morning hours may please the court ted becker i'm half of anderson excavating this is a case that arises out of a claim by a union into trust funds for alleged unpaid delinquencies related to supposedly covered work under a heavy highway agreement anderson's appeal today is focusing on the assessment relative to one particular employee jose tovar it's important to note that jose tovar is not a union member he receives no benefit from the unions or any of the associated funds the contention of the unions and this is reflected in the testimony of their very first witness the designated trustee plaintiff mr rod marshall that acknowledged that mechanics when they're working in the contractors yard are not covered by the heavy highway agreement that's at page seventy three of the trial testimony their contention is that when you send a mechanic out to a covered job site that's when the mechanic becomes subject to review and consideration and inclusion for an obligation to make payment remittance in this case the union testified and this is done helms testimony at page three fifty nine of the trial transcript that they conducted an audit and they focused on one particular job site what was known as the kiewit job site the project it's a billion dollar project on and off air force base their contention was that mr tovar had unreported time they did find that in november of two thousand and twelve and this is the exhibit eleven page three there were eighteen hours of mr tovar as time reported on certified payroll reports which are in evidence as exhibit sixty six in the record over a three year time period of this audit there is one month where mr tovar is down at the actual job site the only job site that is the subject of this audit and there are certified payroll records reflecting his time at that particular job site it's eighteen hours the union there after goes on to say well there was a comment made by our office manager that jose works fifteen percent outside of the office the office manager eileen kaylor denied ever making the statement deny being asked that she's testif she wouldn't know she works in an office tovar works at at the mechanic shop she wouldn't even be in a bait position to know and it's also undisputed that before suit was filed when there was this argument that will run to allocate another fifteen percent of is time that kyler contacted the auditor and said that's wrong you shouldn't include mr tovar it's important to also note that the court in this case in its ruling said at page nineteen i think this is that or a done them it's the court's ruling of aug eleventh two thousand and sixteen the court finds the defendants liable for delinquent contributions for one hundred percent of the tovar work performed on the strat comm project that's the eighteen hours and for fifteen percent of the other hours work tovar performed during the audit period as represented by the audit letter the problem with this is d helms of the union and their auditor john wall the said the only project they looked at the only project that was subject to this audit was strapped com so when the judge concludes that i'm going to allocate one hundred percent of tovar as ours and we're not challenging it on appeal it's not worth it to fight over this eighteen hours he went to the jobsite ok include that but if your audit only covers this project and we provided you those certified peer records then it becomes improper to make this assumption about the estimate of the time he spent on the project because it's disproven by exhibit sixty six the payroll records they have that they got from kiewit that they withheld from anderson which is acknowledged in their testimony that they didn't disclose that they had when they were doing the audit they had records showing how much time this particular gentleman was at the one job site that was the subject of their audit and it showed only eighteen hours when you take that eighteen hours out it reduces the claim of the judgment the court assessed from eleven thousand down to about four thousand which has a cascading effect which affects the interest which affects the liquidator damages and which should attorney fees under the lodestar analysis now what the union will come back and say is well your person said it was fifteen percent and the court accepted that fifteen percent estimate i would respectfully submit that the court erred in that regard and it's demonstrated by the union's own brief at page seven of their brief they make the acknowledgment that they said andersen represented that tovar spent fifteen percent of his total hours doing covered work at job sites they then cite to page two forty two page three thirty two page three sixty one and page three eighty seven have your walker it's go check out every one of those passages not a single one says it's covered work i specifically asked on holmes did you this suppose the question did you ask did you ask where the jobsite was know that becomes important because this heavy highway agreement only covers heavy highway work it doesn't cover all the work some performs in the testimony is anderson does some construction work anderson does demolition work anderson does a specificity bateman work this particular contract only covers heavy highway work it doesn't cover a specified so it doesn't cover all of anderson's work in addition it's geographically limited it does not cover work in iowa missouri kansas minnesota even western nebraska it's essentially a three county radius where there is covered work i asked did you ever ask where this work was know that becomes significant because on this burden shifting that the court in engages in to reach the end result it is soon is that there was this request how much covered work was done but that was never asked of eileen kaylor at best there is he goes to job sites fifteen percent of the time so what half of their work is outside of heavy highway contracting a portion of the work is outside the geographic location unless the auditor does her job and says did you have work within this geographic location and what sort of work was that they don't get the presumption they haven't even begun to do a proper analysis it's also significant to note that the auditor miss waldy testified she didn't even hear the statement about jose tovar i did my cross examination she had knowledge that while i was a party that conversation i didn't hear the bit about jose tovar so the person doing the audit didn't even hear this suppose it fifteen percent analysis point the cases relied upon by the court and the union the michigan laborers in the bricks mason case talk about a burden shifting when an employer refuses to hand over records and also doesn't mean rates maintain records on union employees the michigan labor case says that the ruling applied to quote employees who are participants in employee benefit plan jose tovar is not a member of the union we don't have to keep all these detailed records on him the bricks masing case says the employer has to maintain records with respect to each of his employees sufficient to determine benefits due or which may become due to such employees because he's not a union member and because he doesn't get benefits we don't have to keep particular records on him the evidence in this case demonstrates for twenty years jose took over at work for andersen they never made a contribution form because the assumption understanding always was mechanics aren't covered now the union developed during this audit procedure that well if you go to the job site you're doing certain mechanical work at the job site then we're going to cover you ok they have the certified payrolls for a three year time period and for that the one project they're auditing during that entire three year time period he's there for eighteen hours they turn that eighteen hours which would have been a contribution of about  dollars into a claim for eleven thousand it's tripled with interest and liquidated damages and then another thirty thousand nearly in attorney fees it is preposterous that we've reached this point w yes we did i mean it's in the that's precisely my argument my cross examination you didn't ask where and i said we provided you all the payroll records i have detailed examinations where i said is there any record andersen didn't give you know did they provide you the option to talk to employees yes did you make employees available if they asked yes that they were asked to dr tovar no those cases that they rely upon are when employees are playing games and hiding them we not only made our records available we gave them access to our payroll supply company they got detailed time records they also went in separately got the records from q what phelps on the one project they were auditing this is not a situation where they didn't have access to records or information or we were hiding the ball from them we gave them full access and i asked both the auditor and her assistant from the union was there anything that you asked for that anderson you know refused to provide you in the answer was no so i would respectfully submit as pointed out in our brief what we have here is more like the carpenter's fringe benefit purses mckenzie case which rejected the notion of this burden shifting to the employer when there is a failure of proof and in that case the court said the problem arises because of assumptions of funds made an interpretation records mackenzie has come forth with evidence establishing that the authors assumptions were unfounded this left the funds under remedied failure proof in this case they had a flawed assumption there sumption as well if this eileen allegedly said fifteen percent of the times that a project well then we're going to charge fifteen percent of all of jose tovar as recorded time of this year time period but they never asked was a covered work where was the work they never got details to put it within the jurisdiction and we did give them records we gave them the certified payroll records of the one job they audited and the testimony was the employees have an incentive to make sure they are recorded why because of the davis bacon job and they make more money in addition because it's off but they have to check on to the base it's a secured site so there are records when these guys go on to this site there are guys with guns at the gate check in you in i've been down there it's you're not just going to roll into off it and wander in there and so doing some work i respectfully submit that on the evidence there just was a failure of proof and the district court made an inappropriate extension of that shifting burden assumption we gave a lot of us do you want to address the alter ego conclusion as it relates to two companies i think it's an error for the court to sue a sponte do that they say why sprung it on them they don't allege in their complaint that tovar is an employee of andersen so there's nothing to admit there wasn't a request for admission the record asking us to admit that he was an employee i simply put them on their burden of proof to prove that this gentleman was an employee of andersen excavating it's undisputed that he's technically an employee of andersen excavating plus and that's one of the mechanisms they use because some of their works union some is nonunion they get the union employees in one company nonunion employees in another company if he goes and does union work they remit on him but the fact of the matter is is that's their burden of proof they undisputedly were given access to records of two companies and their auditor knew there were two companies she just never bothered to ask again i don't have to prove their case for them and that seemed to be the assumption from the court as well you hid the ball you spring sprung no i didn't you knew from the start of the audit that there was two companies out there you didn't ask why he was listed under a different company that's not our fault or our problem we did give them the records to show that he was recorded for the time he actually went to the duncan young and in the audience is mike weinberg who also represents the trust fund to start with it want to point out a couple of couple of facts that opposing counsel pointed out and remind the court that this is an appeal from a bench trial of an a risk collection action the findings of fact are subject to a clearly erroneous standard of review the district court also relied on witness credibility to make its factual findings which is  deferential standard before this court first with respect to whether jose tovar is a union member or not that's a relevant under the contract it's covered work it's not union membership that triggers the obligation to contribute to the fund because also a right to work state you can't discriminate against someone based on union membership there are a lot of discussion about  the records first of all with respect to the judge call it is question about they alter ego anderson plus isn't the contractor on the key which broadcom project anderson excavating is the contractor on that project reported as i understand excavating the employee on that project when we saw that in the certified perils during the audit that's what triggered the question ok he's he appears on this certified payroll you didn't report his work or pay pay that to us how much more time does he spend on the job site and they represented to us it's fifteen percent that's not something we made up that's not something we assumed that was something that was represented to our auditors but there were but on that fifteen percent he was an employee of andersen plus right here you don't have any evidence that he was we don't have the andersen excavating years well i don't want to talk about that history i just want to make sure i understand the alter ego and why it was relevant i thought it was relevant i thought the judge thought it was a necessary step in the analysis because  employee of this other company and so in order to find the liability he thought he had to conclude that one company was an alter ego of the other right and and so my question i guess is whether whether he applied the right standard on that alter ego question yes i think i think he did well here's my concern you maybe you can address it he applied this standard from this scandal and case from our court where the court talks about the common law standard for piercing the corporate veil between an individual and a corporation and i says not this is to corporations in this case right and there was no evidence that plus as an actual corporation in the trial record there is no exhibits identified which would establish that plus is actually incorporated entity what do you mean i don't understand i mean i understand that there was no it but but he wasn't he wasn't saying that any individual was an alter ego of anderson plus right he was saying that anderson plus is an alter ego of andersen excavating yes that was the judge's fi all right so what evidence was there about the relationship between those two companies or the shared employees assume jose told ours employed by andersen plus he's working for andersen  b reported as an andersen employee on the certified payroll project in addition to mr tovar there was another employee who they claimed was an andersen plus employee by the name of man well walker and he shows up on andersen excavating certified payroll for that project on a full time basis for four months so you had a sharing of employees in addition to that joshua baker who was one of the employees who the district court said wasn't doing any covered work they claimed he was an andersen plus employee as well and when they asked him well what does he do well he works at anderson's landfill he works at our landfill so right off right off the bat you've got you've got two companies a unity of interest who controlled each of those companies was of the same shareholders well there's no you know there's no record no evidence in the record of say he worked for andersen for twenty years so it's again it's so it's energy as anderson excavating a closely held corporation controlled by virginia  and that's my understanding yes was that in the record or not as far as their anderson separate corporate existence that was alleged i think in the complaint and that and i think that was admitted in the answer all right just a little and your stand this issue came up to a spontaneous and it doesn't seem like there's much of a record about these two corporate entities i'm just a little concerned whether there's enough of a record to support an alter ego conclusion so if there's anything else you want to add about it i think there is because when the district court ran through its analysis on its factual findings the sharing of employees was one factor that the district court pointed out the second factor was we came in to do appear what it of andersen excavating as opposing counsel admits they gave us everything including andersen plus records you identify the job classifications of these people and homes ours excuse me jose told ours name is on there they didn't say he's not our employee he's a plus employee they said he's a mechanic when we sent them the audit results letter which is exhibit a left and they came back to us and said can you remove mr tovar from this because he doesn't spend fifteen percent of the time because he's a mechanic they never mention anything about anderson plus and i think the district court handled this  handle this well because there was evidence that came in that there it's a related and in our brief we argued that you also argue that you could find that there are single employer as that term is defined yeah but i think our cases say we don't use the risk to labor law standard for for i'll tell you where you go but also your employer and alter ego are are a little bit different because the way arista defines employer it includes persons including groups of employers that act in the interests of employers and so you offer you have anderson and anderson plus that are acting together and for the benefit of each other the employees are passing back and forth they're being reported on certified payroll reports which are significant because they're signed and there's the truth of the accuracy of those records are sworn to and the district court again found well if we the significance of the delinquent policy and procedure document that is that's for the interest of liquidated damages on the delinquent contributions because the statute says there are mandatory but for liquidated damages they have to be pursuant to but were its contents and disputed or less  judge called in to your point i don't think on page eighteen of the district court's findings of fact which is a joint appendix one of the five i don't think he's applying corporation and an unincorporated entity i say right so that more that i think scanlon goes more towards the single employer side when we say judge gerard cited the corporate law standard what are you referring to when he says under arrest the circuit applies the corporate law standard to determine alter ego status because it strikes an appropriate balance beyond and that's the standard that the circuit has adopted so he did while he  did apply the corporate law standard that this court has adopted under that shifting burden analysis the funds have the initial burden to demonstrate covered work wasn't reported on which we did by the certified payroll and relying on the representation by andersen which were entitled to do which in addition to relying on their representation to conclude that the all one tovar if you look at the trial testimony of pages three twenty one to three twenty five don helm says that when we got the initial audit results which are reflected in exhibit sixty two she went over those with ms killer at andersen excavating and she removed employees who miss careless said didn't do covered work and that's reflected with the final audit result letter which is exhibit eleven and if you compare exhibit sixty two to exhibit eleven fourteen employees were removed from the preliminary audit results to the final result letter so we didn't just rely on them to say that we relied on them for so much more and as for the burden shifting argument the burden then shifts to the employer because by statute they're required to maintain records and that's twenty nine u s c ten fifty nine we don't have to tell them to maintain records they're required by law to do so and when the burden shifts to that they're required to come forward with records to establish the precise about a covered multiple collective bargaining agreements there were multiple work jurisdiction disputes in that case it was the carpenters who were claiming all this work but the employer had collective bargaining agreements with with multiple craft unions all who claim jurisdiction over the work and that's why the this court in that case said funds didn't meet their initial burden because they couldn't establish that covered work was paid real quick i want to address something as far as attorneys fees those are discretionary with the court we would ask that amount be affirmed because we don't think the court abuse its discretion i will point out  when our gets bill to the pension fund when our gets bill to the health and welfare fund that's our longstanding practice it could have been explained we should have explained it better to the district court we did it but i want to make clear there's no duplicate billings there we don't cross appeal that because again a lot of fees is subject to the district court's discretion we believe they've got there we believe that decision is correct and one last thing i want address with the burden shifting i would also note that the court applied the same burden shifting standard and excluded to employees from the that we were making claim on concluding that data into coverage work ok the burden shifting analysis should have never been triggered because we gave them the records the one job they have jose to work in about two thousand hours a year over a three year time period that six thousand hours he's reported for eighteen point six hours we gave them the records that showed exactly how much time he spent on the one job they were audited in when i asked on helms with well you supposedly had this interpretation of fifteen percent of the jobs cited page three sixty one did i lean specifically say what job site she did not they just make this assumption if they're talking about the job site then it's kiewit and we did give them  precisely how long he was kiewit there never should have been this shifting because we gave him the detailed records that showed with precision how much time he was there doing covered work couple other issues on interest i just want to point out  significance of the document where they adopted the interest in liquidated damages our position on that is the trust say at section twelve section fourteen of one of the trust it's governed by nebraska law that article fifteen section t it says is governed by nebraska law and the point is even if they can get interest under federal law the trust themselves are governed by a nebraska law nebraska law does not allow an interest rate greater than sixteen percent they charged eighteen percent that's the whole point they were beyond the brassica law that then means you are avert to the title twenty six standard which is a much lower interest rate they don't get to charge eighteen percent because they're governed by a nebraska law under their trust agreements and nebraska law prevent an eighteen percent interest rate charge on the lodestar analysis they got twenty percent of what they were suing my client for there's no downward adjustment for that unfavorable result and that's an independent error of the district court but the bottom line is jose tovar was not employed by andersen excavating and for the project that they audited we gave them detailed records that showed he was there eighteen point six hours that should have been the end of this case asked the court