Int'l Bhd. Of Elec. Workers v. Krater Serv. LLC, CIVIL ACTION NO. 08-63J
| Decision Date | 25 March 2011 |
| Docket Number | CIVIL ACTION NO. 08-63J |
| Parties | INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 5, AFL-CIO, Plaintiff, v. KRATER SERVICES, LLC, Defendant |
| Court | U.S. District Court — Western District of Pennsylvania |
This matter comes before the Court on cross-motions for summary judgment filed by Defendant Krater Services, LLC ("Krater Services"), and Plaintiff International Brotherhood of Electrical Workers, Local Union No. 5, AFL-CIO (the "Union"), on April 26, 2010, ECF Nos. 48 & 53. For the reasons that follow, the motion for summary judgment filed by Krater Services (ECF No. 48) will be granted, and the motion for summary judgment filed by the Union (ECF No. 53) will be denied.
Krater Electrical Services, Inc. ("Krater Electric"), was owned by Kenneth R. Krater, Sr. ("Kenneth"), and his wife, Hazel M. Krater ("Hazel"). ECF Nos. 55 & 58 at ¶ 21. The company provided heating, ventilating and air conditioning ("HVAC"), electrical, telecommunications, insulation, telephone, Cat-5/fiber cabling, maintenance and repair services to residential and commercial customers throughout central Pennsylvania. Id. at ¶¶ 84-85. Kenneth's grandson.Bradley Krater ("Bradley"), worked for Krater Electric from 1991 through 2007. Id. at ¶ 87. During the latter portion of his time at Krater Electric, Bradley served as the Vice President of Operations. Id. at ¶ 88. His wife, Shannon Krater ("Shannon"), worked for Krater Electric from 1991 through 1993. Id. at ¶ 106. She returned to Krater Electric in 2003. Id. Shannon became the Office Manager in 2004 and remained in that position until August 2007. Id.
On November 4, 1991, Krater Electric executed a letter of assent authorizing the Western Pennsylvania Chapter of the National Electrical Contractors Association ("NECA") to act as its collective bargaining representative with respect to any current or future labor agreements between itself and the Union. Id. at ¶ 1. In 2001, the NECA negotiated a collective bargaining agreement ("CBA") with the Union that was to be in effect from December 27, 2002, through December 23, 2005. Id. at ¶ 2. Grievances and disputes arising under the CBA were governed by Articles 1-7,1-8 and 1-9, which provided:
1-7 All grievances or questions in dispute shall be adjusted by the duly authorized representative of each of the parties to this Agreement. In the event that these two are unable to adjust any matter within 48 hours, they shall refer the same to the Labor-Management Committee.
1-8 All matters coming before the Labor-Management Committee shall be decided by a majority vote. Four members of the Committee, two from each of the parties thereto, shall be a quorum for the transaction of business, but each party shall have the right to cast the full vote of its membership and it shall be counted as though all were present and voting.
1-9 Should the Labor-Management Committee fail to agree or to adjust any matter, such shall then be referred to the Council on Industrial Relations for the Electrical Contracting Industry for adjudication. The Council's decisions shall be final and binding on both parties thereto.
ECF No. 55-2 at 3. Article 4-2 of the CBA designated the Union as "the sole and exclusive source of referral of applicants for employment." Id. at 4. Article 4-3 gave Krater Electric "the right to reject any applicant" for "just cause." Id. Pursuant to Article 4-4, the Union wasrequired to "select and refer applicants for employment without discrimination against such applicants by reason of membership or non-membership in the Union...." Id. On August 19, 2005, the NECA and the Union executed a new CBA covering the period of time beginning on December 23, 2005, and ending on December 26, 2008, The provisions of the new CBA governing grievances, disputes and the hiring of applicants were not materially different from those contained in the previous CBA.1 ECF No. 55-4 at 4, 6.
In a grievance letter to Kenneth dated October 26, 2006, John Chalovich ("Chalovich"), the Union's Business Manager and Financial Secretary, accused Krater Electric of "utilizing individuals to perform work" within the scope of the CBA who had not been hired from the Union's "exclusive hiring hall." ECF No. 55-5 at 1. Chalovich also accused Krater Electric of improperly changing the classifications of covered employees at its own discretion and directly negotiating wages, benefits and other conditions of employment with covered employees. Id. The Union requested, among other things, that Krater Electric pay "all lost wages and benefits" to those individuals "who should have been referred from the hiring hall" but were not hired. Id.
The grievance was apparently not resolved within 48 hours, thereby necessitating a referral of the matter to the Labor-Management Committee. A hearing was conducted on November 20, 2006. ECF No. 55-3 at 1. The Labor-Management Committee concluded that Krater Electric had violated the CBA by utilizing employees who had not been referred from the Union's "exclusive hiring hall" to perform electrical work from January 2005 to the time of the hearing. Id. at 3. It was also determined that Krater Electric had improperly changed the classifications of several employees "in an effort to circumvent the referral provisions" of the CBA. Id. The Labor-Management Committee further observed that Krater Electric had notwithdrawn its authorization for the NECA to bargain on its behalf, and that it remained subject to the provisions of the second CBA through December 26, 2008. Id. Krater Electric was ordered to pay wages, benefits and union dues to "applicants registered for employment" with the Union's "exclusive hiring hall" "for each and every hour of commercial and/or residential electrical work" performed by employees who had not been referred by the Union, to make appropriate payments to certain trust funds established by the CBA, and to stop assigning electrical work to employees who had not been referred in conformity with the CBA. Id. at 3-4.
The Union commenced an enforcement action in this Court against Krater Electric on April 2, 2007, alleging that Krater Electric had not complied with the Labor-Management Committee's decision. Civil Action No. 07-74, ECF No. 1 at ¶ 18. Bradley and Shannon submitted their resignations to Krater Electric on August 3, 2007. ECF Nos. 50 & 60 at ¶ 1. Their resignations were to be effective on August 30, 2007. Id. On August 8, 2007, Bradley and Shannon created Krater Services. ECF No. 55-10. Shannon owned a 51% interest in Krater Services, while Bradley owned a 49% interest in the company. ECF Nos. 55 & 58 at ¶ 20. They apparently decided to divide their ownership in this manner so that Krater Services could be classified as a Woman's Business Enterprise ("WBE"). Id. They cashed out Bradley's individual retirement account ("IRA") in order to finance the creation of Krater Services. ECF Nos. 50 & 60 at ¶ 2. Additional financial assistance came from money provided by Shannon's parents and a business loan obtained from the Altoona Blair County Development Corporation ("ABCD Corp."). Id.
Krater Electric's Board of Directors conducted a "special meeting" on September 1, 2007. ECF No. 55-8. The official minutes of the meeting, which were recorded by Hazel, consisted of the following: A special meeting of the Board of Directors was called to consider the IBEW Grievance charge.
After many meetings, beginning in February 2007 with our Attorney, and with no progress in resolving the charge but rather a definite hardening in IBEW's position, the decision was made to dissolve the said Corporation.
Attached is the Resolution of the Board of Directors, and Plan of Complete Liquidation signed by Kenneth R. & Hazel M. Krater, Board of Directors.
Id. That same day, nine non-union employees of Krater Electric were hired by Krater Services.2ECF Nos. 50 & 60 at ¶ 3; ECF No. 55-13. Krater Services did not seek applications from electricians who had not worked for Krater Electric. ECF No. 55 at ¶ 45. The employees of Krater Services were paid the same salaries that they had previously been paid while working for Krater Electric. ECF Nos. 55 & 58 at ¶ 46. Krater Services subsequently completed some projects that had been started by Krater Electric prior to its dissolution.3 Id. at ¶¶ 57-64.
Krater Services never purchased assets, equipment or property owned by Krater Electric. Id. at ¶ 4. The only piece of equipment owned by Krater Electric that was utilized by Krater Services was an insulation trailer that was rented out at fair market value. Id. at ¶ 5. Bradley and Shannon never had ownership interests in Krater Electric. ECF Nos. 50 & 60 at ¶ 6. They were neither officers of Krater Electric nor members of its Board of Directors. Id. Kenneth never owned or worked for Krater Services. Id. at ¶ 8. After forming Krater Services, Bradley and Shannon started to operate their business out of their personal residence in Altoona, Pennsylvania, which was just 2.6 miles away from the former business location of Krater Electric. ECF Nos. 55 & 58 at ¶¶ 120-121.
The Union commenced this action against Krater Services on March 10, 2008, alleging that Krater Services was an "alter ego" of Krater Electric and, therefore, responsible for its obligations under the Labor-Management Committee's decision of November 20, 2006. ECF No. 1 at ¶¶ 19, 26-28. The Union also alleged that Krater Services was "bound by any and all orders" entered by this Court in the separate enforcement action against Krater Electric, Id. at ¶ 29. Krater Services filed a motion to dismiss on April 22, 2008, challenging both the Court's subject-matter jurisdiction to adjudicate this action and the sufficiency of the allegations contained in the Union's complaint. ECF Nos. 4 & 5.
The Court was later advised that the Union and Krater Electric had decided to settle the dispute at issue in the earlier...
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