The opinion of the court was delivered by: NEALON
William J. Nealon, Chief Judge, Middle District of Pennsylvania
Plaintiffs instituted this action on May 16, 1986 against defendants Gene Gangloff individually and d/b/a Gangloff Brothers; Gangloff Brothers; Devil's Hole, Inc.; and Hecla Machinery and Equipment Company, alleging violations of a contract between an employer and a labor organization representing employees in an industry affecting commerce within the meaning of § 301(a) of the Labor Management Relations Act of 1947 (LMRA). Plaintiffs seek to collect delinquent contributions allegedly owed to the plaintiff fund, a multi-employer plan within the meaning of the Employment Retirement Income Security Act (ERISA). Specifically, they aver that through a recently developed process known as scalp screening, defendants were able to obtain anthracite silt from culm, previously a waste by-product from coal mining not usable as fuel, and to sell the anthracite silt as fuel. The alleged delinquent employer contributions owed by defendants to the plaintiff fund stem from the sale of this anthracite silt.
Defendants filed a Motion to Dismiss the original Complaint in June 1986. After the parties briefed the relevant issues, the court by Memorandum and Order dated September 16, 1986 denied the Motion to Dismiss and directed plaintiffs to file an amended complaint. Plaintiffs submitted an Amended Complaint on October 6, 1986.
Defendants filed a Motion to Dismiss the Amended Complaint on October 27, 1986 and a Brief in Support thereof on November 26, 1986. Plaintiffs filed a Brief in Opposition on December 19, 1986, and defendants submitted a Reply on January 22, 1987. In an Order issued on March 10, 1987, the court held defendants' Motion to Dismiss the Amended Complaint in abeyance, noting that the parties had requested deferment of any ruling on the pending motion due to serious settlement negotiations which were then underway. The court was recently informed that these negotiations have failed to produce an accord. Therefore, defendants' Motion to Dismiss 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.
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. ...