Trustees of the Local 7 Tile Industry Welfare Fund v. Castle Stone and Tile, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

TRUSTEES OF THE LCOAL 7 TILE INDUSTRY

WELFARE FUND, THE LOCAL 7 TILE MEMORANDUM & ORDER

INDUSTRY ANNUITY FUND, and THE TILE 17-CV-3187 (NGG) (RER)

LAYERS LOCAL UNION 52 PENSION FUND,

TRUSTEES OF THE BRICKLAYERS & TROWEL

TRADES INTERNATIONAL PENION FUND, and

TRUSTEES OF THE INTERNAIONAL

MASONRY INSTITUTE, TRUSTEES OF THE

MARBLE INDUSTRY PENSION FUND, THE

MARBLE INDUSTRY ANNUITY FUND, and

THE MARBLE INDUSTRY TRUST FUND,

Plaintiffs,

-against-

CASTLE STONE AND TILE,INC., and

CATHEDRAL STONE & TILE CO., INC,

Defendants.

NICHOLAS G. GARAUFIS, United States District Judge.

Plaintiffs Trustees of the Local 7 Tile Industry Welfare Fund, the

Local 7 Tile Industry Annuity Fund, the Tile Layers Local Union

52 Pension Fund, Trustees of the Bricklayers & Trowel Trades

International Pension Fund, Trustees of the International Ma-

sonry Institute, Trustees of the Marble Industry Pension Fund,

the Marble Industry Annuity Fund, and the Marble Industry Trust

Fund (collectively the “Funds”) bring this action against Defend-

ants Castle Stone and Tile, Inc. (“Castle”) and Cathedral Stone &

Tile Co., Inc. (“Cathedral”). Plaintiffs assert claims under §§

502(a)(3) and 515 of the Employee Retirement Income Security

Act, as amended, 29 U.S.C. §§ 1132(a)(3), 1145 (“ERISA”), and

§ 301 of the Labor Management Relations Act of 1947, 29 U.S.C.

§ 185. (See Compl. (Dkt. 1).) Plaintiffs allege that Castle failed to

make contributions to the Funds as mandated by a collective bar-

gaining agreement (“CBA”) it signed with the pertinent unions

and that Cathedral is liable for Castle’s delinquency because the

two Defendants are a single employer or alter egos under ERISA.

(See generally Compl.)

Pending before the court is Defendants’ motion for summary

judgment. (See Mot. for Summ. J. (Dkt. 23); Mem. in Supp. of

Mot. for Summ. J. (“Mem”) (Dkt. 23-2); Mem. in Opp. to Mot.

for Summ. J. (“Opp.”) (Dkt. 24); Reply (Dkt. 25).) For the rea-

sons explained below, Defendants’ motion is DENIED.

BACKGROUND

The court constructs the following statement of facts from the

parties’ Local Rule 56.1 Statements and the admissible evidence

submitted. The following facts are undisputed except where oth-

erwise noted. Where the parties allege different facts, the court

notes the dispute and credits Plaintiffs’ version if it is supported

by evidence in the record. All evidence is construed in the light

most favorable to Plaintiffs, as the non-moving parties, with all

“reasonable inferences” drawn in their favor. ING Bank N.V. v.

M/V Temara, IMO No. 9333929, 892 F.3d 511, 518 (2d Cir.

2018).1

Sharon Amari and Edward Teran are friends and have known

each other for over 20 years. (Tr. of Apr. 2, 2018 Dep. of Sharon

Amari (“Amari Tr.”) (Dkt. 24-4) at 139:20-140:17.) Teran is the

current owner of Cathedral, a company that supplies and installs

stone and tile. (Defs. R. 56.1 Statement (“Defs. 56.1”) (Dkt. 23-

1) ¶¶ 1, 3.) Its office is located at 16 Filmore Place, Freeport, NY.

(Id. ¶ 6.) It also has a warehouse at this location that it uses to

store equipment and materials; Cathedral shares its warehouse

1 When quoting cases and unless otherwise noted, all citations and quota-

tion marks are omitted and all alterations are adopted.

space with other companies. (Id. ¶ 7.) Defendants claim that

Teran is the sole officer of Cathedral, but Amari has claimed to

be the Vice President of the company in her LinkedIn profile and

in her email signature. (Id. ¶ 2; Amari Tr. 62:21-63:8, 168:13-

21.) Teran believes that “[u]nion guys are lazy” and that working

with union labor is “a lot more expensive.” (Tr. of Mar. 29, 2018

Dep. of Edward Teran (“Teran Tr.”) (Dkt. 24-5) at 57:9-10.)

Amari is the sole officer and director of Castle. (Defs. 56.1 ¶ 30.)

She founded Castle in July 2014 after speaking with Teran about

her plans to do so. (Amari Tr. at 26:14-20, 165:16-18.) Castle is

a company that installs stone, tile, porcelain and ceramic. (Defs.

56.1 ¶ 36.) Castle signed a CBA with the unions in 2015. (Id. ¶

60.) Amari testified that Castle’s office is in her personal resi-

dence in East Northport, NY, consisting of “half of a garage and

a den that was converted to an office space.” (Id. ¶¶ 32-33; Amari

Tr. at 54:24-25.) Plaintiffs claim this office is little more than a

façade, pointing out that (1) Castle does not pay rent or utilities

at this location, (2) Amari has no fixed hours of work at this office

(and works in Cathedral’s office during normal business hours),

(3) Amari listed Cathedral’s phone number on the CBA that she

signed on Castle’s behalf, and (4) Cathedral receives calls for Cas-

tle at Cathedral’s office. (Pls. Rule 56.1 Statement (“Pls. 56.1)

(Dkt. 24-1) ¶¶ 32-34; Amari Tr. at 54:5-55:21, 58:6-21, 141:15-

142:11; Teran Tr. at 141:14-25.) Additionally, Amari conducts

Castle business at Cathedral’s office. (Amari Tr. at 69:24-25 (tes-

tifying that she would agree to subcontract terms on behalf of

Castle while working in Cathedral’s office), 72:24-25 (Amari left

Castle invoices for payment by Cathedral on Teran’s desk).)

Amari is able to conduct Castle’s business from Cathedral’s office

because she works for Cathedral in addition to owning Castle.

While Castle has never paid Amari a salary, she earns $120,000

per year from Cathedral. (Amari Tr. at 25:21, 32:21-24.) She

started at Cathedral in sales in 2007 or 2008 and by 2013 served

as Cathedral’s bookkeeper “and oversaw accounts payable, ac-

counts receivable[,] and payroll.” (Defs. 56.1 ¶¶ 63, 65.)

Defendants assert there is a clear distinction between the work

done by each company: Cathedral does only non-union work and

Castle does only union work. (See Defs. 56.1 ¶¶ 17, 26, 43.) Plain-

tiffs agree that Amari formed Castle to perform union work (see

Pls. 56.1 ¶ 43), but dispute the remainder of this narrative. Ca-

thedral, through Teran, bids on both union and non-union

projects. (Teran Tr. at 54:21-24.) In a hearing before the NLRB

on an unrelated matter, Teran testified that although he “is a

non-union company,” he occasionally “get[s] a union project . . .

and [the union] stops [him] from working.” (Tr. of Jan. 28, 2016

NLRB Hearing for Case No. 29-CB-58878 (Dkt. 24-2) at 68:1-3;

see also id. at 66:9-19 (describing the union preventing Cathedral

from using non-union labor for a union project).)

Castle and Cathedral share employees, supervisors, and equip-

ment. In addition to Amari, Romano Payonne, Jefferson Sanchez,

and Louis Guachichulca worked for both Cathedral and Castle.

(Teran Tr. at 98:6-14.) Additionally, both Teran and Amari testi-

fied that Teran and John Snow (another Cathedral supervisor)

would supervise Castle’s work. (See Amari Tr. at 143:14-22;

Teran Tr. at 60:16-19.) Castle owns no equipment and, Cathe-

dral supplies—apparently free of charge—all necessary

equipment and materials for Castle’s projects.2 (Amari Tr. at

74:13-22, 85:5-6; Teran Tr. at 109:14-19.)

Transactions between Cathedral and Castle were irregular.

Amari made oral bids to Teran for Cathedral projects, and Teran

orally selected Castle’s bids. (Teran Tr. at 67:4-6; Amari Tr. at

69:16-21, 71:7-19.) After Castle completed work on a particular

2 Defendants assert that the Castle factored use of Cathedral’s equipment

into the subcontract price. (See Defs. 56.1 ¶ 56.) This does not square with

Amari’s testimony that her bids to Teran were based on “labor only.”

(Amari Tr. at 92:6-7.)

project, “Cathedral paid what they could pay when they could

pay it.” (Amari Tr. at 123:21-22; see also Teran Tr. at 83:2-25

(testifying that he made payments on Castle’s invoices based on

“how much [he] can afford”). Also, Amari was given authority to

sign checks on behalf of Cathedral shortly before founding Cas-

tle. (Defs. 56.1 ¶ 67; Amari Tr. 164:2-7.) On multiple occasions,

Amari has signed checks from Cathedral to Castle, placing her on

both sides those transactions. (Amari Tr. at 126:14-127:10,

128:7:16, 134:15-23.)

Castle’s financial documents suggest further irregularities. Cas-

tle’s bank account was opened in August 19, 2014 with a $1,000

deposit from Cathedral. (See Castle August 2014 Bank Statement

(Dkt. 24-8); Castle General Ledger (Dkt. 24-7) at ECF 2.) In the

three years between Castle’s founding and the commencement

of this action, Castle only ever performed subcontracting work

for Cathedral. (Id. at 34:16-21.) Indeed, Cathedral was Castle’s

sole source of revenue for that period. (See generally Castle Gen-

eral Ledger.) Cathedral would deposit money into Castle’s

account whenever Castle’s balance veered close zero or became

negative. (See Id.)

Finally, the allegations on which this action is based are derived

by an audit conducted by the Funds, which estimated Castle’s

delinquent contributions to the Funds based on the money paid

by Cathedral to Castle. (Defs. 56.1 ¶¶ 82-83.)

LEGAL STANDARD

A court must grant summary judgment when “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.

Pro. 56(a). “A ‘material’ fact is one capable of influencing the

case’s outcome under governing substantive law, and a ‘genuine’

dispute is one as to which the evidence would permit a reasona-

ble juror to find for the party opposing the motion.” Figueroa v.

Mazza, 825 F.3d 89, 98 (2d Cir. 2016) (citing Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986)). The movant may dis-

charge its initial burden by demonstrating that the non-movant

“has ‘failed to make a showing sufficient to establish the existence

of an element essential to that party’s case, and on which that

party will bear the burden of proof at trial.’” Lantheus Med. Imag-

ing, Inc. v. Zurich Am. Ins. Co., 255 F. Supp. 3d 443, 451 (S.D.N.Y.

2015) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-323

(1986) (alteration adopted).

“To determine whether an issue is genuine, ‘[t]he inferences to

be drawn from the underlying affidavits, exhibits, interrogatory

answers, and depositions must be viewed in the light most favor-

able to the party opposing the motion.’” Mikhaylov v. Y & B Trans.

Co., No. 15-CV-7109 (DLI), 2019 WL 1492907, at *3 (E.D.N.Y.

Mar. 31, 2019) (quoting Cronin v. Aetna Life Ins. Co., 46 F.3d

196, 202 (2d Cir. 1995)). While the court must draw all infer-

ences in favor of the non-movant, the non-movant “may not rely

on mere speculation or conjecture as to the true nature of the

facts to overcome a motion for summary judgment.” Fletcher v.

Atex, Inc., 68 F.3d 1451, 1456 (2d Cir. 1995).

DISCUSSION

A. Cathedral’s Liability for Castle’s Obligations Under

the CBA

The Funds do not allege that Cathedral is party to a CBA; instead

they assert that Cathedral is liable for Castle’s obligations under

its CBA because the two entities are a single employer and be-

cause they are alter egos. (See Compl.)

While the single employer and alter ego doctrines are “conceptu-

ally distinct,” Div. 1181 Amalgamated Transit Union-New York

Emps. Pension Fund v. Canal Escorts, Inc., No. 14-CV-4575 (SMG),

2020 WL 1472439, at *7 (E.D.N.Y. Mar. 26, 2020), “[t]he deter-

minations of both single employer and alter ego status are

questions of fact.” Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 747

(2d Cir. 1996) (per curiam). “Accordingly, summary judgment is

appropriate only if no reasonable juror could conclude, on the

facts available at summary judgment, that defendants either did

or did not constitute a single employer or alter egos.” Trs. of Ele-

vator Constructors Union Local No. 1 Annuity & 401(K) Fund v.

K.A.N. Elevator Inc., No. 16-CV-7408 (PAE), 2018 WL 2727884,

at *6 (S.D.N.Y. June 5, 2018); see also Trs. of Empire State Car-

penters Annuity, Apprenticeship, Labor-Mgmt. Co-op., Pension &

Welfare Funds v. JJJ Concrete Corp., No. 13-CV-4363 (SJF), 2015

WL 790085, at *8 (E.D.N.Y. Feb. 24, 2015) (denying summary

judgment on single employer theory where “the evidence [was]

not so one-sided as to preclude a reasonable factfinder from hold-

ing in favor of either party on this issue”).

1. Single Employer Analysis

“A CBA that binds one entity also binds a non-signatory entity if

(1) the two entities are a single employer and (2) the employees

of the entities constitute a single appropriate bargaining unit.”

Div. 1181 A.T.U.-New York Emps. Pension Fund By Cordiello v. City

of New York Dep't of Educ., 910 F.3d 608, 617 (2d Cir. 2018).

Courts consider several non-dispositive factors in determining

whether two entities are a single employer: “interrelation of op-

erations, common management, centralized control of labor

relations[,] and common ownership.” Lihli Fashions, 80 F.3d at

747; see also Radio & Television Broad. Technicians Local Union

1264 v. Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256 (1965).

The Second Circuit has found that “two additional factors: (5)

the use of common office facilities and equipment, and (6) family

connections between or among the various enterprises” are also

relevant. United Union of Roofers, Waterproofers, & Allied Workers

Local No. 210, AFL-CIO v. A.W. Farrell & Son, Inc., 547 F. App’x

17, 19 (2d Cir. 2013). “To demonstrate single employer status,

not every factor need be present, and no particular factor is con-

trolling.” Lihli Fashions, 80 F.3d at 747. Single employer status

“depends on all the circumstances of the case” and is “[u]lti-

mately . . . characterized by [the] absence of an arms[-]length

relationship” between the entities. Brown v. Sandimo Materials,

250 F.3d 120, 128 n.2 (2d Cir. 2001).

The first factor, interrelation of operations, weighs heavily in fa-

vor of Defendants being a single employer. Courts considering

this factor often look at whether the entities share assets, offices,

and telephone numbers. Trs. of Mosaic & Terrazzo Welfare, Pen-

sion, Annuity & Vacation Funds v. High Performance Floors, Inc.,

233 F. Supp. 3d 329, 341 (E.D.N.Y. 2017). Also relevant is

whether “companies made payments to one another and made

payments on behalf of one another.” Plumbers, Pipefitters & Ap-

prentices Local Union No. 112 Pension, Health & Educ. &

Apprenticeship Plans ex rel. Fish v. Mauro's Plumbing, Heating &

Fire Suppression, Inc., 84 F. Supp. 2d 344, 350 (N.D.N.Y. 2000).

Here, while Castle has a nominal office in Amari’s residence,

Amari works at Cathedral during normal business hours. She

conducts Castle’s business at Cathedral’s office and listed Cathe-

dral’s phone number on Castle’s CBA. By way of her employment

with Cathedral, Amari—as the putative head of a subcontrac-

tor—is aware of Cathedral’s profit margins, expenses, and

processes for estimating and bidding on jobs. Cathedral is Castle’s

sole source of revenue and Cathedral provides supplies and

equipment for Castle to complete its jobs. Finally, Amari the Ca-

thedral employee has signed checks paying Amari the owner of

Castle, including a check for $1,000 used to open Castle’s bank

account before Castle completed any work for Cathedral.3

3 In their brief, Defendants argue against interrelation of operations based

on factors most commonly considered in employment discrimination

claims brought under Title VII. (See Mem. at 17 (citing United Union of

The court considers the common management and common

ownership factors in tandem; the analyses tend to overlap and

these two factors are generally “accorded less weight.” K.A.N. El-

evator Inc., 2018 WL 2727884, at *6. First, the evidence around

common management favors a finding that Defendants are a sin-

gle employer. Courts find common management between two

entities when employees hold management responsibilities at

both entities and when the entities share employees. Mauro’s

Plumbing, 84 F. Supp. 2d at 349-50. Defendants assert that Teran

is the sole owner and officer of Cathedral and that Amari is the

sole owner and officer of Castle. However, the evidence demon-

strates that, at least, Amari held herself out as Cathedral’s vice

president to Cathedral’s customers and clients via her email sig-

nature as well as to the public at large via her LinkedIn profile.

Additionally, Teran and John Snow supervised projects for both

Cathedral and Castle and several other employees worked for

both companies.4 The evidence of common ownership is more

muddled. Cathedral and Castle are nominally owned by different

people, with no overlap of legal ownership. And while there is

some evidence of Amari and Teran being “connected by close

bonds of history or affection,” K.A.N. Elevator Inc., 2018 WL

2727884, at *8, they are not family. Still, the evidence for both

of these factors weighs in favor of finding that Defendants are a

single employer.

Roofers, Waterproofers, Allied Workers, Local No. 210, AFL-CIO v. A.W. Far-

rell & Son, Inc., No. 07-CV-224 (HKS), 2012 WL 4092598, at *10

(W.D.N.Y. Sept. 10, 2012).) This line of cases is not particularly relevant

to the issue at hand.

4 Defendants’ argument on this point is flatly contradicted by the evidence

they cite for support. Defendants cite Amari’s deposition testimony for the

proposition that Castle’s work is not supervised by “Teran or anyone from

Cathedral.” (Mem. at 19.) In fact, at that point in her deposition, Amari

testified that “occasionally, either John Snow from Cathedral or Eddie

Teran from Cathedral” would supervise Castle projects. (Amari Tr. at

143:16-18.)

The centralized control of labor relations is typically important,

but carries limited weight here. This is because “it is inappropri-

ate” to “accord[] centralized control of labor relations substantial

importance . . . where one of the companies has no employees.”

Carnival Carting, Inc. v. N.L.R.B., 455 F. App’x 20, 23 (2d Cir.

2012) (summary order). Here, it is undisputed that Amari, as the

owner of the company, had no permanent employees. At the

same time, Amari was also an employee of Cathedral and was

responsible for writing at least some of the checks that were used

to pay Castle’s temporary employees. This factor also weighs in

Plaintiffs’ favor.

The next factor is the use of common office facilities and equip-

ment. This weighs in favor of finding Defendants are a single

employer. As mentioned above, Amari listed Cathedral’s phone

number on Castle’s CBA and Teran conceded to receiving calls

for Castle on Cathedral’s office phone. Additionally, the parties

do not dispute that Castle used Cathedral’s equipment and sup-

plies when completing jobs for Cathedral.

The last factor looks at whether there are family connections be-

tween the entities. This factor does not weigh as strongly in

Plaintiff’s favor as the other factors, but also does not counsel

against a finding that Defendants are a single employer. Alt-

hough Amari and Teran are not related, they are friends who

have known and worked with each other for decades. Courts

have found that close personal relationships between the princi-

ples of purportedly separate entities can indicate the lack of

arms-length negotiations between the entities. See High Perfor-

mance Floors, Inc., 233 F. Supp. 3d at 346 (“[A] friendship lasting

more than 30 years” supports the proposition that the “entities

did not function at arm's length.”).

Additionally, the unorthodox manner in which Castle bids on, is

awarded, and is paid for Cathedral projects suggests a closer-

than-arms-length relationship between the two entities. Amari

makes oral bids to Teran, who in turn orally grants the project to

Castle. When the work is completed, Teran “pays what he can,”

when he can, and Amari does not object to Castle being paid for

the work it completes based on the whims and fortunes of Teran.

Further, Teran’s whims and fortunes tend to provide Castle with

just enough revenue to avoid maintaining a negative balance on

its bank account, although not enough to allow Amari to draw a

salary or any other renumeration as Castle’s owner. This arrange-

ment is unlike any arms-length transaction of which the court is

aware, and strongly supports Plaintiffs’ contention that Castle

and Cathedral are a single employer.

Considering the admissible evidence submitted by the parties

and drawing reasonable inferences in favor of the Plaintiffs as the

non-moving parties, there are substantial disputes of material

fact that prevent the court from finding as a matter of law that

Castle and Cathedral are not a single employer.

2. Single Bargaining Unit

Even if a court finds two entities to be a single employer, a CBA

signed by one entity is not binding on the non-signatory unless

they also “represent an appropriate employee bargaining unit.”

Ferrara v. Happy Time Trucking, LLC, 436 F. Supp. 3d 606, 617

(E.D.N.Y. 2020). At this point in the analysis, “attention shifts

from the control, structure and ownership of the employer to the

community of interests of the employees.” Ferrara v. Oakfield

Leasing Inc., 904 F. Supp. 2d 249, 264 (E.D.N.Y. 2012). To de-

termine whether a community of interests exists, courts consider

“factors such as bargaining history, operational integration, geo-

graphic proximity, common supervision, similarity in job

function and degree of employee interchange.” Brown, 250 F.3d

at 129 n.2. A community of interests exists where “contributions

sought are for the same job classification . . . and for the same

type of work.” Bourgal v. Robco Contracting Enters., Ltd., 969 F.

Supp. 854, 863 (E.D.N.Y. 1997), aff’d, 182 F.3d 898 (2d Cir.

1999). Courts in this circuit have also found a community of in-

terests based on an overlap of employees who perform “similar,

if not identical” work, High Performance Floors, Inc., 233 F. Supp.

3d at 346, or a combination of “operational integration, geo-

graphical proximity, and employee interchange,” Oakfield

Leasing 904 F. Supp. 2d at 264.

Plaintiffs have amply demonstrated that there is, at the very least,

a question of material fact as to whether Cathedral and Castle

represent a single bargaining unit. The two entities perform sim-

ilar, if not identical, work in the same geographic region. Also,

several individuals work for both companies. Finally, Teran and

John Snow supervise project work for both companies. Because

Plaintiffs have provided evidence tending to show a “community

of interests of the employees” of Castle and Cathedral, the court

cannot find as a matter of law that the companies do not repre-

sent a single bargaining unit.

3. Alter Ego Analysis

The alter ego theory of liability “provides an[other] analytical

hook to bind a non-signatory to a collective bargaining agree-

ment.” Local Union No. 38, Sheet Metal Worker’ Int’l Ass’n, AFL-

CIO v. Custom Air Sys., Inc., 357 F.3d 266, 268 (2d Cir. 2004)

(per curiam). The alter ego analysis “is flexible, allowing courts

to weigh the circumstances of the individual case.” Ret. Plan of

UNITE HERE Nat. Ret. Fund v. Kombassan Holding A.S., 629 F.3d

282, 288 (2d Cir. 2010). Often important to the analysis is

“whether two enterprises have substantially identical manage-

ment, business purposes, operations, equipment, customers,

supervision, and ownership.” Cordiello, 910 F.3d at 618. “[A]n

anti-union animus or an intent to evade union obligations” is

“germane” and “perhaps . . . [a] sufficient basis for imposing alter

ego status,” but it is not a “necessary factor.” UNITE HERE, 629

F.3d at 288. The alter ego test ultimately seeks to uncover any

“attempt to avoid the obligations of a CBA through a sham trans-

action or technical change in operations.” Cordiello, 910 F.3d at

618.

Although the single employer and alter ego inquiries “generally

warrant separate analysis,” Bourgal, 969 F. Supp. at 863, several

of the single employer factors are also relevant to the alter ego

inquiry. The court discussed above how the available evidence

creates questions of material fact about whether the two compa-

nies shared ownership and management as well as operations,

equipment, and supervision. Remaining to discuss is whether

Castle and Cathedral shared a common business purpose or cus-

tomers and whether there is evidence of anti-union bias.

All three of these factors point toward a finding that Castle and

Cathedral are alter egos. First, the companies share a common

business purpose;5 they both perform tile and stone installation

work in the same geographic area. Next the evidence shows that

Castle and Cathedral also share customers. Teran has testified, in

effect, that he bids on union and nonunion projects and, when

the union shuts down his use of non-union labor on a union pro-

ject, he engages a union subcontracter like Castle to finish the

job. This process necessarily involves the companies sharing com-

mon customers. Finally, Teran’s testimony also reveals anti-

union sentiment. He testified that “[u]nion guys are lazy,” and

that working with union labor “is just a lot more expensive.”

(Teran Tr. at 57:9-10.)

5 Common business purpose exists when companies perform the same type

of work in similar geographic areas. See Mauro’s Plumbing, 84 F. Supp. 2d

at 350. Minor differences, including whether a company performs union

or non-union work, will not defeat a finding that two companies share

a common business purpose. High Performance Floors, 233 F. Supp. 3d

at 338. Notably, Defendants do not contest that they share a common

business purpose. (See Mem. at 11-16.)

The totality of the evidence raises a question of material fact as

to whether Castle was created to allow Cathedral to “avoid the

obligations of a CBA.” Cordiello, 910 F.3d at 618. Teran uses non-

union labor for union projects until he is shut down, at which

point he engages Castle—a company kept barely in the black by

timely deposits from Cathedral, its sole source of revenue—to

finish the project. Based on the available evidence, a reasonable

factfinder might view these actions as Teran’s attempt to avoid

obligations under a CBA.

In sum, there is at least a question of material fact as to whether

the Defendants are alter egos, and, as such, Defendants are not

entitled to summary judgment on this issue.

B. The Alleged Inaccuracy of Castle’s Contributions

Defendants next assert they are entitled to summary judgment

because the damages Plaintiffs seek are based on estimates de-

rived from a “fundamentally flawed” audit. (See Mem. at 24-25.)

Plaintiffs do not dispute that their claim for damages is esti-

mated, but argue that Defendants’ failure to keep records as

required by the CBA shifts the burden of proof on this issue to

Defendants.6 (See Opp. at 22-25.)

6 Plaintiffs rely on a burden-shifting rule stemming from Combs v.

King, an Eleventh Circuit case from the mid-eighties. 764 F.2d 818 (11th

Cir. 1985). Under this rule, if a plaintiff shows “(a) improper record-keep-

ing by the defendants, (b) that employees performed work for which they

were improperly compensated, and (c) the amount and extent of that work

as a matter of just and reasonable inference . . . , the onus shifts to the

employer-defendant to disprove damages.” Reilly v. Reem Contracting

Corp., 380 F. App’x 16, 20 (2d Cir. 2010). The Second Circuit has not for-

mally adopted this analysis. See id. (“We have not addressed whether the

Combs burden-shifting rule . . . applies in ERISA cases where an employer

has not maintained records sufficient to determine whether a CBA covers

a given employee’s work at a particular time.”). It has, however, described

the Combs rule as a potential “remed[y] . . . appropriately tailored to pre-

venting false reporting,” La Barbera v. J.D. Collyer Equip. Corp., 337 F.3d

Defendants’ argument—premised on the belief that “Plaintiffs

have the burden of proof to establish the inaccuracy of a defend-

ant employer’s contributions” (Mem. at 24)—is misguided.

Regardless of what Plaintiffs’ trial burden may be, it is Defend-

ants’ burden at summary judgment to demonstrate an absence of

any question of material fact as to whether Castle failed to make

contributions to the Funds as required by the CBA. The Funds’

audit is sufficient to defeat summary judgement, and further “in-

quiries into the reasonableness of the Funds’ audit or the

adequacy of [D]efendants’ employee records are properly left for

trial.” Morin v. Spectrum Contracting Grp., Inc., No. 08-CV-3567

(SJF) (AKT), 2011 WL 1323005, at *3 (E.D.N.Y. Jan. 13, 2011),

report and recommendation adopted, No. 08-CV-3567 (SJF), 2011

WL 1253232 (E.D.N.Y. Mar. 28, 2011).

CONCLUSION

For the reasons explained above, Defendants’ (Dkt. 23) motion

for summary judgment is DENIED.

SO ORDERED.

Dated: Brooklyn, New York

August 4, 2020

_/s/ Nicholas G. Garaufis_

NICHOLAS G. GARAUFIS

United States District Judge

132, 139 & n.3 (2d Cir. 2003), and cited to it with approval, see Jacobson

v. Empire Elec. Contractors, Inc., 339 F. App’x 51, 53 (2d Cir. 2009). How-

ever, it would be premature to apply this rule at summary judgment. See,

e.g., Del Turco v. Speedwell Design, 623 F. Supp. 2d 319, 347 (E.D.N.Y.

2009) (“[W]hile lower courts have applied the burden shifting analysis at

trial, they have declined to do so at the summary judgment stage.”).