Boland Ex Rel. Bricklayers & Trowel Trades International Pension Fund v. Thermal Specialties, Inc. , 950 F. Supp. 2d 146 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES BOLAND, as Trustee of, and on
behalf of, the Bricklayers & Trowel Trades
International Pension Fund, et al.,
Plaintiffs,
v. Civil Action No. 11-2274 (JEB)
THERMAL SPECIALTIES, INC., and
THERMAL SPECIALTIES
ACQUISITION COMPANY, LLC,
Defendants.
MEMORANDUM OPINION
When Thermal Specialties, Inc., sold substantially all of its assets to the aptly named
Thermal Specialties Acquisition Company, LLC, the acquirer refused to assume TSI’s
collective-bargaining agreements. In particular, TSAC ended contributions to employee pension
funds. Because Superman cannot escape his debts – or his ERISA obligations – by putting on
Clark Kent’s glasses, courts generally hold employers liable for pension agreements made by
their “alter egos.” Relying on that alter-ego doctrine, trustees of the pension funds sued TSAC
and TSI. All parties now move for summary judgment. In this case, however, TSAC and TSI
are not as identical as the superhero and his civilian double. Because their ownership is
decidedly different, the Court will grant TSI’s and TSAC’s Motions and deny Plaintiffs’.
I. Background
For the most part, the evidence in this case is undisputed. As this Opinion ultimately
rules for TSI and TSAC, the Court will credit Plaintiffs’ evidence where there are disputes and
draw justifiable inferences in their favor.
1
A. Factual Background
Robert and Paula Caffey wholly owned TSI for more than 30 years. See Pls. Resp. to
TSI Statement of Material Facts (SMF), ¶ 2; Pls. Resp. to TSAC SMF, ¶ 6. A Texas corporation
with facilities in Oklahoma and Texas, TSI provided services and products related to industrial
furnaces, heat treatment, and insulation. See Pls. Resp. to TSI SMF, ¶ 1. For many years, TSI
maintained collective-bargaining agreements with the local and international Bricklayers Union.
See Pls. SMF, ¶¶ 1, 5. Indeed, Robert Caffey himself was a long-time member of the Union.
See Pls. Resp. to TSI SMF, ¶ 3. Those collective-bargaining agreements required TSI to
contribute to Bricklayers-affiliated benefit Funds – including the Bricklayers and Trowel Trades
International Pension Fund, the Bricklayers and Allied Craftworkers International Health Fund,
and the International Masonry Institute – for each hour of “covered work” performed by TSI
employees. See Pls. SMF, ¶¶ 7-10. The trustees of those Funds are Plaintiffs here.
Having actively run TSI for decades, the Caffeys finally decided to retire. See TSI Mot.,
Exh. 1 (Decl. of Robert Caffey), ¶ 11. In 2008, Robert Caffey hired Mitchell Myers “with the
expectation that Myers would later purchase the assets of TSI.” Pls. SMF, ¶¶ 11-12. Caffey and
Myers defined their relationship through a series of “partnership” and “partnership/equity”
agreements. See Pls. Mot., Exh. B (Dep. of Mitchell Myers, Exh. 6 (First Partnership Agreement
(Feb. 2008))); Myers Dep., Exh. 7 (Second Partnership Agreement (May 2011)); Myers Dep.,
Exh. 8 (Third Partnership Agreement (Dec. 2011)). Despite purporting to be “a statement of
mutual intention” that was “not intended to be legally binding,” see First Partnership Agreement
at 2, all parties treat the agreements as an accurate reflection of Caffey and Myers’s arrangement.
See Pls. SMF, ¶¶ 63-80; TSAC SMF, ¶¶ 14-16; TSI SMF, ¶ 15.
2
As the First Partnership Agreement explained, Myers had agreed to purchase TSI from
Caffey, but uncertainty about the economy and a new facility in Oklahoma City left TSI’s value
unclear. See First Partnership Agreement at 1. “Therefore, in an effort to allow some time to
demonstrate the impact of the above factors to the business valuation and to take an intermediate
step toward the aforementioned business transaction, both parties have agreed to a partnership in
spirit.” Id. During their “partnership in spirit,” Caffey and Myers would “share in the
responsibility of managing” TSI, with Myers acting as “Managing Partner” in charge of day-to-
day management and Caffey acting as “Owner/Investment Partner” in charge of “strategic
direction, significant capital investments, and technical consult[ing].” Id. In exchange, during
this period they would split TSI’s profits evenly. See id.
The Second and Third Partnership Agreements extended these arrangements. The main
change over the span of agreements was in the mechanism for distributing those split profits: The
First Partnership Agreement contemplated pre-sale distributions to Myers, the Second outlined
post-sale distributions to Caffey, and the Third (entered after the sale) set the exact terms of the
distribution to Caffey. See First Partnership Agreement at 2; Second Partnership Agreement at
2; Third Partnership Agreement at 2. All three agreements cautioned that they did “not actually
create a stock transfer.” See First Partnership Agreement at 2; Second Partnership Agreement at
2; Third Partnership Agreement at 2.
In 2009, after Myers had been at TSI for more than a year, the parties signed the initial
Asset Purchase Agreement. See Myers Dep., Exh. 3 (Asset Purchase Agreement (APA) (Feb.
18, 2009)). Myers signed on behalf of TSAC, an Oklahoma limited liability company he wholly
owned, see Pls. Resp. to TSAC SMF, ¶¶ 1-2, while Caffey signed on behalf of TSI. See APA at
24. In the APA, TSAC agreed to buy substantially all of TSI’s assets for $12-13 million. See id.
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at 1; Pls. SMF, ¶ 16. Although initially scheduled to close by July 1, 2009, the parties repeatedly
pushed that date back, eventually closing on June 30, 2011. See APA at 2; Myers Dep., Exh. 4
(First Amendment to APA (June 30, 2009)) at 1; Myers Dep., Exh. 5 (Second Amendment to
APA (Dec. 6, 2010)) at 1; Pls. Mot., Exh. T (Decl. of Charles V. Mehler III, Attch. 1 (Second
Amended and Restated APA (June 27, 2011))) at 2.
Before the sale, Caffey warned his employees that TSI would cease operations on June
30, 2011, and that their jobs would end that day. See Pls. Mot., Exh. C (Dep. of Robert Caffey,
Exh. 3 (Letter from Bob Caffey to TSI Employees)); see also Caffey Dep., Exh. 1 (Letter from
Robert Caffey, President, TSI, to Edward Navarro, Bricklayers & Allied Craftworkers Local No.
5 (June 13, 2011)) (similar notice to Union). Myers, in turn, sent a letter to TSI employees
encouraging them to apply to work for TSAC, while cautioning that the terms and conditions of
employment – including “job descriptions, policies and procedures, wage structure, benefit
plans, etc.” – would be “new.” Mehler Decl., Attch. 7 (Memorandum from Mitch Myers,
President, TSAC, to All Employees of TSI (May 11, 2011)) at 1; see also TSI Mot., Exh. 27
(Letter from P. Bradley Bendure to Navarro (May 10, 2011)) (similar notice to Union, as well as
notice that “the new entities which have been formed by Mr. Myers to purchase the assets of
Thermal Specialties, Inc. are not parties to these CBA’s and do not intend to assume them”).
The turnover went as planned, and on June 30, TSAC bought substantially all of TSI’s assets.
Pls. SMF, ¶ 39.
The parties debate the extent to which TSAC mirrored TSI. According to Plaintiffs,
“TSAC took over TSI’s business in toto . . . with the same offices, equipment, management,
customers, subsidiaries, employees, and types of work performed . . . .” Id., ¶ 41; see also id.,
¶¶ 41-45, 48-51. Myers continued to direct day-to-day operations at TSAC, while Caffey
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maintained a limited involvement as a consultant. See id., ¶¶ 50-54. Plaintiffs say, moreover,
that “a significant number of TSAC’s employees came from TSI.” Id., ¶ 47. Defendants, on the
other hand, emphasize differences (hotly contested by Plaintiffs) between TSI and TSAC,
including TSAC’s new emphasis on industrial-furnace design, Caffey’s withdrawal from
management, TSAC’s decision to hire permanent workers, and the limited number of TSI
bricklayers who ultimately came to work for TSAC. See TSAC SMF, ¶¶ 32-39, 43-46; TSI
SMF, ¶¶ 27-30.
In any event, all agree that there was at least one significant change: TSAC refused to
recognize the Union. It would not, consequently, follow TSI’s collective-bargaining agreements
– and therefore never contributed to the Union-affiliated Funds.
According to Plaintiffs, TSAC’s stance on the Union reflected Myers’s long-held
opposition to unionization. In 2009, Myers asked an employee of the international Union how to
get out of the national collective-bargaining agreement. See Pls. Mot., Exh. K (NLRB
Confidential Witness Aff. of John McIntyre), ¶ 4. In May 2011, Myers told a TSI manager that
“the new company was not going to be a union company.” Pls. Mot., Exh. E (Dep. of Kent
Charles) at 10:9-11, 14:23-15:12. In June 2011, Myers told a TSI superintendent that TSAC
would not be competitive if it were unionized. See Pls. Mot., Exh. G (NLRB Confidential
Witness Aff. of Marcus Petherick), ¶ 5. That superintendent had previously heard Caffey advise
Myers that the new company should “go non-union because they would then be able to
compete.” Id., ¶ 7. (All statements by Caffey and Myers quoted here are admissible as
statements by party-opponents. See Fed. R. Evid. 801(d)(2). The parties squabble over whether
similar statements by Kent Charles, the TSI manager, are admissible. The Court need not
resolve that question, however, because those additional statements add nothing.)
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B. Procedural Background
Within a month of the sale, the Union filed a charge with the NLRB for unfair labor
practices, asserting that TSAC was an alter ego or disguised continuance of TSI and was
therefore bound by the existing collective-bargaining agreements. See TSI Mot., Exh. 31
(NLRB Charge No. 17-CA-61737 (July 27, 2011)). After an investigation, the Acting Regional
Director of NLRB Region 17 dismissed the charge. See Pls. Mot, Exh. R (Letter from Naomi L.
Stuart, Acting Reg’l Dir., NLRB Region 17, to Thomas F. Birmingham (Sept. 28, 2011)). She
explained that while TSAC kept substantially the same management, business purpose,
operation, and customers, “the lack of substantially identical common ownership, the lack of
control of the successor business by the predecessor or its principals and the arms-length nature
of the sale precludes a finding of alter-ego status.” Id. at 1-2. The NLRB General Counsel
affirmed. See Pls. Mot., Exh. S (Letter from Lafe E. Solomon, Acting Gen. Counsel, NLRB, to
Birmingham (Dec. 22, 2011)).
Plaintiffs – trustees of the Funds – then filed this suit against TSI and TSAC based on the
same alter-ego theory, seeking to hold the companies jointly and severally liable for deficient
pension contributions since July 1, 2011. (For those curious why TSI remains in the case:
Plaintiffs maintain that TSI “did not go out of business – it simply transferred its operations to a
different entity run by the very same person.” Pls. Mot. at 18.) Plaintiffs, who were not parties
to the NLRB case, argue that their discovery unearthed evidence unavailable to the NLRB that
extinguishes any doubts about common ownership. All parties have now moved for summary
judgment.
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II. Legal Standard
Summary judgment may be granted if “the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v.
Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A fact is “material” if it is capable of affecting the
substantive outcome of the litigation. See Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at
895. A dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Liberty Lobby, 477
U.S. at 248; Holcomb, 433 F.3d at 895. “A party asserting that a fact cannot be or is genuinely
disputed must support the assertion” by “citing to particular parts of materials in the record” or
“showing that the materials cited do not establish the absence or presence of a genuine dispute,
or that an adverse party cannot produce admissible evidence to support the fact.” Fed. R. Civ. P.
56(c)(1).
When a motion for summary judgment is under consideration, “[t]he evidence of the non-
movant[s] is to be believed, and all justifiable inferences are to be drawn in [their] favor.”
Liberty Lobby, 477 U.S. at 255; see also Mastro v. PEPCO, 447 F.3d 843, 850 (D.C. Cir. 2006);
Aka v. Wash. Hosp. Ctr., 156 F.3d 1284, 1288 (D.C. Cir. 1998) (en banc). On a motion for
summary judgment, the Court must “eschew making credibility determinations or weighing the
evidence.” Czekalski v. Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).
The nonmoving party’s opposition, however, must consist of more than mere
unsupported allegations or denials and must be supported by affidavits, declarations, or other
competent evidence, setting forth specific facts showing that there is a genuine issue for trial.
See Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The nonmovant is
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required to provide evidence that would permit a reasonable jury to find in its favor. Laningham
v. Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the nonmovant’s evidence is “merely
colorable” or “not significantly probative,” summary judgment may be granted. Liberty Lobby,
477 U.S. at 249-50.
III. Analysis
Section 515 of the Multiemployer Pension Plan Amendments Act of 1980, which
amended ERISA, “makes a federal obligation of an employer’s contractual commitment to
contribute to a multiemployer pension fund.” Flynn v. R.C. Tile, 353 F.3d 953, 958 (D.C. Cir.
2004). Under section 515, “[e]very employer who is obligated to make contributions to a
multiemployer plan under the terms of the plan or under the terms of a collectively bargained
agreement shall, to the extent not inconsistent with law, make such contributions in accordance
with the terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. In this case,
everyone agrees that TSI made all of the contributions required through June 30, 2011. See Pls.
Resp. to TSAC SMF, ¶ 48. Plaintiffs, moreover, present only one theory for why TSI and TSAC
owe the Funds further contributions: because TSI and TSAC are “alter egos.” Liability in this
case, therefore, turns entirely on the alter-ego doctrine. 1
A. Alter-Ego Doctrine
Alter-ego liability originated in labor law as an exception to a broader rule. Under that
broader rule, when one employer replaces another, the successor employer often has a duty to
bargain with the union that represented its predecessor’s employees, but the successor is not
bound by the prior collective-bargaining agreement. See Fall River Dyeing & Finishing Corp. v.
1
In a footnote, Plaintiffs note that their Complaint also alleged that TSAC was liable as a successor to TSI.
See Pls. Mot. at 19 n.7 (citing Compl., ¶ 11). Neither in their own Motion nor in opposing TSAC’s and TSI’s
Motions, however, do Plaintiffs support that allegation. They have therefore forfeited this argument.
8
NLRB, 482 U.S. 27, 40-41 (1987). The Supreme Court has laid out the justifications for this
regime:
A potential employer may be willing to take over a moribund
business only if he can make changes in corporate structure,
composition of the labor force, work location, task assignment, and
nature of supervision. Saddling such an employer with the terms
and conditions of employment contained in the old collective-
bargaining contract may make these changes impossible and may
discourage and inhibit the transfer of capital. On the other hand, a
union may have made concessions to a small or failing employer
that it would be unwilling to make to a large or economically
successful firm. The congressional policy manifest in the
[National Labor Relations] Act is to enable the parties to negotiate
for any protection either deems appropriate, but to allow the
balance of bargaining advantage to be set by economic power
realities.
NLRB v. Burns Int’l Sec. Servs., Inc., 406 U.S. 272, 287-88 (1972).
That broad rule is easily abused, however. If employer ABC Corp. (owned by Joe Smith)
is unhappy with its collective-bargaining agreement, it can sell its assets to DEF Corp. (also, not
coincidentally, owned by Joe Smith) and effectively vacate the labor agreement. The alter-ego
exception prevents such an evasion. When the successor “is ‘merely a disguised continuance of
the old employer,’” alter-ego liability binds the successor to the prior agreement. Howard
Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 259 n.5 (1974) (quoting Southport
Petroleum Co. v. NLRB, 315 U.S. 100, 106 (1942)). Alter-ego liability under section 515
prevents a parallel evasion, “enabling ERISA trustees to recover delinquent contributions from a
sham entity used to circumvent the participating employer’s pension obligations.” R.C. Tile, 353
F.3d at 958.
To be alter egos, the predecessor and successor must be essentially the same company,
separated by only a sham transaction that cloaks the successor’s true identity. See Howard
Johnson, 417 U.S. at 259 n.5 (alter-ego cases “involve a mere technical change in the structure or
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identity of the employing entity, frequently to avoid the effect of the labor laws, without any
substantial change in its ownership or management,” where “the successor is in reality the same
employer”); id. (an alter ego is created by “a paper transaction without meaningful impact on the
ownership or operation of the enterprise”); Fugazy Cont’l Corp. v. NLRB, 725 F.2d 1416, 1419
(D.C. Cir. 1984) (“Under well-established NLRB doctrine, one entity is responsible as the alter
ego . . . if an apparent transfer of operations is not an ‘arms length’ transaction between distinct
entities, but merely a sham, creating a ‘disguised continuance’ of the predecessor’s operations.”)
(citations omitted); Ret. Plan of UNITE HERE Nat’l Ret. Fund v. Kombassan Holding A.S., 629
F.3d 282, 288 (2d Cir. 2010) (“Determining that an entity is an alter ego signifies that, for all
relevant purposes, the non-signatory is legally equivalent to the signatory and is itself a party to
the collective bargaining agreement.”) (internal quotation marks and brackets omitted); Mass.
Carpenters Cent. Collection Agency v. Belmont Concrete Corp., 139 F.3d 304, 307 (1st Cir.
1998) (“The alter ego doctrine is meant to prevent employers from evading their obligations
under labor laws and collective bargaining agreements through the device of making a mere
technical change in the structure or identity of the employing entity without any substantial
change in its ownership or management.”) (internal quotation marks and ellipsis omitted); Cent.
States, Se. & Sw. Areas Pension Fund v. Sloan, 902 F.2d 593, 596 (7th Cir. 1990) (“the alter ego
doctrine focuses on the existence of a disguised continuance of a former business entity or an
attempt to avoid the obligations of a collective bargaining agreement, such as through a sham
transfer of assets”) (internal quotation marks omitted).
In deciding whether “two nominally distinct unincorporated businesses are alter egos for
the purpose of assessing liability under § 515,” the D.C. Circuit “evaluate[s] the similarities
between the two enterprises in their ownership, management, business purpose, operations,
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equipment, and customers,” as well as “any transactions or other dealings between the two
entities.” R.C. Tile, 353 F.3d at 958. “No single factor is controlling, and all need not be present
to support a finding of alter ego status.” Id. (quoting Belmont Concrete, 139 F.3d at 308). The
R.C. Tile panel reserved judgment on whether alter-ego liability should be tougher to obtain
when the businesses are incorporated. See 353 F.3d at 958 n.***. That question need not be
resolved here, however, as the Court finds that even under the test for unincorporated entities,
TSI and TSAC are not alter egos.
B. Application to TSI and TSAC
As Plaintiffs note here, TSI and TSAC satisfy many of the factors that R.C. Tile named:
they substantially overlap in management, business purpose, operations, equipment, and
customers. Yet that tally alone cannot carry the day:
The [alter-ego] doctrine is not a formalistic mechanism for
reflexively regarding distinct jural entities as legally
interchangeable whenever the entities’ relationship is marked by a
sufficient number of the doctrine’s characteristic criteria – e.g.,
continuity of ownership between the corporations, management
overlap, similarity of business purpose, evidence that the non-
union entity was created to avoid an obligation in a collective
bargaining agreement. Rather, the doctrine is a tool to be
employed when the corporate shield, if respected, would
inequitably prevent a party from receiving what is otherwise due
and owing from the person or persons who have created the shield.
Mass. Carpenters Cent. Collection Agency v. A.A. Bldg. Erectors, Inc., 343 F.3d 18, 21-22 (1st
Cir. 2003) (citation omitted). These factors thus boil down, in essence, to one key inquiry: Is the
second company really the first, disguised by a sham transaction?
TSI and TSAC, however, clearly are not essentially the same company. The Caffeys
wholly owned and controlled TSI, whereas Myers wholly owns and controls TSAC. “While
common ownership is not an absolute prerequisite to a finding of alter ego status, it weighs
heavily in the alter ego determination.” Douglas Foods Corp. v. NLRB, 251 F.3d 1056, 1063
11
(D.C. Cir. 2001) (citation, emphasis, and internal quotation marks omitted). The Court is aware
that, as Plaintiffs note, courts sometimes find an alter-ego relationship despite new ownership.
Those cases, however, involve intrafamily transfers and other sham transactions that change
formal ownership while leaving the same person (or group) in control. See, e.g., R.C. Tile, 353
F.3d at 956, 959 (brothers and one brother’s wife); Fugazy Cont’l, 725 F.2d at 1419-20 (actual
control remained the same); NLRB v. Omnitest Inspection Servs., Inc., 937 F.2d 112, 118-22 (3d
Cir. 1991) (actual control remained the same); Sloan, 902 F.2d at 597-98 (husband and wife);
J.M. Tanaka Constr., Inc. v. NLRB, 675 F.2d 1029, 1034-35 (9th Cir. 1982) (extended family);
Flynn v. Ohio Bldg. Restoration, Inc., 317 F. Supp. 2d 22, 33-34 (D.D.C. 2004) (husband and
wife).
Here, in contrast, TSAC acquired substantially all of TSI’s assets in a sufficiently arms-
length transaction. Before the sale, the Caffeys owned the assets of the company; thereafter,
Myers and his LLC did. The only relationship between the Caffeys and Myers was a legitimate
business one. That genuine difference in ownership and control after a bona fide transaction
proves dispositive. See, e.g., Howard Johnson, 417 U.S. at 259 n.5 (“There is not the slightest
suggestion in this case that the sale of the restaurant and motor lodge by the Grissoms to Howard
Johnson was in any sense a paper transaction without meaningful impact on the ownership or
operation of the enterprise. Howard Johnson had no ownership interest in the restaurant or motor
lodge prior to this transaction.”); Southport Petroleum, 315 U.S. at 106 (no alter egos when there
is “a bona fide discontinuance and a true change of ownership”).
Nor does the evidence here suggest any flim-flammery. Perhaps most importantly,
Plaintiffs never explain why the Caffeys would have wanted to flush money down the drain by
selling their business for less than what it was worth. Unlike a typical sham deal, moreover,
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negotiations between Caffey and Myers were protracted. They even delayed the sale so that they
could better estimate TSI’s market value. See First Partnership Agreement at 1 (explaining that
Caffey and Myers put off TSI’s sale and entered their profit-sharing arrangement “in an effort to
allow some time to demonstrate the impact of the [specified] factors to the business valuation”).
Caffey and Myers also carefully accounted for and divided hundreds of thousands of dollars of
profits in the interim, refining the distribution plan in each partnership agreement. See id. at 2;
Second Partnership Agreement at 2-3; Third Partnership Agreement at 2-3.
Pointing to the “partnership” agreements, Plaintiffs argue that Myers was a co-owner of
TSI before the sale. But, at core, those agreements created a profit-sharing arrangement –
compensation for Myers’s work while he and Caffey awaited valuation of TSI’s assets. When
employers share profits with employees (as they often do), the employees do not become owners.
See, e.g., Unif. Partnership Act § 202 (1997) (“[T]he association of two or more persons to carry
on as co-owners a business for profit forms a partnership, whether or not the persons intend to
form a partnership. . . . In determining whether a partnership is formed, . . . [a] person who
receives a share of the profits of a business is presumed to be a partner in the business, unless the
profits were received in payment . . . for services as an independent contractor or of wages or
other compensation to an employee . . . .”) (emphasis added). Instead, profit sharing (whether
full or partial) pays an employee for her work and aligns the employee’s and employer’s
incentives. It does not provide an employee an equity stake in a company or guarantee him a
share of the company when it is sold.
The agreements’ wanton use of “equity” and “partner” and “partnership” does not alter
that conclusion. Drafted without the aid of a lawyer, the agreements seem to employ “equity” to
mean “profits” and “partnership” (or, more precisely, “partnership in spirit”) to mean “profit-
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sharing.” The agreements make clear that Caffey retained complete ownership of TSI. See, e.g.,
First Partnership Agreement at 1 (“Caffey would have the role of Owner/Investment Partner”);
id. at 2 (“this agreement is in spirit and will not actually create a stock transfer”); see also Second
Partnership Agreement at 1-2 (same); Third Partnership Agreement at 1-2 (same). Myers,
moreover, acquired no ownership-like rights that distinguish him from a profit-sharing
employee. If Caffey had sold TSI’s assets to someone else, for example, there is no indication
that Myers would have received compensation for his “ownership interest” in TSI.
The Court’s analysis largely tracks the NLRB’s. After an investigation of the Union’s
charge, the Regional Director declined to issue a complaint, explaining:
The investigation disclosed insufficient evidence to establish that
Thermal Specialties Acquisition Company, LLC (“TSAC”) is an
alter ego of Thermal Specialties, Inc. (“TSI”). Rather, the
investigation established separate ownership of the two
independent entities and that the transfer of ownership resulted
from an arms length transaction between unrelated individuals
financed via third party loans.
Letter from Stuart to Birmingham at 1. The General Counsel affirmed this decision:
[T]he investigation revealed no evidence that the TSAC was
formed so TSI could evade its obligations pursuant to its contracts
with the Unions. Rather the evidence established that Robert and
Paula Caffey were the owners of TSI and decided to retire in 2007.
In 2008, they were able to reach an agreement with Mitch Meyers
[sic] whereby he would purchase the assets of TSI and start a new
company, called TSAC. During the interim, Meyers [sic] served
as the General Manager of TSI and conducted the day-to-day
operations. After unexpected delays, the parties executed a final
purchase agreement in 2011. As a result, TSI ceased to exist and
TSAC commenced operations under new terms and conditions of
employment. In these circumstances, it could not be concluded
that TSAC is the alter ego of TSI.
Letter from Solomon to Birmingham at 1.
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TSI and TSAC, in sum, are not alter egos. Neither was obliged, accordingly, to make
additional pension contributions under section 515 of ERISA. The Court will thus enter
summary judgment in favor of TSI and TSAC.
IV. Conclusion
For the aforementioned reasons, the Court will deny Plaintiffs’ Motion for Summary
Judgment and grant Defendants Thermal Specialties, Inc.’s and Thermal Specialties Acquisition
Company, LLC’s Motions for Summary Judgment. A separate Order consistent with this
Opinion will be issued this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: June 19, 2013
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