Int'l Ass'n of Heat & Frost Insulators Local 17 Pension Fund v. Cec Env't, Inc.

• Decision Date: 30 March 2021
• Docket Number: No. 20-cv-3301,20-cv-3301
• Citation: 530 F.Supp.3d 757
• Parties: INTERNATIONAL ASSOCIATION OF HEAT AND FROST INSULATORS LOCAL 17 PENSION FUND, et al., Plaintiffs, v. CEC ENVIRONMENT, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

530 F.Supp.3d 757

INTERNATIONAL ASSOCIATION OF HEAT AND FROST INSULATORS LOCAL 17 PENSION FUND, et al., Plaintiffs,

v.CEC ENVIRONMENT, INC., et al., Defendants.

No. 20-cv-3301

United States District Court, N.D. Illinois, Eastern Division.

Signed March 30, 2021

Jeffrey Allen Krol, Joseph Edward Mallon, William M. Blumthal, Jr., Johnson & Krol, LLC, Chicago, IL, for Plaintiffs.

David Michael Heilmann, Clausen Miller P.C., Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Franklin U. Valderrama, United States District Judge

Plaintiffs, the International Association of Heat and Frost Insulators Local 17 Pension Fund; the International Association of Heat and Frost Insulators Local 17 Welfare Fund; the International Association of Heat and Frost Insulators Local 17 Annuity Fund; the International Association of Heat and Frost Insulators and Asbestos Local 17 Joint Apprenticeship, Training, and Record Keeping Trust (collectively, Trust Funds), the Labor Management Cooperative Trust (LMCT), and the International Association of Heat and Frost Insulators and Allied Workers, Local 17 of Chicago, Illinois (Local 17), have brought suit against Defendants, CEC Environmental, Inc. (CEC) and Celtic Environmental, Inc. (Celtic) pursuant to the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and various provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1132, 1145. R. 1, Compl.¹

Before the Court is Defendant Celtic's Motion to Dismiss Plaintiffs’ Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). R. 18, Mot. Dismiss. For the reasons that follow, Celtic's Motion to Dismiss is denied.

Background

CEC and Celtic are both employers engaged in the asbestos abatement, lead abatement, mold remediation, mechanical insulation work, and interior demolition work. Compl. ¶ 27. Joseph Smrz is the President of both CEC and Celtic. Id. ¶ 20. CEC and Celtic share the same management and employ some of the same employees. Id. ¶¶ 34–35. They operate out of the same building, which is owned by Celtic. Id. ¶¶ 22–23. At least one Local 17 member works for Celtic. Id. ¶¶ 33, 60.

Local 17 is a labor organization as defined by 29 U.S.C. § 185, and was at all relevant times a signatory to an Area Agreement with the Illinois Regional Insulation Contractors Association, Inc.(Area Agreement).² Compl. ¶¶ 1, 4, 10. Local 17's trade jurisdiction includes asbestos and lead removal, toxic waste cleanup, mold remediation, and application of firestopping materials. Id. ¶ 10, Exh. 1 at 46–47.

Since at least October 2008, CEC has been bound to a series of Area Agreements through successive Agreement of Consent Forms. Compl. ¶ 10, Exhs. 1, 2. Through the Area Agreements, CEC agreed to be bound by provisions of the Agreements and Declarations of Trust which created the Trust Funds. Id. ¶ 11. Celtic is a non-union company and is not a signatory to the Area Agreement with Local 17. Id. ¶ 18.

The Trust Funds are multiemployer plans pursuant to ERISA Section 2(37)(A), in that they receive contributions from numerous employers pursuant to the Area Agreements. Compl. ¶ 3; 29 U.S.C. § 1002(37)(A). The Labor Management Cooperative Trust (LMCT) is a labor-management cooperation committee established pursuant to the Labor-Management Cooperation Act of 1978, which also receives contributions pursuant to the Area Agreement. Compl. ¶¶ 4, 14; 29 U.S.C. § 175(a).

On June 4, 2020, Plaintiffs filed a two-count Complaint against CEC and Celtic. In Count I, Plaintiffs seek an order that Celtic is the alter ego of CEC. Count II seeks an order that Celtic constitutes a single employer with CEC. Both Counts I and II seek entry of an order that Celtic is bound to the terms of the Area Agreement with Local 17, entry of an order requiring Celtic to submit to a payroll compliance audit to determine the full amount of liability to the Plaintiffs, and entry of a judgment in favor of the Plaintiffs and against CEC and Celtic, jointly and severally, for all contributions and liquidated damages as revealed by the payroll audit.

Defendant Celtic moves to dismiss Plaintiffs’ Complaint pursuant to Rule 12(b)(1). Mot. Dismiss. For the reasons that follow, Celtic's Motion to Dismiss is denied.

Standard of Review

A Rule 12(b)(1) motion tests whether the court has subject matter jurisdiction. FED. R. CIV. P. 12(b)(1). Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7 , 570 F.3d 811, 820 (7th Cir. 2009). Standing is an "essential component of Article III's case-or-controversy requirement," and the plaintiff "bears the burden of establishing standing ... in the same way as any other matter on which the plaintiff bears the burden of proof ...." Apex Digital, Inc. v. Sears Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). In order to survive a Rule 12(b)(1) motion, the plaintiff bears the burden of establishing subject matter jurisdiction. Ctr. for Dermatology & Skin Cancer, Ltd. v. Burwell , 770 F.3d 586, 588–89 (7th Cir. 2014). When deciding a facial challenge to subject matter jurisdiction—that is, when the defendant argues that the plaintiff's allegations as to jurisdiction are inadequate—"the district court must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff." Ezekiel v. Michel , 66 F.3d 894, 897 (7th Cir. 1995). But district courts may also "look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Taylor , 875 F.3d at 853 (citing Apex Digital , 572 F.3d at 444 ). In that case, "no presumptive truthfulness attaches to plaintiff's allegations," and the court is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Apex Digital , 572 F.3d at 444 (internal citations omitted).

Analysis

As an initial matter, Plaintiffs insist that they are not seeking a determination that Celtic's employees are members of Local 17. R. 24, Resp. at 3. Plaintiffs concede that Celtic is not a signatory to the Area Agreement, but maintain that Celtic is still bound to the Area Agreement based on the single-employer and alter-ego doctrines.³ Id. at 2, 3; see also Compl. ¶ 18. Plaintiffs argue that Celtic is therefore liable for unpaid contributions for work performed by Celtic's employees performing work within Local 17's jurisdiction. Resp. at 3.

The "alter ego theory ‘focuses on the existence of a disguised continuance of a former business entity or an attempt to avoid the obligations of a collective bargaining agreement, such as through a sham transfer of assets.’ " Laborers’ Pension Fund v. GA Paving, LLC , 2018 WL 3659338, at *4 (N.D. Ill. Aug. 2, 2018) (quoting Laborers’ Pension Fund v. Green Demolition Contractors, Inc. , 2016 WL 74682, at *3 (N.D. Ill. Jan. 7, 2016) ). "The single employer doctrine holds that when two entities are sufficiently integrated, they will be treated as a single entity for certain purposes." Moriarty v. Svec , 164 F.3d 323, 332 (7th Cir. 1998). "Specifically, when two businesses are considered a ‘single employer,’ ‘both businesses will be equally liable under a collective bargaining agreement entered on behalf of only one of them.’ " GA Paving , 2018 WL 3659338, at *6 (quoting Bd. of Trs. of the Pipe Fitters Ret. Fund. Local 597 v. Am. Weathermakers, Inc. , 150 F. Supp. 3d 897, 905 (N.D. Ill. 2015) ).

Celtic argues that, in order to find that Celtic bound to the Area Agreement under the alter-ego or single-employer doctrines and therefore is liable under the Area Agreement for any work done by its employees, the Court must determine whether Celtic and CEC's employees comprise a single bargaining unit. Mot. Dismiss at 2. Such a determination, insists Celtic, lies within the province of the National Labor Relations Board (NLRB). Id. at 6 (citing Laborers’ Pension Fund v. Joe Cachey Construction Co., Inc. , 947 F. Supp. 365 (N.D. Ill. 1996) ).

In Joe Cachey , the plaintiff union sought to enforce a collective bargaining agreement (CBA) that it had entered with Joe Cachey Construction Co. (Joe Cachey) and sought an audit pursuant to the agreement. 947 F. Supp. at 368. The plaintiff also argued that Future Masonry, a non-signatory, constituted a single employer with Joe Cachey, and thus was liable under the collective bargaining unit. Id. The court held that it lacked jurisdiction to bind Future Masonry to the CBA, even if Future Masonry was considered a single employer with Joe Cachey, a signatory to the agreement. Id. The court reasoned that in order to enforce the CBA on Future Masonry's employees, it would have to determine "the propriety of a single bargaining unit comprising the employees of the two employers." Id. at 369–71. The court found that it could not make this determination because bargaining unit determinations are within the sole jurisdiction of the NLRB. Id.

Although Celtic relies primarily on Joe Cachey, it ignores the fact that "[c]ourts routinely exercise jurisdiction over claims by labor union funds seeking to impose liability on non-signatory entities through either alter ego or single employer liability ... without engaging in a ‘bargaining unit’ analysis." GA Paving, LLC , 2018 WL 3659338, at *5 ; see also Moriarty v. Svec. , 164 F.3d 323 (7th Cir. 1998) ; Cent. Ill. Carpenters Health & Welfare Tr. Fund v. Olsen, 467 F. App'x 513 (7th Cir. 2012) (affirming grant of summary judgment to plaintiff union on single employer liability); Shales v. Schroeder Asphalt Servs., Inc. , 2013 WL 2242303, at *5 (N.D. Ill. May 21, 2013), on reconsideration in part, 2013 WL 6858775 (N.D. Ill. Dec. 30, 2013) ("[C]ourts clearly have jurisdiction to hold a third-party liable for unpaid benefit contributions owed by a signatory to a collective bargaining agreement if the third-party entity and the signatory constitute a single employer."); Chicago Dist. Council of Carpenters Pension Fund v. Door...