United States District Court, N.D. Illinois, Eastern Division
CHICAGO REGIONAL COUNCIL OF CARPENTERS PENSION FUND, et al., Plaintiffs,
TMG CORPORATION and GALLANT CONSTRUCTION COMPANY, INC., Defendants.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge
plaintiffs, which are pension and health and welfare funds
(the Funds) related to the Chicago Regional Council of
Carpenters (the Union), have sued TMG Corporation and Gallant
Construction Company. TMG was a signatory to a contract with
the Union called the Area Agreement. The Funds allege that
TMG was a sham company that Gallant used to allow it to do
work covered by the Area Agreement without paying appropriate
fringe benefit contributions. The Funds contend that that the
two defendants were in fact a single employer or that TMG was
Gallant's alter ego. Both sides have moved for summary
judgment. For the reasons stated below, the Court grants the
Funds' motion in part and denies defendants' motion.
following facts are taken from the parties' summary
judgment materials. Gallant and TMG were formed on the same
day, TMG by Tom Galante and Gallant by his brother Michael
Galante. To avoid confusion, the Court will refer to each of
the Galantes by his first name.
Michael each had the same registered agent and the same
address in Maywood, Illinois, even though TMG had no office
at that location. Tom was the sole shareholder, officer, and
director of TMG, and Michael was the sole shareholder,
officer, and director of Gallant until 1998, when Kevin Krak
acquired half of the company. Krak acquired full ownership of
Gallant in 2002 and is now Gallant's sole shareholder,
officer, and director. Tom remained the sole shareholder,
officer, and director of TMG until its dissolution in 2014,
during the course of this litigation.
companies operated in the construction industry, performing
remodeling services for their clients. Although there was no
formal agreement between Gallant and TMG until 2007, the two
companies worked together closely from their inception. In
fact, Gallant was TMG's only customer throughout its
entire existence, and the only payments for services that TMG
ever received came from Gallant. Gallant, on the other hand,
employed supervisors through its subcontract with TMG,
through subcontracts with other entities, and through direct,
plaintiffs are multi-employer trust funds that provide
pension, welfare, training and other benefits to Union
members and their families. Each trust fund is organized,
administered, and governed according to an agreement, which
sets out the terms of its services and fund distributions.
Additionally, the Trust Funds are collectively administered
according to the terms of a collective bargaining agreement
known as the Area Agreement. The Area Agreement provides in
relevant part that:
EMPLOYER shall not contract or subcontract any work coming
within the jurisdictional claims of the UNION or any person,
firm or corporation not covered by a Collective Bargaining
Agreement with the UNION provided, however, that the
provision of the paragraph shall apply only to the
contracting and subcontracting of work to be done at the site
of construction, alteration, painting or repair of a
building, structure, or other work.
EMPLOYER, in recognition of the territorial and occupational
jurisdiction of the UNION, shall not subcontract or contract
out jobsite work coming within the jurisdiction of the
Carpenters Union nor utilize on the jobsite the services of
any other person, company, or concern to perform such work
that does not observe the same wage, fringe benefits, hours,
and conditions of employment as enjoyed by the Employees
covered by this Agreement.
Area Agreement § 3.2-3.3, Pls.' Ex. A at Ex. 5.
a signatory to the Area Agreement. As a result, TMG was able
to employ Union workers, but it gave up the right to
subcontract with non-Union entities or employees for work
covered by the Area Agreement.
by contrast, was never a signatory to the Area Agreement. It
used a non-Union work force as it wished and did not pay
those workers the wages or fringe benefits required by the
Area Agreement. But, through its relationship with TMG,
Gallant was also able to obtain and use Union labor when it
needed to do so.
Funds contend that TMG and Gallant were a single employer or,
in the alternative, that TMG was an alter ego of Gallant.
They allege that Gallant and TMG's arrangement allowed
Gallant to employ Union workers nominally employed by TMG
while also employing non-Union workers without paying Union
wages or fringe benefits and thereby operate outside the
bounds of the Area Agreement. The Funds further allege that
defendants did not produce records sufficient to allow the
Funds' auditors to determine whether they had complied
with their obligations under the Area Agreement. In this
lawsuit, the Funds seek to hold Gallant liable under the Area
Agreement. The Funds seek to recover unpaid fringe benefit
contributions, interest, liquidated damages, auditors'
fees, and attorneys' fees and costs for the workers they
hired to perform work within the scope of the Area Agreement.
sides have moved for summary judgment on the issue of
liability. The Court will discuss the facts ...