The opinion of the court was delivered by: MORAN
JAMES B. MORAN, CHIEF UNITED STATES DISTRICT JUDGE
Plaintiffs, the Chicago Plastering Institute (the Institute), and the trustees of several pension and health and welfare trust funds,
have brought this suit against the William A. Duguid Company (Duguid), alleging that Duguid has sought to avoid its obligation to make contributions to their funds as required by its collective bargaining agreements with the Journeyman Plasterers' Protective and Benevolent Society of Chicago, Local 5 (Local 5), and the International Union of Bricklayers and Allied Craftsmen, Local 56 (Local 56) and Local 74 (Local 74), by diverting plastering work to one of its foremen, Marvin Borecky, who does business as C & K Plastering (C & K). The plaintiffs have filed a motion for partial summary judgment on the issue of Duguid's liability for its actions from 1986 to 1988. Duguid has filed a cross-motion for summary judgment. For the reasons stated herein, this court denies plaintiffs' motion and grants that of Duguid.
The following facts, and any inferences to be drawn from them, are uncontested. Duguid is in the business of plastering, lathing, drywall, acoustical tile installation, exterior insulation, and prefabricated exterior plastering. It performs both commercial and residential jobs for general contractors, building owners, architects, and individuals throughout metropolitan Chicago. Duguid has employed approximately 90 to 120 employees each year from 1986 to 1988; on the average, it will employ 25 plasterers at any given time, although this number fluctuates with the season. The crew for each Duguid job is designated by executive vice-president Harold Duguid, job superintendent Don Hermle, president William Duguid, or Matthew Duguid.
All of the plasterers hired by Duguid are members of Locals 5, 56, and 74. Duguid has signed collective bargaining agreements with Locals 5 and 56. Pursuant to these collective agreements and the trust agreements they incorporate, Duguid is required to make contributions to those locals' health and welfare and pension funds on a monthly basis, for each hour worked by each covered plasterer. The Local 5 and Local 56 funds have entered into reciprocity agreements with the Local 74 health and welfare and pension funds, under which contributions made by employers on behalf of each plasterer are directed to the fund or funds in which the plasterer is a participant.
Duguid has employed Marvin Borecky as a plasterer foreman for approximately twenty years. Although Borecky supervises Duguid plastering crews, he is a "working foreman" who works alongside his crews as a journeyman plasterer. Because much plastering work is performed outside, the work is seasonal. Borecky works for Duguid from approximately March through early November, Monday through Friday, from 8:00 a.m. to 4:30 p.m. He has been employed by other contractors as well.
Seeking to supplement his income, Borecky formed C & K, of which he is the owner and sole proprietor, in 1974. A smaller enterprise than Duguid, C & K performs plastering work on both commercial and residential properties. Most of its jobs are performed either on Borecky's off-hours (evenings and weekends) or during the off-season (December through February). C & K performs its off-season jobs during regular business hours.
Contending that Duguid has deliberately diverted work to C & K since 1986 to reduce the amount of contributions it owes the health and welfare and pension funds, the plaintiffs filed the instant action under Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132, and Section 301(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), to recover the allegedly delinquent contributions.
Alleging that over three-quarters of C & K's business is obtained from Duguid, the plaintiffs assert that the two companies are alter egos or a single employer or, alternatively, that Duguid has subcontracted work to C & K in violation of its collective agreements with the Locals. The plaintiffs have filed a motion for partial summary judgment on the issue of Duguid's liability from 1986 to 1988.
Duguid has filed a cross-motion for summary judgment.
I. Summary Judgment Standard
Summary judgment is appropriate where there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Schroeder v. Copley Newspaper, 879 F.2d 266, 268 (7th Cir. 1989). The movant bears the burden of specifying "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, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Fed.R.Civ.P. 56(c)). In response, the non-movant "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Summary judgment motions must be considered in light of both the applicable substantive law and the question of whether a reasonable jury could render a verdict in the non-movant's favor on that basis. Checkers, Simon & Rosner v. Lurie Corp., 864 F.2d 1338, 1344 (7th Cir. 1988). "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, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). That the parties have filed cross-motions for summary judgment does not mean that genuine issues of material fact necessarily do not exist.
II. The Duguid/C & K Relationship
A. C & K as the Alter Ego of Duguid
The alter ego doctrine deems two nominally distinct businesses to be one in order to prevent an employer from avoiding obligations under a collective bargaining agreement merely by altering its corporate form. NLRB v. Dane County Dairy, 795 F.2d 1313, 1321 (7th Cir. 1986). While used most commonly to root out "'a disguised continuance of a former business entity,'" International Union of Operating Engineers, Local 150 v. Centor Contractors, Inc., 831 F.2d 1309, 1312 (7th Cir. 1987) (quoting Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir.), cert. denied, 464 U.S. 892, 78 L. Ed. 2d 228, 104 S. Ct. 237 (1983)), the doctrine is equally applicable to situations in which the entity allegedly seeking to avoid its obligations exists side-by-side with its alleged alter ego. See Central States, Southeast & Southwest Areas Pension Fund v. Sloan, 902 F.2d 593 (7th Cir. 1990); Crest Tankers, Inc. v. National Maritime Union, 796 F.2d 234 (8th Cir. 1986).
The alter ego analysis is heavily fact-laden. Alter egos generally are found where two enterprises share "substantially identical management, business purpose, operation, equipment, customers, and supervision as well as ownership." Crawford Door Sales Co., Inc. and Cordes Door Co., Inc., 226 N.L.R.B. 1144 (1976). While most of these factors are not individually dispositive, the Seventh Circuit considers unlawful motive or intent to avoid collective bargaining agreement obligations to be critical elements of the inquiry. Centor Contractors, 831 F.2d at 1312 (quoting Penntech Papers, 706 F.2d at 24).
1. Duguid's Intent in Subcontracting to C & K
Emphasizing that overtime work is compensated at premiums as high as double pay under Duguid's collective bargaining agreements, the plaintiffs on several occasions characterize C & K as Duguid's "after-hours" crew, apparently claiming that Duguid diverted work to C & K in order to avoid paying these overtime premiums. They contend that Duguid can avoid the payment of union rates and overtime premiums by diverting the work, thus ensuring itself a wide profit margin (Pl. Mem. at 7-8 and n. 8).
Even if true, these allegations fail to address the kind of intent relevant to the plaintiffs' alter ego claim. A desire to avoid having to pay overtime premiums is not probative of whether Duguid sought to avoid the obligation to make a set contribution to the plaintiffs' trust funds for each hour worked by a Duguid plasterer. To the extent that not having to contribute to the trust funds was another result of giving portions of Duguid jobs to C & K, the plaintiffs have provided no direct evidence that such was Duguid's underlying motivation. In the absence of direct evidence, therefore, we look to the remaining factors of the alter ego analysis to determine whether the plaintiffs have demonstrated the requisite intent via circumstantial evidence.
2. C & K as a Sham Entity
Borecky formed C & K on his own in 1974 as a sole proprietorship, to do side work when he was not working for other plasterers. It is undisputed that Duguid did not even know C & K existed until 1986, when Borecky approached William Duguid to inquire whether he had any extra work that could be subcontracted to C & K (Def. Ex. 1 at paras. 19, 22). Dryvit, a new and relatively inexpensive plastering material, was gaining popularity at the time. The resulting increase in business left Duguid with a labor shortage (Def. Ex. 2 at para. 8).
According to Duguid, the unions, particularly Local 5, were unable to furnish a consistent supply of qualified plasterers during this busy period. William Duguid began calling Local 5 almost daily to find plasterers, speaking with its secretary and business representatives. Each time, he claims, he was told that no plasterers were available; those who were either were unfamiliar with Duguid's work or had proved inadequate in the past (Def. Ex. 1 at para. 21; Pl. Ex. 8 at 228-31).
It was at this time that Duguid first subcontracted work to C & K ...