# Opposition Brief — Alman v. George Manufacturing Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0604%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1989 - **Citation:** 489 U.S. 1039 ## Text No. 88-1008 In the Supreme Court of the United States October Term, 1988 yX vv RONALD ALMAN, as Trustee, Board of Trustees, Northeast Department, ILGWU Health and Welfare Fund, ILGWU Health Services Plan and ILGWU National Retirement Fund, Petitioner, GEORGE MANUFACTURING CORP. and GEORGE KALELL, Respondent. a 4 On Petition for Writ of Certiorari to the United States Court of Appeals for the First Circuit , 4 BRIEF FOR RESPONDENT IN OPPOSITION y 4 Jay L. Fiatkow* STEPHEN M. SHEEHY HowarpD M. Brown Kaye, FIALKow, RICHMOND & ROTHSTEIN 100 Federal Street Boston, MA 02110 (617) 482-6800 Counsel for Respondent January 18, 1989 *Counsel of Record COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 i) es al * oe ‘ ’ Be] 4) < ea - wh ' i . . . 6 QUESTION PRESENTED Absent facts sufficient to “pierce the corporate veil” of a corporation, is an individual shareholder or corpo- rate officer personally liable under the Employee Retire- ment Income Security Act for contributions owed by the corporation to multiemployer health, welfare and pen- sion funds? li LIST OF PARTIES The parties to the proceeding below were the Peti- tioner, Ronald Alman (“Alman”), a trustee of various multiemployer benefit funds in the garment industry, Respondent George Kalell (“Kalell”), and George Manu- facturing Corp. (“George Mfg.”), the corporation of which Kalell was the sole shareholder and president. ili TABLE OF CONTENTS p Page SSPE TET CCT PERE REET ET TER LS i NG 55 eyes Veyensckesaseans case rwaes cere ii eh Pee rrr ee eee eee eee ee ee ee eee eee 2 ie a iggy ad olen od oes 6.064 00 0s e a ENS CES y Applicable Statutory Provisions.................+.-- 2 CU MD i cae nes sevens cnncsnvevesua's 3 A. Statement of Prior Proceedings.............. 3 ee ES POE cece esectueasnadenuceds 5 Reasons for Denying the Writ ..................... 6 A. There is No Constitutional Issue or Important ney 0G WGN GW nw oe cece tence. 6 B. There is No Conflict in the Circuit Courts of PEPE ELS PeETe LeeLee TELE EL 10 C. There is No Conflict with Congressional Intent re ee ew ck ec Wee eee EA A eo 11 D. There is No Conflict with Prior Decisions of a ra ne gas # ans 6 oars 12 E. There is No Connection Between this Case and Any Case Pending Before this Court......... 12 Sere eae eeuencaeae : a ee iv TABLE OF AUTHORITIES CITED CASES Alman v. George Manufacturing Corp., 680 FSupp. 56 GD.Maes. 1966)............: 4, 6, 10, Alman v. George Manufacturing Corp., No. OG-1522 (isk Cie fake 21, TRU). occ ieee Commonwealth v. Morash, 402 Mass. 287, 552 N.E.2d 409, cert. granted, _—=- U.S. __, 109 S.Ct. SF CRUD oo oc ee ee eee ea Debreceni v. Graf Bros. Leasing, Inc., 828 F.2d 877 (ist Cir. 1987), cert. denied, __-~OU.S. __, 108 SAd ROR CES ip doe pdedas cd eWernepaes iabas Donovan v. Agnew, 712 F.2d 1509 (1st Cir. 1983) Int’l Brotherhood of Painters v. George A. Kracher, Inc., 856 F.2d 1546 (D.C. Cir. 1988)... Laborers Health and Welfare Trust Fund v. Advanced Lightweight Concrete Co., __ U.S. ee UG MO Nps ee ere Massachusetts Laborers’ Health & Welfare Fund v. Starrett Paving Corp., 845 F.2d 23 (1st Cir. 1988) Dee Bae PRR eH NAS eye ie Se PE tS 3, &, 7, North Dakota v. United States, 460 U.S. 300 (1983) Operating Engineers Pension Trust v. Reed, 726 Fi Sao Ce BA Es ode ce rien kedaecwananas Solomon v. Klein, 770 F.2d 352 (3d Cir. 1985).... Trustees of Amalgamated Insurance Co. v. Gelt- man Industries, Inc., 784 F.2d 926 (9th Cir. 1986), cert. denied, 479 U.S. 822 (1986)........ Page 11, 13 5a, 35 Vv TABLE OF AUTHORITIES CITED - Continued Page STATUTES ‘BR tom @. . | PeppreerereerterrreerrrrT yer ryt 12 DP UD. B BE oo ces nk hncasneecdeaeeasieans + ie ae y Bik ee PP errerer rrr rer Tr rer err Te ye DP TID. Be ok io cn ccd sce e essere oe passim TP UGE. & PERI ac ok ncdcnnvacsntaccousnscageea 3 yp Bik > wae SL Aeeyeper err rrr rrr rer irr. ry i passim CONGRESSIONAL MATERIALS Staff of Senate Committee on Labor and Human Resources, 96th Cong., 2d Sess., The Multi- employer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration Comm, PRUE THs oo csnc cow ecskoarertsanvaxccens 11 SuPREME Court RULES Rules of the Supreme Court of the United States, eA | Perret r er Terr TT eer Tee Ty 10 No. 88-1008 y% _ In the Supreme Court of the United States October Term, 1988 rN vy RONALD ALMAN, as Trustee, Board of Trustees, Northeast Department, ILGWU Health and Welfare Fund, ILGWU Health Services Plan and ILGWU National Retirement Fund, Petitioner, GEORGE MANUFACTURING CORP. and GEORGE KALELL, Respondent. ys vv On Petition for Writ of Certiorari to the United States Court of Appeals for the First Circuit & vv BRIEF FOR RESPONDENT IN OPPOSITION & bl The Respondent, George Kalell, respectfully prays that the Court deny the Petition for a Writ of Certiorari sought by Petitioner Ronald Alman to review the mem- orandum and order of the United States Court of Appeals for the First Circuit entered in the above-entitled pro- ceeding on July 21, 1988. > OPINIONS BELOW - The memorandum and order of the United States Court of Appeals for the First Circuit is not reported and is reprinted as an appendix to the petition at page A-1. The opinion and judgment of the United States Dis- trict Court for the District of Massachusetts (Tauro, J.) is reported at 680 F.Supp. 56 and is reprinted as a supple- mental appendix to the petition at pages B-1 - B-6. & -_ JURISDICTION The United States Court of Appeals for the First Circuit entered judgment on July 21, 1988. Petitioner seeks review of the judgment of the Court of Appeals pursuant to 28 U.S.C. § 1254(1). La — APPLICABLE STATUTORY PROVISIONS Petitioner’s claim does not involve any provisions of the Constitution of the United States of America. Rather, Petitioner’s claim involves the construction and inter- pretation of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1001 et seq. The specific provisions involved in Petitioner’s claim are 29 U.S.C. § 1145, which requires certain employers to make contributions to multiemployer plans, and 29 U.S.C. § 1002(5), which defines “employer” for the pur- poses of ERISA. In addition, because Petitioner attempts to draw an analogy between ERISA and the Fair Labor Standards Act (“FLSA”), this action involves 29 U.S.C. § 203(d), the FLSA definition of “employer” and 29 U.S.C. § 206(a), the FLSA provision which requires all employers to pay wages in accordance with the FLSA. The text of 29 U.S.C. § 203(d), 29 U.S.C. § 1002(5), and 29 U.S.C. § 1145 are reproduced in the petition at pages 4-8. The petition does not include the text of 29 U.S.C. § 206(a), which is reproduced in pertinent part below: Section 206. Minimum Wages (a) Every employer shall pay to each of his employees who in any workweek is engaged in com- merce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the follow- ing rates: (1) not less than $2.65 an hour during the year beginning January 1, 1978, not less than $2.90 an hour during the year beginning January 1, 1979, not less than $3.10 an hour during the year beginning January 1, 1980, and not less than $3.35 an hour after December 31, 1980, except as otherwise provided in this section... . 29 U.S.C. § 206(a). sa ww STATEMENT OF THE CASE A. Statement of Prior Proceedings On July 31, 1985, petitioner Alman filed a Complaint against George Manufacturing Corp. (“George Mfg.”) and George Kalell (“Kalell”), the sole shareholder and president of George Mfg. The Complaint sought, pur- suant to Sections 502(a)(3) and 515 of ERISA, 29 U.S.C. § 1132(a)(3) and § 1145, to collect contributions owed by George Mfg. to the various multiemployer funds (the “Funds”), of which Alman is trustee. A Consent Judg- ment was entered against George Mfg. on October 28, 1985, in the amount of $119,358.94, while the action against Kalell proceeded. Alman filed a Motion for Summary Judgment and Kalell filed a Cross Motion for Summary Judgment. On February 16, 1988, the District Court issued an Opinion and Order allowing Kalell’s Cross Motion for Summary Judgment and denying Alman’s Motion for Summary Judgment. Alman v. George Mfg. Corp., 680 F. Supp. 56 (D.Mass. 1988). The District Court held that a corporate officer or shareholder may be personally liable for a corporation’s unpaid contributions to multiemployer plans only if the circumstances require a piercing of the corporate veil. Id. at 58. Since Alman conceded that there was no factual basis to pierce the corporate veil of George Mfg., Id. at 58, n.4, the District Court entered judgment for Kalell. Shortly after the District Court allowed Kalell’s Cross Motion for Summary Judgment, the United States Court of Appeals for the First Circuit issued its opinion in a case which presented issues virtually identical to those in George Mfg. Corp. See, Massachusetts Laborers’ Health and Welfare Fund v. Starrett Paving Corp., 845 F.2d 23 (1st Cir. 1988), (“Starrett”). The Opinion in Starrett is reproduced as an appendix to the petition at pages A-2 to A-15. In Starrett, the United States Court of Appeals for the First Circuit adopted the reasoning of the District Court in George Mfg. Corp., and held that, absent factors which would justify “piercing the corporate veil”, a corporate officer or shareholder could not be held personally liable for unpaid contributions because such an individual was not “obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement,” as required by 29 U.S.C. § 1145. 845 F.2d at 25. Alman filed an appeal from the District Court’s judg- ment in favor of Kalell. On July 21, 1988, the United States Court of Appeals for the First Circuit granted Kalell’s Motion for Summary Disposition and affirmed the judgment of the District Court. The Memorandum and Order of the Court of Appeals, which is reproduced as an appendix to the petition at page A-1, made plain that its decision was based on its earlier holding in Starrett. On December 15, 1988, Petitioner Alman sought review of the decision below by filing a Petition for Writ of Certiorari to the United States Court of Appeals for the First Circuit. B. Statement of Facts The District Court summarized the facts in this case in its Memorandum. Briefly stated, George Kalell was the sole shareholder and president of George Mfg., a Massa- chusetts corporation engaged in the business of garment manufacturing in Boston, Massachusetts. George Mfg. was a party to a collective bargaining agreement with an affiliate of the International Ladies’ Garment Workers’ Union. George Kalell was not a party to the collective bargaining agreement and signed the agreement solely in his capacity as president of George Mfg. The collective bargaining agreement required George Mfg. to contribute to the Funds of which petitioner Alman is a trustee. George Mfg. experienced financial problems and became delinquent in its contributions to the Funds. George Mfg. eventually terminated its operations, at which time it owed the Funds $119,359. As the Funds concede, nothing in Kalell’s dealings with George Mfg. would allow the Funds to “pierce the corporate veil”. George Mfg. Corp., 680 F.Supp. at 58, n.4. REASONS FOR DENYING THE WRIT The Court should deny certiorari because the petition does not present a significant issue of constitutional inter- pretation or an important question of federal law. The decision of the United States Court of Appeals is not in conflict with other decisions of the Circuit Courts of Appeals, not in conflict with Congressional intent as expressed in ERISA and not in conflict with prior deci- 7 sions of the United States Supreme Court. Further, there is no connection between this case and any case pending before this Court. There is no compelling reason to grant the petition and hear this case. A. There is No Constitutional Issue or Important Question of Federal Law The Petition does not present the Court with any constitutional issue. Instead, Petitioner seeks review of the decision issued by the United States Court of Appeals for the First Circuit which, by its reliance upon Massa- chusetts Laborers’ Health & Welfare Fund v. Starrett Paving — ee Corp., 845 F.2d 23 (1st Cir. 1988), adopted Starrett’s hold- ing that corporate officers or shareholders could not be liable for contributions owed by the corporation to a multiemployer fund absent facts sufficient to “pierce the corporate veil.” The Petitioner opposed this interpreta- tion of ERISA in the District Court and in an amicus curiae brief filed with the Court of Appeals in Starrett, as well as in a brief filed in the Court of Appeals below. Alman now seeks review of this interpretation of federal law in the United States Supreme Court. In place of the interpretation of federal law adopted by the United States Court of Appeals for the First Cir- cuit, the Petitioner proposes an interpretation of ERISA that ignores the plain meaning of 29 U.S.C. § 1145, which requires contributions to be made to multiemployer funds only by an employer “who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement.” See North Dakota v. United States, 460 U'S. 300, 312 (1983) (absent a clearly expressed legislative intention to the contrary, language of a statute is ordi- narily regarded as conclusive). Petitioner ignores the plain meaning of this statute and instead focuses on a flawed analogy between ERISA and the Fair Labor Standards Act (“FLSA”). Petitioner first notes that ERISA’s definition of “employer”, 29 U.S.C. § 1002(5) is very similar to that of the FLSA, 29 U.S.C. § 203(d). Petition at 21. Petitioner then observes that the FLSA definition of “employer” has been inter- preted to include controlling officers or shareholders under an “economic reality” test. Petition at 22. See Don- ovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir. 1983) (officer or shareholder who in economic reality controls the cor- poration is individually liable for the nonpayment of wages to the employees of the corporation). Given the similarity between the ERISA and FLSA definitions of “employer” Petitioner argues that the “economic reality” test should also apply to cases under ERISA, thus impos- ing personal liability upon a controlling shareholder or officer when a corporation fails to make required contri- butions to multiemployer funds. Both the United States District Court for the District of Massachusetts and the United States Court of Appeals for the First Circuit decided that they could not ignore the plain language of 29 U.S.C. § 1145 and adopt the analogy suggested by Petitioner. There is no compelling reason for the United States Supreme Court to review those decisions. Petitioner’s analogy between the FLSA and ERISA is fatally flawed because it fails to recognize the difference between the liability-creating provisions of the FLSA, 29 U.S.C. § 206, and ERISA, 29 U.S.C. § 1145. The relevant provision of FLSA provides in pertinent part that “every employer shall pay to each of his employees . . . wages at the following rates... .” 29 U.S.C. § 206(a). This provision statutorily requires all employers to pay certain wages,whether or not those employers are so obligated by the terms of a collective bargaining agree- ment. That being the case, once a court decides that an individual officer or shareholder is an employer under the FLSA, it inevitably follows that such individuals, like all other employers, are bound to pay wages in accor- dance with 29 U.S.C. § 206(a) and are personally liable if they do not. In contrast to the FLSA, the relevant provision of ERISA, 29 U.S.C. § 1145, does not require all employers to make contributions to multiemployer plans, only those employers who are obligated to contribute under the terms of a particular multiemployer plan or the terms of a collectively bargained agreement. Since Kalell was not obligated to contribute either by the terms of the plans or of the collective bargaining agreement, he is not liable for unpaid contributions. Thus, the question of whether or not Kalell is an “employer” under 29 U.S.C. § 1002(5) is not dispositive, because, even assuming that Kalell is an employer, under the plain language of 29 U.S.C. § 1145 he is not an employer who is obligated to contribute to the Funds of which Petitioner is a trustee. Petitioner claims that “[i]n the years since ERISA’s passage, the Court has granted certiorari to hear a number of cases involving key questions central to the effectiveness [sic] administration of the statute.” Petition at 19. The simple response to this argument is that this Court has often denied certiorari in cases involving pro- visions of ERISA which, like 29 U.S.C. § 1145, apply only to multiemployer plans. Most recently, the Court refused to hear a case from the United States Court of Appeals for the First Circuit which posed a very similar issue, i.e. whether an individual shareholder or officer could be held personally liable for a corporation’s withdrawal lia- bility under ERISA, absent facts sufficient to “pierce the corporate veil” of the corporation. Debreceni v. Graf Bros. Leasing, Inc., 828 F.2d 877 (1st Cir. 1987), cert. denied, 10 __ US. __, 108 S. Ct. 1024 (1988). Certiorari has also been denied in other cases involving questions of first impression under the multiemployer provisions of ERISA. See, Trustees of the Amalgamated Insurance Co. v. Geltman Industries, Inc., 784 F.2d 926 (9th Cir. 1986), cert. denied, 479 U.S. 822 (1986) (denial of certiorari where issue was the application of 29 U.S.C. § 1405(a) and (b), which provide two different methods of limiting the withdrawal liability claims of multiemployer pension plans). B. There is No Conflict in the Circuit Courts of Appeals The Petition for a Writ of Certiorari should be denied since there is no split of opinion in the Circuit Courts of Appeals which the United States Supreme Court should resolve. Rules of the Supreme Court of the United States, Rule 17.1(a). The decision of the United States Court of Appeals for the First Circuit is consistent with those of the three other Court of Appeals which have directly addressed this issue. In Solomon v. Klein, 770 F.2d 352 (3d Cir. 1985), the United States Court of Appeals for the Third Circuit, using an analysis virtually identical to that of the District Court in George Mfg. Corp., rejected the FLSA analogy relied upon by the Petitioner, holding that “in matters of statutory construction of ERISA our responsibility is to ascertain the intention of Congress in ERISA and not its intention in enacting a separate federal statute.” Id. at 355. A similar conclusion was reached by the United States Court of Appeals for the District of Columbia Circuit in Int'l Brotherhood of Painters v. George A. Kracher, Inc., 856 F.2d 1546 (D.C.Cir. 1988). In Kracher, the Court of Appeals cited Starrett with approval and 11 relied upon reasoning very similar to that of the District Court in George Mfg. Corp. and the Court of Appeals in Starrett. 856 F.2d at 1549 and 1550, n.26. The United States Court of Appeals for the Ninth Circuit has reached a similar conclusion. Operating Engineers Pension Trust v. Reed, 726 F.2d 513 (9th Cir. 1984). As a result, in what may be the most important consideration in determining whether or not to grant certiorari, the Circuit Courts of Appeals are in complete agreement. C. There is No Conflict with Congressional Intent The Petition for Writ of Certiorari should be denied because there is no conflict between the decisions of the United States Court of Appeals for the First Circuit in George Mfg. Corp. and Starrett and the intent of Congress in enacting ERISA, particularly Section 515 of ERISA, 29 U.S.C. § 1145, the provision crucial to this case. In Star- rett, the United States Court of Appeals for the First Circuit reviewed the legislative history of 29 U.S.C. § 1145 and found that the “legislative history .. . indicates that the language means what it says.” 845 F.2d at 25. The legislative history is replete with statements which make it plain that this section only imposes a duty to contribute on “employers that are already contrac- tually obligated to make contributions to multiemployer plans.” Staff of Senate Committee on Labor and Human Resources, 96th Cong., 2d Sess., the Multiemployer Pen- sion Plan Amendments Act of 1980: Summary and Anal- ysis of Consideration at 44 (Comm. Print 1980). Thus 12 Petitioner is in error when he argues that the decision in Starrett “produces an illogical result at variance with the statute’s plain meaning and its broad remedial pur- poses.” Petition at 22. D. There is No Conflict with Prior Decisions of this Court Petitioner argues that the decision of the Court of Appeals in Starrett misapprehends the decision of this Court in Laborers Health and Welfare Trust Fund v. Advanced Lightweight Concrete Co.,__ U.S. __, 108 S. Ct. 830 (1988). In the first place, even a cursory review of Starrett dem- onstrates that the Court of Appeals’ discussion of Advanced Lightweight Concrete was not central to its deci- sion, but merely one of many reasons for accepting the plain meaning of 29 U.S.C. § 1145, i.e. that the statute only applies to employers who are contractually obli- gated to contribute to multiemployer plans. The Court of Appeals was correct when it took note of the fact that this Court had held in Advanced Lightweight Concrete that 29 U.S.C. § 1145 only permits multiemployer plans to bring suit for contractually required contributions, as opposed to contributions which might be due under Section 8(a)(5) of the National Labor Relations Act, 29 U.S.C. § 185(a). __ U.S. at __, 108 S. Ct. at 835 (1988). E. There is No Connection Between this Case and Any Case Pending Before this Court Petitioner asserts that this case should be considered in conjunction with Commonwealth v. Morash, 402 Mass. 287, 522 N.E.2d 409, cert. granted, vs. . , eS. G2. 53 (1988). Petition at 25. However, as Petitioner freely acknowledges, the issue presented by Morash is simply 13 whether a Massachusetts statute imposing criminal pen- alties for non-payment of vacation pay is preempted by ERISA. Petition at 26. Morash does not raise any of the issues involved here, nor does it interpret the various statutory provisions involved in George Mfg. Corp. Con- versely, George Mfg. Corp. does not deal with preemption under ERISA. The only thing that George Mfg. Corp. and Morash have in common is that both involve ERISA, hardly a reason for the Court to grant certiorari in this case. y Lf CONCLUSION The Respondent, George Kalell, respectfully urges that the Petition for Writ of Certiorari to the United States Court of Appeals for the First Circuit be denied as there is no constitutional issue, no conflict among the Circuit Courts of Appeals, no conflict with Congressional intent and purpose, and no conflict with prior decisions of this Court created by the decision of the United States Court of Appeals for the First Circuit in Alman v. George Mfg. Corp. The Petition for a Writ of Certiorari to the United States Court of Appeals for the First Circuit should be denied. Respectfully submitted, Jay L. FiAL-Kow STEPHEN M. SHEEHY Howarpb M. Brown Kaye, FIALKow, RICHMOND & ROTHSTEIN 100 Federal Street Boston, MA 02110 (617) 482-6800 January 18, 1989 Counsel for Respondent --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0604%3A4. Public record. Not legal advice.