Board of Trustees of the Local Union No. 373 United Assocation of Journeymen…

Background

The Funds sued Mid-Orange Mechanical Corp. (Mid-Orange), Mid-Orange Plumbing and Heating, Inc. (MOPHI), Mid-Orange Fire Protection Corp. (Mid-Orange Fire), and 1191 Dolsontown Road, LLC. The claims arose under the Employee Retirement Income Security Act of 1974 (ERISA) and the Multiemployer Pension Plan Amendments Act. The Funds sought unpaid benefit contributions, withdrawal liability, interest, liquidated damages, costs, attorneys’ fees, and actuary fees.

Mid-Orange had agreed through a collective bargaining agreement to make contributions to the Funds. The Funds calculated $147,611.35 in unpaid contributions for work performed between April 25, 2012, and May 1, 2013. Mid-Orange argued that it had submitted the required reports, but the court found that the defendants offered no supporting evidence beyond stating that Mid-Orange’s financial records had been lost in a flood.

Mid-Orange stopped operating in 2013. The Funds previously obtained a $173,061.53 judgment against Mid-Orange for unpaid contributions and a $631,978.00 withdrawal-liability judgment against Mid-Orange. The Funds argued that MOPHI was Mid-Orange’s alter ego or successor and that MOPHI, Mid-Orange Fire, and 1191 Dolsontown were businesses under common control with Mid-Orange and therefore shared responsibility for the withdrawal-liability judgment.

Summary-judgment standard

The court applied Federal Rule of Civil Procedure 56. Summary judgment is appropriate when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment under the law. The court does not decide witness credibility or weigh competing evidence at this stage; it decides whether a trial is needed.

Unpaid contributions and the earlier contribution judgment

The court held that Mid-Orange was liable for the unpaid benefit contributions. The defendants did not challenge the calculation, and the Funds provided the collective bargaining agreements, employee work-hour reports, and affidavits stating that the Funds had no record of receiving Mid-Orange’s required reports.

The court also held that MOPHI was jointly and severally liable for the unpaid contributions. Under ERISA’s alter-ego and successor-liability principles, a company may be responsible for another company’s obligations when the businesses are substantially continuous or the later company is effectively a continuation of the earlier one. The court relied on the companies’ shared officers, shareholders, manager, phone number, employees, customers, business activities, payroll transition, and transfers of equipment, vehicles, and other assets. The fact that MOPHI operated on a smaller scale did not create a genuine factual dispute.

For the same reasons, the court held MOPHI jointly and severally liable for the $173,061.53 judgment previously entered against Mid-Orange.

Withdrawal liability

The court rejected the defendants’ attempt to challenge Mid-Orange’s withdrawal liability based on an asserted building-and-construction-industry exception. The defendants had not initiated the required arbitration or raised that exception before the withdrawal-liability judgment was entered. The court also found that the defendants had not provided sufficient facts to show that the exception applied.

The court held that MOPHI was jointly and severally liable for the $631,978.00 withdrawal-liability judgment because MOPHI was a successor to Mid-Orange.

The court further held that MOPHI and Mid-Orange Fire were businesses under common control with Mid-Orange. The parties did not dispute common control. MOPHI plainly operated a business for income with employees and customers. As to Mid-Orange Fire, the court relied on corporate tax returns showing business activity and income from 2012 through 2014, along with evidence that Mid-Orange employees worked for Mid-Orange Fire and that Mid-Orange Fire purchased materials from MOPHI. The defendants’ general statements that Mid-Orange Fire worked only sporadically did not create a genuine dispute of material fact.

The court reached a different result for 1191 Dolsontown. Withdrawal liability is determined based on the entities existing when the employer withdrew from the pension plan. Mid-Orange’s withdrawal occurred in May 2013, but 1191 Dolsontown was not incorporated until May 2014. Because it did not exist when the withdrawal liability arose, 1191 Dolsontown was not under common control with Mid-Orange for this purpose and was not liable for the withdrawal-liability judgment.

Disposition

The court granted in part and denied in part the Funds’ motion for summary judgment. It granted judgment, with interest, liquidated damages, reasonable costs, and attorneys’ fees, as follows:

The court denied the Funds’ request for judgment against 1191 Dolsontown for the $631,978.00 withdrawal-liability judgment and dismissed 1191 Dolsontown from the action. The court directed the Funds to file a proposed judgment itemizing the total amounts claimed for interest, liquidated damages, costs, and attorneys’ fees, after which the court would enter final judgment.