhill v. Minn. Mut. Life Ins. Co., 286 F.3d 1051, 1057-1058 (8th Cir. 2002)).
A.

COUNT ONE - ALTER EGO
Defendants argue the plaintiff has failed to plead “any facts” demonstrating that

HCH is the alter ego of Acme. “The two paragraphs of the facts section that address
alter ego status reference Plaintiff’s mere unsubstantiated ‘beliefs.’ . . . While Plaintiff
may believe that Acme and HCH have satisfied the elements required for alter ego
status and that ‘HCH has been operated as an artifice and sham so as to avoid the
obligations imposed under the CBA,” this factually unsupported hypothesis alone
cannot defeat a motion to dismiss.” (Acme suggestions in support, p. 5). Defendant’s
argument is without merit.
The alter ego doctrine developed under the National Labor Relations Act, 29
U.S.C. §§ 151 et seq., focuses “on the existence of a disguised continuance of a former
business entity or an attempt to avoid the obligations of a collective bargaining
agreement.” Greater Kansas City Laborers Pension Fund v. Superior General
Contractors, Inc., 104 F.3d 1050, 1055 (8th Cir. 1997) (quoted case omitted); see also
Trustees of the Graphic Commc’ns Int’l Union Upper Midwest v. Bjorkedal, 516 F.3d
719, 727 n. 2 (8th Cir. 2008) (citing cases); Greater St. Louis Const. Laborers Welfare
Fund v. Mertens Plumbing and Mechanical, Inc., 552 F.Supp.2d 952 (E.D. Mo. 2007).
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“The essential inquiry under the alter ego analysis is ‘[w]hether there was a bona fide
discontinuance and a true change of ownership . . . or merely a disguised continuance
of the old employer.’” Iowa Express Distr., Inc. v. N.L.R.B., 739 F.2d 1305, 1310 (8th
Cir. 1984) (quoting Southport Petroleum Co. v. N.L.R.B., 315 U.S. 100, 106 (1942)).
“In determining whether two business entities are alter egos, . . . courts consider
a variety of factors, including whether the two entities have substantially identical
management, business purpose, operation, equipment, customers, supervision, and
ownership.” Midwest Precision Heating and Cooling, Inc. v. N.L.R.B., 408 F.3d 450, 458
(8th Cir. 2005) (cited case omitted). In the alter ego analysis, “one of the most
important [factors] is the existence of continued control or ownership by the owner of
the discontinued company.” Iowa Express Distr., Inc. v. N.L.R.B., 739 F.2d at 1310
(cited case omitted). Another key factor is “whether a motive for the new entity’s taking
over of the operations of the old entity was to evade responsibilities under the Act and
whether dealings between the two entities were at arm’s length.” Midwest Precision
Heating and Cooling, Inc. v. N.L.R.B., 408 F.3d at 458-459 (cited case omitted). This
test is flexible, so the lack of any particular factor does not preclude a finding of alter
ego status. Id. at 459 (citing N.L.R.B. v. Campbell-Harris Elec., Inc., 719 F.2d 292, 296
(8th Cir. 1983) (affirming NLRB finding that ownership and management of first
company, a two-man partnership, was substantially identical to that of second
company, a sole proprietorship)); Greater St. Louis Const. Laborers Welfare Fund v.
Mertens Plumbing and Mechanical, Inc., 552 F. Supp.2d at 955.
Contrary to defendants’ argument, the complaint includes a factual basis for
plaintiff’s claim of alter ego. Whether two business entities share substantially identical
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or common management or control of labor relations is a fact supporting a finding that
the entities are alter egos. Greater St. Louis Const. Laborers Welfare Fund v. Mertens
Plumbing and Mechanical, Inc., 552 F.Supp.2d 952, 954 (E.D. Mo. 2007). Whether the
two entities share a common business purpose is also a fact supporting the conclusion
that they are alter egos. Carpenters’ District Council of Greater St. Louis and Vicinity v.
F.G. Lancia Custom Woodworking, LLC, 155 F.Supp.3d 951, 958 (E.D. Mo. 2015);
Greater St. Louis Const. Laborers Welfare Fund v. Mertens Plumbing and Mechanical,
Inc., 552 F.Supp.2d at 954. Whether the two business entities have common
operations is a fact supporting the alter ego conclusion. Carpenters’ District Council of
Greater St. Louis and Vicinity v. F.G. Lancia Custom Woodworking, LLC, 155
F.Supp.3d at 958-959; Greater St. Louis Const. Laborers Welfare Fund v. Mertens
Plumbing and Mechanical, Inc., 552 F.Supp.2d at 954. Use of common equipment is a
fact supporting the alter ego conclusion. Carpenters’ District Council of Greater St.
Louis and Vicinity v. F.G. Lancia Custom Woodworking, LLC, 155 F.Supp.3d at 959960; Greater St. Louis Const. Laborers Welfare Fund v. Mertens Plumbing and
Mechanical, Inc., 552 F.Supp.2d at 954. Common supervision is a fact supporting the
conclusion of alter egos. Carpenters’ District Council of Greater St. Louis and Vicinity v.
F.G. Lancia Custom Woodworking, LLC, 155 F.Supp.3d at 957-958. Common
ownership is a factual finding supporting a legal conclusion of alter egos. Carpenters’
District Council of Greater St. Louis and Vicinity v. F.G. Lancia Custom Woodworking,
LLC, 155 F.Supp.3d at 957; Greater St. Louis Const. Laborers Welfare Fund v. Mertens
Plumbing and Mechanical, Inc., 552 F.Supp.2d at 954 (“the evidence shows that John
Dickinson owned, controlled and operated all three companies”).
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Defendant cites Schultz v. Ability Ins. Co., 2012 WL 4794365 (N.D. Iowa,
October 9, 2012), in support of its position that the allegations in the instant complaint
are nothing more than legal conclusions, quoting the following: “[S]imply alleging that
Ability Resources is the alter ego of Ability Insurance, without more, fails to satisfy the
pleading requirements of Iqbal and Twombly.” However, the court in Schultz noted that
a unity of interest and ownership was a factual allegation supporting a finding of alter
ego, whereas defendant here argues the opposite. Schultz does not support
defendant’s position.1
Federal Rule of Civil Procedure 8 does not require that the complaint’s factual
allegations include the evidence that will be used to prove those factual allegations.
Bell Atlantic Corporation v. Twombly, 550 U.S. at 556 (Federal Rule of Civil Procedure
8 “simply calls for enough facts to raise a reasonable expectation that discovery will
reveal evidence” to support the claim). All that is required at the pleading stage is fair
notice of the nature and basis or grounds for a claim, and a general indication of the
type of litigation involved. The facts pled in this complaint give defendants fair notice
that plaintiff’s alter ego claim is based on the plaintiff’s belief and intent to offer
evidence to support the belief that defendants share common management, control of
labor relations, business purpose, operations, equipment, customers, supervision,

1

I also note here, as plaintiff points out in its response, that the alter ego doctrine
as developed under the National Labor Relations Act involves a more lenient standard
for disregarding the corporate form than that employed in corporate law, which was the
case in Schultz. See Greater Kansas City Laborers Pension Fund v. Superior General
Contractors, Inc., 104 F.3d 1050, 1055 (8th Cir. 1997).
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ownership and financial control. It is only at the summary judgment stage or trial that
evidence to prove those facts will be required.
B.

COUNT TWO - SINGLE EMPLOYER LIABILITY
Defendants raise the same argument with respect to plaintiff’s second claim.

“Plaintiff does not plead any facts, let alone facts sufficient to state a plausible claim
that a ‘single employer’ relationship exists between Acme and HCH. Plaintiff merely
offers a conclusory statement that ‘Defendants Acme and HCH share interrelated
operations, common management, centralized control of labor relations, and/or
common ownership for financial control.” (Acme suggestions in support, p. 7).
Under the single employer doctrine, two or more related enterprises are treated
“as a single employer for purposes of holding the enterprises jointly to a single
bargaining obligation or for the purpose of considering liability for any unfair labor
practices.” Kansas City S. Transp. Co., Inc. v. Teamsters Local Union #41, 126 F.3d
1059, 1062 (8th Cir. 1997) (citing Iowa Exp. Distribution, Inc. v. N.L.R.B., 739 F.2d
1305, 1310 (8th Cir. 1984)). The Eighth Circuit has adopted a four-part test to
determine whether two corporate entities should be viewed as a single employer of the
plaintiff under the LMRA. Pulitzer Pub. Co. v. N.L.R.B., 618 F.2d 1275, 1278-1279 (8th
Cir. 1980). See also Radio & Television Broad. Technicians Local Union 1264 v.
Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256 (1965); Russom v. Sears, Roebuck &
Co., 415 F. Supp. 792, 796-797 (E.D. Mo. 1976), aff’d sub nom. 558 F.2d 439 (8th Cir.
1977). These factors include:
1.

Interrelation of operations,

2.

Centralized control of labor relations,
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3.

Common management, and

4.

Common ownership or financial control.

Radio & Television Broad. Technicians Local Union 1264 v. Broad. Serv. of Mobile,
Inc., 380 U.S. at 256. “No one of these factors is controlling nor need all criteria be
present; single employer status is a factual question that ultimately depends upon all
the circumstances of the individual case.” Id.
For the same reasons as stated above with respect to count 1 of the complaint, I
find that the requirements of Federal Rule of Civil Procedure 8 have been met here.
Defendants have been given fair notice that plaintiff’s single employer claim is based on
the plaintiff’s belief and intent to offer evidence to support the belief that defendants
share common management, control of labor relations, business purpose, operations,
equipment, customers, supervision, ownership, and financial control. No more is
required at the pleading stage.
III.

CONCLUSION
Based on the above, I find that each count of the complaint sets forth enough

facts to state a claim to relief that is plausible on its face. Therefore, it is
ORDERED that defendants’ motions to dismiss are denied.

ROBERT E. LARSEN
United States Magistrate Judge
Kansas City, Missouri
October 17, 2016

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