Opinion ID: 1354610
Heading Depth: 2
Heading Rank: 1

Heading: Alter Ego and Single Employer Liability of Rodin and SCP

Text: The alter ego doctrine is designed to prevent employers from escaping their collective bargaining obligations by shifting work to non-union firms they also own. Nor-Cal Plumbing, Inc., 48 F.3d at 1475. Employers may not create non-union alter egos for the fraudulent purpose of shifting union work to a non-union company and thereby engaging in a sham to avoid their collective bargaining obligations. Id. at 1470; see also Howard Johnson Co., Inc. v. Detroit Local Joint Executive Bd., 417 U.S. 249, 259 n. 5, 94 S.Ct. 2236, 41 L.Ed.2d 46 (1974) (describing an alter ego as a paper transaction without any meaningful impact on the ownership or operation of the enterprise for the purpose of avoiding a unionized company's collective bargaining agreements); Brick Masons Pension Trust v. Indus. Fence & Supply, Inc., 839 F.2d 1333, 1337 (9th Cir.1988). The alter ego doctrine applies if two entities function as a single employer and the non-union entity is being used in a sham effort to avoid collective bargaining obligations, . . . rather than for the pursuit of legitimate business objectives untainted by `union animus.' Nor-Cal Plumbing, Inc., 48 F.3d at 1470 (internal quotation marks and citation omitted). The plaintiff has the burden of proving a disguised continuation, technical change, or sham undertaken for the purpose of shifting union work to a non-union company. A. Dariano & Sons, Inc., 869 F.2d at 519; Brick Masons Pension Trust, 839 F.2d at 1337. The Union's alter ego claim does not fit within this established framework. Rather, the Union brings what it terms a reverse alter ego claim. Whereas a traditional alter ego claim consists of a union employer opening a non-union company to avoid existing collective bargaining obligations, the Union's novel reverse alter ego claim consists of a non-union employer allegedly opening a union company to avoid future collective bargaining obligations. We know of no court that has recognized a reverse alter ego doctrine, and at least one court that has explicitly rejected it. See Chicago Dist. Council of Carpenters Pension Fund v. Vacala Masonry, Inc., 946 F.Supp. 612, 618 (N.D.Ill.1996). The Northern District of Illinois reasoned that to recognize a reverse alter ego doctrine would be patently inequitable and illogical, because a company that has not signed a collective bargaining agreement cannot simultaneously be avoiding a collective bargaining agreement. Id. at 618 (citation omitted). [T]he alter ego doctrine was not intended to be used as a means of coercing a non-union company into becoming a union company by requiring it to sign a collective bargaining agreement or by requiring it to comply with the terms of a collective bargaining agreement which it never signed, absent proof that the non-signatory company was being used by the signatory to avoid its collective bargaining agreement obligations. Id. We find this reasoning persuasive. Because the alter ego doctrine prevents union employers from avoiding collective bargaining obligations, it does not apply in the reverse where a non-union employer creates a union company because the non-union employer has no collective bargaining obligations to avoid. Absent some indication that SCP was using Rodin to avoid SCP's union obligations, the alter ego doctrine is simply inapposite. We decline to recognize a reverse alter ego doctrine. The alter ego doctrine was never intended to coerce a non-union company into becoming a union company by requiring its compliance with a collective bargaining agreement it never signed, with a union its employees never authorized to represent them. Rodin is not bound by the MLA or liable under the alter ego doctrine because a non-union company cannot be guilty of evading a collective bargaining agreement that it never entered into. The doctrine is also inapplicable to SCP because SCP did not use Rodin to avoid SCP's union obligations. Nor has the Union made out a claim under the alter ego doctrine. There is no evidence that joint operations between Rodin and SCP were for the purpose of avoiding SCP's obligations under the MLA. Likewise, there is no evidence that Rodin diverted union work from SCP at all, let alone that Rodin did so to help SCP avoid SCP's obligations under the MLA. The only examples that the Union can provide of work originally intended for SCP but completed by Rodin are the Bank of America and Ticketmaster projects. However, the Bank of America project was completed only after SCP had ceased business operations entirely, so SCP could not have been avoiding obligations it had under the MLA. The Ticketmaster job is similarly unhelpful for the Union's argument. SCP admits to having hired moonlighting non-Union painters to complete the Ticketmaster job, some of whom also worked for Rodin. However, it did so only after attempting to employ Union painters, and there is no evidence that Rodin benefited from that arrangement. Only the individual moonlighting painters were paid. Moreover, the Union fined SCP and SCP paid the fine. In neither case did jobs go to Rodin that would have gone to SCP. Finally, SCPthe union companywas created fifteen years after Rodin, and SCP never came close to generating the quantity of business that Rodin consistently performed. During the three years SCP operated, it handled seventeen jobs; during the same period, Rodin accepted more than 2500 jobs. There is no evidence of any shift in business from SCP to Rodin. Although there may have been tension between Rodin and the Union, that tension does not support a finding that SCP violated the MLA. [4] Likewise the evidence does not suggest that SCP used Rodin to avoid SCP's obligations under the MLA, or that Rodin used SCP to benefit from SCP's Union labor force. That some Rodin employees offered clerical assistance to SCP does not support the Union's claim because SCP satisfied its obligations under the MLA. Not a single Union witness contended that SCP diverted Union jobs to Rodin to avoid obligations under the MLA; in fact, at least one witness indicated that any shift in jobs that occurred went in the other directionfrom Rodin, the non-union company, to SCP, the union company. The district court therefore did not err in granting summary judgment in favor of Rodin and SCP on the alter ego doctrine.
Under the single employer theory, a collective bargaining agreement can extend to a non-union company only if the NLRB finds that the employees of both the union and non-union companies constitute a single bargaining unit. Nor-Cal Plumbing, Inc., 48 F.3d at 1470. That the companies in question may constitute a single employer does not necessarily . . . make them a single bargaining unit. The bargaining unit question is a representational question [that] must be decided by the NLRB in the first instance. Id. Without an NLRB determination that the employees of the union and non-union entities constitute a single bargaining unit, the doctrine of primary jurisdiction bars the district court from extending a collective bargaining agreement to a non-union entity. Id. at 1469-70. The Union has not shown that the NLRB determined that the employees of Rodin and SCP constituted a single bargaining unit. The district court could not have extended the MLA to Rodin, and the Union's claim under the single employer theory cannot be maintained. [5] Because Rodin and SCP do not satisfy the requirements for alter ego or single employer liability, the district court properly granted summary judgment in their favor.