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Central States, Southeast & Southwest Areas Pension Fund v. John Clark Trucking & Rigging Co.

March 19, 2009

CENTRAL STATES, SOUTHEAST & SOUTHWEST AREAS PENSION FUND ET AL, PLAINTIFFS,
v.
JOHN CLARK TRUCKING & RIGGING COMPANY F/K/A/ THE JOHN CLARK TRUCKING COMPANY ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION & ORDER

Plaintiffs Central States, Southeast and Southwest Areas Pension Fund, Central States, Southeast and Southwest Areas Health and Welfare Fund, and trustee, Howard McDougall (collectively "the Fund") have brought suit pursuant to Section 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1145, against Defendants John Clark Trucking & Rigging Company ("Clark Trucking"); Hosea Industrial Packing, LLC ("Hosea-Industrial Packing"); Hosea Industrial Warehousing & Packing, LLC ("Hosea-Warehousing"); Hosea Worldwide, Inc. ("Hosea-Worldwide"); Hosea Office & Industrial Services, Inc. ("Hosea-Office"); Hosea Packing & Shipping, Inc. ("Hosea-Packing&Shipping"); Hosea Project Movers, LLC ("Hosea-Project"); Hosea-Hensley Trucking & Rigging Co., Inc. ("Hosea-Hensley"); Southern Project Movers, LLC ("SPM"); and Todd Transportation Company ("TTC"). The amended complaint contains five counts. Count I seeks delinquent contributions from Clark Trucking for an employee whom Clark Trucking reported to the Fund, but for whom Clark Trucking allegedly failed to pay the required contribution in 2004.*fn1 Count II alleges that Clark Trucking utilized employees who worked for the other defendants and who were not reported to the Fund (collectively, "unreported employees") for jobs that should have been reserved for employees who are reported to the Fund (collectively, "reported employees"). This count alleges that Clark Trucking is contractually obligated to pay contributions for these unreported employees under a Collective Bargaining Agreement ("CBA") between Clark Trucking and a local union, Local Union No. 100 ("Local 100"). Count III alleges that the remaining defendants constitute a "single employer" with Clark Trucking, and are liable for any unpaid contributions for employees who engaged in work covered by the CBA from 1998 to 2006. Count IV alleges that the remaining defendants constitute the "alter ego" of Clark Trucking, and are liable for any unpaid contributions for employees who engaged in work covered by the CBA from 1998 to 2006. Count V alleges that the remaining defendants constitute "joint employers" with Clark Trucking, and are liable for any unpaid contributions for employees who engaged in work covered by the CBA from 1998 to 2006. Pending before the court are cross-motions for summary judgment*fn2 and a related motion to strike.

I. BACKGROUND*fn3

A. The Defendant Entities

Clark Trucking, which was owned by Jack Clark prior to its purchase by David Hosea in the 1980s, was primarily engaged in the business of rigging, dismantling, and hauling large equipment. David Hosea operated several different corporations prior to and after his purchase of Clark Trucking, some of which engaged in work similar to that performed by Clark Trucking and others of which focused on related packing and shipping functions. The following is a brief chronological description of the various defendant entities.

Prior to the purchase of Clark Trucking, David Hosea operated Hosea-Worldwide for work largely related to moving heavy machinery and plant relocation, as well as packing and shipping. It appears that TTC was also operating at this point, primarily providing the service of over-the-road transportation of heavy machinery and other large items. Around 1990, David Hosea purchased Hosea-Hensley to expand Hosea-Worldwide's ability to utilize cranes in its work.

In 1992, the Hosea entities underwent their first major transformation. Hosea-Worldwide's packing and shipping work was transferred to a new company, Hosea-Packing & Shipping. HoseaWorldwide's heavy machinery moving and plant relocation work, and related relocation services, was transferred to the new entity Hosea-Office. By 1995 or 1996, Hosea-Hensley and TTC had ceased operations. The employees of Hosea-Hensley and TTC were largely absorbed into the existing companies.

A second restructuring occurred in the late 1990s. Hosea-Packing & Shipping ceased operations in 1998, and its work was split between two new companies: Hosea-Industrial Packing and Hosea-Warehousing. In 2000, Hosea-Project was formed, and Hosea-Office's work was merged into Hosea-Project in the early 2000s. Around this same time, Clark Trucking ceased operations,*fn4 and its remaining reported employees were absorbed into other defendant entities. By 2002, Hosea-Worldwide had also transferred its remaining work to Hosea-Project, and Hosea-Worldwide became a holding/leasing company, leasing its equipment to Hosea-Project.

In 2003 or 2004, the new company SPM was formed. Unlike all of the prior entities described herein, David Hosea did not own SPM. Instead, SPM was formed in part by David Hosea's mother, Marcia Hosea. SPM was created to work on an anticipated transportation contract for a car manufacturing facility. This contract did not come to fruition, and SPM shut down shortly after being formed.

B. Clark Trucking, Local 100, and Union Representation

Clark Trucking is the only entity owned by David Hosea that employed union labor, and there is no allegation that the other Hosea entities entered into any relevant CBAs. Prior to and continuing after David Hosea's purchase, Clark Trucking was a party to a series of CBAs with Local 100. The particular CBA that was in effect from 1998 onward was to cover the following employees: all leadmen (pushers), heavy machinery mover handler drivers, mule and fork lift operators, and helpers employed by the Employer directly, or indirectly, or in any wholly owned or controlled subsidiary company of the Employer, who was engaged in construction work, demolition, hauling materials or machinery for construction or used in construction or demolition.

See Am. Compl. ¶ 21 (quoting CBA art. I, sec. 2). The CBA requires Clark Trucking to submit contributions on behalf of covered employees to both the plaintiff pension fund and plaintiff health and welfare fund.

C. The Functioning and Interconnected Nature of the Entities

David Hosea purchased Clark Trucking to take advantage of the expertise of Clark Trucking's employees, and to expand the business opportunities for his other corporations by gaining access to Clark Trucking's customer list and by gaining the ability to compete for union-only contracts. At the time of purchase, David Hosea promised Jack Clark that all of the existing unionized employees working for Clark Trucking (and who were being reported to the Fund) would continue to work for him until they had retired-none would be laid off. David Hosea appears to have fulfilled this promise.

David Hosea was the president of every defendant, with the exception of SPM. Although the various defendants maintained distinct corporate identities, much of their day-to-day work was interconnected. Shortly after Clark Trucking was acquired, David Hosea began employing integrated working crews that crossed corporate lines. Staffing for particular jobs was done based on the employee's relevant skill set. Reported and unreported employees would work side by side, and reported employees would train unreported employees. Mechanics from different payrolls worked on all of the defendants' equipment without regard to which company owned it. All defendants shared the same corporate counsel and accountant,*fn5 and all defendants' insurance policies were maintained by the same company. Defendants shared the same phone and fax numbers in their business operations, though the parties dispute whether the same receptionist was shared by the companies. Some defendants operated from the same premises, though a few were located away from the main office. All administrative functions, including payroll, human resources, and accounts receivable and payable, were handled for all defendants by the same individuals. Labor relations were also centralized across the companies. Kim McKenney f/k/a/ Kim Kraemer was responsible for hiring, firing, disciplining, and dispatching all defendants' employees, both reported and unreported, from 1990 to present. David Hosea was involved in the formation of the last CBA between the Local 100 and Clark Trucking.

Some matters were kept distinct, at least as between Clark Trucking and the other defendants.*fn6 All employees other than the reported employees had access to a corporate-sponsored 401(k) plan. Each entity maintained separate bank accounts, and many of the shared costs (such as utilities for those that shared common premises) were divided among the entities. Also, prior to Clark Trucking's cessation of operations in 2000, the parties agree that Clark Trucking's day-to-day operations-including bidding jobs, dispatching crews, and general management of the company-were handled by first Ray Doran and later Bob Clark; Ray ...


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