# Petition for Writ of Certiorari — Pipefitters Pension Trust v. Waldo > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1702%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1993 - **Citation:** 506 U.S. 1054 ## Text A hs | ROY 10 1992 | OFFICE GI THE CLERK No. In Che Supreme Court of the United States (October Cerm, 1992 PIPEFITTERS PENSION TRUST; PIPEFITTERS LOCAL UNION No. 562; JOHN MARSHAL, administrator and fiduciary of all plaintiff funds; LESTER GROss, JOE BARRY, DON DEVvITT, ROBERT MCDONALD, trustees, Petitioners, Vv. RUSSELL WALDO, Respondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT JOHN H. GOFFSTEIN* Bartley, Goffstein, Bollato and Lange 130 South Bemiston, Suite 604 St. Louis, Missouri 63105 (314) 727-0922 *Counsel of Record November 6, 1992 QUESTIONS PRESENTED I WHETHER THE DOMINANT SHAREHOLDER - AND OFFICER OF A CORPORATION IS AN EMPLOYER AS THAT TERM IS DEFINED BY THE EMPLOYEE INCOME RETIREMENT SECURITY ACT (ERISA) AND PERSONALLY LIABLE FOR THE CORPORATION'S FAILURE TO MAKE EMPLOYEE BENEFIT FUND CONTRIBUTIONS. II WHETHER THE COURT OF APPEALS APPLIED THE PROPER RULE OF LAW IN DECIDING THAT THE SOLE SHAREHOLDER AND OFFICER OF A CLOSELY HELD CORPORATION WAS NOT PERSONALLY LIABLE FOR THE CORPORATION'S UNPAID CONTRIBUTIONS TO EMPLOYEE BENEFIT FUNDS GOVERNED BY ERISA. ii LIST OF PARTIES The parties to the proceedings below were the Respondents Russell Waldo, R. Waldo, Inc. and Waldo, R., Inc., and Petitioners Pipefitters Health and Welfare Trust, Pipefitters Pension Trust- and Pipefitters Local Union No. 562; John Marshall, administrator and fiduciary of the Respondents funds; Lester Gross, Joe Barry, Don Devitt and Robert McDonald, trustees. ii iil TABLE OF CONTENTS Page QUESTIONS PRESENTED .....-.+.e.« -« i fe ge ge ee a a a ee © | TABLE OF AUTHORITIES esa 2 ee 2 se wo ae OPINIONS BELOW er a oe ae oe on oe ee 1 JURISDICTION os. & € 6 « ee ef] 2 STATEMENT OF THE CASE ....e« « « e« « 2 REASONS FOR GRANTING THE WRIT ... . 7 ARGUMENT: ie THERE IS DISAGREEMENT AMONG THE LOWER COURTS AS TO WHETHER A CONTROLLING SHAREHOLDER IS AN EMPLOYER PURSUANT TO TITLE 29 U.S.C. §1002(5) AND IS PERSONALLY LIABLE FOR UNPAID ERISA CONTRIBUTIONS TO EMPLOYEE ' BENEFIT ee 1986. TIME PERIOD HOURS April 15, 1984 - May 31, 1984 2,912.40? June 1, 1984 - Dec. 31, 1984 4,654.75 Jan. 1, 1985 - May 31, 1985 S,hnawsto June 1, 1985 - Dec. 31, 1985 10,946.75 Jan. 1, 1986 - March 31, 1986 2,338.00 Defendants now argue that the stipulation should not be used because there is no breakdown of the work as to laborers, electricians, or other trades and because plaintiffs elicited no evidence as to which employees are entitled to the difference between Local 562 wages and C.1I.U. wages. As to the first argument, the Court has reviewed the transcript of Shirley Steele's testimony. Steele was the bookkeeper of R. Waldo, inc. She testified concerning the total hours of *The parties originally stipulated to the period from January 1, 1984, to May 31, 1984 (9708 hours). Since the court of appeals decision neither party has indicated how many of those hours were for the period from April 15, 1984 to May 31, 1984; however, the parties have agreed that a pro rata computation should be utilized. pipefitting worked by employees of R. Waldo, Inc. As Steele was going through her figures, the Court questioned her concerning supporting documentation. She advised the Court that she had some of the documents with her and the rest could easily be obtained. After a fifteen minute break, defense counsel informed the Court that the parties could stipulate to the hours in question. It was the Court's understanding that the stipulation would cover pipefitters and it could be used to determine hours lost under the Pipefitters' contract. That understanding is supported by a plain reading of the stipulation. The Court does not have to reach defendant's argument that plaintiffs do not have standing to sue for wages here because implicit in the court of appeals' decision is a finding that plaintiffs have standing to recover the wages in question.’ Id. at 819-20. Plaintiffs have provided an exhibit calculating the damages, liquidated damages, wages due and attorney fees.‘ See 29 U.S.C. §1132(g)(2). The only information contained in the exhibit which was disputed by defendants were the figures used for "hours" worked. Having - decided that defendant's objection to the stipulation on "hours" is without merit, the Court now finds that plaintiffs' exhibit properly reflected how much money *The issue of "associational standing" was briefed before the court of appeals. ‘Originally, plaintiffs agreed to waive their claim for the full amount of lost wages; however, in response to defense counsel's decision to reserve his right to contest wages due, the plaintiffs now seek the full amount of lost wages on behalf of its members and not just the difference between the labor rates paid to the CIU employees and the Pipefitters rate. The court has decided that defendants must abide by their stipulation. Likewise, plaintiffs must abide by their decision to waive their claim for the full amount of lost wages. was due under the Pipefitters' contract through July 15, 1990. The figures, as expressed below, have been adjusted to reflect money owed through the date of judgment. As to attorneys fees, it was stipulated to at the time of the first trial that $50,000.00 in attorneys fees was fair and reasonable. Plaintiffs' counsel has submitted an affidavit in which he indicates that since the time of the trial, an additional 400 hours of plaintiffs' legal counsel's professional services were required to process this matter through several judiciary proceedings before this Court, the Eighth Circuit, and the United States Supreme Court. The parties agree that the additional 400 hours of legal time were necessary, and the amount charged per hour was customary to this geographical area. The Court finds that an additional $40,000 in attorneys fees requested is fair and reasonable. CALCULATION OF DAMAGES Period Hours Rate Amount 4/15/84 to 2,912.40 $5.255 $15,304.66 5/31/84 6/1/84 to 4,654.75 $5.655 $26,322.61 12/31/84 1/1/85 to 5,152.75 $5.655 $29,138.80 5/31/85 6/1/85 to 10,946.75 $6.155 $67,377.25 12/31/85 1/1/86 to 2,338.00 $6.155 $14,390.39 3/31/86 Total April 15, 1984 to May 31, 1986: $152,533.71 a Liquidated Damages Through May 15. 1991, on Unpaid Health & Welfare and Pension Funds Contributions Period Amount Months 2% per Liqui- Delin- Month dated quent Damages 4/15/84 to $15,305 86 $26,325 $17,200 5/31/84 6/1/84 to $26,323 80 $42,117 $22, 400 12/31/84 1/1/85 to $29,139 74 $43,126 $14,800 5/31/85 6/1/85 to $67,377 68 $91,633 $19,040 12/31/85 1/1/86 $14,390 62 $17,844 $12, 400 $221,045 $85,480 C. Wages Due Difference Between Hourly Rate of Pipefitters and Period CIU Hours Amount 1/15/84 to $6.42 2,912.00 $18,698 5/31/84 6/1/84 to $7.42 4,654.75 $34,538 12/31/84 1/1/85 to $6.92 5,152.79 $35, 657 5/31/85 6/1/85 to $7.92 10,946.75 $86,698 12/31/85 1/1/86 to $6.92 2,338.00 $16,179 3/31/86 Total April 15, 1984, to March 31, 1986: 191,770 Total Amounts Owing: Contributions to Funds: $152, 534 Z Interest and Liquidated Damages: $306, 885 Wages Deferential: $191,770 $651,189 Attorneys fees as per Affidavit ) $50,000 stipulation; 400 x $100 @ hour= $40,000: $90,000 $741, 189 Plaintiffs seek to hold Russell Waldo individually liable for the amount due under the Pipefitters' contract because of Waldo's "self dealing with the corporate entities," complete commingling of corporate and individual assets," and “utter disregard for the corporate form or practice." Additionally, plaintiffs assert that Russell Waldo should be held individually now operates the remaining shell of the company business out of his home." Corporate officers cannot be held personally liable under ERISA where there is no basis for piercing the corporate veil.’ Rockney v. Blohorn, 877 F.2d 637 (8th Cir. 1989). In considering whether "Several courts have held that corporate offices or stockholders could be personally liable under the _ Employee Retirement Income Security Act of 1974, even though it would be inappropriate to pierce the corporate veil. See _ e.g., Gambino v. Index Sales Corp., 673 F.Supp. 1450, 1456 (N.D.I1l. 1987); Trustees of Amalgamated Ins. Fund v. Danin, 648 F.Supp. 1142, 1147 (D.Mass. 1986). to disregard the corporate form in actions to recover fringe benefit fund payments, the Court applies federal substantive law, although it may look to state law for guidance. Laborers Clean-up Contract Admin. Trust Fund v. Uriarte Clean-up Service, Inc., 736 F.2d 516, 523 (9th Cir. 1984). To determine whether Russell Waldo should be held personally liable for the debts of the corporation, the courts looks to three general factors: the amount of respect given to the separate identity of the corporation by its shareholders, the fraudulent intent of the incorporator, and the degree of injustice visited on the litigants by recognition of the corporate entity.°® Seymour _v. Hull & Moreland *"Reliance on state corporate law is proper if consistent with the federal policy of uniform interpretation and enforcement of collective bargaining agreements." Seymour v. Hull & Moreland Engineering, 605 F.2d 1105, 1110 (9th Cir. 1979). Because federal law provides ample guidance on this matter, the Court has looked to it in deciding this matter; however, the result under Missouri law ; ‘ * ? 2 Engineering, 605 F.2d 1105, 1110-1111 (9th Cir. 1979). The Court has already decided that Waldo R. was the alter ego of R. Waldo. Therefore, in deciding whether to pierce the corporate veil to hold Waldo individually liable, the Court, to appiying the factors discussed in Seymour, focuses on Waldo's relationship with the corporations, not the relationship of the corporations with one another. With this in mind, the court finds that the corporate formalities were preperly observed. Among other things, R. Waldo would be the same. Under Missouri law, the corporate entity may be disregarded if it is controlled and influenced by one or a few persons and the evidence establishes that the corporate cloak was used as "a subterfuge to defeat public convenience, to justify wrong or to perpetuate fraud." Fairbanks v. Chambers, 665 S.W.2d 33, 37 (Mo.App. 1984). Under the facts presented here, the Court would not pierce the corporate veil under the Missouri law. Although Waldo controlled and influenced the corporations in question, the corporate cloak was not used as a subterfuge. maintained separate corporate records, the board of directors met annually, and, on occasion, the board of directors held special meetings to authorize the president of the company, Russell Waldo, to proceed on a particular matter. For example, on August 1, 1986, the board of directors held a special meeting and decided to sell the assets of the corporation. Waldo, as president of the corporation, was authorized to conduct the negotiations and execute all sale agreements. Additionally, although plaintiffs tried to establish that Waldo commingled his personal funds with those of the corporations and that he treated corporate assets as his own, they failed in their proof. Given the above, the Court finds that Waldo showed respect for corporate formalities. As to the second prong of Seymour, there is no evidence of bad faith or fraudulent intent in the forming of the t 5 $ a 5 nn corporations. R. Waldo was an ongoing business which appears to have been adequately capitalized at the outset. Waldo R. was treated in good faith for the purpose of bidding on projects which required an AFL-CIO union work force. Nonetheless, the plaintiffs ask this Court to infer bad faith towards the union based on a land transaction which occurred in December of 1983 and on the fact that the corporate assets have now been sold off. The land in question was sold to Russell Waldo and so were many of the assets of the corporations. See International Union v. Cardwell Manufacturing Co., 416 F.Supp. 1267 (D.C.Kan. 1976) (parent corporation held liable for contributing to fringe benefit funds owed by a subsidiary corporation). On September 30, 1982, the board of directors of R. Waldo, Inc., agreed to sell Russell Waldo a tract of land with the legal description of Alpha Industrial Park for 71 shares of R. Waldo, Inc., stock. The value of the land was estimated at $95,708. The property was actually transferred in December of 1983, but the transaction remained unrecorded until August 28, 1985. In November of 1986, Mr. and Mrs. Waldo sold the property to Sieveking, Inc. for $550,000. The land transaction in question not only occurred before this suit was filed, it also occurred before a formal complaint was issues against "Waldo Construction" by the National Labor Relations Board. Under these facts, the Court will not infer bad faith. Likewise, the Court will not assume that Waldo ceased operating the corporations for an improper purpose. The Court finds credible Waldo's testimony that he ceased operating the businesses because of his health and because they were no longer profitable. Finally, although plaintiffs might have trouble collecting the judgement to be entered contemporaneously with this memorandum opinion, that alone does not constitute an inequitable result. The evidence establishes that Waldo created two corporations in good faith and abided by the corporate form. Additionally, plaintiffs have not convinced this Court that Waldo fraudulently drained the corporate assets. Under the circumstances, the Court will enter judgment in favor of Waldo individually and impose joint and several liability against Waldo, R. and R. Waldo. Dated this 10th day of May, 1991. EDWARD FILIPPINE “ad /s/ UNITED STATES DISTRICT JUDGE D-1 APPENDIX D TITLE 29 USC §1002(5) (5) The term “employer" means any person acting directly as an_- employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association acting for an employer is such capacity. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1702%3A1. Public record. Not legal advice.