Rod Marshall v. Anderson Excavating & Wrecking
901 F.3d 936
| 8th Cir. | 2018Background
- Union and trustees of CLT&E Welfare and Pension Plans sued Anderson Excavating under ERISA and LMRA provisions seeking unpaid fringe contributions, interest, liquidated damages, and fees after an audit covering 2010–2013.
- A CPA audit and CLT&E contract-compliance review produced a spreadsheet alleging unpaid covered hours for several employees, including Jose Tovar. Records the auditors used came from two related corporations: Anderson Excavating and Anderson Excavating Company Plus (Anderson Plus).
- Plaintiffs alleged Anderson Excavating failed to remit contributions for three employees (Hightree, Wachter, and Tovar); the district court found liability for those three. Anderson Excavating challenges liability only as to Tovar.
- The district court rejected Anderson Excavating’s contention that Tovar was employed by Anderson Plus, treated Anderson Plus as the alter ego of Anderson Excavating, and awarded unpaid contributions plus interest, liquidated damages, attorneys’ fees, and costs.
- On appeal the Eighth Circuit held the district court erred by applying an alter ego theory sua sponte because plaintiffs never pleaded alter-ego/veil-piercing and the plaintiffs bore the burden to prove alter-ego; the record evidence was insufficient to pierce the corporate veil.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability for unpaid contributions for Tovar | Audit and CLT&E spreadsheet showed covered hours for Tovar and contributions unpaid; thus Anderson Excavating owes contributions. | Tovar was employed by Anderson Plus (a separate corporation); plaintiffs did not plead alter-ego, so Anderson Excavating cannot be held liable for Anderson Plus employees. | Reversed: district court erred by applying alter-ego theory sua sponte; plaintiffs never pleaded it and bore the burden to prove it. |
| Whether court could raise alter-ego theory sua sponte | Plaintiffs relied on testimony and audit records showing overlap and did not need to plead alter-ego explicitly. | Raising alter-ego sua sponte deprived defendant of proper notice and the plaintiffs of their burden to prove veil-piercing. | Court cannot impose alter-ego liability not pled; doing so was legal error. |
| Sufficiency of evidence to pierce corporate veil | Auditors used records from both companies and testimony indicated employees sometimes worked across entities, supporting veil-piercing. | Evidence (occasional cross-work, one employee full-time for four months) was insufficient to show control such that Anderson Plus existed only in form. | Evidence insufficient under Eighth Circuit veil-piercing standard; plaintiffs failed to satisfy burden. |
| Impact on remedies (interest, liquidated damages, fees) | If contributions are owed, plan’s delinquent policy justifies interest, liquidated damages and fees. | If liability for Tovar is vacated, associated monetary awards must be recalculated. | Court remanded for further proceedings; did not decide remaining remedy issues because liability ruling controls those awards. |
Key Cases Cited
- Minn. Laborers Health & Welfare Fund v. Scanlan, 360 F.3d 925 (8th Cir.) (discussing federal common-law veil-piercing standard used in certain ERISA contexts)
- Contractors, Laborers, Teamsters & Eng’rs Health & Welfare Plan v. Hroch, 757 F.2d 184 (8th Cir.) (presumption that a corporation is a separate entity and plaintiff bears burden to pierce veil)
- Greater Kan. City Laborers Pension Fund v. Superior Gen. Contractors, Inc., 104 F.3d 1050 (8th Cir.) (standard for piercing corporate veil between two corporations; requires control to render one entity a mere instrumentality)
- Cooper Tire & Rubber Co. v. St. Paul Fire & Marine Ins. Co., 48 F.3d 365 (8th Cir.) (standards of review for bench-trial factual findings and legal conclusions)
- Hyland v. HomeServices of Am., Inc., 771 F.3d 310 (6th Cir.) (plaintiffs may not assert veil-piercing theory on appeal when not pleaded)
- Counts v. MK-Ferguson Co., 680 F. Supp. 1343 (E.D. Mo.) (noting plaintiff must plead alter-ego liability to hold defendant on that theory)