Adeline Sand & Gravel, LLC. v. International Union of Operating Engineers Local 150 AFL-CIO
1:09-cv-07594
N.D. Ill.Jul 2, 2013Background
- Adeline Sand & Gravel, Inc. (Adeline, Inc.) signed a collective bargaining agreement (CBA) with International Union of Operating Engineers Local 150 covering 2002–2006; a nearly identical successor agreement was signed by NICA on behalf of Adeline, Inc. for 2006–2011.
- In May 2009 Adeline, Inc. sold the gravel pit and assets to Dan and Paula Ellberg, who began operating as Adeline Sand & Gravel, LLC (Adeline, LLC); Adeline, Inc. then changed its corporate name to Bocker & Kampen Enterprises, Inc. (B&K).
- After the sale, some prior employees continued working for Adeline, LLC; the union continued correspondence addressed to “Adeline Sand & Gravel” at the pit; Adeline, LLC refused some mail from the union.
- The Joint Grievance Committee (JGC) held hearings on September 8, 2009 (only the union appeared) and awarded the union $71,314 against “Adeline Sand & Gravel.” Adeline, LLC denied receiving the award and disputed liability.
- Adeline, LLC filed a petition to vacate/modify the JGC award; the district court reviewed whether Adeline, LLC is bound by the CBA as a successor or alter ego and whether the award should be enforced.
Issues
| Issue | Plaintiff's Argument (Adeline, LLC) | Defendant's Argument (Union) | Held |
|---|---|---|---|
| Whether Adeline, LLC is a party to the CBA | Not a signatory; therefore not bound | Successor/alter ego liability can bind non-signatories under the CBA’s successor clause | Court: Adeline, LLC can be bound as successor/alter ego, so not being a signatory is not dispositive |
| Whether Adeline, LLC is a successor to Adeline, Inc. | New ownership, officers, employees and expanded business show no substantial continuity | Business operations, customers, equipment and many same employees show substantial continuity | Court: Adeline, LLC is a successor (substantial continuity) |
| Whether Adeline, LLC is an alter ego of Adeline, Inc. | Sale was legitimate; no sham transfer | Transfer preserved substantial identity of management, operation, customers and employees | Court: Adeline, LLC is an alter ego under relevant factors |
| Whether the JGC exceeded its authority or lacked notice | JGC relied on documents outside the CBA; Adeline, LLC lacked notice of hearing | CBA/successor clause authorized JGC to determine whether sale terminated the CBA; union gave adequate notice addressed to operating name | Court: JGC acted within scope and notice was sufficient; award enforced |
Key Cases Cited
- Merryman Excavation, Inc. v. Int'l Union of Operating Eng'rs, Local 150, 639 F.3d 286 (7th Cir. 2011) (joint committee awards reviewed under §301 principles, not FAA arbitration standards)
- Gen. Drivers, Warehousemen & Helpers, Local 89 v. Riss & Co., 372 U.S. 517 (U.S. 1963) (courts may not reweigh merits of grievance arbitration if parties agreed to binding process)
- Ganton Techs. v. UAW, Local 627, 358 F.3d 459 (7th Cir. 2004) (reviewing court must ensure award draws its essence from the CBA; failure to raise arguments before arbitrator is waived)
- Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (U.S. 1987) (successor analysis focuses on substantial continuity of enterprise)
- Int'l Union of Operating Eng'rs v. Centor Contractors, Inc., 831 F.2d 1309 (7th Cir. 1987) (successor and alter ego doctrines apply to bargaining obligations and arbitration awards)
- Prate Installations, Inc. v. Chi. Reg'l Council of Carpenters, 607 F.3d 467 (7th Cir. 2010) (courts give great deference to arbitrator interpretations of CBAs)
- J.W. Peters, Inc. v. Bridge, Structural & Reinforcing Iron Workers, 398 F.3d 967 (7th Cir. 2005) (one-person rule permits unilateral withdrawal of recognition/repudiation when employer permanently employs one or fewer unit employees)