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Boland v. Thermal Specialties, Inc.

United States District Court, District Circuit

June 19, 2013

JAMES BOLAND, as Trustee of, and on behalf of, the Bricklayers & Trowel Trades International Pension Fund, et al., Plaintiffs,


JAMES E. BOASBERG United States District Judge

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.

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.

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-today 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 Dated: 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 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 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., ΒΆ 7. (All statements by Caffey and Myers quoted here are admissible as statements by ...

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