Trustees of The Painters Union Deposit Fund v. Interior/Exterior Specialist Co., 040710 FED6, 08-1966

Docket Nº:08-1966
Opinion Judge:ROGERS, Circuit Judge.
Party Name:TRUSTEES OF THE PAINTERS UNION DEPOSIT FUND, Plaintiff-Appellee, v. INTERIOR/EXTERIOR SPECIALIST COMPANY, et al., Defendants-Appellants, v. PAINTERS DISTRICT COUNCIL NO. 22 OF THE INTERNATIONAL BROTHERHOOD OF PAINTERS AND ALLIED TRADES (AFL-CIO), Defendant-Appellee.
Judge Panel:BEFORE: MERRITT, GIBBONS, and ROGERS, Circuit Judges.
Case Date:April 07, 2010
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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TRUSTEES OF THE PAINTERS UNION DEPOSIT FUND, Plaintiff-Appellee,

v.

INTERIOR/EXTERIOR SPECIALIST COMPANY, et al., Defendants-Appellants,

v.

PAINTERS DISTRICT COUNCIL NO. 22 OF THE INTERNATIONAL BROTHERHOOD OF PAINTERS AND ALLIED TRADES (AFL-CIO), Defendant-Appellee.

No. 08-1966

United States Court of Appeals, Sixth Circuit

April 7, 2010

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

BEFORE: MERRITT, GIBBONS, and ROGERS, Circuit Judges.

ROGERS, Circuit Judge.

In this labor relations appeal, Interior/Exterior Specialists Co. (IES), a Union painting contractor, and The Llamas Group (TLG), a non-Union general contractor, challenge the district court's decision that they are alter egos and therefore owe fringe benefits to a Union fund for both firms' painting work. IES and TLG also challenge the district court's conclusion that federal labor law preempts their third-party claims and counterclaims for defamation and the district court's denial of IES's third-party claims for discrimination and restitution. The district court, however, applied the correct legal standard for determining alter ego liability, and the district court's factual findings for alter ego liability are not clearly erroneous. In addition, because Union officials did not make the statements that allegedly defame IES and TLG with actual malice, IES and TLG's defamation claims fail. The district court also properly rejected IES's claim of discrimination based on IES's Hispanic ownership and IES's independent restitution claim.

I.

IES is a Hispanic-owned painting contractor founded in 1997, with Mr. Rito Julien Llamas as sole shareholder, officer, and director. In 1998, IES and Painters District Council No. 22 of the International Brotherhood of Painters and Allied Trades (the Union) concluded a collective bargaining agreement (CBA) that requires IES to pay a set fringe benefit amount to the Painters Union Deposit Fund (the Fund) for every hour that IES painters work. If IES's payments are delinquent, IES must pay liquidated damages. IES officially terminated the CBA effective May 31, 2004. TLG was formed in 1999 with Mrs. Julie Llamas, Mr. Llamas' wife, as sole shareholder, officer, and director. TLG is a non-Union general contractor that does design, building, concrete, and masonry work. Until May 21, 2004, TLG also did painting work. In July and August 2003, after Union officials learned that TLG painters were doing a job that IES was supposed to perform, the Union picketed TLG's worksite with signs accusing TLG of paying unfair wages.

On August 21, 2003, the Union filed a National Labor Relations Board (NLRB) charge against IES "d/b/a" TLG. The Union alleged that for six months, IES and TLG had worked as an illegal double-breasted operation and failed to pay CBA-required wages and fringe benefits. In November 2003, IES employees complained that they were not receiving fringe benefit contributions, and the Union requested a comprehensive audit of IES. In February 2004, the Fund sued IES for alleged CBA violations and failure to pay fringe benefits, and sought a comprehensive audit of IES's books and records to determine the amount owed. On March 23, 2004, IES notified the Union that IES was terminating the CBA, effective May 31, 2004. On May 21, 2004, the Union agreed to drop its NLRB charge if TLG ceased painting work and IES placed a Union steward on two existing projects. The Union also agreed to recommend to the Fund that the Fund's suit against IES be dismissed without prejudice. The Fund dropped the lawsuit.

On September 16, 2004, after the CBA terminated under IES's notice and after an IES employee complained to the Union about his insurance, Tommy Thomas, the Union's Business Representative and Director of Organizing, told the project manager of IES's Patrick Henry Middle School worksite that IES was not paying fringe benefits. That day IES sent the Fund IES's June and July 2004 payroll report, two checks totaling $56,000, and a letter explaining that these monies were "being submitted in accordance to our Agreement dated May 21, 2004," the date IES, TLG, and the Union settled the NLRB charge, but that "these payments in no way reflect a desire to continue a contract or to extend the contract as per our letter dated March 23, 2004," the date IES purported to terminate the CBA. In December 2004, after another employee complained to the Union about his insurance, Thomas told the project manager at IES's Western Michigan University worksite that IES was not paying fringe benefits. That month the Union notified the Fund that IES had not paid fringe benefits, and the Union requested a comprehensive audit of IES.

In the present suit, the Fund alleges that TLG, as IES's alter ego, is bound by the CBA and that defendants1 must pay delinquent fringe benefits and liquidated damages for all CBA-covered work performed or subcontracted by either firm before the CBA's termination. IES and TLG impleaded the Union. IES claimed that the Union's ordering of comprehensive audits constituted discrimination under 42 U.S.C. § 1981 because the Union had not ordered audits of non-Hispanic companies with similar business practices. IES asserted defamation...

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