Appeal from the United States District Court for the Central District of California, A. Howard Matz, District Judge, Presiding, D.C. No. CV-04-129 AHM (PLAx).
The opinion of the court was delivered by: Bybee, Circuit Judge
Argued and Submitted April 7, 2008 -- Pasadena, California.
Before: Alfred T. Goodwin, Andrew J. Kleinfeld, and Jay S. Bybee, Circuit Judges.
Plaintiff-appellant Southern California Painters & Allied Trades, District Council No. 36 ("the Union") brought suit, alleging that defendants-appellees Rodin & Co., Inc. ("Rodin") and Southern California Painting, Inc. ("SCP") were alter egos, and that Rodin was therefore bound by the Master Labor Agreement signed by SCP. For the reasons set forth below, we affirm the district court's judgment in favor of Rodin and SCP.
Rodin is a commercial painting contractor in Los Angeles. It has been in business for over eighteen years, employs more than seventy people, and completes more than one thousand commercial painting jobs each year. Fred Rodin*fn1 is the sole shareholder of Rodin and is responsible for its daily operations. Rodin is not a party to any union collective bargaining agreements. Ron Benveniste and Fred Rodin have been friends since the mid-1980s. Benveniste established a residential painting business in 1979. In 2001, he wanted to expand his business to include commercial painting services, so he consulted with Fred, who already had experience in the commercial painting market. He told Benveniste that there were painting jobs Rodin could not perform as a non-union contractor, and recommended that Benveniste create a union company. Fred also advised that starting a union company would allow Benveniste to call the union when he needed painters rather than maintain a standing workforce.
On September 21, 2001, Benveniste formed SCP. In March 2002, Benveniste signed the Union's Master Labor Agreement ("MLA") on behalf of SCP, which allowed SCP to bid on Union projects and required SCP to meet certain obligations, such as paying union wages on all of its projects. The MLA prohibited SCP from "double-breasting," that is, running both union and non-union painting businesses. When the first MLA expired in 2003, SCP signed a second MLA, which was in effect from 2003 until June 30, 2006.
SCP rented office space separate from Benveniste's residential painting business, and bought furniture, purchased supplies, and installed telephone and fax lines at its office. Fred introduced Benveniste to contractors who performed Union jobs. He asked some Rodin employees to provide startup help to SCP, and calls and faxes to SCP were often forwarded to Rodin's offices. Fred also informally asked one of his employees, Candace Weisz, to help Benveniste set up his bookkeeping. Weisz set up payroll, payables and receivables, and helped Benveniste complete Union paperwork, for which she was not compensated. Rodin employees were not asked to track the time they spent on SCP matters; they believed that the time they spent handling SCP matters was trivial and would last only until SCP had sufficient capital to hire its own staff. The parties dispute whether Fred Rodin also contributed several thousand dollars in start-up money for SCP. Neither Fred nor Rodin, however, had an ownership interest in or received any benefits from SCP.
Aside from this assistance, the Union alleged that Rodin and SCP worked together or overlapped on several jobs. One was the "Ticketmaster job." SCP had been hired to paint Ticketmaster's offices and needed to use a specific product to complete the job according to the contract. SCP contacted the Union several times over a two-week period, but the Union was unable to provide anyone familiar with the product. To finish the contract, SCP hired four non-union painters who were familiar with the product. Some of the non-Union workers SCP hired also had worked for Rodin, although Rodin played no role in hiring these painters and received no compensation for their work. Benveniste does not recall if he paid the non-Union painters the prevailing Union wage. After a hearing, the Union fined SCP $2,524 for hiring non-union painters. SCP paid the fine.
The second job in which SCP and Rodin both were involved was the "Bank of America job." Rodin had received an invitation to bid on the job, but could not because it was a Union job. SCP, however, successfully bid on the job and executed a contract on September 25, 2003. A year later, in September 2004, the contractor issued a change order specifying that Rodin would complete some touch-up work. In October 2004, Rodin entered a subcontract to perform additional work on the Bank of America project.
From 2001 to 2004, SCP performed only seventeen jobs. During the same period Rodin performed over 2500 jobs. In mid 2004, Benveniste concluded that it was not ...