Opinion ID: 2994733
Heading Depth: 2
Heading Rank: 1

Heading: Home’s Contributions on Behalf of James

Text: James has two arguments as to why he was not an employee of Home during the first half of 1987./1 The first is that the definition of employee used in LMRA, which excludes the children of employers, should be used to interpret the CBA. The second is that judicial estoppel requires that the single employer doctrine be used to determine whether he was a principal owner of the Home/WSL combination.
The LMRA provides that, for purposes of determining an appropriate bargaining unit any individual employed by his parent or spouse is not included within the definition of employee. 29 U.S.C. sec. 152(3). ERISA’s definition of employee is any individual employed by an employer. 29 U.S.C. sec. 1002(6). James claims that LMRA’s definition of employee should be used to interpret the CBA rather than ERISA’s because ERISA was not passed until well after the trust agreements creating the funds were formed, which was in 1961 and 1963. The district court relied on the ERISA definition and the CBA’s explicit exclusion of trainees but not children of employers in determining that such children were employees on whose behalf contributions are owed. We review the district court’s interpretation of pension plan terms de novo. Moriarty, 164 F.3d at 330. We agree with the district court that the definition contained in 29 U.S.C. sec. 152(3) should not be used to interpret the CBA. Even assuming without deciding that LMRA rather than ERISA should be used to interpret the CBA, James’s argument that he is not an employee because he was Elmer’s son would not succeed. Within LMRA itself, the definition of employee is broader than that contained in sec. 152(3) when determining whether an employer may make payments to workers by means of a trust fund under sec. 186(c)(5). See Reiherzer v. Shannon, 581 F.2d 1266, 1276 (7th Cir. 1978), abrogated in other part by Black v. TIC Inv. Corp., 900 F.2d 112 (7th Cir. 1990). For example, retired workers are not employees for purposes of sec. 152(3) but are employees under sec. 186(c)(5). See Allied Chem. & Alkali Workers of Am. v. Pittsburgh Plate Glass Co., 404 U.S. 157, 170 (1971). The portion of the CBA about which James is arguing concerns a trust fund, and so the broader definition of sec. 186(c)(5) should be used to interpret the CBA rather than sec. 152(3). Whether children of employers would be considered employees for purposes of sec. 186(c)(5) is unclear. Thus, LMRA does not support James’s construction of employee in the CBA.
The doctrine of judicial estoppel provides that when a party prevails on one legal or factual ground in a lawsuit, that party cannot later repudiate that ground in further litigation based on the same underlying facts. See Menominee Indian Tribe of Wisc. v. Thompson, 161 F.3d 449, 454 (7th Cir. 1998); McNamara v. City of Chicago, 138 F.3d 1219, 1225 (7th Cir. 1998). Moriarty prevailed on Claim I by using the single employer doctrine, which provides that when two entities/2 are sufficiently integrated these will be treated as a single entity for certain purposes. See Moriarty, 164 F.3d at 332. Moriarty successfully argued that Home and WSL are a single organization such that the employees of WSL would be considered the employees of Home for purposes of contributions to the funds under the CBA. Thus, James is correct that Moriarty is now estopped from arguing that the single employer doctrine cannot be applied in determining whether James is an employee of Home. Both James and Moriarty agree that a principal owner rule applies to interpret the CBA, under which those who work at one of the firms within the FDSA are not considered employees for purposes of the CBA if they own a certain percentage of the firm. Because of his half- ownership in WSL, James could not have been considered an employee of WSL under the principal owner rule. In the current litigation, employees of WSL and Home are considered to be the employees of a combined Home/WSL organization for purposes of the contributions required under the CBA. A nominal employee of Home/WSL is entitled to show that his or her ownership of WSL or Home translates to sufficient ownership of the Home/WSL organization such that the principal owner rule applies and he or she is not considered an employee for purposes of the CBA. Thus, the lower court erred in not taking account of James’s partial ownership of this combined Home/WSL organization through his ownership of WSL in determining whether he is an employee of the Home part of this combined entity such that Home owes contributions on his behalf. However, two factual questions prevent this court from determining whether James should prevail on Claim II. The first involves the percentage of the Home/WSL combination that James owned. James claims that because he owned half of WSL and there are two entities in this combination, James owned one quarter of Home/WSL during the relevant time period. However, this is not necessarily correct; WSL may have been much smaller than Home, such that James’s half- ownership of WSL amounted to owning only a tiny fraction of Home/WSL. We remand to the district court to determine the relative sizes of Home and WSL during the first half of 1987 and thus what percentage of Home/WSL James owned by his half- ownership of WSL. In calculating these sizes, the district court should be guided by the annual revenues of Home and WSL, which is what the NLRB uses in its applications of the single employer doctrine. See Goodman Investment Co., 292 N.L.R.B. 340, 347-48 (1989). The second factual question concerns what percentage of ownership is necessary before James is considered a principal owner under the CBA. James claims that ten percent ownership is sufficient, but Moriarty has an opportunity on remand to show that this figure is incorrect.