Cement Masons v. Coatings

Background

Cement Masons is the receiving and collection agency for several multiemployer employee-benefit funds administered under the Employee Retirement Income Security Act of 1974 (ERISA). It sued Quality Coatings, LLC; Quality Cleaning, Inc.; QC Companies; and Alisa Maciej. Quality Coatings signed the relevant collective-bargaining agreements (CBAs), while QC Companies and Quality Cleaning did not.

Cement Masons alleged that QC Companies and Quality Cleaning were alter egos of Quality Coatings and were used to avoid obligations under the CBAs. An alter ego is a separate company that, despite its formal legal identity, is controlled by another company and used as a substitute to avoid legal obligations. Cement Masons also sought personal liability against Alisa Maciej and asserted claims concerning audits and unpaid fringe-benefit contributions under ERISA.

The record showed that Quality Cleaning had performed floor-coating work and later operated under the name QC Companies. Quality Coatings was organized in 2013 with Alisa Maciej as its owner and later signed an Independent Addendum to a CBA. Defendants maintained that Quality Coatings performed work requiring union labor while QC Companies performed non-union work, and that the businesses were kept separate. Cement Masons disputed that account and argued that the entities shared business purposes, management, employees, vendors, operations, and finances.

Legal standard and analysis

Summary judgment is proper only when there is no genuine dispute about any material fact and the moving party is entitled to judgment as a matter of law. A material fact could affect the case’s outcome, and a dispute is genuine when a reasonable jury could decide the fact for the nonmoving party.

The court explained that ERISA section 515, 29 U.S.C. § 1145, requires an employer obligated under a plan or CBA to make contributions according to the plan or agreement. The court also explained that the alter-ego doctrine may be used to determine whether an entity is liable for unpaid contributions. Under the applicable test, the party seeking liability must show that one entity is controlled by another so extensively that it has only a formal independent existence, and that the entity is used as a subterfuge to defeat public convenience, justify wrongdoing, or perpetuate fraud.

The court found that Cement Masons had not shown, as a matter of law, that the defendant entities existed independently in form only. Although evidence supported possible inferences of common control—including shared ownership and management, similar work, shared employees, and financial transfers—competing evidence supported the defendants’ position that the companies separated union and non-union work and kept their books and payroll distinct. Resolving those disputes could require assessing competing interpretations and witness credibility.

The court also found factual disputes concerning the second part of the alter-ego test. In the CBA context, a key question is whether the employer displayed anti-union sentiment by using an alter ego to avoid its obligations. Cement Masons relied on evidence that the defendants routed union work through another union company before Quality Coatings was formed, created Quality Coatings for union projects, stated that QC Companies could not be competitive as a union company, and used QC Companies for jobs to avoid contributions. The court stated that routing union work to a union company and non-union work to a non-union company did not, by itself, establish anti-union sentiment beyond dispute.

Ruling

The court denied Cement Masons’ motion for summary judgment. It also denied the defendants’ motion for partial summary judgment on the subterfuge element of the alter-ego claim. The court did not reach the issues of damages or Alisa Maciej’s potential personal liability because the alter-ego issues remained for trial.