McCleskey v. CWG Plastering, LLC
897 F.3d 899
7th Cir.2018Background
- Gianino Plastering (owned by Wally Gianino) entered into a 2009 CBA obligating contributions to multiemployer pension and welfare Funds; the Funds sued for delinquencies and a $196,940.73 judgment was recommended July 27, 2012 and entered August 14, 2012.
- On the same day the judgment was entered, Curt Gianino (Wally’s son) formed CWG Plastering, LLC; CWG began performing jobs Gianino Plastering had been performing and accepted payment for work completed through July 31.
- Three of four Gianino Plastering employees (including Curt) moved to CWG payroll immediately after the closing; Wally had ongoing contacts with CWG work and signed a CWG lien waiver later that year.
- The Funds sued CWG asserting two theories: (1) CWG is a successor to Gianino Plastering and thus liable for the predecessor’s ERISA/NLRA obligations; and (2) CWG is the alter ego of Gianino Plastering and therefore bound by the predecessor’s collective bargaining obligations and judgment.
- The district court granted summary judgment to CWG, finding the Funds’ evidence insufficient; the Seventh Circuit reversed and remanded, holding the Funds presented enough evidence to send successor and alter-ego claims to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CWG is successor liable for Gianino Plastering’s ERISA/NLRA obligations | CWG continued the business: same jobs, many same employees, received predecessor’s payments, formed immediately after judgment — had notice and continuity | CWG was a separate entity: different owner/manager (Curt vs. Wally), separate formation, separate capitalization; differences preclude successor liability | Reversed: factual record shows disputed but substantial continuities and notice; triable issue on successor liability |
| Whether CWG is alter ego of Gianino Plastering and thus bound by CBA and judgment | Funds: CWG and Gianino show substantially identical management, customers, operations; evidence of intent to avoid pension obligations supports alter-ego finding | CWG: no fraudulent intent shown; ownership and management were different; transactions (truck sale/lease, financing) were legitimate | Reversed: sufficient evidence of knowledge and possible fraudulent intent to create a jury question on alter-ego liability |
| Whether federal law governs successor/alter-ego questions or state law applies | Funds: ERISA and NLRA claims invoke federal standards and federal common law for successor/alter-ego in labor/benefit contexts | CWG: late-argued choice-of-law challenge (state law should apply) | CWG forfeited the choice-of-law argument by failing to raise it earlier; federal law applied here and governs the triable claims |
| Whether the record supported summary judgment for CWG | Funds: proffered evidence of timing, employee continuity, payments, shared customers/equipment, and possible intent suffices to reach a jury | CWG: differences in ownership/control, capitalization, and disputed facts entitle it to judgment as a matter of law | Held: summary judgment improper; record contains disputed material facts that a reasonable factfinder could resolve for the Funds |
Key Cases Cited
- John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (recognizing federal successor-liability rule in labor context)
- Golden State Bottling Co. v. NLRB, 414 U.S. 168 (federal labor policy can support successor liability)
- Burns Int'l Sec. Servs., Inc. v. NLRB, 406 U.S. 272 (successor not necessarily bound to predecessor’s bargain)
- Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249 (federal alter-ego doctrine: alter ego is same employer and bound by predecessor’s obligations)
- Peacock v. Thomas, 516 U.S. 349 (limits on federal ancillary jurisdiction to collect judgment against nonparty; collection actions may invoke state law)
- Teed v. Thomas & Betts Power Sols., L.L.C., 711 F.3d 763 (Seventh Circuit discussion of successor liability principles)
- Chi. Truck Drivers, Helpers & Warehouse Workers Union Pension Fund v. Tasemkin, 59 F.3d 48 (successor liability requires notice; factors for continuity)
- Int'l Union of Operating Engineers, Local 150 v. Centor Contractors, 831 F.2d 1309 (alter-ego standard in labor cases)
- Int'l Union of Operating Engineers, Local 150 v. Rabine, 161 F.3d 427 (lists factors for alter-ego: management, purpose, operation, equipment, customers, ownership)
- G-K-G, Inc. v. EEOC, 39 F.3d 740 (use of substantial continuity test for successor liability)
- Indiana Elec. Workers Pension Benefit Fund v. ManWeb Services, Inc., 884 F.3d 770 (Seventh Circuit discussion of buyer’s anticipation of successor liability and indemnity negotiations)