United States District Court, N.D. Illinois
March 31, 2004.
CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, et al., Plaintiff's
MARCA CONSTRUCTION, et al., Defendants
The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
This case comes before the Court on a Motion to Dismiss Plaintiffs'
Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by
Defendants East Lake Management and Development Corporation and Burling
Builders, Incorporated. The motion has been fully briefed and is now ripe
Plaintiff's in this case are three Trust Funds ("Trust Funds") that
receive contributions from numerous employers pursuant to collective
bargaining agreements between the employers and the Chicago and Northeast
Illinois District Council of Carpenters, a labor union. Defendant Marca
Construction ("Marca") is an employer who is bound by the terms of a
collective bargaining agreement to pay fringe benefits to the Trust
Funds. Defendants East Lake Management and Development Corporation ("East
Lake") and Burling Builders, Incorporated ("Burling") are not signatories
to the collective bargaining agreements, but the Trust Funds allege that
East Lake and Burling should be required to pay benefits to them because
they are mere
alter-egos of Defendant Marca.
The Plaintiff trust funds filed a complaint on September 18, 2002
seeking to audit the books and records of Defendants Marca, East Lake,
and Burling pursuant to the Employee Retirement Income Security Act
(ERISA). Defendants filed a Motion to Dismiss asserting that the action
should be barred by collateral estoppel.
In ruling on a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), the Court "must accept all well pleaded allegations as true. In
addition, the Court must view these allegations in the light most
favorable to the plaintiff." Gomez v. Illinois State Board of
Education. 811 F.2d 1030, 1039 (7th Cir. 1987). A party's claim
should only be dismissed if it is clear that no set of facts in support
of the claim would entitle the party to relief. Ledford v.
Sullivan, 105 F.3d 354, 356 (7th Cir. 1997) (quoting Hishon v.
King & Spaulding, 467 U.S. 69, 73 (1984)).
Defendants Marca, East Lake and Burling assert that the Plaintiff Trust
Funds should not be permitted to pursue this action because of previous
litigation in this district pursuant to which a determination was made
that they were not mere alter-egos of each other. In the previous
litigation, Sharon Walker sued Marca for discrimination under Title VII.
Walker is a member of the Chicago & Northeast Illinois District
Council of Carpenters Union and at one time she served as a steward in
that Union, Defendant Marca asserted that it was not obligated to comply
with Title VII because it had too few employees. Walker attempted to
pierce the corporate veil of Defendant Marca and present Defendants
Burling and East Lake to show that the three
companies were alter-egos of each other and together they had
sufficient employees to be covered under Title VII. The district court
judge in that case found that Walker could not prove that the companies
were alter-egos nor could she prove that the three companies were sharing
employees to escape Title VII liability. See Walker v. Marca
Construction. No. 02-C-3285, 2003 WL 297529 (N.D. Ill. Feb. 11,
The three Defendants in this action assert that the district court's
grant of summary judgment for Defendant Marca in the Walker
case should estop Plaintiff Trust Funds from arguing that they are
alter-egos of each other. Collateral estoppel requires that: (1) the
issues decided in the prior adjudication are identical to issues
presented for adjudication in the current proceeding; (2) the issue was
fully, fairly, and necessarily resolved in the prior actoin; and (3) the
party against whom estoppel is asserted was a party or in privity with a
party in the prior action. See Parklane Hosiery Co. v. Shore,
439 U.S. 322, 326 (1979); Meyer v. Rigdon. 36 F.3d 1375, 1379
(7th Cir. 1994).
The third requirement of collateral estoppel is clearly not met in this
case. The Plaintiff Trust Funds were not parties to the prior case, nor
were their interests represented therein. Defendants assert that because
Walker was a member of the Chicago Carpenters Union and an alleged
beneficiary of the Plaintiff Trust Funds, the instant Plaintiff's can be
effectively bound because they are in privity with Walker. This theory
cannot be accepted. "Although `strict identity of the parties is not
necessary to achieve privity[,] . . . the parties must be so closely
aligned that they represent the same legal interest.' Kunzelman v.
Thompson], 779 F.2d [1172,] at 1178 [(7th Cir. 1986)]."
Kraushaar v. Flanigan, 45 F.3d 1040, 1050 (7th Cir. 1995). The
Plaintiff Trust Funds interests in assuring that the three Defendant
employers in this case are not
defrauding them of contributions are much broader than Plaintiff
Walker's interest in her Title VII case. Walker sought to vindicate her
private interest in being free from discrimination in employment;
Plaintiff Trust Funds are seeking to assure that their beneficiaries are
getting the moneys that they are entitled to under ERISA. Perhaps Walker
and the Plaintiff Trust Funds would have each benefitted from a finding
that these Defendants are alter-egos of one another, but that is a far
cry from determining that they represent the "same legal interest,"
As the Defendants cannot meet the standards for asserting collateral
estoppel against Plaintiff Trust Funds, their Motion to Dismiss must be
For the reasons set forth above, Defendants' Motion to Dismiss is
© 1992-2004 VersusLaw Inc.