02-2435 Massachusetts Carpenters Central Collection Agency v. A.a. Building Erectors, Incorporated; Kalwall Corp.

United States Court of Appeals
For the First Circuit
No. 02-2006, 02-2050, 02-2435
MASSACHUSETTS CARPENTERS CENTRAL COLLECTION AGENCY;
TRUSTEES OF THE MASSACHUSETTS STATE CARPENTERS PENSION FUND;
MASSACHUSETTS STATE CARPENTERS GUARANTEED ANNUITY FUND;
MASSACHUSETTS STATE CARPENTERS HEALTH BENEFIT FUND;
NEW ENGLAND CARPENTERS TRAINING FUND;
CARPENTERS LABOR MANAGEMENT FUND;
CARPENTERS LOCAL 108 HEALTH & WELFARE FUND;
WESTERN MASSACHUSETTS APPRENTICESHIP & TRAINING FUND;
BOSTON CARPENTERS APPRENTICESHIP & TRAINING FUND
EASTERN MASSACHUSETTS APPRENTICESHIP & TRAINING FUND; and the
SOUTHEASTERN MASSACHUSETTS APPRENTICESHIP & TRAINING FUND,
Plaintiffs-Appellants, Cross-Appellees,
v.
A.A. BUILDING ERECTORS, INCORPORATED; KALWALL CORP.,
Defendants-Appellees, Cross-Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Circuit Judge,
Bownes and R. Arnold,* Senior Circuit Judges.
Christopher N. Souris with whom Krakow, Souris & Birmingham,
LLC was on brief for appellants, cross-appellees.
Mark T. Broth with whom William R. Bagley, Jr., Abigail J.
Sykas and Devine, Millimet & Branch, P.A. were on brief for
appellees, cross-appellants.

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September 8, 2003
*Of the United States Court of Appeals for the Eighth
Circuit, sitting by designation.

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HOWARD, Circuit Judge. These consolidated appeals
require us to decide whether, on facts that are largely undisputed,
defendants A.A. Building Erectors, Inc., and its alleged alter ego,
Kalwall Corporation, have breached a series of successive
collective bargaining agreements between A.A. Building and the non-
party United Brotherhood of Carpenters & Joiners of America, AFL-
CIO (UBC). Seeking damages for the alleged breaches are the
trustees of the funds (all of which are affiliated with the UBC)
and the Massachusetts Carpenters Central Collection Agency (MCCCA),
which serves as the funds' collection agent. Plaintiffs brought
the underlying actions under the Employment Retirement Security Act
of 1974 (ERISA), 29 U.S.C. §§ 1132(a)(3)(B)(ii), 1132(d)(1),
1132(f), and 1145, and under the Labor Management Relations Act of
1947 (LMRA), 29 U.S.C. § 185.
Because the district court has set forth the factual
background of these proceedings in a published opinion, see 208 F.
Supp. 2d 94 (D. Mass. 2002), we confine ourselves to essentials.
Since 1955, Kalwall has been a family-run designer, manufacturer,
and seller of translucent fiberglass and aluminum panel
fenestration systems. The company periodically contracts with
customers to install its products, although it never has had
installers on its own payroll. In its early years, Kalwall (acting
through an affiliated entity) subcontracted all of its installation
work to non-affiliated installation contractors. The company

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tended to use non-unionized installers when its customers primarily
were concerned with saving money, but it also sometimes went with
unionized installers because some of its customers preferred that
it do so. Kalwall itself has never been unionized.
In 1964, after Kalwall repeatedly experienced performance
problems with its union subcontractors, the company's principals
established A.A. Building as an affiliated, unionized installation
contractor. Since 1964, Kalwall has subcontracted with A.A.
Building to perform all of its union installation work. But in
order to remain competitive in both the union and non-union
markets, Kalwall has continued to subcontract with unaffiliated,
non-unionized installers when customers do not require union
installation.
A.A. Building exclusively serves Kalwall customers and
itself has no clerical, managerial, or supervisory employees.
(Persons performing the supervisory and managerial functions
necessary for A.A. Building to operate are on the payroll of an
affiliated company that performs bookkeeping and accounting
functions for Kalwall, A.A. Building, and other related companies.)
A.A. Building uses Kalwall's telephone number, fax number, and
office address. Its shareholders, directors, and officers are the
same family members who own and control the group of related
companies of which Kalwall is a member. Kalwall holds the
contractors' license used by A.A. Building, has characterized A.A.

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Building in internal and external communications as its
"installation department" and "installation manager," and does not
obtain written permission to "subcontract" installation work to
A.A. Building when customers require written outsourcing approval.
The district court summed it up well: "That Kalwall and A.A.
Building are joined at the hip, and that A.A. Building is a captive
of Kalwall, seems hardly worth a debate . . . ." 208 F. Supp. 2d
at 98.
Since its founding, A.A. Building has been a party to a series
of collective bargaining agreements with the UBC. Although we do
not have copies of all of the agreements, these appeals have been
briefed and argued on the assumption (which we shall adopt) the
agreements have required A.A. Building to use unionized laborers on
all of its Massachusetts construction sites and to make pension
fund contributions based on the number of hours its unionized
employees work. The agreements also have required that, if A.A.
Building subcontracts with non-unionized laborers, it must make
pension payments on the hours worked by such laborers as if the
hours had been worked by unionized workers.
In these lawsuits, the MCCCA and the trustees of the
funds it administers invoke the alter ego doctrine to contend that
A.A. Building, and Kalwall as its alter ego, have failed to comply
with this last contribution requirement. The alter ego doctrine is
essential to plaintiffs' case theory because there is no allegation

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that A.A. Building itself has hired or subcontracted with non-
unionized laborers and then failed to make pension contributions on
the hours worked. Rather, plaintiffs, who apparently only recently
learned that Kalwall and A.A. Building are "joined at the hip,"
contend that Kalwall and A.A. Building should have been making
pension fund contributions for work performed by non-unionized
installation subcontractors hired by Kalwall precisely because
Kalwall and A.A. Building are so joined. In plaintiffs' view,
under the alter ego doctrine, there is no legal distinction to be
drawn between Kalwall and A.A. Building; the legal obligations and
liabilities of one are the legal obligations and liabilities of the
other.
The district court rejected this argument and awarded
Kalwall and A.A. Building summary judgment on plaintiffs' ERISA and
LMRA claims. Quoting Mass. Carp. Cent. Coll. Agency v. Belmont
Concrete Corp., 139 F.3d 304, 307 (1st Cir. 1998), the court
started from the premise that "'[t]he alter ego doctrine [as
applied in this labor law context] 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.'" 208 F.
Supp. 2d at 98 (ellipses and internal quotation marks omitted).
The court then concluded that, notwithstanding the strong identity

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between Kalwall and A.A. Building, there was no reason to invoke
the alter ego doctrine in these cases because Kalwall's
establishment of A.A. Building was neither designed to permit, nor
had the effect of permitting, Kalwall to avoid preexisting labor
law obligations: "Kalwall is, and always has been, a non-union
entity. It has never been bound by a [collective bargaining
agreement] and consequently has never been obligated to make
pension contributions . . . . Rather than seeking to avoid such an
obligation, Kalwall created A.A. Building to employ union workers
who are [p]lan participants." Id.
On appeal, plaintiffs' essential argument, which they
press from a number of angles, is that the district court erred in
concluding that labor law's alter ego doctrine should only be
called into play when an employer is seeking to avoid a preexisting
labor law obligation. Plaintiffs correctly observe that, although
the doctrine usually applies in "situations[] involving successor
companies 'where the successor is merely a disguised continuance of
the old employer,'" Belmont Concrete, 139 F.3d at 307 (quoting
C.E.K. Indus. Mechanical Contractors, Inc. v. NLRB, 921 F.2d 350,
354 (1st Cir. 1990)), it also has sufficient play in its joints,
see generally NLRB v. Hospital San Rafael, Inc., 42 F.3d 45, 50-52
(1st Cir. 1994), to cover instances where a company uses a
parallel entity to avoid a labor law obligation, see, e.g., id.
(citing Union Builders, Inc. v. NLRB, 68 F.3d 520, 524 (1st Cir.

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1995)). According to plaintiffs, it is irrelevant whether
establishment of the non-union entity followed or preceded the
event giving rise to the obligation; the doctrine can apply
whenever there has been some sort of corporate restructuring and a
concomitant avoidance of an obligation -- even if the restructuring
and avoidance are largely contemporaneous with the creation of the
obligation.
We need not disagree with the premise of this assertion
in order to reject plaintiffs' argument that the alter ego doctrine
should apply in this instance. The 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. See Hospital San Rafael, 42 F.3d
at 50. 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. See id. at 51 (discussing the
doctrine's "animating purpose" and observing that it can apply even
where those who created the corporate shield did not do so to avoid
an obligation). Here, we see no potential inequity of this sort.

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Two factors drive our conclusion. First, there is no
evidence that A.A. Building deceived the UBC about its structure,
ownership, relationship with Kalwall, or the fact that Kalwall
regularly subcontracts with non-unionized installers. This matters
because arrangements such as those between Kalwall and A.A.
Building are neither uncommon nor inherently unlawful. See C.E.K.,
921 F.2d at 352 n.3 (discussing so-called "double breasted
operations" -- i.e., ones in which the employer is closely
affiliated with a non-union "open shop" which performs the same or
similar work and thus permits those in control of the affiliated
entities to service both the union and non-union markets); see also
Ben Marsh, Comment, Corporate Shell Games: Use of the Corporate
Form to Evade Bargaining Obligations, 2 U. Pa. J. Lab. & Empl. L.
543 (2000) (discussing double-breasted operations and their legal
implications under labor law). If the UBC wants to ensure that
employers with whom it contracts are not or will not be part of a
double-breasted operation, we see no reason why it cannot bargain
for such an arrangement. See Brown v. Sandimo Materials, 250 F.3d
120, 123 (2d Cir. 2001) (involving a collective bargaining
agreement precluding an employer from running a double-breasted
operation); cf. Int'l Union of Operating Engineers, Local 150, AFL-
CIO v. Rabine, 161 F.3d 427, 433 (7th Cir. 1998) ("In the end, it
appears that the union may just have been careless in its
assumptions about the party with which it was dealing . . . .").

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Second, and relatedly, there is absolutely no indication
that the relationship between A.A. Building and Kalwall has changed
over the years or has caused the UBC to receive less than that for
which it bargained. This matters because, in all the cases
involving application of the labor law alter ego doctrine to which
plaintiffs have drawn our attention (or which we have read on our
own), the union membership with rights under a collective
bargaining agreement has been somehow worse off following some
change in the structure or operations of the employer with whom the
collective bargaining agreement was negotiated. Indeed, even in
those cases where we have emphasized the doctrine's flexibility and
thus described its purpose at a high degree of generality, we have
stated that the doctrine will apply in the face of some corporate
"change" which has caused a union to be in a worse position than it
was in prior to the change. See, e.g., Belmont Concrete, 139 F.3d
at 307; Hospital San Rafael, 42 F.3d at 51. Of course, the fact
that the alter ego doctrine has not been applied without some
change in corporate structure or operations after the event giving
rise to the union's right does not mean that it never should be so
applied. But doing so would require a convincing explanation that
the doctrine's purposes would be served its application in such a
situation. Here, plaintiffs have provided us with no reason to
apply the doctrine other than pointing out that, unbeknownst to
them until recently, many of the criteria necessary for an alter

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ego finding characterize the relationship between Kalwall and A.A.
Building. As we have explained, this is not enough.
In sum, we see no equitable basis for regarding A.A.
Building's agreements to make pension fund contributions for work
performed by non-unionized workers with whom it has subcontracted
as implying corresponding agreements by Kalwall to make
contributions for the work performed by non-unionized installers
with whom it has subcontracted. A contrary ruling on these facts
would be tantamount to holding that a common ownership group cannot
control affiliated but nominally separate corporations to service
similar union and non-union markets -- a proposition that would be
at odds with circuit precedent. See C.E.K., 921 F.2d at 352 n.3.
Accordingly, we affirm the district court's entry of summary
judgments in favor of Kalwall and A.A. Building.

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