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 LOCAL 7 TILE INDUSTRY

MEMORANDUM & ORDER

WELFARE FUND, THE LOCAL 7 TILE

17-CV-3187 (NGG) (RER)

INDUSTRY ANNUITY FUND, and THE TILE

LAYERS LOCAL UNION 52 PENSION FUND,

TRUSTEES OF THE BRICKLAYERS &

TROWEL TRADES INTERNATIONAL

PENSION FUND, and TRUSTEES OF THE

INTERNATIONAL 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.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiffs, trustees for various labor-management funds,1 bring

this action against Defendants Castle Stone and Tile, Inc. and Ca-

thedral Stone & Tile Co., Inc., asserting claims under Sections

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

7 Tile Industry Annuity Fund, and the Tile Layers Local Union 52 Pension

Fund; Trustees of the Bricklayers & Trowel Trades International Pension

Fund; Trustees of the International Masonry Institute; and Trustees of the

Marble Industry Pension Fund, the Marble Industry Annuity Fund, and the

Marble Industry Trust Fund.

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

Act (“ERISA”), 29 U.S.C. §§ 1132(a)(3), 1145, and Section 301

of the Labor Management Relations Act of 1947 (“LMRA”),

29 U.S.C. § 185. (See Am. Compl. (Dkt. 39).) They make three

claims: (1) Castle failed to make contributions to the Funds as

mandated by the relevant collective bargaining agreements

(“CBAs”) it signed with the unions; (2) Defendants are jointly

and severally liable for Castle’s delinquency because they consti-

tute a single employer and alter egos of one another; and (3) as

a result of their single employer/alter ego status, Cathedral is

bound to the CBAs and similarly maintains a delinquency, for

which Defendants are also jointly and severally liable.

The court previously denied Defendants’ motion for summary

judgment. (Aug. 4, 2020 M&O (Dkt. 29).) As the parties pro-

ceeded to trial, though, Cathedral’s counsel withdrew from the

case, citing Cathedral’s failure to pay legal fees and a breakdown

of communications. (Decl. in Supp. of Mot. to Withdraw from

Cathedral (Dkt. 45); Jan. 7, 2021 Order (Dkt. 48).) Three

months later, Castle’s counsel moved to withdraw because Cas-

tle, through its President, Sharon Amari, terminated them. (Mot.

to Withdraw from Castle (Dkt. 54).) But Castle’s counsel with-

drew that motion soon thereafter. (See May 13, 2021 Not. (Dkt.

57).) Because Cathedral failed to subsequently appear through

counsel, the Clerk of Court entered an entry of default against

Cathedral. (See Entry of Default (Dkt. 55).) Plaintiffs later moved

for default judgment against Cathedral, (Mot. for Default J. (Dkt.

59)), which the court granted, (Mar. 31, 2022 Order (Dkt. 72)).

A bench trial was held on July 13, 2021. After considering the

evidence at trial, and having reviewed the parties’ post-trial sub-

missions, the court makes the following Findings of Fact and

Conclusions of Law pursuant to Federal Rule of Civil Procedure

52(a):

e Castle is delinquent in its contributions to the

Plaintiff Funds.

e Castle and Cathedral constitute a single employer

and single employee bargaining unit.

e Castle and Cathedral are alter egos of one

another.

e Because of Defendants’ single employer/alter ego

status, Cathedral is bound to the Castle-signed

CBAs.

e Because Cathedral is bound to the CBAs,

Cathedral is obligated to remit contributions to

Plaintiffs for each hour of Cathedral employees’

“Covered Work” pursuant to the CBAs.

e Finally, because of their single employer/alter

ego status, Defendants are jointly and severally

liable for Castle’s and Cathedral’s delinquent

contributions, plus accompanying damages

provided under the CBAs, enforceable through

Section 301 of the LMRA, 29 U.S.C. § 185, and

Sections 502(g)(2) and 515 of ERISA, 29 U.S.C.

§§ 1132(g)(2), 1145.

As to the damages jointly and severally owed by Defendants for

their respective delinquencies, the court finds that Plaintiffs must

recalculate those damages in accordance with this decision.

Therefore, the court RESERVES judgment on awarding Plaintiffs’

damages, attorneys’ fees and costs, and auditor costs until it has

reviewed Plaintiffs’ resubmission.

I. SINGLE EMPLOYER AND ALTER EGO

A. Findings of Fact

These findings of fact are based on the joint stipulations of fact,

(see Third Am. Joint Pre-Trial Order (“JPTO”) (Dkt. 66)), and the

testimony and exhibits adduced during the bench trial, (see July

13, 2021, Tr. of Proceedings (“Tr.”) (Dkt. 69)).

1. Cathedral Stone & Tile Co., Inc.

Operating out of an office at 16 Filmore Place in Freeport, New

York, Ed Teran runs Cathedral Stone & Tile, a company that sup-

plies and installs stone and tile. (See JPTO at 5.) Cathedral is a

non-union company. But Teran, through Cathedral, bids on both

union and non-union jobs. (Tr. at 54:3-6, 138:25-139:7.) When

Cathedral wins a union job, it awards that contract to a union

subcontractor to perform the work. (Id. at 88:7-89:6, 123:19-

124:2, 138:25-139:7.)

Teran, as Cathedral’s sole owner, determines when and how

much to bid for a project. (See JPTO at 5; see, e.g., Tr. at 113:2-

16, 117:17-118:7.) He also supervises the work on Cathedral’s

projects. (See Tr. at 19:4-9.) But his friend of over twenty years,

Sharon Amari, manages Cathedral’s operations and office re-

sponsibilities. (See JPTO at 5-6.)

Teran hired Amari in 2007 as a salesperson to market Cathedral

services to general contractors. (See Tr. at 101:4-22.) By 2013,

her duties expanded to purchasing materials for construction

projects, obtaining insurance quotes, and serving as bookkeeper,

which included managing payroll, accounts payable, and ac-

counts receivable. (See id. at 101:8-102:9, 104:6-15.) By 2014,

she became a signatory on Cathedral’s Chase bank account, au-

thorizing her to issue and sign checks on behalf of Cathedral. (Id.

at 124:3-23.) She also served as Cathedral’s point of contact for

some general contractors after Cathedral won a project. (See, e.g.,

Pls.’ Exs. 19-21.) Over time, Amari represented herself in cus-

tomer emails and on LinkedIn as Cathedral’s Vice President. (Tr.

at 108:11-109:10, 122:11-123:7; e.g., Pls.’ Ex. 15-1.) She con-

tends that she promoted herself to earn respect in a male-

dominated industry. (Tr. at 108:15-18.) Self-imposed or not,

Teran tacitly approved of her using the title, and Cathedral paid

her commensurately. (Id. at 109:2-12.)

2. Castle Stone and Tile, Inc.

In 2014, Cathedral won a construction project at 501 Madison

Avenue that required union labor. (Id. at 88:12-89:6.) So Cathe-

dral (a non-union shop) subcontracted that project to Capital

Marble (a union shop). (Id.) But internal issues at Capital Marble

caused it to shut down mid-project. (Id. at 81:17-24, 137:11-12.)

This left Cathedral with a union job without a union sub to com-

plete the installation. (Id. at 137:13-14.) Enter Castle Stone and

Tile, Inc. (Id. at 137:11-21.)

Formed on August 15, 2014 by Sharon Amari (yes, 20-year-

friend-of-Teran and Cathedral-employee, Sharon Amari), Castle

Stone and Tile joined the Local 7 Tile Union and Marble Union,

agreeing to their respective CBAs. (See Joint Ex. 8, Castle Articles

of Inc.; Tr. at 81:10-82:9.)2 Under the Tile CBA and Marble CBA,

Castle was required to remit benefit contributions to Plaintiffs for

every hour of work performed by Castle within the trade and ge-

ographical jurisdiction of the Tile Union and Marble Union, at

contribution rates specified in Schedules set forth in the CBAs.

(See JPTO at 4; Joint Ex. 1 (“Tile CBA”) at 12-20 & Sch. A; Joint

Ex. 2 (“Marble CBA”) at 11-14 & Sch. C; Joint Ex. 5, Tile Funds

Collection Policy; Pls.’ Ex. 24, Marble Funds Collection Policy.)

The CBAs also require Castle to submit to an audit of its books

2 Amari did not physically sign the Tile CBA and Marble CBA until Septem-

ber 2, 2015 due to a clerical error. (Tr. at 82:21-84:21.) But nobody

disputes that Amari assented to the CBAs shortly after forming Castle in

2014. (Id. at 82:7-15.)

and records to ensure compliance with its contribution obliga-

tion. (See Tile CBA at 17; Marble CBA at 14.)3

Castle thus entered the industry as a Local 7-affiliated subcon-

tractor installing tile, marble, granite, porcelain, and ceramic.

(See JPTO at 4.) And just four days after incorporation, Castle

apparently won then invoiced Cathedral for the 501 Madison job.

(Joint Ex. 12, Castle-Cathedral Job Invoices; Tr. at 88:12-89:9.)

Castle thus filled the Capital-created void and completed the job

with Local 7 labor. (Tr. at 88:12-89:9, 137:5-17.)

3. The Castle-Cathedral Relationship

From 2014 to 2017, Teran, through Cathedral, bid on and won

several projects requiring union labor for the installation of tile

or marble. He used various union installers as subcontractors to

complete Cathedral’s union jobs, and he awarded five such sub-

contracts (including 501 Madison) to Castle for the installation

of tile or marble. (Id. at 111:14-19, 123:19-124:2; Joint Ex. 12,

Castle-Cathedral Job Invoices.)

a. Sharon Amari’s Dual Roles

Amari, though founder, president, and sole officer of Castle—in-

deed Castle’s only permanent employee, responsible for

bookkeeping, payroll, banking, invoicing, and insurance—never

left her position with Cathedral. (See JPTO at 4-5; Tr. at 87:12-

24, 91:12-14, 117:12-14.) She listed her home as Castle’s place

of incorporation, but Castle paid neither rent nor utilities there.

(See JPTO at 4-5; Tr. at 85:4-25.) And she continued to work

regular hours (typically 8:00am to 6:30pm) at Cathedral’s office,

3 The relevant provisions of the CBAs are described in greater detail in the

damages section.

where she took Castle’s calls and tended both her Castle and Ca-

thedral job responsibilities. (Tr. at 85:4-86:17, 102:12-23.)4

Sometimes, those job responsibilities overlapped. She served

simultaneously as bookkeeper for Castle and Cathedral.5 She in-

voiced Cathedral for Castle labor, then processed the Castle

invoices into Cathedral’s books and records. (Id. at 134:23-

137:4.) And when Teran authorized Cathedral to make a pay-

ment toward a Castle invoice, Amari sometimes signed the check

as the payer (Cathedral) and endorsed it as the payee (Castle).

(Id. at 124:3-125:23.) Even when Cathedral won a union project

from a general contractor and awarded that contract to Castle,

Amari continued to correspond with those general contractors as

Cathedral’s Vice President or point of contact. (See, e.g., Pls.’ Exs.

15-1, 15-2, 19, 20, 21.) There is no evidence showing that Amari

spoke to anyone, let alone general contractors, from a Castle

email account with a Castle signature.

b. Castle Subcontracts with Cathedral

Cathedral awarded Castle five subcontracts for projects requiring

union labor to install tile or marble: (1) 501 Madison Avenue;

(2) 25 Madison Avenue; (3) 225 Park Avenue South; (4) 75

Rockefeller Plaza; and (5) 1407 Broadway. (Tr. at 70:17-20,

72:8-12, 123:19-124:2; Joint Ex. 12, Castle-Cathedral Job In-

voices.) These subcontracts represent the entirety of Castle’s

work history. (Tr. at 87:25-88:5.) Castle never bid on a non-Ca-

thedral project, and Castle bid on Cathedral projects only when

Teran solicited a bid from Amari. (Id. at 91:7-8, 93:8-10, 113:4-

18, 114:19-25.) She testified that “[Teran] would come to me

and say, hey, I want to do – to know if you’re interested in this

4 Castle did have a different phone number than Cathedral. And yet Amari

listed Cathedral’s number on the Tile CBA.

5 Amari also served as bookkeeper for Teran’s real estate holding company,

“16 Filmore.” (Tr. at 147:18-20; 148:6-18.)

union job.” (Id. at 113:6-7.) Then, Amari testified, she would re-

view the project and submit a bid. (Id. at 114:23-25.)

Whereas Cathedral used a full-time estimator for construction

projects (who worked in Cathedral’s office), Amari testified that

she, though lacking an architectural background and having

never participated in estimating for Cathedral,6 put together Cas-

tle’s bid estimates. (Id. at 104:16-18, 113:7-9, 115:1-116:21,

117:17-118:7; 118:17-23.) After Amari orally submitted a bid on

behalf of Castle, she testified that she and Teran would verbally

negotiate the price of the subcontract between Castle and Cathe-

dral. (Id. at 113:4-14, 114:19-25, 117:4-15, 122:2-10.) There is

no evidence to suggest that Amari ever decided against submit-

ting a bid after Teran asked. Nor is there evidence that Castle

ever lost out on a Cathedral project once it submitted a bid.

After Cathedral formally awarded Castle a project, Amari called

Local 7 for labor—Castle did not employ any workers on a full-

time basis. (Id. at 87:3-11.) But evidence at trial showed that

when Castle did not have a project, some of its Local 7 employees

would then work for Cathedral, performing non-union work.

(See JPTO 5-6; Tr. at 11:20-12:2, 13:1-3, 23:2-16.) For example,

Jefferson Sanchez worked the 75 Rockefeller project for Castle

as a member of Local 7, then, after that project ended, he went

to work for Cathedral “because Castle was out of work.” (Tr. at

23:2-16.) In both instances, i.e., working for Castle and for Ca-

thedral, Sanchez testified that Teran hired him. (Id.) Tax records

show that Castle and Cathedral shared several other employees

beyond Amari and Sanchez, including Louis Guachichulca, So-

tero Payan, Ioannis Tsiatis, and Romano Payonne. (See JPTO at

5-6; see also Pls.’ Exs. 13-14; Joint Exs. 9-11, 13.)

6 Amari testified that she previously owned a marble supply and installa-

tion company for ten years but offered no other evidence about this

company. (Tr. at 139:13-140:2.)

On the jobsite, Castle used Cathedral’s equipment and materials

(free of charge), such as tile and grout, because Castle owned no

such equipment or materials of its own. (JPTO at 5.) And Teran

and John Snow (a Cathedral supervisor) supervised Castle em-

ployees on Castle projects. (Id.; Tr. at 19:4-9, 143:3-5.) Amari

testified that Teran went to jobsites daily because “they were his

contracts,” and “since it was his project[,] he oversaw his pro-

ject.” (Tr. at 143:3-9.) She did not supervise Castle employees,

and at least one employee, Louis Guachichulca, could not recall

ever seeing her at a Castle project. (Id. at 13:25-14:5.) She tes-

tified that she went to worksites weekly to speak to the foreman

about labor needs but also that “I don’t have to go all the time

because they are union men so they are reporting back to me,

letting me know if they needed anything or more men.” (Id. at

149:12-16.)

c. Cathedral’s Payments and Non-Payments to Castle

Castle invoiced Cathedral for its five subcontracts, which meant

that Amari made the invoice for Castle, then processed it for Ca-

thedral. These invoices, four of which are based on Amari’s

estimates, cover only labor costs. (See JPTO at 5; Tr., 135:4-

136:11.) Here’s how they broke down:

e August 19, 2014, 501 Madison Avenue (which

Castle assumed from Capital Marble, i.e., not

Amari’s estimate): $142,604.33.

e August 5, 2015, 25 Madison Avenue: $65,000.00.

e September 15, 2015, 225 Park Avenue South:

$210,000.00.

e November 24, 2015, 75 Rockefeller Plaza:

$450,000.00.

e January 31, 2017, 1407 Broadway: $235,000.00.

(See Joint Ex. 12, Castle-Cathedral Job Invoices.) Cathedral made

many payments to Castle; all of which went to these open in-

voices. (Tr. at 94:19-95:7.) But Cathedral made these payments

seemingly at random—both in time and in amount. (See Joint

Ex. 14, Castle General Ledger, at 22-24; JPTO at 5-6; Tr. at

127:24-128:1, 138:5-15.) Amari explained away these irregular

payments, testifying that “Cathedral was writing a check for what

they could give at that time.” (See JPTO at 5-6; Tr. at 96:2-99:1,

99:17-20.)

When Cathedral did make payments, however, it frequently paid

a sum sufficient to keep Castle in the black by injecting just

enough cash to enable Castle to cover impending payroll, costs,

taxes, and union contributions. (See generally Joint Ex. 14, Castle

General Ledger, at 1-22; Tr. at 96:2-100:18.) Amari provided

vague testimony about how Cathedral, time and again, paid the

sufficient, or close to sufficient, amount to cover Castle’s needs.

Although she and Teran did not negotiate payments per week or

per job, she testified that she would tell Teran that she needed

money for payroll—“to get funds and . . . to get payment on an

invoice so the men can be paid”—then Teran authorized a pay-

ment. (Tr. at 99:17-100:18.) When asked how Cathedral knew

to pay specific amounts for payroll, e.g., $8,500, Amari just

pointed back to the overall invoice: “Eddie Teran gets a report

10

that shows what [are] open invoices and he decides what gets

paid.” (Id. at 125:20-126:14.) What she did not say, but what is

clear from the ledgers, is that Teran knew the precise amount to

cover those forthcoming bills. (See generally Joint Ex. 14, Castle

General Ledger, at 1-22.)

When Teran did pay Castle, Amari testified about how she prior-

itized where those funds went. The union benefits received the

lowest priority: “Whatever got paid by Cathedral in this case

would go to the employees first and whatever was left over

would be paid for taxes. . . . When there wasn’t enough money,

the benefits were what got held up.” (Tr. at 129:1-6.) And when

there “wasn’t enough,” and invoices went unpaid (which was of-

ten), Amari, as Castle’s owner and officer, did nothing more than

ask for payment (if even that)—she did not file a mechanic’s lien

or sue Cathedral for its unpaid invoices because she “didn’t feel

it was necessary.” (Id. at 100, 126, 129-130.) As Castle’s general

ledger shows, Cathedral owes Castle outstanding receivables of

at least $163,000. (Joint Ex. 14, Castle General Ledger, at 22; Tr.

at 93:11-95:7.) Amari has never attempted to recoup those

funds.

Unlike her company, Amari did get paid—just not by Castle. In

fact, she never earned compensation from Castle, not a salary, a

draw, or an equity distribution. (Tr. at 91:15-20; 103:25-104:2,

144:20-22, 138:3-8, 153:22-154:9.) Rather, while she owned

Castle on paper and earned nothing in return, Cathedral paid her

$109,668 and $131,300 in 2015 and 2016 respectively. (Pls.’ Ex.

13; Tr. at 103:2-104:2, 127:6-10.) Castle ceased operating in

2017 around the time of this suit, i.e., when Local 7 began inves-

tigating Castle’s delinquent contributions. (Tr. at 130:1-8.) And

at the time of trial, in July 2021, Amari still worked for Cathedral,

who paid her a salary of $118,000 in 2020. (Id. at 127:4-17.)

The Castle-Cathedral, Amari-Teran relationship left others with

the impression that the companies, though nominally two enti-

ties, were run by one person. From the perspective of employees

common to Castle and Cathedral, they “only worked for

[Teran],” (id. at 11:10-12:2, 19:4-9); he was their supervisor and

their employer, (id. at 13:1-24, 19:4-9, 20:15-21). Even Castle’s

accountant thought Cathedral “was a non-union company of Cas-

tle Stone” and readily provided the Local 7 auditor (then

reviewing Castle’s records) with Cathedral’s records. (Id. at

53:21-54:6.) That impression was evident at trial and remains so

in Castle’s post-trial submissions. So focused was, and is, Castle

on defending Cathedral, an outside observer watching proceed-

ings for the day or reading Castle’s submissions, would be

surprised to learn that it was Cathedral—not Castle—that de-

faulted and failed to defend itself at trial.7

B. Conclusions of Law

Plaintiffs argue that Castle and Cathedral constitute a single em-

ployer and are alter egos of one another. The court agrees. The

facts established at trial show that the Castle-Cathedral relation-

ship satisfies the single employer and alter ego doctrines. Thus,

(1) Cathedral, a non-signatory to the Castle-signed CBAs, is

nonetheless bound to and liable for contributions under those

CBAs, and (2) Defendants are jointly and severally liable for both

Castle’s and Cathedral’s unpaid benefit contributions and related

damages.

7 At least one court observer was familiar with these proceedings. That was

Ed Teran’s corporate counsel. (Tr. at 133:24-134:17.) So while Teran

stopped paying counsel to represent Cathedral in this matter following De-

fendants’ motion for summary judgment and Plaintiffs’ amended

complaint, he could afford to send his corporate counsel (a different law

firm) to attend trial for the day.

1. Single Employer Doctrine

a. Legal Standard

Under the single employer doctrine, a collective bargaining

agreement binding on one employer may be enforced against a

non-signatory employer if (1) the two employers constitute a

“single employer,” and (2) the employees of the companies con-

stitute a “single appropriate bargaining unit.” See Brown v.

Sandimo Materials, 250 F.3d 120, 128 n.2 (2d Cir. 2001).8

“Separate companies are considered a single employer if they are

part of a single integrated enterprise.” See Lihli Fashions Corp. v.

NLRB, 80 F.3d 743, 747 (2d Cir. 1996). To assess whether mul-

tiple entities constitute a “single employer,” courts consider four

non-dispositive factors: (1) interrelation of operations, (2) com-

mon management, (3) centralized control of labor relations, and

(4) common ownership. See id. “Family connections and the

common use of facilities and equipment are also relevant.”

Brown, 250 F.3d at 128 n.2. But “not every factor need be pre-

sent, and no particular factor is controlling.” Lihli Fashions, 80

F.3d at 747. “Ultimately, single employer status depends on all

the circumstances of the case and is characterized by absence of

an arm’s length relationship found among the unintegrated com-

panies.” Id.

In order to bind a non-signatory to the terms of a CBA under the

single employer doctrine, though, plaintiffs must also establish

that the signatory and non-signatory to a CBA “represent an ap-

propriate employee bargaining unit.” Ferrara v. Happy Time

Trucking, LLC, 436 F. Supp. 3d 606, 617 (E.D.N.Y. 2020). Here,

“attention shifts from the control, structure and ownership of the

employer to the community of interests of the employees.” Fer-

rara v. Oakfield Leasing Inc., 904 F. Supp. 2d 249, 264 (E.D.N.Y.

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

tion marks are omitted, and all alterations are adopted.

2012). To determine whether a community of interests exist,

courts consider “factors such as bargaining history, operational

integration, geographic proximity, common supervision, similar-

ity in job function and degree of employee interchange.” Brown,

250 F.3d at 128 n.2.

b. Application

Castle and Cathedral constitute a single employer and single em-

ployee bargaining unit. One could hardly think up a clearer case.

Castle was formed to address a Cathedral need. Castle’s owner

worked for Cathedral, and Cathedral paid her a six-figure salary.

Castle bid only on Cathedral projects, and even then, only when

Cathedral asked. Cathedral’s owner supervised Castle employees

using Cathedral equipment, and those employees viewed him as

their employer. Cathedral paid Castle invoices at its convenience,

and Castle made no effort to collect unpaid invoices. In sum, de-

spite Amari’s muddying and often misdirecting testimony, the

facts presented at trial show that Castle and Cathedral operated

as a single integrated enterprise absent an arm’s length relation-

ship. An assessment of the relevant factors confirms this

conclusion.

First, Castle and Cathedral maintained interrelated operations.

Amari formed Castle to replace Cathedral’s union subcontractor

on the union job at 501 Madison. Castle bid only on Cathedral

projects—and bid only when Ed Teran asked Amari to do so.

They also shared employees (e.g., Amari, Jefferson Sanchez, and

Louis Guachichulca, among others), supervisors (Teran and John

Snow), and equipment (Castle used Cathedral equipment). See

Trs. of Mosaic & Terrazzo Welfare, Pension, Annuity & Vacation

Funds v. High Performance Floors, Inc., 233 F. Supp. 3d 329,

341 (E.D.N.Y. 2017). Moreover, while Castle listed its office as

Amari’s residence, it is clear that address meant little in reality.

Castle paid neither rent nor utilities there, and Amari testified

that she typically worked ten-hour days from Cathedral’s of-

fice, where Castle received its calls. The payment history

between Castle and Cathedral further establishes the interrelat-

edness of their operations. See Plumbers, Pipefitters &

Apprentices Local Union No. 112 Pension, Health & Educ. & Ap-

prenticeship Plans ex rel. Fish v. Mauro’s Plumbing, Heating &

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

(finding interrelated operations, in part, because “companies

made payments to one another and made payments on behalf

of one another”). Those records show that Cathedral frequently

paid Castle in sums and at times that allowed Castle to satisfy its

obligations like payroll, taxes, and union benefits.

Second, Castle and Cathedral shared common management:

Amari as Vice President at Cathedral and President at Castle;

Teran as owner and supervisor at Cathedral and supervisor at

Castle; and John Snow as supervisor at both Cathedral and Cas-

tle. See Mauro’s Plumbing, 84 F. Supp. 2d at 349-50 (noting

that courts find common management between two entities

when employees hold management responsibilities at both en-

tities and when the entities share employees). Third, so clear

was Teran’s control over Castle—in formation, in deciding what

projects to bid, in supervision, and in payment (how much and

when)—that common ownership also weighs in favor of single

employer status notwithstanding Amari’s nominal ownership.

Fourth, Castle and Cathedral shared centralized control of labor

relations. It is true that Castle used Local 7 labor for its projects.

But the evidence at trial established that (1) a revolving door ex-

isted among several Castle and Cathedral employees; (2) Teran

hired those shared employees; and (3) those employees recog-

nized Teran as their employer. See High Performance Floors, Inc.,

233 F. Supp. 3d at 345-46. Moreover, Teran supervised Castle

employees at Castle worksites daily because, as Amari testified,

they were “his contracts” and “his projects.” (Tr., 143:3-9.) These

facts show a centralized control of labor relations.

Even the additional factors, family connections and the common

use of facilities and equipment, support a single employer find-

ing. Castle used Cathedral’s facilities (the 16 Filmore office) and

equipment (tile and grout). And Amari and Teran, though not

family, share a 20-year friendship, representing a close bond of

history or affection which suggests that “the entities did not

function at arm’s length.” See High Performance Floors, Inc.,

233 F. Supp. 3d at 346 (finding that friendship lasting more

than 30 years supported single-employer relationship). The

court thus finds that Castle and Cathedral constitute a single

employer.

Castle and Cathedral also represent a single employee bargaining

unit because the community of interests among employees of

Castle and Cathedral were similar, if not identical. Employees of

Castle and Cathedral did the same work (marble and tile instal-

lation), under the same conditions, in the same geographic area

(New York City). They worked interchangeably for both compa-

nies. They were hired by the same person (Teran); they were

supervised by the same people (Teran and Snow); and they used

the same equipment (Cathedral’s). These facts establish that an

employee, whether of Castle or Cathedral, shared the same com-

munity of interests.

For the reasons stated above, the court holds that Castle and

Cathedral represent a single employer and single bargaining unit.

As a result, Cathedral is bound to the Castle-signed CBAs, and

Defendants are jointly and severally liable for their respective

damages owed to Plaintiffs.

2. Alter Ego

a. Legal Standard

“The alter ego doctrine provides an[other] analytical hook to

bind a non-signatory to a collective bargaining agreement.” Truck

Drivers Local Union No. 807 v. Reg’l Imp. & Exp. Trucking Co., 944

F.2d 1037, 1046 (2d Cir. 1991). But the alter ego doctrine,

“while having the same binding effect on a non-signatory as the

single employer/single unit doctrine,” and sharing several over-

lapping factors, “is conceptually distinct.” Brown, 250 F.3d at 128

n.3. That distinction, however, can prove difficult to pinpoint—

especially where, as here, the alleged alter egos are parallel com-

panies operating concurrently. See Barbera v. R. Rio Trucking, No.

03-CV-1508 (SLT) (AKT), 2010 WL 3928553, at *9 (E.D.N.Y.

Sept. 30, 2010); see also Ret. Plan of UNITE HERE Nat’l Ret. Fund

v. Kombassan Holding A.S., 629 F.3d 282, 288 (2d Cir. 2010) (re-

jecting the argument “that alter ego status cannot apply where

the entities exist simultaneously”).

Putting this blurred distinction aside, the alter ego doctrine fo-

cuses on “the existence of a disguised continuance or an attempt

to avoid the obligations of a collective bargaining agreement

through a sham transaction or technical change in operations.”

Lihli Fashions Corp., 80 F.3d at 748-49. Its purpose “is to prevent

an employer from gaining an unearned advantage in his labor

activities by evading his responsibilities under a CBA.” Barbera,

2010 WL 3928553, at *10. The Second Circuit therefore instructs

courts to flexibly apply the alter ego doctrine, weighing the cir-

cumstances of the individual case with that purpose in mind. See

Brown, 250 F.3d at 128 n.3. In doing so, courts analyze seven

defined hallmarks of an alter ego relationship: whether the two

enterprises have substantially identical (1) management,

(2) business purpose, (3) operation, (4) equipment, (5) custom-

ers, (6) supervision, and (7) ownership. See id. Anti-union

animus is also relevant, but “a showing of anti-union animus is

not required.” High Performance Floors, Inc., 233 F. Supp. 3d at

345.

b. Application

The evidence at trial established that Castle, from inception, was

the alter ego of Cathedral. Both Amari’s testimony and Castle’s

bank account show how Ed Teran used Castle as a vehicle to win,

control, and supervise certain union projects, without ever bind-

ing Cathedral to the relevant CBAs. Castle worked when Teran

wanted it to work, and Castle got paid when Teran wanted to

pay. Even when he did pay, remitting union benefits was Castle’s

lowest stated priority:

THE COURT: You’re saying that the only thing that you

didn’t receive payment for of the invoices was the amount of

money that would have been necessary to pay the obligation

to the pension fund?

[Amari]: Some of that, yes, and obviously anything left over

would have been a profit into the company.

(Tr. at 129:16-21; see also id. at 128:6-10.) Of course, there was

never anything left over.

The evidence at trial showed that Teran used Castle to evade

costs and fees connected to the CBAs because it allowed Cathe-

dral to directly perform—and control—union projects without

signing the union CBAs. The court thus agrees with Plaintiffs that

Castle was Cathedral’s alter ego. The hallmarks of the alter ego

doctrine confirm this conclusion.

i. Ownership, Management & Supervision

As the single employer discussion in the preceding section made

clear, the evidence at trial established that Castle and Cathedral

share common ownership (Amari on paper, Teran in fact), man-

agement (Amari and Teran), and supervision (Teran and Snow).

Castle can argue only what Castle put on paper—that Amari

wrote Castle’s checks, that Castle filed its own tax returns, and

that Castle and Cathedral nominally shared no common owners,

officers, or managers. In other words, Castle can argue only form,

ignore substance, and make the same arguments that most every

alter ego can satisfy. These arguments fail to account for the in-

tertwined relationship between Castle and Cathedral and

between Amari and Teran. Thus, Castle and Cathedral’s shared

ownership, management, and supervision supports an alter ego

relationship.

ii. Business Purpose

“Two entities may be found to have a common business purpose

when, for example, the principal work they perform is the same,

particularly when that work is performed in the same geographic

area.” High Performance Floors, Inc., 233 F. Supp. 3d at 338.

There is no dispute that Castle and Cathedral performed tile and

marble installation or that they did so in the same geographic

area. Still, Castle contends that their purposes differed because

Castle performed union work, and Cathedral performed non-un-

ion work. But “differentiating among entities by pointing out that

one performs union work and the other does not will not defeat

a finding of common business purpose.” Id.; see also Happy Time

Trucking, LLC, 436 F. Supp. 3d at 620 (finding that the proffered

union, non-union distinction “insufficient to dispute alter ego sta-

tus”). Thus, Castle and Cathedral’s shared business purpose

supports an alter ego relationship.

iii. Customers

Sharing clients and customers also indicates an alter ego relation-

ship. Here, Castle’s only client was Cathedral. This factor

therefore does little to assist the court in its alter ego analysis.

Whatever force it has, however, it suggests an alter ego relation-

ship.

iv. Operations & Equipment

Companies may also be found to be alter egos when they share

equipment, tools, supplies, or other resources in connection with

their operations. See High Performance Floors, Inc., 233 F. Supp.

3d at 343 (collecting cases); see also Moore v. Navillus Tile, Inc.,

276 F. Supp. 3d 110, 150 (S.D.N.Y. 2017) (overlapping “offices,

telephones, computer systems, books and records, insurance pol-

icies, bank accounts, human resources, payroll systems, [or]

professional services” may all be relevant to this factor), vacated

pursuant to settlement agreement, No. 14-CV-8326 (CM) (JLC),

2018 WL 7048697 (S.D.N.Y. Oct. 26, 2018). As the single em-

ployer discussion made clear, Castle did not have its own

equipment and material, yet it used Cathedral’s as needed and at

no cost.

Defendants also shared operations. Amari worked at Cathedral’s

office and received Castle’s calls there. She served as bookkeeper

for both Castle and Cathedral. And Castle and Cathedral used the

same accountant—who believed that Cathedral “was a non-un-

ion company of Castle.” (Tr. at 53:21-54:6.) Castle can again

point only to what’s on paper, e.g., separate bank accounts, sep-

arate taxes, and separate offices. But the facts at trial made clear

that there was only one office, and that Amari had significant

authority over both entities’ banking operations. These shared fa-

cilities, operations, and equipment represent “significant

circumstantial evidence of [Castle and Cathedral’s] alter ego sta-

tus.” See 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).

* * *

The facts and evidence at trial established that Castle and Cathe-

dral constitute a single employer and single bargaining unit and

that Castle and Cathedral are alter egos of one another. Defend-

ants’ single employer/alter ego status began with Castle’s

incorporation and ended when it ceased operations, with Cathe-

dral owing at least $163,000 in open invoices. As a result of their

single employer/alter ego status, Cathedral is bound to the Cas-

tle-signed CBAs, and Defendants are jointly and severally liable

for their delinquent benefit contributions, interest, liquidated

damages, audit costs, and attorneys’ fees. The amount of those

damages and costs is subject to recalculation by Plaintiffs in ac-

cordance with the following section.

II. DAMAGES

Castle failed to offer any evidence to rebut Plaintiffs’ damages

calculations. As explained below, however, Plaintiffs’ proposed

damages contain significant defects. Thus, Plaintiffs must recal-

culate and resubmit their alleged damages.

A. Findings of Fact

Castle is a party to two collective bargaining agreements: the Tile

CBA and the Marble CBA. So too is Cathedral because of its single

employer/alter ego status with Castle.

1. Relevant CBA Provisions

The Tile and Marble CBAs require bound employers to remit ben-

efit contributions pursuant to specified rate schedules for every

hour of work performed within the trade and geographical juris-

diction of the Tile and Marble Unions. (See JPTO at 4; Tile CBA

at 12-20 & Sch. A; Marble CBA at 11-14 & Sch. C.) Schedule A

of the Tile CBA provides the applicable wage and contribution

rates for each type of Local 7 Tile Union member, such as Tile

Setter and Tile Finisher; Schedule C of the Marble CBA provides

the applicable wage and contribution rates for each type of Local

7 Marble Union member, such as Marble Setter and Marble Fin-

isher.

Schedule A covers “Fringe Benefits,” including International Pen-

sion, Local Pension, Promotion, International Masonry Institute

(“IMI”), Local 7 Training Fund, Annuity, Welfare, Retiree Wel-

fare, and Supplemental; Schedule C covers the same, although it

refers to Retirement Fund rather than Retiree Welfare. (See Tile

CBA, Sch. A; Marble CBA, Sch. C.)

The Tile CBA provides that “[a]ll fringe benefit fund contribu-

tions shall be paid on the basis of Tile Setter/Finisher hours paid

for, except that IPF, IMI, Tile Promotion and Local Pension shall

be paid on the basis of hours worked.” (Tile CBA, Article IX, Sec-

tion 3(C).)9 The Marble CBA requires contributions pursuant to

the rate schedules in accordance with hours worked. (See gener-

ally Marble CBA, Article XIX.) Plaintiffs act as collection agents

for these benefit contributions. The CBAs also employ collection

policies. (Joint Ex. 5, Tile Funds Collection Policy (“Tile Collec-

tion Policy”); Pls.’ Ex. 24, Marble Funds Collection Policy

(“Marble Collection Policy”).)10

The Tile and Marble CBAs provide the consequences for when a

bound employer is delinquent in its contributions to Plaintiffs.

Under the Tile CBA (under Article IX, Section 3, “Fringe Benefit

Funds”) and the Tile Collection Policy (for “Delinquent Fringe

Benefit Contributions”), interest will accrue at the rate of 10%

per annum (calculated from the due date) for the local funds and

15% per annum (calculated from the due date) for the interna-

tional funds, plus liquidated damages of 20% of the amount of

delinquent contributions owing, and reasonable attorneys’ fees

and costs incurred in connection with collection of the delinquent

contributions. (Tile CBA, Article IX, Section 3(L); see also Tile

Collection Policy.)

9 Hours worked means hours worked without overtime, and hours paid

includes an overtime premium.

10 The Tile Collection Policy refers only to Tile Layers Local Union 52 Pen-

sion Fund (not Local Union 88) but provides for the same collection

procedure in the CBA. (See Joint Ex. 5, Tile Funds Collection Policy at 1.)

Under the Marble CBA (under Article XX, “Fringe Benefit Proce-

dures and Protection”) and the Marble Industry Funds Collection

Policy (under Step 1, discussing “fringe benefit contributions”),

interest will accrue at the rate of 10%, plus liquidated damages

of 20% of the amount of delinquent contributions owing, attor-

neys’ fees at 25% of the contribution delinquency, and actual

audit costs. (Marble CBA, Article XX(6); see also Marble Collec-

tion Policy, at Step 1.) Unlike the Tile CBA, the Marble CBA does

not provide for a separate 15% interest rate for international

funds.

The Tile and Marble CBAs also include provisions concerning the

use of non-signatory subcontractors. Article XVI of the Tile CBA

provides:

No employer, having a contract requiring the performance

in connection therewith of labor within the classification set

forth in this Agreement, shall subcontract, sell, sublet and/or

assign to any other person, firm, corporate or entity who is

not signatory to or bound by this Agreement, the perfor-

mance of such contracts including the Portland cement float

coat or any other portion of the contract so far as the labor

is required to be performed thereunder. The Employer shall

not be responsible for payment of fringe benefits of a signa-

tory subcontractor.

(Tile CBA, Article XVI.) Article XVII of the Marble CBA provides:

If the Employer hereunder subcontracts all or any part of the

work covered under this Agreement to be performed at a

jobsite regarding alteration, repair or construction of a build-

ing structure, or other work, it is agreed that the Employer

shall subcontract the work covered under this Agreement

only to a subcontractor signatory to this Agreement.

(Marble CBA, Article XVII.)

2. First Castle Audit: 2015-2016

In 2016, Plaintiffs hired Marshall & Moss Compliance Services to

audit Castle. Michael Sarosy performed the audit, which he com-

pleted at Castle’s accountant’s office. (Tr. at 31:7-8.)11 Sarosy

first audited the period of July 1, 2015 through June 30, 2016.

(Id. at 31:9-18; Pls.’ Ex. 4, Castle Payroll v. Remittance.)

In conducting the audit, Sarosy completed a Monthly Payroll v.

Remittance Worksheet. (See Pls.’ Ex. 4, Castle Payroll v. Remit-

tance.) This Worksheet compiles information about the number

of hours worked by Castle employees from two sources: (1) the

hours as reported by Castle on Plaintiffs’ fund administrator’s

website;12 and (2) the hours as reflected in Castle’s internal pay-

roll records. (Tr. at 29:8-34:20.) With this information, the

auditor can determine whether any discrepancies exist between

the hours Castle reported to Plaintiffs and the payroll hours Cas-

tle made internally. (Id.) Where the payroll hours are greater

than the reported hours, the auditor can calculate the amount in

delinquent contributions.

The Monthly Payroll v. Remittance Worksheet indicated that Cas-

tle failed to report 1,231 hours reflected in its payroll records.

(See Pls.’ Ex. 4, Castle Payroll v. Remittance.) Castle thus failed

to remit benefit contributions to Plaintiffs for 1,231 hours worked

by its employees who were Local 7 members. (Id.; Tr. at 31:10-

34:24.)13 This Worksheet provides detail on the deficient hours

for each Castle employee as well as each employee’s status and

11 Sarosy later came to work as an auditor for Local 7.

12 D.H. Cook is the third-party fund administrator. (Tr. at 29:9-16.)

13 The Monthly Payroll vs. Remittance Worksheet distinguishes between

“Hours Paid” and “Hours Worked” because the Tile CBA and the Marble

CBA require some benefit funds to receive a contribution for every hour

worked, without any overtime premium included, whereas other benefit

funds receive a contribution for every hour paid, which includes any over-

time premium. (Tr. at 33:22-34:4; Tile CBA, Article IX, Section 3(C).)

position within Local 7, e.g., tile setter, tile finisher, marble setter,

and marble finisher. (Pls.’ Ex. 4, Castle Payroll v. Remittance; Tr.

at 31:9-34:24.) This information allowed Sarosy to determine

Castle’s delinquent contributions and attempt to calculate accom-

panying damages arising from the deficient hours by multiplying

the deficient hours for each Castle employee by the applicable

benefit contribution rate in (1) Schedule A of the Tile CBA, and

(2) Schedule C of the Marble CBA. (See Pls.’ Ex. 4, Castle Payroll

v. Remittance; Tr. at 31:10-34:24.) From there, Sarosy applied

the formula for interest, liquidated damages, and audit costs as

set forth in the Tile CBA and Marble CBA. (See Pls.’ Ex. 5, First

Castle Tile Audit; Pls.’ Ex. 6, First Castle Marble Audit.)

Plaintiffs offered, and the court accepted, several exhibits about

Sarosy’s audit, including the Final Castle 2015-16 Audit Reports

for the Tile and Marble Funds. (Pls. Ex. 1, Final 2015-16 Castle

Tile Audit; Pls.’ Ex. 2, Final 2015-16 Castle Marble Audit.)

These final reports and summaries covered the first audit period

from July 1, 2015 through June 30, 2016. They provide a break-

down by local union within Local Union 7 (e.g., Local Union 52

(Tile Setters) and Local Union 88 (Tile Finishers); Local Union 4

(Marble Setters) and Local Union 20 (Marble Finishers)), as well

as a breakdown of the delinquent benefit contributions to the In-

ternational and Local Funds.

The Final 2015-16 Audit Reports include the following categories

of delinquencies:

e Delinquent Contributions to International Funds:

o International Pension.

o IU Pension Surcharge (Tile Unions only).

o IMI.

o Bricklayers and Allied Craftworkers Political

Action Committee (“PAC”).

o International Dues.

e Delinquent Contributions to Local Funds:

o Welfare.

o Retiree Welfare.

o Local Pension.

o Vacation.

o Supplemental.

o Annuity.

o Promotion.

o Training Fund.

o Building Fund.

o Defense Fund.

o Local PAC.

o Local Dues 1.

o Local Dues 2.

(Pls.’ Ex. 1, Final 2015-16 Castle Tile Audit at 2; Pls.’ Ex. 2, Final

2015-16 Castle Marble Audit at 2.) Of those categories, however,

26

several benefits are not “Fringe Benefits” as defined under Sched-

ules A and C of the Tile and Marble CBAs respectively. Those

non-fringe benefit categories include Bricklayers and Allied

Craftworkers PAC; International Dues; Vacation; Local PAC; De-

fense Fund; Building Fund; and Local Dues 1 and 2—collectively,

the “non-Plaintiff funds.”

For each category of benefits, the Final 2015-16 Reports include

a breakdown of the total Deficiency Amount (unpaid hours mul-

tiplied by the contribution rate defined in the rate schedules); the

Allocated Interest (which Plaintiffs compounded annually at the

10% or 15% rate); the Liquidated Damages (applied only to

ERISA funds at 20% of the unpaid principal); and Allocated Au-

dit Costs.

Because of the errors in Plaintiffs’ calculation, the court omits the

specific figures that Plaintiffs submitted. Rather, as explained be-

low, Plaintiffs are directed to recalculate and resubmit their

request for damages.

3. Second Castle Audit: 2016-2017

On November 3, 3020, Plaintiffs filed an Amended Complaint,

adding a claim for delinquent contributions owed by Castle to

Plaintiffs during the period of July 1, 2016 through June 16,

2017. (See Am. Compl. (Dkt. 39) ¶¶ 19-21.) Defendants Cathe-

dral and Castle filed Amended Answers on November 17, 2020

and November 19, 2020, respectively. (See Cathedral Answer

(Dkt. 40); Castle Answer (Dkt. 41).)

To determine Castle’s delinquent contributions from this period,

Plaintiffs rely on Castle’s self-reported hours of Covered Work on

Plaintiffs’ fund administrator’s website, which shows due and un-

paid employer contributions to each specific Local Union (e.g.,

Local 52 or Local 88). (See Joint Ex. 6, D.H. Cook Report, Castle

Tile; Joint Ex. 7, D.H. Cook Report, Castle Marble; Tr. at 48:2-

53:20.). Plaintiffs calculated the principal delinquency amounts

from the total amounts due on the administrator’s website. But

these total amounts due provide no breakdown as to which spe-

cific contribution category the unpaid delinquencies come

from—there is just a single number for any given work period.

(See Joint Ex. 6, D.H. Cook Report, Castle Tile; Joint Ex. 7, D.H.

Cook Report, Castle Marble.) In other words, unlike the first Cas-

tle audit, these total amounts do not list a delinquency amount

by contribution category, e.g., Welfare, Local Pension, Annuity.

As a result, the court cannot determine whether these total

amounts due are overinclusive, encompassing contribution cate-

gories beyond Plaintiffs’ collection remit. Nor is there a

breakdown as to ERISA versus non-ERISA funds—a key detail to

determine which delinquencies warrant liquidated damages.

Moreover, the applicable rate schedule for the Tile CBA, Sched-

ule A, ended December 5, 2016, but this audit runs through June

16, 2017. (The applicable rate schedule for the Marble CBA,

Schedule C, ended January 1, 2018.)

Despite these deficiencies, Plaintiffs purport to provide a “true

and correct” calculation of interest on these delinquent contribu-

tions. (See Harras Aff. (Dkt. 67-1) ¶¶ 4-5; Castle Tile Interest

Calculation (Dkt. 67-3); Castle Marble Interest Calculation (Dkt.

67-4).) These calculations (screenshots of an Excel sheet ostensi-

bly created by Plaintiffs’ attorney) compound the issues described

above and are insufficient to support a judgment for damages

from interest or liquidated damages.

4. Cathedral Audit

Sarosy also performed an audit of Cathedral for Plaintiffs. In per-

forming this audit, Sarosy relied on Cathedral’s tax forms—its

NYS-45, 1099s, and W-2s for the period of July 1, 2015 through

September 30, 2017. (Tr. at 55:4-6, 57:2-66:7.) Because Cathe-

dral did not provide a copy of its weekly payroll records, Sarosy

calculated the number of hours worked by each Cathedral em-

ployee by taking the total quarterly payment that Cathedral

made to each employee identified in the NYS-45 forms and di-

viding that figure by the applicable union wage rate. (Id. at

58:11-59:7.)

In calculating these hours, Sarosy included hours worked by Lo-

cal 7 members and non-Local 7 members. He calculated both

member sets because he presumed that the non-member Cathe-

dral employees performed the same work covered in the Tile and

Marble CBAs—a presumption that he inferred from Cathedral’s

business name, its relation to Castle, and its known business pur-

pose of installing tile and marble. (Pls.’ Ex. 9, Cathedral Payroll

v. Remittance Worksheet; JPTO at 5-6; Tr. at 60:14-24.) Sarosy

then used a Monthly Payroll vs. Remittance Worksheet to com-

pare the hours worked by Cathedral employees against any hours

for which Cathedral reported a remittance to Plaintiffs. Based on

the Cathedral Monthly Payroll vs. Remittance Worksheet, Cathe-

dral failed to remit contributions to Plaintiffs for 33,611.65 hours

worked by its employees. (Pls.’ Ex. 9, Cathedral Payroll v. Remit-

tance Worksheet at 7.)

Sarosy also reviewed Cathedral’s 1099s. These 1099s reflected

cash disbursements to subcontractors. Sarosy identified 11 non-

union subcontractors of Cathedral that either had a name indi-

cating that it performed work covered by the Tile and Marble

CBAs, had an address at the residence of a Local 7 member or

former Local 7 member, or both. Sarosy testified that he re-

viewed Cathedral’s disbursements for subcontractors because,

assuming the Tile and Marble CBAs applied to Cathedral, he be-

lieved that Cathedral would be required to subcontract work

covered by the Tile and Marble CBAs to union contractors only.

He calculated the delinquent contributions owed to Plaintiffs

based on Cathedral’s disbursements to non-union subcontractors

by dividing the total annual payment to the subcontractor, as re-

flected on the 1099, by the applicable union wage rate as

reflected in either Schedule A of the Tile CBA or Schedule C of

the Marble CBA. This yielded an estimate of hours worked, which

Sarosy then multiplied by the applicable benefit contribution

rate, as reflected in either Schedule A of the Tile CBA or Schedule

C of the Marble CBA.

Like the first Castle Audit, Sarosy issued a final audit report of

his Cathedral findings in the same format as the first Castle Re-

ports, using the same breakdown of contribution categories

listed in the bulleted points above. This report provides a sum-

mary breakdown of delinquent contributions for specific

categories within the Local Unions: Members; Non-Members;

and 1099s (subcontractor employees). (Pls.’ Exs. 7-8, 2015-17

Cathedral Audit Reports.) But, like the Castle Audits above,

there are material issues in the calculations such that it would

be distracting to discuss those final calculations here.

Neither Castle nor Cathedral offered any evidence to rebut, con-

tradict, or allow for a more precise figure for the delinquencies

alleged by Plaintiffs throughout the course of this litigation.

B. Conclusions of Law

Neither party disputes the existence of the valid collective bar-

gaining agreements between the parties, Castle’s obligation to

make the required contributions under those agreements, or

Plaintiffs’ right to enforce Castle’s duties. See 29 U.S.C. §§

1132(a)(3), 1145; see also Gesualdi v. RRZ Trucking Co., No. 03-

CV-3449 (ETB), 2011 WL 1988374, at *3-4 (E.D.N.Y. May 20,

2011). Nor do the parties dispute Castle’s obligations to maintain

certain records and to furnish to benefit plans, like Plaintiffs, such

information needed for the plans’ fulfillment of their reporting

duties. See 29 U.S.C. § 1059(a)(1); see also Gesualdi, 2011 WL

1988374, at *4. As to damages, however, Castle incorrectly

places the burden to establish the accuracy of Castle’s and Cathe-

dral’s delinquent contributions and accompanying damages

solely on Plaintiffs. But this misconstrues the appropriate burden-

shifting standard, which provides that if a plaintiff shows “(a) im-

proper record-keeping 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,” then the burden shifts to the em-

ployer-defendant to disprove damages. See Reilly v. Reem

Contracting Corp., 380 F. App’x 16, 20 (2d Cir. 2010) (citing

Combs v. King, 764 F.2d 818 (11th Cir. 1985)).14

This rule advances the policies of ERISA because it imposes a

burden that reflects (1) the employer’s duties under ERISA, and

(2) the fact that the employer is in the best position to know the

number of hours worked. See Demolition Workers Union v.

Mackroyce Contracting Corp., No. 97-CV-4094 (LMM), 2000 WL

297244, at *7 (S.D.N.Y. Mar. 22, 2000). Therefore, if the em-

ployer fails to produce evidence that rebuts the trustees’

14 The Second Circuit has not formally adopted this rule. See id.; see also

N.Y. State Teamsters Council Health and Hosp. Fund v. Estate of DePerno, 18

F.3d 179, 182-83 (2d Cir. 1994). But it has described the Combs rule as a

potential “remed[y] . . . appropriately tailored to preventing false report-

ing,” La Barbera v. J.D. Collyer Equip. Corp., 337 F.3d 132, 139 & n.3 (2d

Cir. 2003), and has cited to it with approval, see Jacobson v. Empire Elec.

Contractors, Inc., 339 F. App’x 51, 53 (2d Cir. 2009). Other circuits have

followed the Eleventh Circuit and applied this burden-shifting analysis

when deciding ERISA actions. See, e.g., Mi. Laborers' Health Care Fund v.

Grimaldi Concrete, Inc., 30 F.3d 692, 696-97 (6th Cir. 1994); Brick Masons

Pension Trust v. Industrial Fence & Supply Inc., 839 F.2d 1333, 1338 (9th

Cir. 1988). So too have courts within the Eastern and Southern Districts of

New York. See, e.g., Fuchs v. Tara Gen. Contracting, Inc., No. 06-CV-1282

(ETB), 2009 WL 2922840, at *7 (E.D.N.Y. Sept. 8, 2009); Demolition

Workers Union v. Mackroyce Contracting Corp., No. 97-CV-4094 (LMM),

2000 WL 297244, at *7 (S.D.N.Y. Mar. 22, 2000) (applying burden-shift-

ing analysis and citing other cases that have done so); Local 282 Welfare

Trust Fund v. A. Morrison Trucking, Inc., No. 92-CV-2076 (JMA), 1993 WL

120081, at *1 (E.D.N.Y. Mar. 30, 1993) (applying burden-shifting analy-

sis). This court adopts and applies the burden-shifting rule here.

proposed damages, “the court may award damages to the trus-

tee[s] even where the damages are an approximate

amount.” Fuchs v. Tara Gen. Contracting, Inc., No. 06-CV-1282

(ETB), 2009 WL 2922840, at *7 (E.D.N.Y. Sept. 8, 2009).

Here, the utility of this rule proves salient. Defendants knew from

the outset that the vast majority of damages flowed from Cathe-

dral. After summary judgment, however, Cathedral defaulted,

effectively removing itself from scrutiny at trial. Now, following

the trial, Castle attempts to escape damages for both Castle and

Cathedral—not by offering any evidence to the contrary, but by

relying exclusively on the faulty premise that Plaintiffs must carry

their burden to establish accurate damages and that an estimate

does not suffice. Given Castle’s failure, Plaintiffs have satisfied

their burden by explaining how (and based on what materials)

they estimated the alleged delinquency amounts owed by Castle

and Cathedral. In other words, the court accepts Plaintiffs’ pro-

posed methodology to determine Defendants’ contribution

delinquency.

But the sufficiency of Plaintiffs’ submission ends there, as it suf-

fers from its own significant failures. Accordingly, before the

court will order a judgment against Defendants, Plaintiffs must

recalculate their requested damages and costs in accordance with

this decision.

This will come as no surprise to Plaintiffs, who time and again

provide courts in this District, including this court, with incom-

plete and error-ridden calculations as to damages. See, e.g., Trs.

of Local 7 Tile Indus. Welfare Fund v. AM Tile Specialty Constr., No.

19-CV-1809 (RPK) (SJB), 2020 WL 7034025, at *7, *9-*11

(E.D.N.Y. Sept. 23, 2020), report and recommendation adopted,

2020 WL 7021646 (E.D.N.Y. Nov. 30, 2020); Trs. of Local 7 Tile

Indus. Welfare Fund v. All Flooring Solutions, LLC, No. 19-CV-126

(ENV) (RLM), 2020 WL 9814088, at *9 (E.D.N.Y. Feb. 12,

2020); Trs. of Local 7 Tile Indus. Welfare Fund v. Caesar Max Con-

str. Inc., No. 18-CV-1339 (FB) (LB), 2019 WL 1130727, at *8

(E.D.N.Y. Feb. 11, 2019), report and recommendation adopted,

2019 WL 1129430 (E.D.N.Y. Mar. 12, 2019); Trs. of Local 7 Tile

Indus. Welfare Fund v. Larsen Marble & Tile, LLC, No. 18-CV-1025

(ARR) (SMG), 2018 WL 6363923, at *4 (E.D.N.Y. Nov. 19,

2018), report and recommendation adopted as modified, 2018 WL

6344188 (E.D.N.Y. Dec. 5, 2018); Trs. of the Local 7 Tile Indus.

Welfare Fund v. EAQ Constr. Corp., No. 14-CV-4097 (SJ) (CLP),

2016 WL 4540306, at *4 (E.D.N.Y. Aug. 12, 2016), report and

recommendation adopted, 2016 WL 4536866 (E.D.N.Y. Aug. 30,

2016); Trs. of the Local 7 Tile Indus. Welfare Fund v. Penn Valley

Tile, Inc., No. 15-CV-3891 (MKB) (RER), 2016 WL 4384328

(E.D.N.Y. July 21, 2016), report and recommendation adopted,

2016 WL 4384717 (Aug. 16, 2016); Trs. of the Local 7 Tile Indus.

Welfare Fund v. EAQ Constr. Corp., No. 14-CV-4097 (E.D.N.Y.

Aug. 24, 2015) (Dkt. 26), report and recommendation adopted,

No. 14-CV-4097 (E.D.N.Y. Sept. 30, 2015) (Dkt. 30).15

In 2015, in a Report & Recommendation later adopted by this

court, Judge Reyes warned Plaintiffs about their frequent fail-

ings:

I would be remiss if I did not mention that this is not the first

time that the law firm representing Plaintiffs, Virginia &

15 That Plaintiffs continue to offer the same incorrect calculations is not

troubling in itself—particularly not when, as here, the issues involve dif-

ferent parties bound to similar, or the same, agreement. What is troubling,

however, is that Plaintiffs—represented by the same attorneys, using the

same auditor—continue to offer this calculation without any reference to

the now legion instances in which a court has rejected their position and

done the work for them. It is one thing to disagree with these decisions,

explain why, and attempt to persuade another court to see things their

way. It is quite another to hide the ball, hope for the best, and leave it to

the courts to clean up their mess. As officers of the court, attorneys are

subject to duties of candor, decorum, and respect for the tribunal before

which they appear. Plaintiffs have failed to uphold those basic precepts.

Ambinder LLP, has failed to provide the Court with accurate

calculations and complete submissions. On a number of oc-

casions this Court has had to recalculate various plaintiffs’

damages because the documentation and calculations pro-

vided by plaintiffs’ counsel were replete with inaccuracies. In

the future, if incorrect calculations are submitted to this Court,

this Court will not recalculate and reconstruct damages based

on what evidence is presented, but instead disallow recovery as

a whole. It is not the Court’s job nor duty to perform such

calculations in the first instance, rather the Court is to insure

that such calculations presented are arithmetically sound

and supported, both factually and legally.

Trs. of the Local 7 Tile Indus. Welfare Fund v. Alp Stone, Inc., No.

12-CV-5974 (NGG) (RER), 2015 WL 4094615, at *6 (E.D.N.Y.

June 17, 2015) (emphasis added), report and recommendation

adopted, 2015 WL 4112449 (E.D.N.Y. July 7, 2015). As the

lengthy string cite above makes clear, Plaintiffs ignored that

warning.16 But trial courts are not “green-eyeshade account-

ants,” Fox v. Vice, 563 U.S. 826, 838 (2011), and they do not

work for the Trustees of Local 7. Because Plaintiffs seem to think

otherwise, judgment as to damages is RESERVED. So too is con-

sideration of Plaintiffs’ request for attorneys’ fees and costs and

auditor costs. Plaintiffs must do—and show—their work before

any judgment for damages is granted. They are DIRECTED to

16 Plaintiffs have also ignored more recent public admonishment. In 2019,

Judge Bloom noted that “this [wa]s not the first time Plaintiffs have filed

inadequate papers in support of a motion for default judgment.” Caesar

Max Const. Inc., 2019 WL 1130727, at *8 n.6 (collecting cases). Judge Bul-

sara noted the same a year later. See AM Tile Specialty Constr., 2020 WL

7034025, at *9. Still, Plaintiffs persist in submitting inadequate support for

their calculations, this time after a motion for summary judgment, a bench

trial, and post-trial submissions.

read the decisions listed above and resubmit a detailed account-

ing clearly breaking down and showing their calculations.17

a. Delinquent Contributions, Interest, and Liquidated

Damages

Plaintiffs’ resubmission must, at a minimum, incorporate or ad-

dress the following the issues:

17 Plaintiffs are directed to Judge Pollak’s decisions in particular for guid-

ance as to the level of detail required in their submissions. See, e.g., Trs. of

Local 7 Tile Indus. Welfare Fund v. Tuckahoe Tile, Inc., No. 15-CV-5535

(RJD) (CLP), 2016 WL 8711716, at *5-10 (E.D.N.Y. Sept. 2, 2016); EAQ

Constr. Corp., 2016 WL 4540306, at *6-11. In short, there should be no

head-scratching, no second-guessing, and no confusion on the next turn.

1) Plaintiffs must remove delinquencies from non-fringe

benefit, non-Plaintiff funds including Bricklayers and

Allied Craftworkers PAC; International Dues; Vacation;

Local PAC; Defense Fund; Building Fund; and Local

Dues 1 and 2. See AM Tile Specialty Constr., 2020 WL

7034025, at *7 (collecting cases); Tuckahoe Tile, Inc.,

2016 WL 8711716, at *5 n.8; R&R at 16-20, EAQ

Constr. Corp., No. 14-CV-4097 (Dkt. 26); Alp Stone, Inc.,

2015 WL 4094615, at *4-5 (citing Flynn v. Anthony

Mion & Son, Inc., 112 F. App’x 101, 102 (2d Cir. 2004)).

Plaintiffs must also remove subcontractor damages

based on Cathedral’s 1099s. See Caesar Max Const. Inc.,

2019 WL 1130727, at *9; EAQ Constr. Corp., 2016 WL

4540306, at *9-10 (“[T]here is no provision of the CBA

which authorizes plaintiffs to seek contributions from

the employer for the hours worked by

subcontractors.”).18

2) For the Second Castle Audit from 2016 to 2017,

Plaintiffs must provide a breakdown of the total

amounts due and explain which contribution categories

make up that total amount. If that total amount

includes categories of non-Plaintiff funds, then Plaintiffs

must reduce the amounts. In short, the Second Castle

Audit, as submitted, may satisfy a principal delinquency

figure, but it is woefully inadequate to calculate

accompanying interest or damages. Plaintiffs must fully

explain their damages calculation for this period.

18 Plaintiffs may offer evidence to argue that they can collect on these non-

Plaintiff fund delinquencies or on these subcontractor-related delinquen-

cies. Should Plaintiffs make this argument, however, they should include

these calculations separately and apply a 9% interest rate. See All Flooring

3) “The Trustees have attempted to collect compound

interest based on this agreement before other Courts in

this District; in each case, simple interest was

recommended and awarded.” AM Tile Specialty Constr.,

2020 WL 7034025, at *10 n.5 (collecting cases). So too

here. Plaintiffs must use a simple interest formula to

calculate all interest damages.

4) Neither the Marble CBA nor the Marble Funds

Collection Policy provide for a 15% interest rate. (See

Marble CBA, Article XX(6); Pls.’ Ex. 24, Marble Funds

Collection Policy.) Thus, Plaintiffs must remove the 15%

interest rate from all international Marble Fund

delinquencies and apply only the 10% interest rate.

5) Plaintiffs must apply the same liquidated damages

calculation to the Marble Fund delinquency as they did

to the Tile Fund delinquency. Plaintiffs must further

explain that calculation. See, e.g., Larsen Marble & Tile,

LLC, 2018 WL 6363923, at *5 n.3.

6) Plaintiffs must state and explain the requisite “due date”

on which interest begins to accrue. See AM Tile Specialty

Constr., 2020 WL 7034025, at *10-11.

Plaintiffs should not rely on the preceding list as their exclusive

list of errors. Rather, Plaintiffs must review the decisions listed

above and resubmit their request for damages in accordance with

this list and those decisions. In permitting this second chance, the

court reiterates for a final time what Judge Reyes warned seven

Sols., LLC, 2020 WL 9814088, at *10; Caesar Max Const. Inc., 2019 WL

1130727, at *10. In other words, Plaintiffs should provide a final calcula-

tion both inclusive and exclusive of the non-Plaintiff fund delinquencies

and subcontractor-related delinquencies.

years ago: “In the future, if incorrect calculations are submitted

to this Court, this Court will not re-calculate and reconstruct

damages based on what evidence is presented, but instead disal-

low recovery as a whole.” Alp Stone, Inc., 2015 WL 4094615, at

*6.

b. Attorneys’ Fees and Costs & Audit Costs

Decision on Plaintiffs’ motion for attorneys’ fees and costs and

audit costs are reserved. The court will decide these motions fol-

lowing the revised calculation. No additional fees or costs should

be added based on the revised calculations. Specific to the Mar-

ble delinquency, Plaintiffs should explain the significance of the

clause stating that “attorneys’ fees at 25% of the contribution de-

linquency.” (Pls.’ Ex. 24, Marble Funds Collection Policy at 2; see

also Marble CBA, Article XX(6).) Plaintiffs should further address

their frequently made errors in this and other courts in this Dis-

trict, and why these errors should, or should not, bear on the

court’s discretion in determining reasonable attorneys’ fees.

See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“The court

necessarily has discretion in making this equitable judgment.”).

So too for audit costs. Alp Stone, 2015 WL 4094615, at *8 (“Re-

quests for audit fees are generally determined by utilizing the

same standards the court applies in awarding attorneys’ fees.”).

III. CONCLUSION

For the reasons explained above, based on the evidence adduced

at the bench trial on July 13, 2021, the court concludes the fol-

lowing:

e Castle is delinquent in its contributions to the

Plaintiff Funds;

e Castle and Cathedral constitute a single employer

and single employee bargaining unit;

e Castle and Cathedral are alter egos of one

another; because of Defendants’ single

employer/alter ego status, Cathedral is bound to

the Castle-signed CBAs;

e Because Cathedral is bound to the CBAs,

Cathedral is obligated to remit contributions to

Plaintiffs for each hour of Cathedral-employees’

“Covered Work” pursuant to the CBAs;

e Because of their single employer/alter ego status,

Defendants are jointly and severally liable for

Castle’s and Cathedral’s delinquent contributions,

plus accompanying damages provided under the

CBAs, enforceable through Section 301 of the

LMRA, 29 U.S.C. § 185, and Sections 502(g) (2)

and 515 of ERISA, 29 U.S.C. 88 1132(g)(2),

1145.

Decision on damages, attorneys’ fees and costs, and auditor costs

is RESERVED for additional briefing. Plaintiffs are DIRECTED to

file a renewed damages calculation in accordance with this opin-

ion, as well as their request for attorneys’ fees and costs and audit

39

costs by Friday, July 8, 2022. Defendants, if they wish, are DI-

RECTED to provide Plaintiffs with additional information to

permit a more accurate damages calculation. Should Defendants

decide to provide such information, they are DIRECTED to notify

Plaintiffs and this court of their intent to do so Friday, June 17,

2022. The procedures set out in Federal Rule of Civil Procedure

52 otherwise apply with respect to all other findings and conclu-

sions in this decision.

5O ORDERED.

Dated: Brooklyn, New York

June 8, 2022

s/Nicholas G. Garaufis

Olas Me Matas

NICHOLAS G. GARAUFIS

United States District Judge

40