Resilient Floor Covering Pension Fund v. M&M Installation, Inc.
630 F.3d 848
9th Cir.2010Background
- Simas Floor Co. is a non-union residential/commercial flooring contractor; M&M Installation, Inc. is a union-signatory subsidiary created to handle union work.
- M&M and Simas Floor share ownership/control and operate with intermingled administration; M&M performed work for Simas Floor and used Simas Floor for income flow and payments.
- M&M ceased pension contributions in 2004 after a contract dispute, triggering a withdrawal liability assessed by the Resilient Floor Covering Pension Fund in the amount of $2,414,228 with 20-year installments.
- Simas Floor continued to be involved in the business and payments post-2004, leading the Pension Fund to seek to hold Simas Floor liable as M&M’s alter ego.
- The district court granted summary judgment for the Pension Fund on alter ego/avoidance grounds, and Simas Floor challenged this posture, while the Fund cross-appealed on acceleration and related theories.
- The Ninth Circuit reversed the district court’s application of the alter ego standard, remanding for reconsideration under the proper Nor-Cal framework and certifying potential considerations under § 1392(c) and related provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Simas Floor M&M's alter ego for withdrawal liability? | Pension Fund: substantial commonality and control make Simas Floor the employer. | Simas Floor: no valid alter ego; separate entities with independent obligations. | Remanded for proper analysis under the Nor-Cal framework; alter ego liability possible. |
| What test governs alter ego in withdrawal liability (Nor-Cal vs. other standards)? | Nor-Cal-like common ownership/control plus misuse to avoid obligations. | District court’s test focusing on ERISA goals is inappropriate. | Nor-Cal test governs; district court must apply proper standard on remand. |
| Does the Rodin framework apply as an exception or guide to the present scenario? | Rodin supports extending liability where a non-union firm creates a union firm to evade obligations. | Rodin is distinguishable; not a reverse alter ego scenario here. | Rodin distinguishable; still informs approach for remand. |
| Can the Pension Fund accelerate withdrawal liability under § 1399(c)(5)? | Anticipatory repudiation justifies acceleration. | Statutory text requires cure after notice; repudiation not binding. | Not reached; district court did not decide; affirmed remand guidance on remand. |
Key Cases Cited
- H.C. Elliott, Inc. v. Carpenters Pension Trust Fund for N. Cal., 859 F.2d 808 (9th Cir. 1988) (establishes withdrawal liability framework under ERISA/MPPAA)
- Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602 (U.S. 1993) (defines ERISA context and withdrawal liability concerns)
- UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465 (9th Cir. 1994) (two-part alter ego test: common ownership/operations; sham to avoid obligations)
- Carpenters Local Union No. 1478 v. Stevens, 743 F.2d 1271 (9th Cir. 1984) (alter ego factors and avoidance intent in labor contexts)
- Rodin & Co. v. S. Cal. Painters No. 36, 558 F.3d 1028 (9th Cir. 2009) (reverse alter ego scenario; distinguishable but informative)
- CMSH Co. v. Carpenters Trust Fund for N. Cal., 963 F.2d 238 (9th Cir. 1992) (alter ego requires avoidance of preexisting duty; distinguishable facts)
- S. Cal. Painters & Allied Trades Dist. Council No. 36 v. Rodin & Co., 558 F.3d 1028 (9th Cir. 2009) (explains reverse alter ego concerns and application limits)