Union wins battle against alter-ego created to avoid benefit obligations
The Sixth Circuit recently reversed Judge John O'Meara's summary disposition of a claim brought by the Detroit Carpenters local against Industrial Contracting, LLC and LaSalle Group, Inc. The carpenters maintained that the latter two companies were cooking the books to avoid paying benefits earned by union members. It was the employees' argument that the two companies were essentially alter-egos created solely to obfuscate ERISA obligations. O'Meara had dismissed the claim without allowing the Union to examine the companys' books, but the Sixth Circuit reversed.
The appellate judges noted that the two enterprises "have substantially identical management, business purpose, operation, equipment, customers, supervision and ownership." Under the law, if they control and manage work through a successor, subsidiary or alter-ego, they are required to comply with the Collective Bargaining Agreement. The court found a "mountain of evidence establishing intermingling of the two companies" and pointed out that the Union was not required to establish an intent to evade the CBA in order to prevail.