Court Opinion

ID: 2965080
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:34:57.245634+00
Date Added: 2024-06-11T11:43:05.279809
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ____________________

        No. 97-1133

                             SANDRA CRANE, FUND MANAGER,

                                Plaintiff, Appellant,

                                          v.

                    GREEN & FREEDMAN BAKING COMPANY, INC., ET AL.,

                                Defendants, Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________

                                 ____________________

                                        Before

                                 Selya, Circuit Judge,
                                        _____________

                     Coffin and Campbell, Senior Circuit Judges.
                                          _____________________

                                 ____________________

            David  C.  Jenkins,  with  whom  Matthew  E. Dwyer,  Christine  L.
            __________________               _________________   _____________
        Nickerson and Dwyer & Jenkins, P.C. were on brief for appellant.
        _________     _____________________
            Adam S. Elman for appellees.
            _____________
                                 ____________________

                                   January 20, 1998
                                 ____________________

                      CAMPBELL, Senior  Circuit Judge.   The  terms of  a
                                _____________________

            collective  bargaining agreement  required  Green &  Freedman

            Baking Company, a Massachusetts corporation, to make periodic

            payments  on  behalf of  its  unionized  drivers to  the  New

            England Teamsters  and Baking  Industry  Health Benefits  and

            Insurance Fund.   After experiencing financial  difficulties,

            Green & Freedman ceased to make the agreed-upon contributions

            and  transferred all remaining  assets to a  successor entity

            named Boston  Bakers, Inc.   The Fund  Manager of  the Health

            Benefits and Insurance  Fund (referred to hereinafter  as the

            "Health Fund") thereupon sued Green & Freedman, Boston Bakers

            and the  two  corporations'  principals,  Richard  Elman  and

            Stanley Elman, in the district  court to recover the payments

            owed by Green & Freedman with interest, costs  and penalties.

                      Both  corporate defendants  conceded liability  for

            the delinquent  contributions owed by Green & Freedman to the

            Health  Fund.     The  Elmans,  however,  denied   they  were

            personally liable for these corporate debts, and a jury trial

            took place to  determine that issue.   After the presentation

            of evidence, and before submission to the jury, the  district

            court entered judgment  as a matter  of law  in favor of  the

            Elmans,  pursuant to Federal  Rule of Civil  Procedure 50(a).

            The Health Fund appeals.   We affirm in  part and reverse  in

            part. 

                                         -2-

            I.        Background
                      __________

                      Defendant-Appellee Green &  Freedman Baking Company

            ("Green  &  Freedman")   was  a  family-owned   Massachusetts

            corporation formed in 1934 that produced and sold baked goods

            until,  on  January  15,  1993,  its  remaining  assets  were

            transferred  in bulk to Appellee Boston Bakers, Inc. ("Boston

            Bakers").    Boston  Bakers  operated  essentially  the  same

            business as Green & Freedman until its demise in 1995.  

                      Starting  in  1975,  responsibility   for  Green  &

            Freedman's affairs  rested with  Defendants-Appellees Stanley

            Elman  and Richard  Elman, grandsons  of one  of the  company

            founders.  Stanley Elman started working for Green & Freedman

            in  1959 and  by 1969  became its  treasurer and  a director,

            positions  he occupied through  the end of  the corporation's

            and  its successor's  existence.   Richard  Elman began  with

            Green &  Freedman in 1964 and  served as its President  and a

            director from 1975.  

                      Prior to  transferring its assets  to Boston Bakers

            as of January 15, 1993,  Green & Freedman employed between 12

            and 18 truck  drivers who were members of  the Bakery Drivers

            and Helpers Local 494.   The union drivers' wages, hours, and

            conditions  of  employment  were  governed  by  a  collective

            bargaining  agreement between the Union and Green & Freedman,

            effective from May 5,  1991 to May 1,  1994.  That  agreement

            required Green  &  Freedman to  contribute $88  per week  for

                                         -3-

            every  covered worker to the New England Teamsters and Baking

            Industry  Health Benefits  and Insurance  Fund.   The  Health

            Fund's  contractual  right to  contribution  was additionally

            protected by   515 of the Employee Retirement Income Security

            Act ("ERISA"),  29 U.S.C.    1145 (1985),  which doubles  the

            obligation  of  any  employer who  promises  in  a collective

            bargaining agreement to make contributions to a multiemployer

            benefits or pension plan.

                      From  1991, Green &  Freedman began to  suffer what

            the  Elmans   described   as  a   serious,   and   ultimately

            irreversible, decline  in sales  and profits.   Beginning  in

            April  1992, and continuing until its business was terminated

            in  January 15,  1993, Green  & Freedman  stopped making  its

            required  contributions  to   the  Health  Fund.     Green  &

            Freedman's  unpaid  contributions for  this  period, totaling

            $39,776, are  the  basis for  the liability  the Health  Fund

            seeks to impose in this action.

                      By  December  1992,  the  Elmans  had  decided   to

            transfer all of  Green & Freedman's assets to  a newly-formed

            corporate shell entitled Boston Bakers, Inc., pursuant to the

            bulk  transfer  provisions   of  the  Massachusetts   Uniform

            Commercial Code.  See Mass. Gen. Laws ch. 106,    6-101 to 6-
                              ___

            110 (1990), repealed,  Mass. Acts 1996 ch. 160,    3 (1996).1
                        ________

                                
            ____________________

            1.  Although  repealed  in  1996,  the  former  Massachusetts
            U.C.C. Article 6  still applies to bulk  transfers that, like
            the  Boston Bakers transaction, occurred prior to the repeal.

                                         -4-

                      Boston  Bakers was simply a continuation of Green &

            Freedman's  business.  Its  nominal and sole  shareholder was

            Claire  Lank, a long-time Green & Freedman employee installed

            by  the  Elmans.   The  Elmans  were  designated as  the  new

            corporation's  officers and, along  with their wives,  as its

            directors.   A voting trust  with Lank enabled the  Elmans to

            continue exercising  complete control  of Green  & Freedman's

            assets, once transferred, in the form of Boston Bakers.

                      The bulk transfer shifted all of Green & Freedman's

            assets,  which were then worth somewhere between $480,000 and

            $500,000,  to  Boston  Bakers.   In  exchange,  Boston Bakers

            assumed Green  & Freedman's secured debt.   The secured debt,

            which totaled $498,498.17, was owed to two secured creditors:

            U.S.  Trust, the company's  institutional lender, and  the 75

            Old  Colony Avenue Realty Trust  (the "Realty Trust"), a real

            estate trust that owned the  company's plant for the  benefit

            of the Elmans.  U.S. Trust held a security interest in all of

            Green &  Freedman's property, both  then-owned and thereafter

            acquired, while  the  Realty Trust  held  a mortgage  on  the

            plant.  

                      As  part of the  bulk transfer, Boston  Bakers gave

            Green & Freedman a promissory  note, which Boston Bakers held

            for  the benefit of  Green & Freedman's  unsecured creditors,

            worth  $32,798.99.  That amount left the unsecured creditors,

                                
            ____________________

            See 1996 Mass. Acts ch. 160,   5.
            ___

                                         -5-

            including the  Health Fund,  with claims  worth roughly  five

            cents on the dollar. 

                      As  required by law,  Green & Freedman,  after some

            hesitation,  announced the bulk transfer to creditors in late

            December 1992 and  provided a list of its assets.   See Mass.
                                                                ___

            Gen. Laws  ch. 106,     6-104 to 6-106, repealed,  Mass. Acts
                                                    ________

            1996  ch. 160,    3.   The Health Fund  responded by bringing

            this  action in  the  federal district  court  which, in  its

            initial form, sought,  inter alia,  a preliminary  injunction
                                   _____ ____

            against the transfer  of Green & Freedman's  assets, alleging

            the transfer to  violate ERISA   515,  29 U.S.C.   1145.   On

            January  12,  1993,  the  district  court  denied  injunctive

            relief.  Three days later, the bulk transfer was consummated.

                      Boston Bakers thereafter carried on business in the

            same manner as Green &  Freedman.  Employing the same workers

            and equipment at  the same plant, it produced  the same kinds

            of baked goods for the same customers.  Boston  Bakers was as

            unprofitable as Green & Freedman.  After two-and-a-half years

            of  continued difficulties, U.S. Trust foreclosed, and Boston

            Bakers closed its doors in August 1995.  According to Richard

            Elman's  testimony, which  was not  contradicted, the  Elmans

            personally received no distribution in settling the company's

            affairs.  

                                         -6-

                      Following the liquidation of Boston Bakers' assets,

            the  Health Fund filed an amended complaint2 seeking recovery

            of  the delinquent contributions  from both corporations, and

            from Richard  Elman and Stanley  Elman as well.   As Green  &

            Freedman  had   done  previously,   Boston  Bakers   conceded

            liability  for the contributions  Green & Freedman  failed to

            make  to the  Health  Fund  from April  1992  until the  bulk

            transfer on January 15, 1993.   With the assets of both Green

            &  Freedman  and  Boston  Bakers completely  liquidated,  the

            Health Fund looked  to the Elmans personally for  recovery of

            Green & Freedman's delinquent contributions.   Count 3 of the

            Health Fund's  Second  Amended  Complaint  alleged  that  the

            Elmans were personally  liable as the "'alter  egos' of Green

            and  Freedman."    Count  4  premised  the  Elmans'  personal

            liability  on their  disregard for  Boston Bakers'  corporate

            identity,  alleging  that  the Elmans  completely  controlled

                                
            ____________________

            2.  An  amended complaint dated March 1, 1995, was superseded
            by a  Second Amended Complaint dated July  14, 1995.  In both
            complaints,  the  Health  Fund sought  recovery  for  Green &
            Freedman's  defaulted  payments   due  under  the  collective
            bargaining  agreement  for  the  period  April  1992  through
            January 15, 1993,  totaling $39,770,  exclusive of  interest,
            costs and liquidated damages.  Recovery from Green & Freedman
            was sought under the contract,  and from Boston Bakers on the
            theory  that, as  a  successor entity  to  Green &  Freedman,
            Boston  Bakers was obligated to remit the latter's delinquent
            contributions.  Recovery  from the two Elmans  personally was
            sought because  they were allegedly  "alter egos" of  Green &
            Freedman,  and  because  they  allegedly  established  Boston
            Bakers  with  fraudulent intent,  exercised  complete control
            over  it  (although  owning no  stock),  and  disregarded its
            corporate identity.

                                         -7-

            Boston  Bakers and created  it with fraudulent  intent.  Both

            parties requested a trial by jury.

                      At trial,  the  Health Fund  called Stanley  Elman,

            Richard  Elman,   and  Richard's  wife,   Barbara  Elman   as

            witnesses.  Counsel for the Elmans declined cross-examination

            at  the time, planning to call  the Elmans later as their own

            witnesses.   The Health  Fund also introduced  the deposition

            testimony  of   Claire  Lank,  who  had  served  as  Green  &

            Freedman's secretary before being installed as Boston Bakers'

            nominal  shareholder.  In addition, the parties stipulated to

            the  admission of  many  documents recording  the  collective

            bargaining  agreement, the creation of Boston Bakers, and the

            operation of Green & Freedman. 

                      At the  close of  the Health  Fund's case-in-chief,

            the Elmans moved for  judgment in their favor as  a matter of

            law pursuant to  Rule 50(a).  The district  court granted the

            motion  with respect to Count 3  and the liability of Green &

            Freedman, ruling that the Health  Fund had failed to meet the

            criteria  stated in  Alman v.  Danin,  801 F.2d  1 (1st  Cir.
                                 _____     _____

            1986), for  corporate veil-piercing  in an  ERISA case.   The

            court left  open for the  time being the Health  Fund's claim

            that the  Elmans were  personally liable  for Boston  Bakers'

            liability. 

                      The defense then called as its only witness Richard

            Elman,  who testified  about the  creation  and operation  of

                                         -8-

            Boston  Bakers.  The Elmans renewed their motion for judgment

            as a matter  of law.   Again relying  on Alman, the  district
                                                     _____

            court allowed the motion.  

                      The  Health  Fund  now  appeals  from  the district

            court's grant of judgment as a matter of law.

            II.       Standard of Review
                      __________________

                      To review a  grant of judgment as a  matter of law,

            we stand in the district court's shoes and may affirm only if

            the evidence did not furnish a  "legally sufficient basis for

            a reasonable jury to find" for the non-moving party.  Fed. R.

            Civ.  P. 50(a)(1);  see  also Coyante  v.  Puerto Rico  Ports
                                _________ _______      __________________

            Auth.,  105 F.3d  17,  21  (1st Cir.  1997).   This  standard
            _____

            requires more than "a mere scintilla" of evidence in the non-

            moving party's favor.   Fashion House, Inc. v.  K Mart Corp.,
                                    ___________________     ____________

            892 F.2d  1076,  1088  (1st Cir.  1989).    Every  reasonable

            inference, however, must be drawn in favor  of the non-moving

            party.   See Favorito v. Pannell,  27 F.3d 716, 719 (1st Cir.
                     ___ ________    _______

            1994). 

                      In the instant appeal, we must decide whether there

            was a legally sufficient basis  in the evidence presented for

            a reasonable jury to have  pierced the corporate veils and to

            have imposed  personal liability  on the  two Elmans  for the

            conceded indebtedness to the Health Fund of both companies.

                      The legal standard  for when it is proper to pierce

            the corporate  veil is notably  imprecise and fact-intensive.

                                         -9-

            Leading commentators state that "no  hard and fast rule as to

            the  conditions under  which the  [corporate]  entity may  be

            disregarded  can  be stated  as  they vary  according  to the

            circumstances  of each case," William M. Fletcher, 1 Fletcher
                                                                 ________

            Cyclopedia of the Law of Private Corps.   41.30, at 662 (1990
            _______________________________________

            rev.   ed.),  and,  more  skeptically,  that  "[t]here  is  a

            consensus  that  the  whole area  of  limited  liability, and

            conversely of  piercing the corporate veil, is among the most

            confusing in corporate law," Frank H. Easterbrook & Daniel R.

            Fischel, Limited Liability and the Corporation, 52 U. Chi. L.
                     _____________________________________

            Rev. 89, 89 (1985).  

                      Because a rigid test could not account for all  the

            factual variety, the  federal common law standard  adopted in

            our Circuit for measuring  an ERISA plaintiff's veil-piercing

            claim is somewhat  open-ended.  We said in  Alman that courts
                                                        _____

            should  consider  "the  respect  paid   by  the  shareholders

            themselves  to   [the]  separate   corporate  identity;   the

            fraudulent  intent of  the  [individual defendants];  and the

            degree of injustice that would be visited on the litigants by

            recognizing the corporate  identity."  Alman, 801  F.2d at 4.
                                                   _____

            Of these three elements, "a finding of some fraudulent intent

            is a sine qua non to the  remedy's availability."  See United
                                                               ___ ______

            Elec.,  Radio  and  Machine Workers  v.  163  Pleasant Street
            ___________________________________      ____________________

            Corp., 960 F.2d 1080, 1093 (1st Cir. 1992).  
            _____

                                         -10-

                      Before  examining the  district court's  Rule 50(a)

            ruling in  light of these  criteria, we need to  consider yet

            another problem.   The ERISA cause of action  under which the

            Health  Fund sued here, ERISA   515(a)(1)(3), authorizes only

            injunctive or  "other  appropriate  equitable  relief."    29
                                                _________

            U.S.C.      1132(a)(1)(3)  (emphasis  added).    Courts  have

            interpreted this cause  of action as providing no  right to a

            jury trial,  even when the  relief sought is monetary.   See,
                                                                     ____

            e.g., Spinelli v. Gaughan, 12  F.3d 853, 855 (9th Cir. 1993).
            ____  ________    _______

            As a  result, Alman  and other federal  precedent were  bench
                          _____

            proceedings in  which the judge  determined both the  law and

            the  facts.   No  consideration  was  given to  the  separate

            responsibilities of judge  and jury in the  applying of veil-

            piercing criteria.  

                      The  jury trial  here,  not  being  of  right,  was

            undertaken  by the judge  with the  consent of  both parties.

            Federal Rule  of Civil  Procedure 39(c),  allows  a judge  to

            order a  consensual jury trial  in actions not triable  as of

            right by a  jury.  In such  cases, the "verdict has  the same

            effect as if trial by  jury had been a matter of right."  Id.
                                                                      ___

            Accordingly,  in reviewing  the district  court's Rule  50(a)

            determination, we are  supposed to apply the  same principles

            as if the jury  trial had been one  of right.  We must  do so

            here,  however,  without  the  benefit  of   ERISA  precedent

            instructing on whether, and to  what  degree, the jury rather

                                         -11-

            than  the judge is  responsible for applying  the Alman veil-
                                                              _____

            piercing factors.  

                      While the absence of ERISA precedent on this aspect

            is somewhat troubling, we conclude that, in a consensual jury

            trial, it  is principally the  jury's function,  and not  the

            court's, to  decide whether  or not  the Alman  veil-piercing
                                                     _____

            standards  were  met.    The  jury,  to  be  sure,  can  find

            individual  liability  only  if  the  evidence  is  minimally

            sufficient  to  do  so under  Alman  criteria.   Whether  the
                                          _____

            evidence reaches  that threshold is  a question of law.   But

            given the issue's fact-intensive nature, the legal  threshold

            of evidentiary sufficiency is a relatively low one.

                      In reaching the above conclusion, we are influenced

            by  the fact that federal courts,  outside the ERISA context,

            have  held that veil-piercing  "is the sort  of determination

            usually made by a jury because it is so fact specific."   Wm.
                                                                      ___

            Passalacqua  Builders, Inc. v.  Resnick Developers  S., Inc.,
            ___________________________     ____________________________

            933 F.2d  131, 137 (2d Cir. 1991); see also FMC Finance Corp.
                                               ________ _________________

            v. Murphree, 632 F.2d 413, 421 & n.5 (5th Cir. 1980) (holding
               ________

            that, as  a matter of  federal procedure in  diversity cases,

            "the  issue  of corporate  entity  disregard is  one  for the

            jury").   Most state courts  adopt a similar approach.   See,
                                                                     ____

            e.g., Pepsi-Cola Metropolitan Bottling Co. v. Checkers, Inc.,
            ____  ____________________________________    ______________

            754  F.2d 10, 14 (1st Cir. 1985)(applying Massachusetts law);

            Castleberry  v. Branscum,  721 S.W.2d  270,  277 (Tex.  1986)
            ___________     ________

                                         -12-

            (treating  veil-piercing  as  factual  and,  therefore,  jury

            question).    Courts in  these jurisdictions  have emphasized

            that  "[t]he conditions under which the corporate entity will

            be disregarded vary according to the circumstances present in

            each  case."    Electric  Power  Bd.  v.  St.  Joseph  Valley
                            ____________________      ___________________

            Structural Steel  Corp., 691  S.W.2d 522,  526 (Tenn.  1985).
            _______________________

            Even  where veil-piercing  is decided  by  judge rather  than

            jury,  the  courts   have  held  that  the   question,  while

            equitable, is one of fact.   See, e.g., Smetherman v. Wilson,
                                         _________  __________    ______

            626 So. 2d 71,  73 (La. Ct. App. 1993)  (explaining that trial

            judge  decides   whether  to  pierce   corporate  veil  after

            examining the "totality  of the circumstances").   Indeed, in

            Alman we  reviewed the  district court's determinations  that
            _____

            the  individual defendants "had acted in  bad faith" and "had

            not   respected  [corporation's]   separate  existence   even

            minimally" as  "inferences" subject to  the clearly-erroneous

            review accorded issues of fact.  801 F.2d at 4; see also Pipe
                                                            ________ ____

            Fitters Health and Welfare Trust v. Waldo, R., Inc., 969 F.2d
            ________________________________    _______________

            718, 721  (8th  Cir.  1992)  (reviewing  ERISA  veil-piercing

            decision for clear error).  

                      In  assigning  veil-piercing  here  largely to  the

            jury,  we are  also  influenced by  the  fact that,  although

            entitled  to a  bench  trial, the  parties agreed  to proceed

            before a jury.  This choice would be next to meaningless were

            we  now to  hold that  the principal  contested issue  -- the

                                         -13-

            Elmans' personal liability  -- remained one for the  court to

            determine.   Given a Rule  39(c) election to proceed  by jury

            trial,  other courts  have held that  the district  court may

            relegate all factual  determinations to the jury,  even those

            normally  treated as equitable.  See,  e.g., Gloria v. Valley
                                             __________  ______    ______

            Grain  Prods.,  Inc., 72  F.3d  497,  499  (5th  Cir.  1996);
            ____________________

            Thompson v.  Parkes, 963 F.2d  885, 888 (6th Cir.  1992); cf.
            ________     ______                                       ___

            McCain  Foods, Inc.  v. St.  Pierre, 463  A.2d 785,  787 (Me.
            ___________________     ___________

            1983)(holding that veil-piercing,  while normally in Maine  a

            matter for the court, was  properly submitted to jury under a

            state rule parallel  to Fed. R. Civ. P. 39(c)).  The point of

            Rule 39(c)'s jury-by-consent provision has been said to be to

            allow parties who  so wish to have  disputed facts, including

            ultimate facts, resolved by a  jury.  See generally 9 Charles
                                                  _____________

            A. Wright &  Arthur R. Miller, Federal Practice and Procedure
                                           ______________________________

              2333 (1995). 

                      As the  veil-piercing determination  is principally

            for the  jury to make,  we shall affirm the  district court's

            grant  of judgment  for the  individual  defendants only,  as

            previously  noted,  if  we determine  there  was  no "legally

            sufficient  basis  for a  reasonable  jury to  find"  for the

            plaintiff  Health Fund.  (Our review standard would obviously

            be different  were veil-piercing  regarded as  a legal  issue

            relegated to the judge even in a jury trial.)

                                         -14-

                      We  turn  now  to  the  evidence  presented  below,

            inquiring whether jury  issues were presented concerning  the

            Elmans' personal  liability,  first, for  Green &  Freedman's

            obligations to the Health Fund, and, second for Boston Bakers

            responsibility for those same obligations.

            III.      Piercing the Corporate Veil: Green & Freedman
                      _____________________________________________

                      We hold  that, on  the record  before the  district

            court  its decision to take from the jury the question of the

            Elmans'   liability   for  Green   &   Freedman's  delinquent

            contributions was  erroneous and  must be vacated.   We  find

            ample  evidence to  afford a  reasonable  jury, applying  the

            Alman  criteria,  801 F.2d  at  4, and  exercising  its broad
            _____

            authority  over  the  veil-piercing issue,  supra,  a legally
                                                        _____

            sufficient basis to reach beyond Green & Freedman's corporate

            identity and  hold the  Elmans liable  for the  corporation's

            unpaid contributions.  

                      A.   Fraudulent Intent
                           _________________

                      As previously  noted, "the cases  that permit  veil

            piercing in the ERISA milieu  all emphasize that a finding of

            some  fraudulent intent  is a  sine qua  non to  the remedy's

            availability."   United Elec., Radio and Machine Workers, 960
                             _______________________________________

            F.2d at  1093.  We explained in that  case that, in the ERISA

            veil-piercing  sense, fraud need  not reach the  level needed

            for  criminal or even  independently actionable  civil fraud.

            Still, it has to be more than "invisible."  Id. 
                                                        ___

                                         -15-

                      There was  evidence that the Elmans,  through their

            domination of  Green &  Freedman, caused  the corporation  to

            make  payments to  themselves and their  relatives at  a time

            when the  corporation was  known to be  failing and  could be

            expected to  default,  or  was  already in  default,  on  its

            obligations  to the  Health Fund.   These  payments  could be

            found  to lack  any  business  justification.    Courts  have

            routinely viewed  the wrongful diversion of  corporate assets

            to  or  for  controlling  individuals  at  a  time  when  the

            corporation  is in  financial distress  as  a fraud  that can

            justify  piercing the corporate  veil.  See,  e.g., Laborers'
                                                    __________  _________

            Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d
            __________________    _____________________________

            702, 705  (6th Cir.  1988) (per  curiam)(piercing veil  where

            shareholder withdrew corporate funds at time of dissolution);

            Lowen v. Tower  Asset Management, Inc.,  829 F.2d 1209,  1221
            _____    _____________________________

            (2d   Cir.  1987)   (holding   individuals  responsible   for

            fiduciary's  ERISA  violations  on  evidence  of   "extensive

            intermixing  of  assets  . .  .  among  the corporations  and

            individual  defendants"); Labadie Coal Co. v. Black, 672 F.2d
                                      ________________    _____

            92,  98-99 (D.C.  Cir.  1982)  (instructing  trial  court  to

            consider  defendants'  diversion   of  corporate  assets   to

            personal  uses); I.A.M.  National Pension  Fund v.  Wakefield
                             ______________________________     _________

            Indus.,  Inc., 14 Employee  Benefits Cas. (BNA)  1890 (D.D.C.
            _____________

            1991)  (piercing employer's corporate  veil under ERISA based

            in  part on "selective  diversion of corporate  assets"); see
                                                                      ___

                                         -16-

            generally 1  William M.  Fletcher, Cyclopedia of  the Law  of
            _________                          __________________________

            Corporations    41.30, at 663 (listing among relevant factors
            ____________

            "siphoning  of corporate funds  by dominant stockholders" and

            "the use of corporate funds  to pay personal expenses without

            proper accounting").

                      The  Health Fund introduced a series of checks that

            the  Elmans made out  to themselves  from Green  & Freedman's

            corporate accounts.   These checks dated from January 1991 to

            January 1993,  a period  during which,  according to  Richard

            Elman,  Green &  Freedman "was  in  trouble," "los[ing]  some

            money,"  and experiencing a  "decline in profits  and sales."

            In the  last few  months of this  period,   Green &  Freedman

            ceased to  be able  to pay its  debts including  its required

            contributions to  the Health Fund.   It then  transferred its

            assets to Boston Bakers.

                      Meanwhile, the  Elmans had been  writing themselves

            and their relatives checks  for no business purpose that  the

            Elmans could adequately  explain.  When questioned  about one

            of   these  payments,   Richard  Elman  testified   that  the

            corporation was  repaying him  an unrecorded  loan --  itself

            evidence  weighing in favor  of piercing the  corporate veil,

            see United States v.  Pisani, 646 F.2d 83, 88 (3d  Cir. 1981)
            ___ _____________     ______

            (piercing   corporate   veil  on   basis   of   repayment  of

            shareholders' loan at  time when corporation was  failing) --

                                         -17-

            before stating that he could  not remember the purpose of the

            payment.  

                      Particularly  flagrant  was   the  evidence  of   a

            personal  vacation that  the  Elmans financed  with corporate

            funds.  In  January 1991, the Elmans caused  Green & Freedman

            to pay for them to travel to New Orleans, where they attended

            the  Super  Bowl.    On  direct  examination,  Stanley  Elman

            testified that  the checks  in question  represented "payment

            for expenses and conducting business."  On cross-examination,

            however,  Stanley Elman admitted that Green & Freedman had no

            customers in Louisiana and did no business in connection with

            the  Super  Bowl.    Nothing  in  Stanley  Elman's  testimony

            rehabilitated his initial claim that he conducted business on

            the Super Bowl trip.  

                      In  addition, the Elmans caused Green & Freedman to

            pay Eleanor Elman, Stanley Elman's  wife, three checks for  a

            total of  $4,500.   Stanley Elman  initially explained  these

            payments as wages.   However, the Elmans did  not report this

            amount on  their tax  return and there  was no  evidence that

            Green &  Freedman reported  it as wages.   Moreover,  Green &

            Freedman's receptionist, Claire Lank,  testified that Eleanor

            Elman did not work at Green & Freedman during 1992.

                      Finally, just days before Green & Freedman executed

            the bulk transfer to  Boston Bakers, and at  a time when  the

            company had  ceased  to meet  its obligations  to the  Health

                                         -18-

            Fund,  the  Elmans   caused  the  corporation  to   write  an

            unexplained check  for cash in  the amount of $10,000,  and a

            second check payable to Stanley Elman for $2,500.  

                      The payments made by Green & Freedman to the Elmans

            and their  relatives during 1991  and 1992  with no  apparent

            business justification amounted to $30,109.  In ruling on the

            Elmans' Rule 50(a) motion, the district court was required to

            draw all reasonable inferences and resolve credibility issues

            in favor of  the non-movant Health  Fund.  Looked at  in this

            light,   the  evidence  was  sufficient  to  support  a  jury

            determination  that the Elmans  had used corporate  funds for

            personal  purposes at  times when they  knew either  that the

            company was inadequately capitalized to meet its obligations,

            or  that,  in  fact,  it had  stopped  doing  so  --  and, in

            particular,  had ceased to  pay its Health  Fund obligations.

            We add  that the jury's  ability to conclude that  the Elmans

            had acted  in a knowingly  fraudulent manner would  have been

            bolstered by  inconsistencies in the  Elmans' testimony about

            the payments,  particularly their  testimony  that the  Super

            Bowl trip and Eleanor Elman's "wages" had business purposes.

                      The  Elmans protest  that  the  amount of  arguable

            self-dealing evidenced  at trial  was too  little to  justify

            sending the Health Fund's case to the jury.  The Elmans point

            out  that the payments described  above amounted to less than

            one percent of the corporation's gross annual sales, and that

                                         -19-

            the trip to New Orleans was, after all, only one trip.  While

            it  is  difficult to  quantify  nicely  the amount  of  fraud

            required,  the  Elmans's  self-dealing  occurred  on  several

            occasions,  at  a time  when  the  company was  in  financial

            straits.   We cannot  say that this  conduct and  the amounts

            involved were  de minimis,  to the  point that no  reasonable

            jury could find that the fraudulent intent prong of the Alman
                                                                    _____

            standard was established.

                      B.   Disregard of Corporate Identity
                           _______________________________

                      The  fraudulent  self-dealing  just  discussed  was

            probative not only  of fraudulent intent but  also of another

            Alman  element,  disregard  of corporate  identity.    On the
            _____

            latter  score, there was  additional evidence.   For example,

            the Elmans appear to have mixed their own finances with those

            of Green &  Freedman's.  At a  time that the Elmans  owed the

            corporation $141,000 in  loans, they also loaned  it $170,000

            through  their real estate trust.  These unexplained dealings

            suggest that money  was being moved around with  little or no

            regard for  the corporate identity.   There was no  record of

            the  terms of  the purported  loans nor  of any  agreement to

            repay.  Undocumented  and interest-free loans could  be found

            to  show a  disregard for  the  corporate form.   See,  e.g.,
                                                              __________

            Uriarte, 736 F.2d  at 524 (treating unrecorded  and interest-
            _______

            free loans from  shareholders to the corporation  as evidence

            of shareholders' disrespect for corporate form).  

                                         -20-

                      Beyond the  undocumented loans, there  was evidence

            of  inadequate and, indeed,  fraudulent record keeping.   The

            Elmans admittedly  falsified  Green &  Freedman's minutes  to

            state  that their  wives, who  served  as nominal  directors,

            attended and  authorized corporate  borrowing,  when in  fact

            their wives did neither.  

                      We accept  the Elmans'  contention that  a closely-

            held corporation need not hew to every corporate formality in

            order  to  maintain  its  shareholders'   immunity  from  the

            corporation's debts.    A veil-piercing  plaintiff  will  not

            prevail  if the  evidence shows  only  that the  closely-held

            defendant  corporation was run without the strict formalities

            of its publicly-held  counterpart.  But the  evidence adduced

            at trial, viewed most favorably  to the Health Fund, could be

            found  to show practices that went beyond mere informalities.

            Important  transactions  between   the  corporation  and  its

            controlling  shareholders  went  undefined,  and  the  Elmans

            appear  to  have created  false minutes.   These  facts, when

            added  to the  financial self-dealing  and  when viewed  in a

            light most favorable to the Health Fund, support a reasonable

            inference by a  jury that the Elmans, in the two years before

            Green & Freedman's demise, did  not treat Green & Freedman as

            a separate entity.  

                      C.   Manifest Injustice
                           __________________

                                         -21-

                      The  evidence just  described under  the first  two

            Alman factors could also allow  a reasonable jury to conclude
            _____

            that  sheltering the Elmans from Green & Freedman's liability

            to  the Health  Fund  would  be manifestly  unjust.   As  one

            commentator has explained,  courts have found this  prong met

            when "a corporation  is so undercapitalized that it is unable

            to meet debts that may reasonably be expected to arise in the

            normal course of business."  Note, Piercing the Corporate Law
                                               __________________________

            Veil:   The Alter Ego  Doctrine Under Federal Common  Law, 95
            _________________________________________________________

            Harv.  L. Rev. 853,  855 (1982).   Thus, a jury  would not be

            unreasonable  in viewing  as  manifestly unjust  the  Elmans'

            decision  to  issue themselves  payments  for personal,  non-

            corporate purposes, as well as other unexplained payments, at

            a time when the corporation could not meet its obligations to

            the  Health Fund.  Of course, the mere non-payment of debt is

            not,  by itself,  enough to  justify  piercing the  corporate

            veil.  However, a jury could reasonably conclude on the basis

            of  the  evidence below  that  the Elmans  both  placed their

            personal    interests    ahead   of    their    corporation's

            responsibilities  and   did  not  themselves  honor  Green  &

            Freedman's corporate form.  As  a result, it could be thought

            manifestly  unjust  to   insist  that  the  Health   Fund  be

            restricted by the corporate form.

            IV.       Piercing the Corporate Veil:  Boston Bakers
                      ___________________________________________

                                         -22-

                      Whether  the evidence sufficed  for a jury  to find

            the Elmans personally liable for Boston Bakers' successorship

            obligation  to pay Green & Freedman's indebtedness for Health

            Fund  contributions missed  in  April 1992,  through  January

            1993,  is  more  problematic.   Given  the  Elmans' potential

            direct liability, supra, for Green & Freedman's debts on this
                              _____

            score, the question of their tangential exposure for the same

            debt via Boston Bakers  may seem more theoretical than  real.

            Still, the court's ruling on  count 4 of the complaint raises

            the issue, and we must address it.

                      For  the showing of  fraud needed to  pierce Boston

            Bakers' corporate  veil, the  Health Fund  relies inter  alia

            upon the  Elmans' transfer  of Green  & Freedman's  assets to

            Boston   Bakers,  a   transaction  said   to  be   inherently

            fraudulent.   Yet we can  see nothing in the  transfer itself

            that further disadvantaged the Health Fund in  its ability to

            realize   its   claim   for   Green   &   Freedman's   unpaid

            contributions.           Had the Elmans chosen simply to shut

            down  the  operations of  Green  &  Freedman  in early  1993,

            instead of undertaking the bulk  transfer to Boston Bakers, a

            jury would have  to conclude that the Health  Fund would have

            received nothing.  At  the time of the bulk transfer,  it was

            undisputed that Green  & Freedman had no more  than $2,000 in

            cash  on  hand,  and liabilities  to  secured  creditors that
                                                  _______

            outweighed  its assets.  The firm's primary secured creditor,

                                         -23-

            U.S.  Trust, held  a  security  interest in  all  of Green  &

            Freedman's  assets.   Once  a  debtor  grants  an  all-assets

            security  interest, unsecured creditors  like the Health Fund

            are  made no worse off  by a bulk  transfer:  the transferred

            assets were already  encumbered and therefore  unavailable to

            the Health Fund regardless of the bulk transfer.

                      We  note   that  neither  in  its   second  amended

            complaint  nor in  arguments on  appeal, has the  Health Fund

            claimed  that Boston Bakers, as Green & Freedman's successor,

            was liable under the latter's collective  bargaining contract

            for  payments  after  January  15, 1993,  the  date  Green  &
                           _____

            Freedman shut  down.  Rather  the damages sought are  for the

            period from  April 1992,  until January  15, 1993,  being all

            based on  defaulted contributions  owed by  Green &  Freedman

            while it was  still operating.   Boston Bakers' liability  is

            premised  solely  on its  inherited responsibility  for these

            earlier  debts of  its predecessor.    As said,  had Green  &

            Freedman simply shut  down on  January 15,  1993, the  Health

            Fund would  apparently have been  no better off.   (It might,

            arguably,  have  been  worse off.)    Plaintiff  propounds no

            concrete  theory  as   to  how  the  bulk   transfer  further

            diminished  its prospects  for recovering  the  sums owed  by

            Green & Freedman between April 1992 and January 15, 1993.

                      It is  significant  that, from  the outset,  Boston

            Bakers continued openly  to carry on the  business of Green &

                                         -24-

            Freedman.    Lank,  Boston Bakers'  nominal  shareholder  and

            receptionist, even continued  to answer the phone  "Green and

            Freedman" after the bulk sale.  A company does not extinguish

            its  ERISA obligations  simply by  changing the  name on  its

            letterhead.   See  Hawaii Carpenters  Trust  Funds v.  Waiola
                          ___  _______________________________     ______

            Carpenter  Shop,  Inc., 823  F.2d  289, 294  (9th  Cir. 1987)
            ______________________

            (holding  that alter ego  test is  met when  two corporations

            share a  "substantial continuity"); cf. Guzman  v. MRM/ELGIN,
                                                ___ ______     _________

            409  Mass. 563, 566  (1991) (explaining exception  to general

            rule of  successor non-liability  for a  transferee that  "is

            merely a  continuation of  the seller  corporation").   Thus,

            Boston Bakers  was  available  throughout  its  existence  to

            answer for the liabilities of its predecessor.

                      At trial, the  Health Fund produced no  evidence as

            to  how the  bulk transfer  worked to  its disadvantage.   As

            Richard Elman's uncontradicted testimony put  it, by December

            1992,  Green & Freedman was in  such dire straits that it had

            to choose between liquidation and reorganization.  The Elmans

            chose the  latter  course,  and  undertook  a  reorganization

            through the bulk transfer.  

                      Further undercutting the  contention that the  mere

            fact of the bulk transfer demonstrates the Elmans' fraudulent

            intent is  the fact that  they did not conceal  the transfer.

            As  required  by  statute,  Green  &  Freedman  notified  its

            creditors, including  the Health Fund,  before executing  the

                                         -25-

            bulk  transfer.   The district  court  thereafter denied  the

            Health Fund's motion  to enjoin the transfer,  an action from

            which no appeal was taken.

                      We are  thus unable to  find, on this  record, that

            the   bulk  transfer  provided  the  Elmans  with  an  unfair

            advantage,  amounting  to  a fraud,  material  to  the Health

            Fund's  current claim.   Under Alman, fraudulent  intent is a
                                           _____

            necessary element in  order to piece the corporate  veil.  We

            do not think a jury  could properly derive a relevant finding

            of  fraudulent intent material  to the harm  alleged from the

            transfer  by itself.   See  United Elec.,  Radio and  Machine
                                   ___  _________________________________

            Workers,  960  F.2d   at  1094  (approving  "good   faith  if
            _______

            ultimately  unsuccessful  attempt  to  resurrect  a  moribund

            company"); Laborers  Clean-Up Contract  Admin. Trust  Fund v.
                       _______________________________________________

            Uriarte Clean-Up  Serv., Inc.,  736 F.2d  516, 525 (9th  Cir.
            _____________________________

            1984)  (noting  difference  between  a corporation  that  was

            unable  to pay its debts from  the outset and one that simply

            "fell upon bad times").  

                      Besides the fact  of the bulk transfer,  the Health

            Fund points to other factors as a supposed basis for piercing

            Boston Bakers'  veil.  In  its complaint it alleged  that the

            nominal and sole  shareholder, Claire Lank, was  "unaware" of

            her  obligations and rights as a  shareholder and, instead of

            following  her  independent  judgment,  followed the  Elmans'

            instructions.   Also alleged was the Elmans' complete control

                                         -26-

            over  Boston Bakers,  even though  they  owned no  stock; the

            Elmans'   disregard   of   corporate   identity;   and    the

            incorporation of Boston Bakers with fraudulent intent.  These

            allegations, however,  to the extent  legally material,  must

            stand  or  fall  on  the  existence in  the  record  of  some

            supporting   evidence.      Moreover,   proof  of   corporate

            informalities, standing  alone, are insufficient.   Plaintiff

            may  not prevail without  some evidence of  fraudulent intent

            material to the harm suffered.  
            _____________________________

                      There  is no evidence  of financial self-dealing in

            the  case of  Boston Bakers  such  as occurred  with Green  &

            Freedman.  None  of the checks introduced by  the Health Fund

            as  payable to  or for  the Elmans  came from  Boston Bakers'

            accounts.

                      In respect to the  claimed "undercapitalization" of

            Boston  Bakers, all the  latter's capital came  from the bulk

            transfer; there was  no unmet agreement by the  Elmans to add

            more, nor  evidence that,  after transfer  to Boston  Bakers,

            they diverted the bulk transfer funds to personal objectives.

            The mere  fact that  Boston Bakers  eventually failed  or had

            less  capital than  needed is  not a  basis for  reaching the

            Elmans personally, absent fraud.

                      Much  is  made  of  the  fact  that  Richard  Elman

            indicated  ignorance as  to how  he was  named  president and

                                         -27-

            director of Boston  Bakers3 or whether Boston Bakers  held an

            annual  shareholders'  meeting.    Stanley  Elman  failed  to

            recognize  the firm's  stock  ledger.    And Lank,  the  sole

            shareholder, appears  to have  been a  straw for  the Elmans,

            allegedly so as to make it harder for creditors to reach them

            personally.     None  of  these  items,  however,  singly  or

            together, provide  a sufficient  evidentiary basis  to pierce

            the  corporate  veil.   While  they  may  suggest a  lack  of

            attention  to  corporate  formalities,  they do  not  reflect

            fraudulent intent  material to  the harm alleged,  nor is  it

            clear  how  any  of them,  even  slightly,  disadvantaged the

            plaintiff.

                      There  was also evidence that the Elmans' wives did

            not know  they were directors;  did not participate  in board

            meetings, although corporate  records falsely indicated  they

            did; and  did not  know that Lank  was the  sole stockholder.

            But  these  snippets  do  little  to  demonstrate  more  than

            corporate informality.   Even if the false  corporate records

            concerning the wives'  attendance at directors'  meetings are

            characterized as a  "fraud," there is no  evidence the Health

            Fund knew or  relied on this information to  its detriment or

                                
            ____________________

            3.   Q:   And would you acknowledge, sir, that you don't know
                      by  what authority you  were elected a  director of
                      Boston Bakers?
                 A:   The attorneys set up the corporation.  I don't know
                      the direction.    I  know I  was  an  officer,  the
                      president.

                                         -28-

            sustained any injury  whatever as a result.   The "fraudulent

            intent  of  the  individual  defendants" mentioned  in  Alman
                                                                    _____

            requires some meaningful relationship between the  intent and

            the harm visited upon plaintiff.  We add that even the Health

            Fund  itself does  not  argue that  the incorrect  records by

            themselves show fraudulent intent sufficient under Alman.
                                                               _____

                      We  conclude that the district court was correct in

            granting the Elmans'  motion for judgment as a  matter of law

            with  respect to the  Elmans' alleged personal  liability for

            Boston  Bakers' corporate  obligation to  make  good Green  &

            Freedman's delinquent payments to the Health Fund.

            V.        Conclusion
                      __________

                      The  district court's grant of judgment as a matter

            of law is vacated with  respect to Count 3 and affirmed  with
                      vacated                              affirmed
                      _______

            respect to Count 4.  The case is remanded for a new trial and

            other proceedings consistent herewith.

                                         -29-