the Amended Complaint is now ripe for disposition. For the reasons set forth below, the motion will be denied except as it pertains to Counts VII through IX of the Amended Complaint.
STANDARD OF REVIEW
In examining a motion to dismiss, a district court should confine its inquiry to the pleadings and should liberally construe the complaint in favor of the plaintiffs. See Conley v. Gibson, 355 U.S. 41, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Hooten v. Pennsylvania College of Optometry, 601 F. Supp. 1151 (E.D. Pa. 1984). The material allegations of the complaint should be regarded as admitted, and the complaint should not be dismissed unless it appears that the plaintiffs can prove no set of facts in support of their claims which would entitle them to relief. See Conley v. Gibson, supra; District Council 47 v. Bradley, 795 F.2d 310 (3d Cir. 1986).
In Count III(a) of their Amended Complaint, plaintiffs allege that all defendants are liable to them under the single employer doctrine.
In particular, plaintiffs aver that Gene Gangloff is the chief executive officer of each of the defendant enterprises, that he controls both the daily operations and the labor relations of each enterprise and that he made the decision for each defendant enterprise not to report the production of scalp-screened anthracite silt to plaintiffs as well as the decision not to pay contributions to the plaintiff fund from the sale of anthracite silt. Plaintiffs further claim in Count III(a) of their Amended Complaint that all of the defendants conducted the same or similar business, operated out of the same office and shared equipment, assets and employees. Plaintiffs conclude that the defendants were so intertwined as to constitute a single employer.
Defendants seek to have Count III(a) dismissed as to Gene Gangloff. They argue that the single employer theory cannot be used to impose liability under ERISA or the LMRA on individual shareholders or officers of a corporation, merely by virtue of their status, for delinquent contributions to an employee retirement fund.
Defendants point out that ERISA obligates only employers to make contributions to multi-employer plans. 29 U.S.C. § 1145. The term "employer" is defined in ERISA as "any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan." 29 U.S.C. § 1002(5). The definition of person, in turn, does not include corporate officers or shareholders but does include "an individual, partnership, joint venture, [and] corporation . . . ." 29 U.S.C. § 1002(9). Relying upon the above definitions, defendants maintain that liability under ERISA cannot be imposed upon individual officers and shareholders under the single employer theory by virtue of their status within the corporation and that, except for situations where the alter ego doctrine applies, judgment cannot be rendered against individuals unless they are employers and parties to the bargaining agreement. Defendants add that Gene Gangloff is neither a named party to the collective bargaining agreement nor a business enterprise in the form of a single employer, so the LMRA affords no independent cause of action against him. See 29 U.S.C. § 185(a).
The defendants correctly state the relevant law that personal financial responsibility may not be imputed under ERISA or the LMRA to shareholders or officers merely because of the size of their ownership or the extent of control which they exercise over a corporation. See Solomon v. Klein, 770 F.2d 352, 354 (3d Cir. 1985); International Molders v. United Foundries, Inc., 644 F. Supp. 499, 505 (M.D. Pa. 1986) (Nealon, C.J.); Amalgamated Cotton Garment v. J.B.C. Company of Madera, Inc., 608 F. Supp. 158, 167 (W.D. Pa. 1984); Combs v. Indyk, 554 F. Supp. 573, 575 (W.D. Pa. 1982). Commenting upon the definition of "person" in ERISA, the Court of Appeals for the Third Circuit stated:
There is no indication that Congress intended to expose corporate officers to liability for their employers' violations of ERISA; in fact, the exclusion of corporate officers from the extensive enumeration of persons points in the opposite direction.
Solomon v. Klein, supra, at 354 (quoting Combs v. Indyk, supra, at 575). Moreover, the principle of limited personal liability is fundamental to corporate law, and the shield from personal liability serves as one of the major purposes for doing business in a corporate form. Connors v. P & M Coal Company, 255 U.S. App. D.C. 334, 801 F.2d 1373, 1377 (D.C. Cir. 1986).
The court, however, disagrees with defendants' contention that the above legal principles warrant the dismissal of Count III(a) as to Gene Gangloff. First, in paragraph 2 of their Amended Complaint, plaintiffs identify Gene Gangloff, individually, as an employer within the meaning of ERISA and the LMRA.
In contrast, defendants, without providing any affidavits or other supporting evidence, indicate that Gene Gangloff is not an employer in his individual capacity. Thus, there exists a factual dispute on this point. In reviewing a motion to dismiss, of course, the court must concentrate on the pleadings and must regard all material allegations as admitted. For purposes of the present motion, Gene Gangloff will be considered as an employer in his individual capacity. As such, he may be included by plaintiffs under the single employer theory since his inclusion therein does not stem from his role as a corporate officer or shareholder.
Secondly, as defendants recognize, an important exception to the rule against personal liability under ERISA and the LMRA for delinquent corporate contributions to an employee retirement fund arises in situations where the alter ego doctrine applies. See Solomon v. Klein, supra, at 353; International Molders v. United Foundries, Inc., supra, at 505 ("individual liability may be imposed under the LMRA if the individual defendants were acting as alter egos of the defendant employer"); Amalgamated Cotton Garment v. J.B.C. Company of Madera, Inc., supra, at 167 (individual defendants are not liable under ERISA unless they were acting as alter egos of the employer). In Count III(b), plaintiffs allege that Gene Gangloff, individually, is an alter ego of the other defendants. Defendants contend that plaintiffs have failed to state a claim under the alter ego doctrine, but as discussed infra, the court finds that plaintiffs have sufficiently pled an alter ego relationship among the defendants. Therefore, Gene Gangloff could be held personally liable under the single employer theory should plaintiffs prove that he was the alter ego of one or more of the defendant corporations which allegedly are signatories of the collective bargaining agreement.
The court recognizes the strong precedent within this circuit that corporate officers and shareholders are normally not subject to liability under ERISA and the LMRA for delinquent corporate contributions to an employee retirement fund and holds only that plaintiffs have made sufficient allegations in the Amended Complaint of personal liability on the part of Gene Gangloff to withstand defendants' Motion to Dismiss. Should discovery reveal no evidence that Gene Gangloff was at any relevant time either an employer in his individual capacity or an alter ego of the other defendants, the court expects that plaintiffs in good faith will reexamine their claims against Gene Gangloff. In any event, should defendants conclude that no factual dispute exists as to Gene Gangloff's personal liability, they may after discovery submit a motion pursuant to Fed.R.Civ.P. 56, at which time the court's review would expand beyond the pleadings to the underlying factual record.
In Count III(b) of their Amended Complaint, plaintiffs incorporate their allegations from Count III(a), i.e., that all defendants conducted the same or similar business, operated out of the same office and shared equipment, assets and employees and that each defendant enterprise was controlled by Gene Gangloff. Plaintiffs then assert that the defendants are so intertwined that each is the alter ego of the other.
By way of background, the court in its September 16, 1986 Memorandum and Order indicated that it was unclear whether plaintiffs were claiming that, in addition to the single employer theory, the alter ego doctrine applied to this case. The court listed the relevant factors for applying the alter ego doctrine and afforded plaintiffs "an opportunity to more completely set forth the basis for imposing joint and several liability." See document 11 of the record at 13. The court noted that "defendants may challenge either theory by appropriate motion when a proper factual record exists (emphasis added)." Id. at 13 n.6. In their subsequent Amended Complaint, plaintiffs asserted the single employer theory in Count III(a) and the alter ego theory in Count III(b).
Defendants have moved to dismiss Count III(b), arguing that in contravention of the court's September 16, 1986 Memorandum and Order, plaintiffs have failed to sufficiently plead any of the elements of the alter ego theory. Citing American Bell, Inc. v. Federation of Telephone Workers, 736 F.2d 879, 886 (3d Cir. 1984), defendants maintain that the allegations that they shared assets, employees, etc. do not satisfy the alter ego doctrine which requires that "specific, unusual circumstances" must be pled. Defendants also assert that the Amended Complaint does not provide fair notice to them with respect to plaintiffs' alter ego claim.
In response, plaintiffs argue that their allegations are sufficient to meet the standards of both the alter ego doctrine and the notice requirements of the Federal Rules of Civil Procedure. They also maintain that the cases cited by defendants are inapplicable because those decisions are based upon developed factual records. Plaintiffs further claim that the facts necessary to pierce the corporate veil can only be obtained through discovery and that they should be given the opportunity to develop a factual record. They also allude to unspecified facts elicited in United States v. Devil's Hole, Inc., 548 F. Supp. 451 (E.D. Pa. 1982), aff'd, 747 F.2d 895 (3d Cir. 1984), but to the extent that these facts are not averred in the Amended Complaint, the court will not consider them in reviewing defendants' Motion to Dismiss.
As noted by this court in its September 16, 1986 Memorandum and Order, the following are relevant factors in determining the applicability of the alter ego doctrine:
1. Failure to observe corporate formalities;
2. Nonpayment of dividends;