Trustees Of The New York City District Council Of Carpenters Pension Fund v…

Background

The plaintiff Funds moved for default judgment against Alite Flooring, LLC and Alite Floor LLC. According to the amended complaint, Alite entered into collective bargaining agreements requiring it to make hourly benefit contributions, provide books and records for audits, and pay interest on delinquent contributions. The Funds alleged that audits showed $90,713.38 in delinquent contributions for 2016 through 2019 and $3,943,586.38 in delinquent contributions for March 25, 2019 through the present, plus interest, audit costs, liquidated damages, and attorneys’ fees and costs. They sought a total of $5,307,891.64.

The action was filed on January 20, 2022. The Funds served Alite through the Corporate Division of the New York State Department of State and served Alite Floor by hand at its business address. Neither defendant answered or appeared. The Clerk issued certificates of default on March 29, 2022, and the Funds filed their default-judgment motion on May 24, 2022.

Claims and Evidence

Counts One and Two asserted claims under the Employee Retirement Income Security Act and the Labor Management Relations Act. Counts Three and Four sought findings that Alite Floor was Alite’s alter ego, successor in interest, and single employer, as well as orders requiring Alite Floor to submit to an audit and requiring payment of delinquent contributions and related amounts.

The Funds submitted collective bargaining agreements, audit records, an estimated audit, interest calculations, and declarations from William Davidian, the Funds’ Employer Services Director, and their attorney. The court stated that a default admits all well-pleaded allegations against the defaulting party. The Funds showed that Alite owed $90,713.30 in contributions for the July 19, 2016 through March 24, 2019 audit period. Because Alite did not comply with the later audit demand, the Funds performed an estimated audit that calculated a presumptive delinquency of $3,943,586.38.

The court also found that the Funds had shown entitlement under the agreements and collection policy to interest, liquidated damages equal to 20% of delinquent contributions, audit costs, and reasonable attorneys’ fees and costs. The opinion lists interest, audit costs, liquidated damages, late-payment interest, and attorneys’ fees and costs as components of the claimed total damages.

Alter-Ego Claims

The court explained that the alter-ego doctrine can bind a nonsignatory to a collective bargaining agreement and can prevent an employer from avoiding labor-law obligations through a sham transaction or technical change in operations. Relevant considerations include whether two businesses have substantially identical management, business purpose, operations, equipment, customers, supervision, and ownership.

The complaint alleged that Charles Byrne was Alite Floor’s CEO and Alite’s vice president; that both defendants were operated by Michael Malgieri; that they shared addresses; that they performed the same type of work, worked on the same projects, and shared customers; and that they shared employees and intermixed funds. It also alleged that Alite employees were paid by Alite Floor for work performed on Alite’s behalf. The court held that, because of the defendants’ default, these well-pleaded allegations supported finding that Alite Floor was Alite’s alter ego.

Ruling

The court found that the Funds had demonstrated liability on the ERISA claim in Count One and the LMRA claim in Count Two, as well as damages of $5,307,891.64. It also entered default judgment on Counts Three and Four. The motion for default judgment was GRANTED, and the Clerk was directed to terminate the motion and close the case.