December 6, 2017
from the United States District Court for the Southern
District of Indiana, Indianapolis Division. No. 1:15-cv-01284
- Larry J. McKinney, Judge.
Wood, Chief Judge, and Easterbrook and Hamilton, Circuit
"Wally" Gianino owned and operated a plastering
company in St. Louis, Missouri, for over thirty years. That
business-Gianino Plastering-abruptly closed in 2012. Around
the same time, Wally's son, Curt Gianino, who had worked
at Gianino Plastering for over a decade, founded his own
company, CWG Plastering, LLC. CWG took on at least some of
Gianino Plastering's customers, hired its employees, and
without missing a beat completed jobs that Gianino Plastering
had begun. What might be a story of a son following in his
father's footsteps is complicated by an inconvenient
fact: Curt went into business on the same day that a $196,
940.73 judgment was entered against his father's company.
judgment arose out of Gianino Plastering's 2009
collective bargaining agreement with the Operative Plasterers
and Cement Masons International Association Local 3
("the Union"). The agreement obligated the company
to make regular contributions to the Indiana State Council of
Plasterers and Cement Masons Health and Welfare and Pension
Funds ("the Funds"). Gianino Plastering soon fell
short of meeting that obligation, prompting the Funds to sue
in the Southern District of Indiana in 2011 to recover the
delinquent payments. After a bench trial, the district court
entered judgment against Gianino Plastering and in favor of
the Funds. But the Funds were blocked from collecting on
their judgment because Gianino Plastering filed for
Funds now have sued CWG, asserting that CWG is Gianino
Plastering's successor and alter ego and thus liable for
both the judgment and for other ongoing violations of the
collective bargaining agreement. After discovery, the parties
filed cross-motions for summary judgment. The district court
ruled that the Funds had not produced enough evidence to
proceed to trial. Our de novo review of the record
convinces us to the contrary: the Funds proffered
considerable evidence that a trier of fact could use to
support its case against CWG, and so we reverse and remand.
Funds rely on two legal theories to impose liability on CWG
for Gianino Plastering's debts and continuing
obligations. First, they contend that CWG is a successor to
Gianino Plastering, making it liable for Gianino
Plastering's failure to pay into the Funds. See,
e.g., Teed v. Thomas & Betts Power Sols.,
L.L.C., 711 F.3d 763, 764 (7th Cir. 2013). Second, they
argue that CWG must continue to abide by Gianino
Plastering's collective bargaining obligations as an
alter ego of the defunct company. See, e.g.,
Int'l Union of Operating Eng'rs, Local 150,
AFLCIO v. Centor Contractors, Inc., 831 F.2d 1309,
1312-13 (7th Cir. 1987).
CWG's liability arises under the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. §§ 1132,
1145, and the National Labor Relations Act (NLRA), 29 U.S.C.
§ 185(a), everyone assumed in the district court that
federal law governs both claims. (On appeal, CWG cited a few
cases that rested on state law, but it never actually argued
that state law applies.) At oral argument, CWG belatedly took
the position that state law should apply. Choice of law is
not a subject of jurisdictional status, and so a party can
forfeit that issue by overlooking it. McCoy v. Iberdrola
Renewables, Inc., 760 F.3d 674, 684 (7th Cir. 2014).
That is what CWG did here: it failed to challenge the
governing law either in its briefs before this court or in
its summary judgment materials in the district court. We thus
consider the subject forfeited, see Puffer v. Allstate
Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012).
with the forfeiture, the question remains whether we should,
on our own initiative, reject the use of federal law in favor
of one or more state laws. We see no reason to do so here. If
the choice of federal law appeared to be flatly inconsistent
with the Supreme Court's decisions, we would have a
different problem. But it is not. To the contrary, the NLRA
and ERISA are both statutes in which the Supreme Court has
often opted for a federal standard, in light of the broad
preemptive force of both ERISA and section 301 of the Labor
Management Relations Act. See Smith v. Evening News
Ass'n, 371 U.S. 195, 200 (1962); Pilot Life Ins.
Co. v. Dedeaux, 481 U.S. 41, 55-56 (1987).
example, the Supreme Court announced a federal standard for
successor liability in a number of cases beginning with
John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543 (1964), where it addressed the question whether a
corporate successor had a duty to arbitrate under the labor
laws. Id. at 548-49. There the Court found that
federal law controlled and imposed a duty to arbitrate on the
successor employer, even though only the predecessor had
actually agreed to arbitrate. Id. at 550-51. Over
the next decade, the Court periodically returned to successor
liability under the NLRA and in each instance, it used a
federal standard. See Golden State Bottling Co. v.
NLRB, 414 U.S. 168, 174-85 (1973) (finding that federal
labor policy favored holding a successor liable for the
unlawful discharge of an employee from its predecessor);
NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S.
272, 287-88 (1972) (holding that a successor is not bound to
substantive terms of previous collective bargaining
agreement). See also Howard Johnson Co. v. Detroit Local
Joint Exec. Bd., Hotel & Rest. Emps. & Bartenders
Int'l Union, AFL-CIO, 417 U.S. 249, 264-65 (1974)
(no successor liability).
federal standard for alter-ego liability also has deep roots
in labor law. In Howard Johnson, the Supreme Court
held, without even a nod to state law, that federal common
law governed the question before it. It then went on to state
that under federal law, an "alter ego" (unlike a
successor corporation) "is in reality the same employer
and is subject ...