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Marshall v. Anderson Excavating & Wrecking Co.

United States Court of Appeals, Eighth Circuit

August 23, 2018

Rod Marshall, Trustee; Kim Quick, Trustee; Ron Kaminski, Trustee; Ron Fucinaro, Trustee; Frank Neuvirth, Trustee; Timothy McCormick, Trustee; International Union of Operating Engineers, Local 571; Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan; Contractors, Laborers, Teamsters and Engineers Pension Plan Plaintiffs - Appellees
v.
Anderson Excavating & Wrecking Company, also known as Anderson Excavating Co. Defendant-Appellant

          Submitted: May 16, 2018

          Appeal from United States District Court for the District of Nebraska - Omaha

          Before SMITH, Chief Judge, BEAM and COLLOTON, Circuit Judges.

          SMITH, Chief Judge.

         International Union of Operating Engineers, Local 571 ("Union") and trustees of the Contractors, Laborers, Teamsters, and Engineers ("CLT&E") Health and Welfare Plan ("Welfare Plan") and Pension Plan ("Pension Plan") (collectively, "plaintiffs") sued Anderson Excavating and Wrecking Co. ("Anderson Excavating") under 29 U.S.C. § 185(a), 29 U.S.C. § 1132, and 29 U.S.C. § 1145. They requested that the district court order Anderson Excavating to pay the contributions it allegedly owes to the Welfare Plan and Pension Plan, along with interest, liquidated damages, and attorneys' fees and costs. The district court found Anderson Excavating liable to the plaintiffs for delinquent contributions under § 1145 and entered judgment against it and in favor of the plaintiffs in the amount of $11, 956.96 in unpaid contributions; $8, 817.96 in prejudgment interest; $8, 817.96 in liquidated damages; $38, 331 in attorneys' fees; and $516.50 in nontaxable costs.

         On appeal, Anderson Excavating argues that the district court erred in determining (1) damages for unpaid contributions, (2) prejudgment interest, (3) liquidated damages, and (4) attorneys' fees. We conclude that the district court legally erred in applying the alter ego doctrine to justify an award of unpaid contributions for an alleged employee's work. Accordingly, we reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

         I. Background

         A. Facts

         After a bench trial, the district court made the following findings of fact. See Marshall v. Anderson Excavating & Wrecking Co., No. 8:14-CV-96, slip op. at 1-11 (D. Neb. Aug. 11, 2016), ECF No. 77. Various construction labor unions and contractors established the Welfare Plan and Pension Plan to administer health benefits and a pension program for employees the unions represent. On May 30, 1996, Anderson Excavating, a construction business owned by Virgil Anderson, entered into an agreement with the Union, which "recognized the Union as the 'exclusive collective bargaining agent for all employees within the contractually described bargaining unit on all present and future job sites within the jurisdiction of the Union.'" Id. at 2 (quoting Ex. 30).

         Anderson Excavating entered into a collective bargaining agreement (CBA) with the Union. It provides, in relevant part, that the parties must comply with agreements establishing the Welfare Plan and Pension Plan. The CBA states that Anderson Excavating must contribute $4.00 to the Welfare Plan and $2.45 to the Pension Plan for each hour employees "worked on projects in Douglas, Cass, Washington, Sarpy, that portion of Saunders County lying east of Highway 109 extended north and south to the County Line for each employee covered by this Agreement." Id. (quoting Ex. 1 at 16). Separate CBA provisions detailed the types of employees the CBA covered.

         In 2013, the CLT&E commissioned an audit of Anderson Excavating's payroll. The CLT&E retained JoAnne Walde, a CPA for DeBoer & Associates, to audit Anderson Excavating's payroll for the period between January 1, 2010, and April 30, 2013. Walde testified that she used records Anderson Excavating provided to determine what type of work each of Anderson Excavating's employees performed. The records included a payroll summary report, W-2s, W-3s, 1099s, 1096s, and state unemployment records. She also explained that Dawn Helms, the CLT&E's contract compliance auditor, provided her with the Fringe Benefit Reports that Anderson Excavating had submitted to the CLT&E for the relevant time period.

         Each Fringe Benefit Report lists the contributions Anderson Excavating made to the Welfare Plan and Pension Plan funds for a particular month. The Fringe Benefit Reports indicate that Anderson Excavating contributed to the Welfare Plan and Pension Plan each month from 2006 through 2015. Helms also gave Walde certain certified payroll records that Anderson Excavating had submitted to its general contractor on a project known as the Kiewit Phelps job or the StratCom job. Walde testified that she conversed with Ilene Kahler, Anderson Excavating's office manager, concerning what work certain employees performed. Walde gave a list of employees to Kahler, and Kahler then made handwritten notes about the type of work each employee performed.

         The records Walde reviewed and relied on actually came from two different but related companies owned by Virgil Anderson. Some of the records came from Anderson Excavating. The rest of the records came from a separately incorporated entity called Anderson Excavating Company Plus ("Anderson Plus"). Walde testified that no one told her there were two separate companies. Consequently, her audit report did not distinguish between the two companies.

         After reviewing company records, Walde testified that she next divided the list of employees into two groups: operating engineers and those who were not operating engineers. Walde's understanding was that the CBA covered only work that the operating engineers performed. According to Walde, her next step was to identify any work that operating engineers performed that Anderson Excavating had not reported or remitted on. Walde created a document representing the variances between the ...


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