919 F.3d 368
6th Cir.2019Background
- Bourdow Trucking, Inc. ("Trucking") was a family-owned, unionized excavation and materials-transport business that withdrew from a multiemployer pension plan in July 2011 and was later assessed $1,163,279 (plus interest) in ERISA withdrawal liability. Trucking filed Chapter 7 and paid Plaintiff $52,034 on its allowed proof of claim of $1,272,187.
- Immediately after Trucking missed its first withdrawal-payment in November 2012, family members incorporated Bourdow Contracting, Inc. ("Contracting"); Contracting began bidding on projects before Trucking’s bankruptcy concluded and shared substantial personnel, customers, and business activities with Trucking.
- Plaintiff Trustees sued Contracting under ERISA to collect the unpaid withdrawal liability on theories that Contracting was Trucking’s alter ego and a successor/evader of obligations; plaintiff sought the full withdrawal liability plus interest and fees.
- At summary judgment the district court applied the NLRA alter-ego test and found Contracting to be Trucking’s alter ego, entering judgment for Plaintiff in an amount greater than the bankruptcy proof-of-claim because it included post-judgment interest and fees under 29 U.S.C. § 1132(g)(2).
- On appeal the Sixth Circuit affirmed: it declined to consider whether applying the NLRA test to ERISA claims was preserved, assumed its applicability, found six of eight alter-ego factors favored Plaintiff, and held that an uncontested proof of claim allowed under 11 U.S.C. § 502(a) is a final judgment for res judicata purposes but did not bar Plaintiff’s separate alter-ego action because the causes of action were not identical.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of NLRA alter-ego test to ERISA withdrawal-liability claims | NLRA alter-ego test is an appropriate framework to evaluate whether Contracting should be treated as Trucking for labor/pension obligations | Applying the NLRA test to ERISA claims is incorrect; district court erred | Issue not preserved on appeal; Court assumed NLRA test applies and proceeded (no relief on this point) |
| Whether Contracting is alter ego of Trucking | Contracting is merely a disguised continuance: shared owners, supervisors, workforce, customers, business purpose, and intent to evade | Contracting had different management and acquired no equipment; thus not an alter ego | Six of eight factors favored Plaintiff; Court affirmed that Contracting is Trucking’s alter ego |
| Effect of Trucking’s allowed, uncontested bankruptcy proof of claim on later suits | Proof of claim was allowed in bankruptcy but Plaintiff may pursue additional recovery from alter ego (different cause of action) | Res judicata from allowed proof of claim bars relitigation of amount of liability against Contracting | An uncontested §502(a) proof of claim is a final judgment for res judicata, but because the alter-ego claim rests on different operative facts, claim preclusion did not bar Plaintiff’s suit |
| Whether interest and fees under 29 U.S.C. §1132(g)(2) were precluded by bankruptcy proof of claim | Interest/fees could be recovered in the separate alter-ego action and were not litigated in the bankruptcy | Such interest/fees should have been addressed in the bankruptcy and thus precluded | Court held interest and fees could have been litigated in bankruptcy but res judicata did not bar the separate alter-ego action; judgment including §1132(g)(2) awards stands |
Key Cases Cited
- Trustees of Detroit Carpenters Fringe Benefits Fund v. Industrial Contracting, L.L.C., 581 F.3d 313 (6th Cir. 2009) (Sixth Circuit’s alter-ego test overview and precedent)
- NLRB v. Fullerton Transfer & Storage Ltd., Inc., 910 F.2d 331 (6th Cir. 1990) (alter-ego doctrine described; test factors)
- Road Sprinkler Fitters Local Union 669 v. Dorn Sprinkler Co., 669 F.3d 790 (6th Cir. 2012) (application of alter-ego factors and framing of management/operations analysis)
- EDP Medical Computer Sys., Inc. v. United States, 480 F.3d 621 (2d Cir. 2007) (allowed uncontested §502(a) proof of claim treated as final judgment for res judicata)
- Siegel v. Federal Home Loan Mortgage Corp., 143 F.3d 525 (9th Cir. 1998) (same: deemed-allowed bankruptcy claims have res judicata effect)
- Board of Trustees of Local 17 Iron Workers Pension Fund v. Harris Davis Rebar, LLC, 800 F.3d 289 (6th Cir. 2015) (purpose of alter-ego doctrine to prevent evasion of labor obligations)