Labor & Employment Law

Court declines to recognize ?reverse? alter ego doctrine

Today's Employment Law Memo reports on yesterday's decision in Southern California Painters v. Rodin (9th Cir 03/10/2009)

The union sued two employers ? one which was unionized and the other which was not. The union claimed that the two employers were a single employer and/or alter egos, and that both were thus liable for alleged breach of a collective bargaining agreement entered into by the unionized employer. The trial court granted summary judgment in favor of the employers. The 9th Circuit affirmed.

The alter ego doctrine applies in this context when 1) two entities (only one of which is unionized) function as a single employer; and 2) the non-unionized entity is ?being used in a sham effort to avoid collective bargaining obligations,...rather than for the pursuit of legitimate business objectives untainted by ?union animus.??

Traditionally, alter ego claims arise when a unionized employer opens a non-union entity in order to avoid existing collective bargaining obligations. In contrast, a ?reverse? alter ego claim arises when a non-union employer allegedly opens a unionized entity in order to avoid future collective bargaining obligations. The court declined to recognize the ?reverse? alter ego doctrine.

The court reasoned, ?[t]e alter ego doctrine was never intended to coerce a non-union company into becoming a union company by requiring its compliance with a collective bargaining agreement it never signed, with a union its employees never authorized to represent them.?

Full post as published by Ross' Employment Law Blog on March 11, 2009 (boomark / email).