Cement Masons v. Coatings

Background

This case was tried to the bench — decided by the judge alone, without a jury — under the Employment Retirement Income Security Act of 1974 (ERISA), specifically 29 U.S.C. §§ 1132(a) and 1145, which require employers bound by collective bargaining agreements (CBAs) to make fringe-benefit contributions to multiemployer benefit plans.

The Parties. Plaintiff Cement Masons, Plasterers and Shophands Service Corp. (Service Corporation) is a non-profit entity that serves as the receiving agent, fiduciary, and collection agent for four union benefit funds: a health and welfare fund, a pension fund, a savings trust fund, and a journeyman and apprentice training fund (the Funds), all established for workers covered by the Local 633 CBA.

Defendant Quality Cleaning, Inc. (Cleaning), doing business as QC Companies (together, QC), is a Minnesota corporation co-owned equally by brothers Tim Maciej and Gary Maciej. QC performs cleaning services and floor-coating work in commercial construction, and has historically operated as a non-union company.

Defendant Quality Coatings, LLC (Coatings) was formed in June 2013 by Alisa Maciej, Tim Maciej's wife, and is wholly owned by her. Coatings performed floor-coating work on union construction projects.

Defendant Alisa Maciej is sued in her individual capacity. She served as owner and Chief Operating Officer of Coatings and was a salaried management employee of QC responsible for bookkeeping and payroll for both companies.

The CBA Obligations. Local 633 is a labor union representing cement mason workers. On or around June 30, 2014, Alisa Maciej signed an Independent Addendum on behalf of Coatings binding Coatings to the Local 633 CBA. She signed two additional addenda in 2016 and 2019, keeping Coatings bound through April 30, 2022 (the Audit Period runs June 1, 2016 through April 30, 2022). The CBA required Coatings to pay union wage rates and make monthly fringe-benefit contributions for all covered hours worked by its employees, and to permit audits of employment and payroll records. The Independent Addendum also expressly stated the CBA was 'binding personally and individually' upon Alisa Maciej as owner.

QC was never a signatory to the CBA.

Claims at Issue

The Service Corporation brought four counts. Counts I through III were resolved at trial: - Count I: That QC and Coatings are alter egos and should be treated as a single employer liable for fringe-benefit contributions. - Count II: That the Service Corporation is entitled to audit the records of both entities for the Audit Period. - Count III: That Alisa Maciej is personally liable for any contributions found to be owed. - Count IV: The actual dollar amount of unpaid contributions — reserved for after the audit.

Legal Standard: Alter Ego Under ERISA

Under ERISA, only parties to a CBA are ordinarily bound by it. However, a fiduciary may pursue a non-signatory employer if it can establish that the non-signatory is an alter ego of the signatory. The Eighth Circuit applies corporate-law principles: the separate corporate form may be disregarded when (1) one entity is controlled by another to the extent that it has independent existence in form only, and (2) the entity is used as a subterfuge to defeat public convenience, justify wrong, or perpetuate a fraud. See Greater Kan. City Laborers Pension Fund v. Superior Gen. Contractors, Inc., 104 F.3d 1050, 1055 (8th Cir. 1997); Johnson v. Charps Welding & Fabricating, Inc., 950 F.3d 510, 520 (8th Cir. 2020).

Relevant factors include: shared business purpose, shared management and control, commingling of funds, shared employees, and whether the entities transact at arm's length.

The court noted that ERISA does not specify the evidentiary standard but declined to resolve whether preponderance or clear-and-convincing evidence applies, because the evidence was sufficient to satisfy either.

Findings on Prong One: Coatings Existed in Form Only

The court found overwhelming evidence that Coatings lacked independent existence:

Shared management and ownership. Alisa Maciej performed bookkeeping and payroll for both QC and Coatings. Gary Maciej and Joe Maciej (QC employees) handled sales and bidding for both companies and were never employed or paid by Coatings. Tim Maciej (a QC employee only) assigned QC employees to Coatings projects, directed their daily work, and had authority to hire and fire workers on Coatings projects — all without being employed by or paid by Coatings.

No independent employees or assets. Coatings never had its own employees; all work was performed by QC employees. Coatings never acquired its own vehicles or equipment during its six-year operation. Coatings was initially capitalized with only $1,000. Coatings relied entirely on interest-free loans from QC to meet payroll, none of which were memorialized in promissory notes. During the Audit Period, Coatings transferred $5.6 million to QC for operational and equipment expenses.

No independent identity. Coatings had no website, no dedicated social media, no employee handbook or policy manuals of its own, and no confidentiality agreements with QC. Its phone number was Alisa Maciej's personal cell phone. Employees wore apparel bearing the QC Companies name regardless of which entity they were working for. Third parties — including insurers and contractors — were frequently confused about which company they were dealing with. Joe Maciej corresponded about Coatings projects using QC email addresses. A single bid log tracked bids for both companies without distinguishing between them.

Intermingled finances and operations. QC and Coatings used the same vendors, the same timekeeping system, the same physical shop space, and the same credit cards. Coatings's insurance (except for 2020) was carried under QC's operational expenses. Coatings had no workers' compensation policy of its own. Customer payments for Coatings projects were sometimes deposited directly into QC's bank account.

The court concluded the first prong of the alter-ego test was satisfied: Coatings existed in form only and was not an independently viable company.

Findings on Prong Two: Use as Subterfuge to Avoid CBA Obligations

The court found that Coatings systematically used QC to avoid its obligations under the Local 633 CBA:

Overtime hour siphoning. When employees working on Coatings projects accumulated overtime (more than 40 hours per week), Alisa Maciej routed those overtime hours through QC's payroll at QC's significantly lower non-union rate — not through Coatings at the higher union rate. This practice occurred throughout the Audit Period. For example, employee Aaron Yonak regularly worked overtime on Coatings projects but was always paid overtime through QC. In May 2021, employee T.T.M. recorded 136.5 hours on Coatings projects but Coatings reported only 98 hours to the Service Corporation, with the remaining 38.5 hours paid through QC despite T.T.M. not having worked 40 hours of straight QC time.

Unfounded designations of 'non-covered' work. Alisa Maciej manually determined which hours were 'covered' under the CBA, based on admittedly unfounded assumptions about when employees started and stopped covered work. She acknowledged that employees on Coatings projects loaded trucks at QC's shop before heading to union job sites, yet designated that time as QC time rather than Coatings time. She admitted she did not know how she formed her beliefs about what was covered work.

Concealment. Tim Maciej threatened to fire whoever had reported Coatings's payroll practices to the union. On at least one occasion, a QC employee was directed to hide from a visiting union representative at a Coatings job site.

The court rejected Defendants' argument that the absence of expressed anti-union sentiment negated the second prong, noting that the key inquiry is whether the corporate form was abused to the union's detriment — not whether the individuals openly expressed hostility to unions.

The court concluded the second prong was satisfied: Coatings purposely used QC to defeat its obligations under the Local 633 CBA.

Count III: Alisa Maciej's Personal Liability

The court held Alisa Maciej personally liable for any contributions later determined to be owed. The Independent Addendum she signed on behalf of Coatings expressly stated it was 'binding personally and individually' upon her as owner of the employer. Because Coatings and QC are treated as a single employer under the alter-ego analysis, her personal liability extends to the obligations of both entities for the Audit Period.

Disposition

Count IV — the actual dollar amount of unpaid contributions — was not resolved and will be addressed after the audit is completed.