MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE
The plaintiffs, the Central States, Southeast and Southwest Areas Pension Fund and one of its trustees Howard McDougall (collectively "Central States"), have sued to recover delinquent pension contributions from David Sloan, d/b/a Sloan Excavating, and Darlene Sloan, d/b/a Sloan Enterprises. Currently before the Court is Central States' motion for summary judgment. For the reasons set forth below, that motion is granted.
The parties do not dispute most of the evidence here, but they do dispute the inferences to be drawn from that evidence. They agree that David Sloan has operated Sloan Excavating ("Excavating") in the Bloomington, Illinois, area for the last fourteen years. As part of that business, he has used trucks and employed drivers to haul rock, gravel and concrete. In February 1987, Excavating executed both a pre-existing area-wide collective bargaining agreement and a participation agreement with Local 26 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America ("Teamsters"). Under these agreements, Excavating agreed to pay pension contributions to Central States on behalf of Excavating's three covered drivers, amounting to $ 61 a week for each employee. Soon after signing these agreements, however, David Sloan found that he "couldn't stay in business under that contract." David Sloan Dep. at 30, attached as Exh. D, Central States' Local Rule 12(1) Statement.
Accordingly, in May 1987, he essentially transferred the hauling and trucking part of his business to a new company formed by his wife Darlene Sloan and known as Sloan Enterprises ("Enterprises"). With only two exceptions,
neither Enterprises nor Excavating has remitted any further pension contributions.
The relationship between Enterprises and Excavating forms the crux of this case. Central States contends that Enterprises is the alter ego of Excavating and as such remains liable for the pension fund contributions, while the Sloans argue that Excavating and Enterprises are really two separate entities, and that Enterprises therefore has no obligation to Central States. Because of the importance of this dispute, it is necessary to examine the creation of Enterprises and its relation to the ostensibly separate Excavating.
On May 31, 1987, Excavating's three truck drivers stopped working for Excavating, see Answers to Interrogatories para. 7, Exh. I, and began working for Enterprises, see Darlene Sloan Response to Request for Admissions paras. 14, 16; Dep. of James Bridgewater at 10, Exh. K. In addition, Excavating transferred all four of its trucks to Enterprises free of charge. See Darlene Sloan Dep. at 8, Exh. C; David Sloan Dep. at 9, Exh. D. Ever since the transfer of employees and trucks, the two entities have had separate offices and truck sheds, but they are relatively close together. Specifically, their offices are about 120 feet apart; Enterprises' office is in a room at the Sloan's home, while Excavating's office is in the shop behind the house. David Sloan Dep. at 40-41, Exh. D. Likewise, the trucks used by Enterprises and the equipment used by Excavating are kept in separate parts of the same building. Id. at 59-59.
The two entities have separate telephone numbers, see David Sloan Dep. at 41, Exh. D, advertise separately, id. at 42; Darlene Sloan Dep. at 34-35, Exh. C, bill separately, id. at 34, and maintain separate books and records, id. at 42. However, there are financial relations between the two. First, from June to September 1987, Enterprises used Excavating's checking account to pay the wages of its truck drivers, although the money came from Enterprises' funds. See id. at 8-9. In addition, BancMidwest made two loans to Excavating after the transfer of trucks and employees from Excavating. Each loan listed the borrowers as "David L. Sloan/Cara Darlene Sloan [her full name] d/b/a David Sloan Excavating"; each loan was signed by both David and Darlene Sloan; and each loan was secured by one of the trucks transferred from Excavating to Enterprises. See Exhibits 1 and 2 to Dep. of Karen Fincham, Exh. M. Darlene Sloan indicated that Excavating is paying one of these loans, even though Enterprises is using the truck which secures the loan. Darlene Sloan Dep. at 30. (The parties have not pointed to any evidence concerning the second loan.) Moreover, in a personal financial statement submitted in connection with the loan, David Sloan listed the four trucks used by Enterprises, as well as the equipment used by Excavating, as personal assets. Exhibit 3 to Dep. of Karen Fincham, Exh. M.
Excavating remained in the excavation business after it transferred its trucking business to Enterprises. When Excavating needed truckers in its work, David Sloan would hire Enterprises' truck drivers, just as any other contractor might. If Enterprises had equipment available, it would do the work for Excavating and then bill Excavating at the same rate as other contractors for the service rendered. Dep. of Darlene Sloan at 37, Exh. C; Dep. of David Sloan at 64, Exh. D. Enterprises' truck drivers reported to Darlene Sloan, and she would give them their assignments. Dep. of Darlene Sloan at 13, Exh. C. They would also report to the contractor who hired Enterprises, whether that was David Sloan or someone else. Id. at 14; David Sloan Dep. at 23-25, Exh. D. David Sloan did not otherwise direct the activities of Enterprises' employees. Id. at 62.
Initially, about forty to forty-five percent of Enterprises' work was done for Excavating. Darlene Sloan Dep. at 21, Exh. C. Shortly thereafter, the percentage began to decrease and now stands at ten to fifteen percent. Id. at 37.
Under the Federal Rules of Civil Procedure, summary judgment is appropriate if "there is no genuine issue as to any material facts and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). This standard places the initial burden on the moving party to identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986) (quoting Rule 56(c)). Once the moving party has done this, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (quoting Rule 56(e)).
The Alter Ego Doctrine
To determine whether a genuine issue of material fact is present, "we must consider both the substantive law applicable to this case and the question of whether a reasonable jury could render a verdict in favor of the non-moving party based upon this law." Checkers, Simon & Rosner v. Lurie Corp., 864 F.2d 1338, 1344 (7th Cir. 1988). Central States assumes that the substantive law applicable to this case is the alter ego doctrine. This doctrine is usually applied to determine whether one employer is required to bargain with a union that represented a former employer's employees or whether that employer is bound by an arbitration decision against the former employer. See International Union of Operating Engineers, Local 150 v. Centor Contractors, Inc., 831 F.2d 1309, 1313 (7th Cir. 1987). However, we see no reason the same principles should not be applicable when a party seeks to enforce the terms of a labor contract, and the Sloans' do not argue otherwise.
The intent to avoid labor obligations is the linchpin of the alter ego doctrine, at least in the Seventh Circuit:
The alter ego doctrine focuses on "the existence of a disguised continuance of a former business entity or an attempt to avoid the obligations of a collective bargaining agreement, such as through a sham transfer of assets." Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir. 1983). In sum "'unlawful motive or intent are critical inquiries in an alter ego analysis. . . .'" Iowa Express Distribution, Inc. v. NLRB, 739 F.2d 1305, 1311 (8th Cir. 1984) (quoting Penntech Papers, 706 F.2d at 24).
Centor Contractors, 831 F.2d at 1312-13.
In both his deposition and the response to the motion for summary judgment, David Sloan has forthrightly admitted that he transferred Excavating's trucking business to Enterprises because he believed Excavating's labor obligations threatened its continued survival. The cost of Excavating's labor obligations made Excavating less competitive with other, non-union contractors, David Sloan Dep. at 10; see also Darlene Sloan Dep. at 7. David Sloan found that he "could not afford to stay in business the way things were going," David Sloan Dep. at 29. He concluded that transfer was the only way to avoid Excavating's labor obligations and to save Excavating's business. As stated in Defendants' Counterstatement of Material Facts,
The most fundamental and bona fide of economic motives underlay David Sloan's decision to get his company, Sloan Excavating ("Excavating"), out of the trucking and hauling business: Excavating could not survive if its trucking and hauling functions continued to operate under the collective bargaining agreement and participating agreement . . .
Transfer of Excavating's trucking and hauling business to a new company not bound by the agreements was seen as the means to Excavating's survival. . . .