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Board of Trustees of Employers-Shopmen's Local 516 Pension Trust v. Columbia Wire & Iron Works, Inc.

United States District Court, D. Oregon

February 8, 2017

BOARD OF TRUSTEES OF THE EMPLOYERS-SHOPMEN'S LOCAL 516 PENSION TRUST, through their designated fiduciaries Zanley Galton, III and Phil Casciato, Plaintiff,
v.
COLUMBIA WIRE & IRON WORKS, INC., an Oregon corporation; COLUMBIA STEEL SERVICES, INC., an Oregon corporation; COLUMBIA STEEL SERVICES, INC. dba COLUMBIA WIRE & IRON WORKS, an Oregon corporation; COLUMBIA STEEL SOLUTIONS, INC., an Oregon corporation; ROBERT G. PARK, an individual; ANDREW V. PARK, an individual; and SHAWNA C. PARK, an individual, Defendants.

          Gene Mechanic and Whitney Stark, Mechanic Law Firm, Of Attorneys for Plaintiff.

          Robert B. Miller and Candice R. Broock, Kilmer, Voorhees & Laurick, P.C. Of Attorneys for Defendants.

          OPINION AND ORDER

          MICHAEL H. SIMON, DISTRICT JUDGE.

         Plaintiff Board of Trustees of the Employers-Shopmen's Local 516 Pension Trust (the “Fund”) brings claims under Oregon common law and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., against Defendants Columbia Wire & Iron Works, Inc. (“CWIW”); Columbia Steel Services, Inc. (“CSSI”); Columbia Steel Services, Inc. dba Columbia Wire & Iron Works (“CSSI dba CWIW”); Columbia Steel Solutions, Inc. (“Solutions”); and Robert and Andrew Park (collectively, the “Parks”) (collectively, “Defendants”).[1] The Fund alleges that CWIW incurred more than $2 million in withdrawal liability when it withdrew from the Fund and seeks to recover CWIW's withdrawal liability from CWIW, CWIW's former owners (the Parks), and from other corporations owned by the Parks. Before the Court is Defendants' motion to dismiss the First Amended Complaint. For the reasons that follow, the motion to dismiss is granted in part and denied in part.

         STANDARDS

         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         BACKGROUND[2]

         Until it ceased operations in 2012, CWIW was a corporation owned by the Parks and others.[3] CWIW had collective bargaining agreements (collectively, the “CBA”) with the Ironworkers-Shopmen's Local 516, International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers. The CBA allegedly covered all of CWIW's production and maintenance employees engaged in the fabrication of iron, steel, metal, and other products. The CBA also required CWIW to contribute regularly to a pension fund (the Fund) on behalf of CWIW's employees. CWIW withdrew from the Fund in 2012 when it ceased all business operations. As a result of its withdrawal, CWIW allegedly incurred more than $2 million in withdrawal liability to the Fund.

         In this suit, the Fund seeks to recover the alleged withdrawal liability from Defendants, and primarily CWIW. Because CWIW, however, is no longer in business and may be unable to pay the withdrawal liability, the Fund also seeks to recover CWIW's withdrawal liability from the Parks and other corporations owned by the Parks, Defendants CSSI, CSSI dba CWIW, and Solutions. The Fund alleges that despite CWIW's cessation of business operations in 2012, the Parks have continued CWIW's steel fabrication business as a non-union operation through CSSI, CSSI dba CWIW, and Solutions. The Fund further alleges that Defendants fraudulently concealed from the Fund the fact that they were continuing their steel fabrication business in order to avoid payment of CWIW's withdrawal liability.

         The Fund brings five claims under ERISA and the common law. First, the Fund claims that CWIW has failed to pay withdrawal liability. 29 U.S.C. §§ 1145, 1451(b). Second, the Fund claims that CSSI, CSSI dba CWIW, and Solutions are liable for CWIW's withdrawal liability because they are in the same controlled group as CWIW. 29 U.S.C. § 1401(f)(3)(B). In the third and fourth claims, the Fund claims that CSSI, CSSI dba CWIW, and Solutions are liable for the withdrawal liability under the common law alter ego and successor liability doctrines, respectively. Fifth, the Fund seeks to hold Robert and Andrew Park liable under the doctrine of “piercing the corporate veil.”

         DISCUSSION

         Defendants move to dismiss Claim Two against Solutions and Claims Three, Four, and Five against all Defendants.[4] The Fund has agreed voluntarily to dismiss Claim Two against Solutions. Accordingly, remaining before the Court is Defendants' motion to dismiss Claims Three through Five.

         A. Claim Three: Alter Ego Liability

         Defendants argue that Claim Three should be dismissed against CSSI and Solutions for three reasons. First, Defendants argue in their reply that the alter ego doctrine does not apply to suits attempting to collect withdrawal liability after the enactment of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. § 1381 et seq. In 2010, the Ninth Circuit declined to decide “whether [29 U.S.C.] § 1392(c) is intended to be the sole route of redress for evading or avoiding withdrawal liability” or whether the alter ego doctrine is still available despite enactment of the MPPAA. Resilient Floor Covering Pension Fund v. M&M Installation, Inc., 630 F.3d 848, 852 (9th Cir. 2010). The Ninth Circuit instructed the district court on remand to decide the issue. Id. In a thoroughly reasoned opinion, which this Court finds persuasive, the district court held that the alter ego doctrine was still available. See Resilient Floor Covering Pension Fund v. M&M Installation, Inc., 2012 WL 669765, at *4-5 (N.D. Cal. Feb. 29, 2012).

         Although the Ninth Circuit does not appear to have expressly considered the issue, other circuits have applied the alter ego doctrine to suits to collect withdrawal liability after the enactment of the MPPAA. See, e.g., N.Y. State Teamsters Conference Pension & Ret. Fund v. Express Servs., Inc., 426 F.3d 640, 649-50 (2d Cir. 2005); Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 171-73 (3d Cir. 2002); Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 85 F.3d 1282, 1288-89 (7th Cir. 1996). Moreover, the Ninth Circuit has applied the alter ego doctrine in suits to collect delinquent contributions, which are “treated in the same manner” as actions to compel an employer to pay withdrawal liability. 29 U.S.C. § 1451(b); Trs. of the Screen Actors Guild-Producers Pension & Health Plans v. NYCA, Inc., 572 F.3d 771, 776-77 (9th Cir. 2009); cf. Resilient Floor Covering Pension Tr. Fund Bd. of Trs. v. Michael's Floor Covering, Inc., 801 F.3d 1079, 1093 (9th Cir. 2015) (“We see no reason why the successorship doctrine should not apply to MPPAA withdrawal liability just as it does to the obligation to make delinquent ERISA contributions.”) Accordingly, the Court holds that the alter ego doctrine still applies to actions to compel employers to pay withdrawal liability after the enactment of the MPAA.

         Second, Defendants argue that the Fund has not adequately alleged unity of interest or fraud or injustice under Ranza v. Nike, Inc., 793 F.3d 1059, 1073-75 (9th Cir. 2015), cert. denied, 136 S.Ct. 915 (2016). The Fund correctly responds that the Ranza test does not apply to the alter ego claim in this case. When a union company is accused of creating a non-union alter ego for the purpose of avoiding collective bargaining obligations, a court must determine: (1) “whether the two firms are a single employer by measuring the degree of common ownership, management, operations, and labor relations”; and (2) whether the non-union firm is “being used ‘in a sham effort to avoid collective bargaining obligations, rather than for the pursuit of legitimate business objectives.'” UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1470 (9th Cir. 1994) (citation omitted) (quoting Brick Masons Pension Tr. v. Indus. Fence & Supply, Inc., 839 F.2d 1333, 1336 (9th Cir. 1988)); see also M&M Installation, 630 F.3d at 854 (“[T]he rationale of our alter ego cases shows that the Nor-Cal standard, adapted to the circumstances of withdrawal liability, remains applicable.”).

         Regarding the first Nor-Cal factor, the Fund points to allegations that Robert, Andrew, and Shawna Park collectively own all of the shares of CWIW, CSSI, and Solutions, ECF 28 ¶ 9-11; Robert Park is CWIW's and CSSI's Chief Executive Officer and Solutions' President and Secretary-Treasurer, ECF 28 ¶ 9; Andrew Park is CWIW's and CSSI's President, ECF 28 ¶ 10; CSSI is a successor to CWIW's steel fabrication business, ECF 28 ¶ 13, 21-25; and “Defendants continued to do business with the same customers and vendors, and to use employees formerly employed by [CWIW], ECF 28 ¶ 20. Taking these allegations as true, the Fund has adequately alleged common ownership, management, operations, and labor relations between CWIW, on the one hand, and CSSI and Solutions, on the other.

         Regarding the second Nor-Cal factor, the Fund points to allegations that CSSI and Solutions fraudulently concealed that they were continuing their “steel fabrication” business and “are being used in a sham effort to evade and avoid their withdrawal liability obligations to” the Fund. ECF 28 ¶¶ 13, 18, 20-21, 23, 25, 35. Defendants reply that the Fund has not alleged that CSSI and Solutions continue to engage in work covered by the CBA. The Court notes the CBA allegedly covers “all production and maintenance employees . . . engaged in the fabrication of iron, steel, metal and other products, ” which the First Amended Complaint refers to as “steel fabrication.” ECF 28 ¶ 12. Accordingly, the Fund has adequately alleged that CSSI and Solutions continue to engage in covered work. Defendants further reply that the CBA only covered shop fabrication, not steel design or construction, and that Defendants ceased shop fabrication work after CWIW withdrew from the Fund. Defendants argue that because the evidence does not support the Fund's allegations that Defendants continued CWIW's fabrication business, the Fund does not have a valid alter ego claim. The Court notes that Defendants have not filed a copy of the CBA and have not requested that it be incorporated by reference into the First ...


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