Opinion
Case No. 2:20-cv-00224-GMN-BNW
2022-10-24
TRUSTEES OF the BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 13 DEFINED CONTRIBUTION PENSION TRUST FOR SOUTHERN NEVADA, et al., Plaintiffs, v. PEGASUS MARBLE, INC., et al., Defendants.
Nathan R. Ring, Branstetter, Stranch & Jennings, PLLC, Las Vegas, NV, for Plaintiffs. Daniel Marks, Adam Marks Levine, Law Office of Daniel Marks, Las Vegas, NV, for Defendants.
Nathan R. Ring, Branstetter, Stranch & Jennings, PLLC, Las Vegas, NV, for Plaintiffs. Daniel Marks, Adam Marks Levine, Law Office of Daniel Marks, Las Vegas, NV, for Defendants. ORDER Gloria M. Navarro, District Judge
Pending before the Court is Plaintiffs Trustees of the Bricklayers & Allied Craftworkers Local 13 Defined Contribution Pension Trust for Southern Nevada; Trustees of the Bricklayers & Allied Craftworkers Local 13 Health Benefits Fund; Trustees of the Bricklayers & Allied Craftworkers Local 13 Vacation Fund; Bricklayers & Allied Craftworkers Local 13 Nevada; Trustees of the Bricklayers & Trowel Trades International Pension Fund; Trustees of the Bricklayers & Trowel Trades International Health Fund; and Trustees of the International Masonry Institution (collectively "Plaintiffs' ") Motion for Summary Judgment, (ECF No. 53). Defendants Pegasus Marble, Inc., Cygnus, LLC, and Gagik Zargaryan (collectively "Defendants") filed a Response, (ECF No. 58), and Plaintiffs filed a Reply, (ECF No. 61).
For the reasons discussed below, the Court GRANTS in part Plaintiffs' Motion for Summary Judgment.
I. BACKGROUND
This case arises out of Defendants' alleged failure to comply with obligations under a collective bargaining agreement and pay fringe benefit contributions to Plaintiffs, who are employee benefit trusts. (Am. Compl. ¶¶ 7, 15, ECF No. 21). Plaintiffs explain that Pegasus Marble ("Pegasus"), which is owned and operated by Defendant Gagik Zargaryan ("Gagik"), was the signatory to a collective bargaining agreement, the Master Labor Agreement ("MLA"), with the Bricklayers & Allied Craftworkers, Local 13 ("the Union"), that covered the terms and conditions of employment for Pegasus Marble's employees in Nevada. (Id. ¶¶ 11, 13).
Plaintiffs argue that Gagik breached the MLA by using another business, Defendant Cygnus, LLC, ("Cygnus"), as Pegasus' alter ego to avoid making fringe benefit contributions to the trust. (Id. ¶¶ 17, 31). Plaintiffs initiated this ERISA action to establish that Pegasus and Cygnus are a single employer bound by the collective bargaining agreement and to collect the delinquent fringe benefit contributions. (Id. 10:1-27). On January 20, 2022, Plaintiffs filed the instant Motion for Summary Judgment. (See generally Mot. Summ. J. ("MSJ"), ECF No. 53).
II. LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is genuine if there is a sufficient evidentiary basis on which a reasonable fact-finder could rely to find for the nonmoving party. See id. "The amount of evidence necessary to raise a genuine issue of material fact is enough 'to require a jury or judge to resolve the parties' differing versions of the truth at trial.' " Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
In determining summary judgment, a court applies a burden-shifting analysis. "When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24, 106 S.Ct. 2548. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). However, the nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists," Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and "must do more than simply show that there is some metaphysical doubt as to the material facts." Orr v. Bank of Am., 285 F.3d 764, 783 (9th Cir. 2002) (internal citations omitted). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548.
At summary judgment, a court's function is not to weigh the evidence and determine the truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255, 106 S.Ct. 2505. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See id. at 249-50, 106 S.Ct. 2505.
III. DISCUSSION
By the instant motion, Plaintiffs seek summary judgment on all their claims. (MSJ 1:17-4:2); (Reply 2:13-20, ECF No. 61). As a preliminary matter, however, the parties have identified that the "threshold legal question[ ]" integral to this action is whether "Cygnus is the alter-ego of Pegasus[ ]." (Joint Stip. Remove Settlement Conference 3:24-26, ECF No. 68). The determination of this issue will decide "approximately 80% of all damages available to Plaintiffs in this matter." (Id. 3:27-4:1). Accordingly, because the core concerns whether Cygnus is an alter-ego of Pegasus, the Court will solely examine the alter-ego issue.
The parties have asserted that there will be a far greater chance for settlement once the alter ego issue is decided. (Id. 3:24-4:6). Therefore, the Court will defer on addressing the rest of Plaintiffs' claims until after the parties are given an additional opportunity to settle.
Under the "alter ego" doctrine, a non-signatory successor employer will be bound by the substantive terms of its predecessor's collective bargaining agreement if the successor employer is the "alter ego" of the predecessor employer. See New England Mech., Inc. v. Laborers Local Union 294, 909 F.2d 1339, 1343 (9th Cir. 1990) ("[A] successor employer will be bound to the substantive terms of a prior CBA if the successor employer is merely the alter ego of the predecessor employer."). The alter ego test "highly fact specific." UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994).
To prevail on a theory of alter ego liability, Plaintiffs must make a "threshold showing" that Cygnus and Pegasus "constitute a single employer." UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994). The criteria for determining whether two entities have a single employer are (1) common ownership, (2) common management, (3) interrelation of operations, and (4) centralized control of labor relations. Id. While "[n]o factor is controlling," the most significant factor is "centralized control of labor relations, which can be demonstrated either by showing common control of day-to-day labor matters, or by showing that the person in charge of the union company's labor relations made the decision that the second company would be non-union." Id. (internal citations omitted). In addition to these four factors, courts must also ask whether the non-union firm "was being used 'in a sham effort to avoid collective bargaining obligations' rather than for the pursuit of legitimate business objectives untainted by 'union animus.' " Slack v. Int'l Union of Operating Eng'rs, 83 F. Supp. 3d 890, 899 (N.D. Cal. 2015) (quoting Resilient Floor Covering Pension Fund v. M&M Installation, Inc., 630 F.3d 848, 852 (9th Cir. 2010)). The Court will first examine whether Pegasus and Cygnus have common ownership.
A. Common Ownership
Plaintiffs argue that common ownership existed between Pegasus and Cygnus because Gagik owned one hundred percent of Pegasus, and twenty-five percent of Cygnus. (MSJ 15:4-10). Plaintiffs' further note that Ani Zargaryan, Gagik's daughter, owned the remaining seventy-five percent of Cygnus. (Id. 15:8-14). In rebuttal, Defendants argue that Gagik only acquired a twenty-five percent interest in Cygnus to comply with NRS § 624.260. (Resp. 9:21-24).
In J.M. Tanaka Constr., Inc. v. NLRB, the Ninth Circuit relied in part on close familial relationship to find common ownership where an eight percent common ownership existed in a single person between enterprises compromised by members of the same family. 675 F.2d 1029, 1032-33, 1035 (9th Cir. 1982). Moreover, courts outside the Ninth Circuit have similarly observed that ownership by members of the same family supports a finding of common ownership. See Trafford Distrib. Ctr. v. N.L.R.B, 478 F.3d 172, 179 (3d Cir. 2007) (writing that "substantially identical[,]" or common ownership, "may be found where two enterprises are owned by members of the same family"); Bourgal v. Robco Contr. Ents., Ltd., 969 F. Supp. 854 (E.D.N.Y. 1997), aff'd, 182 F.3d 898 (2d Cir. 1999) (finding common ownership, management, and supervision of three related companies owned by husband and wife where husband controlled day-to-day operations and made employment decisions for all three companies).
Here, it is undisputed that Gagik had an ownership interest in Pegasus and Cygnus. (Gagik Dep. 11:4-13:22, 18:8-10, Ex. 3-A to MSJ, ECF No. 53-11). Thus, common ownership existed between both companies. See J.M. Tanaka Const., Inc., 675 F.2d at 1034 ("An alter ago relationship may exist when only a portion of an enterprise is purportedly transferred to a new owner."). The facts additionally show that Ani owned the remaining seventy-five percent of Cygnus at the time of its formation. (Ani Dep. 11:19-12:19, Ex. 3-H to MSJ, ECF No. 53-18). A finding of common ownership is further supported by complete ownership of both enterprises residing in one family. See id. at 179; Trafford Distrib. Ctr., 478 F.3d at 179.
Defendants argue that Gagik only owned twenty-five percent of Cygnus to comply with NRS § 624.260. (Resp. 9:21-10:2). NRS § 624.260 provides "that one person may not qualify on behalf of another unless the qualifying person 'owns at least [twenty-five percent] of each licensee for which the person qualifies." According to Gagik, he acquired a twenty-five percent interest in Cygnus to qualify for contractors licenses on behalf of Cygnus and expediate Cygnus' procurement of said licenses needed for its operation. (Gagik Dep. 13:16-18:7). It is unclear to the Court how this argument rebuts a finding of common ownership. Irrespective of motivation, the undisputed fact is that Gagik had an ownership interest in both companies. Therefore, the common ownership factor weighs in favor of Plaintiffs.
Specifically, both Cygnus and Pegasus obtained a: C-18 license to perform masonry work, C-19 license to install terrazzo and marble, and a C-20 license for tiling. (Pegasus Licenses at 1-4, Ex. 3-B to MSJ, ECF No. 53-12); (Cygnus Licenses at 1-4, Ex. 3-C to MSJ, ECF No. 53-13).
Defendants additionally argue that there is no longer common ownership because Gagik sold his interest in Cygnus to Ani. (Resp. 10:1-2). Cygnus was formed in 2017. (Ani Decl. ¶ 3, Ex. C to Resp., ECF No. 58-3). Gagik closed Pegasus in December 2019. (Resp. 14:23); (Notice of Withdrawal from MLA at 2, Ex. G to Resp., ECF No. 58-7). Here, Plaintiffs seek unpaid contributions owed by Pegasus from the period of March 2019 through December 2019. (MSJ 27:4-14, 10:21-24). Even if Ani did buy out Gagik's interest, it is undisputed that Gagik had an ownership interest for the time period at issue in this action.
B. Common Management
Plaintiffs argue that common management existed between Pegasus and Cygnus because Gagik is the "qualified person on both companies' contractors licenses." (MSJ 16:3-5). As the qualified person, Plaintiffs contend that Gagik performed a management and supervisory role at both enterprises. (Id. 16:20-17:11). In response, Defendants argue that Ani, rather than Gagik, exercised complete control over Cygnus' operations. (Resp. 10:7-14).
"Under this [element], the court examines whether the entities have common officers, directors, and managers." Writers Guild of Am., West, Inc. v. BTG Prod., LLC, No. 14-05828, 2018 WL 3241766, at *3 (C.D. Cal. July 3, 2018) (quoting EEOC v. Con-Way, Inc., No. 06-1337, 2007 WL 2610367, at *5 (D. Or. Sept. 4, 2007). Further, "the court looks to whether the common officers or managers exert regular control, i.e., day-to-day, over the operations of both entities." Id.
Here, Plaintiffs have shown that Gagik was involved in the day-to-day operations of both companies. As the "qualified person" at Pegasus and Cygnus, Gagik is required by NRS § 624.260(b) "[t]o hire, superintend, promote, transfer, discipline, or discharge other employees and to direct them, either by himself or through others, or to effectively to recommend such actions on behalf of his principal or employer." NRS § 624.260(b); (Gagik Dep. 18:8-10); (Ani Dep. 27:21-23). Nevada law thereby mandated that Gagik perform a managerial role at both enterprises.
Defendants contend that Gagik never performed any of the responsibilities codified in NRS § 624.260(b) despite being the "qualified person" at Cygnus. (Resp. 10:7-23 Instead, Defendants argue that Ani was solely responsible for Cygnus' management. (Id.). Defendants cannot rely on Gagik's alleged contravention of Nevada's contractors' law to argue that it is not liable under ERISA. (Reply 10:15-18). Pursuant to NRS § 624.260(b), Gagik performed a management role at Cygnus. Gagik's alleged abdication of his responsibilities does not rebut Plaintiffs showing of common management.
Ani stated in a Declaration attached to Defendants' Response that she "ran 100% of Cygnus operations." (Ani Decl. ¶ 11, Ex. C to Resp., ECF No. 58-3). The Court "may disregard a self-serving affidavit at the summary judgment stage." Smith v. Albertsons, LLC, No. 2:13-cv-01479, 2015 WL 4162481, at *2 (D. Nev. July 8, 2015) (citing S.E.C. v. Phan, 500 F.3d 895, 909 (9th Cir. 2007). Specifically, a party's affidavit that contradicts their own deposition testimony cannot raise an issue of fact to avoid summary judgment. Orr v. Bank of Am., 285 F.3d 764, 780 n.28 (9th Cir. 2002). Ani acknowledged in her deposition that Gagik is the qualified person on Cygnus' licenses, and that he oversaw inspection sites to ensure they were compliance with Nevada code. (Ani Dep. 27:21-29:12). Accordingly, the Court finds that Ani's Declaration does not create a reasonable dispute of fact concerning Gagik's role at Cygnus.
Moreover, contrary to Defendants assertions, the evidence demonstrates that Gagik did in fact perform a management role at Cygnus. Specifically, Gagik recommended certain employees to Ani to hire, (Gagik Dep. 48:3-8), supervised the work of Cygnus employees on construction projects, (Gagik Dep. 35:5-36:2), and acted as a "foreman" at Cygnus job sites in addition to inspecting to the work of Cygnus employees, (Ani Dep. 29:2-8); (MSJ 17:6-7). Even assuming that Ani did manage a significant amount of Cygnus' operations, the evidence shows that Gagik was involved in Cygnus' operations. See Haley & Haley, Inc. v. NLRB, 880 F.2d 1147, 1151 (9th Cir. 1989) ("Although the evidence did not conclusively demonstrate that the same individuals played a significant role in the day-to-day operations of both companies, there was substantial evidence to indicate that Larry Haley was a dominant figure in major as well as minor management decisions for both companies."); Writers Guild of Am., West, Inc., 2018 WL 3241766, at *4 ("[W]hile BTG may have had non-Myriad employees managing some of its day-to-day operations, Myriad and BTG shared a number of officers who were all involved in different areas of both entities' operations.") Accordingly, the Court finds that the common management factor weighs in favor of Plaintiffs.
C. Interrelated Operations
Plaintiffs contend that there is "ample evidence" to demonstrate Pegasus and Cygnus had interrelated operations (MSJ 17:24). Specifically, Plaintiffs argue that both companies: (1) operated in the same industry; (2) targeted a similar market with a common business purpose; (3) maintained the same three contractors licenses; (4) operated from the same location for a period of time; (5) had common employees; and (6) utilized money from a bank account jointly owed by Gagik and Ani. (Id. 17:24-19:11).
Evidence relevant to a finding of close interrelationship of operations includes, but is not restricted to: (1) shared business purpose as evidence by similar client base and operations; (2) shared office space, personnel, supplies and equipment; and (3) any joint undertakings or financial relationships. Haley, 880 F.2d at 1151; see also Taylor v. Shippers Transport Exp., Inc., 2014 WL 7499046, at *18 (C.D. Cal. Sept. 30, 2014) ("[T]he plaintiff may submit evidence demonstrating interrelated operations, such as 'combined accounting records, lines of credit, payroll preparation, telephone lines, or offices, and interchange of employees." (quoting Van Norman v. Harmon Mgmt. Corp., No. 93-2880, 1995 WL 803509, at *4 (N.D. Cal. July 6, 1995); accord Con-Way, Inc., 2007 WL 2610367, at *3 ("Evidence of interrelated operations can include common offices, long distance shipping, bank accounts, payroll preparation, and shared facilities.").
As to the first factor, Pegasus and Cygnus share a common business purpose. Both enterprises were involved in the sale, installation, and design of tile and marble. (Ani Dep. 17:17-18:17); (Gagik Dep. 20:6-9). Additionally, both enterprises obtained C-18, C-19, and C-20 contractors licenses. (Pegasus Licenses at 1-4, Ex. 3-B to MSJ, ECF No. 53-12); (Cygnus Licenses at 1-4, Ex. 3-C to MSJ, ECF No. 53-13). Further, both enterprises operated in the same geographic market, targeting the Las Vegas area. (Ani Dep. 17:17-18:17); (Gagik Dep. 20:6-9). Pegasus and Cygnus also share common customers, including Discovery Builder. (Ani Dep. 30:24-32:21, 32:18).
Defendants argue that merely operating in the same industry does not constitute evidence of interrelated operations. (Resp. 11:10-15). However, the Ninth Circuit in Haley specifically listed "similar client base and operations" as factors to consider in examining interrelated operations and noted that the two enterprises at issue had a similar business purpose. Haley, 880 F.2d at 1150. Moreover, Courts outside of the Ninth Circuit have considered shared business purpose in their alter-ego analysis, evaluating whether both businesses perform the same work, particularly when that shared work is performed in the same geographic area. See Salgo v. New York Concrete Corp., 447 F. Supp. 3d 136, 145 (S.D.N.Y. 2020); Flynn v. Ohio Bldg. Restoration, Inc., 317 F. Supp. 2d 22, 31 (D.D.C. 2004); Mandarini v. Accurate Engineered Concrete, Inc., 433 F. Supp. 3d 186, 203 (D. Ma. 2019); Carpenters' District Council of Greater St. Louis and Vicinity v. F.G. Lancia Custom Woodworking, LLC, 155 F. Supp. 3d 951, 958 (D.C. Mo. 2015). Accordingly, shared business purpose, while not a dispositive factor, should be considered in evaluating interrelated operations.
Defendants argue that the two businesses do not share a business purpose because in addition to installation, Cygnus also performs "digital design work, materials supply or project management." (Resp. 11:10-15); (Ani Decl. ¶ 10, Ex. C to Resp.). However, minor distinctions in the work performed between companies does not rebut Plaintiffs showing of common purpose. The Court further notes Ani previously acknowledged in her deposition that Pegasus Marble and Cygnus perform similar work. (Ani Dep. 18:1-7).
As to the second factor, both enterprises temporarily operated at a property owned by Gagik located at 2661 Western Avenue, Las Vegas, Nevada 89101. (Ani Dep. 25:15-27:15). Turning to shared personnel, eight former Pegasus employees now work for Cygnus in the same positions. (Ani Dep. 38:23-39:25). As to shared equipment, Cygnus utilizes scaffolding previously used by Pegasus. (Gagik Dep. 49:22-24, 50:8-51:20).
As to the third factor, Plaintiffs have presented evidence that commingled funds and accounts were used to fund Pegasus and Cygnus. Specifically, the initial funding for Cygnus came from a bank account jointly owned by Gagik and Ani. (Ani Dep. 11:15-12:10, 49:16-53:2); (Gagik Dep 44:14-46:11). Defendants argue that Ani's initial contribution to Cygnus is unrelated to Pegasus because it was from money gifted to Ani in an account by her parents for "the sale of family property previously managed by Ani." (Resp. 12:3-8). What Defendants argument ignores is that this family property was owned by Gagik and Ani's mother. (Ani Dep. 50:21-51:3). Moreover, Gagik is still listed on, and adds money to, the account. (Id. 52:1-53:2). In contrast, Ani stated in her deposition that neither she nor her husband transferred their personal income into the account. (Id. 52:14-23). Any initial capital used to fund Cygnus was ultimately Gagik's money. Accordingly, the Court finds that all three factors weigh in favor of Plaintiffs.
Ani conceded in her deposition that the $37,500 her father provided as part of his 25% interest in Cygnus came from the family account. (Ani Dep. 11:4-13:23).
D. Centralized Control of Labor Relations
Plaintiffs argues that Gagik maintained a centralized control of labor relations for both companies because as the "qualified person," Gagik had "broad legal duties" which included "control[ling] and monitor[ing] the work of Cygnus and Pegasus employees on job sites." (MSJ 19:13-19). Plaintiffs further alleges that the evidence demonstrates that Gagik performed a supervisory role at both companies. (Id. 19:19-20:27). In rebuttal, Defendants again assert that centralized control of labor relations was vested solely in Ani. (Resp. 13:8-16).
In Tanaka, the Ninth Circuit held that centralized control of labor relations is the most important fact and placed particular emphasis upon the fact that the same individual was in charge of daily operations and constituted effective management of both companies. Id. at 1034. Later, in Nor-Cal Plumbing, the Ninth Circuit again observed that [t]he most important factor is centralized control of labor relations," and explained that centralized control of labor relations "can be demonstrated either by showing common control of day-to-day labor matters, or by showing that the person in charge of the union company's labor relations made the decision that the second company would be non-union." Nor-Cal Plumbing, 48 F.3d at 1471. (internal citations omitted)).
Defendants argue that Ani had the sole authority to make hiring and firing decisions, assign jobs, and determine employee's payment at Cygnus. (Resp. 13:8-16). However, it is undisputed that Gagik was the "qualified person" on Pegasus and Cygnus' contractors licenses. (Gagik Dep. 18:8-10); (Ani Dep. 27:21-23). As stated above, a "qualified person" is required by Nevada law to control certain day-to-day labor matters at Cygnus. See Nor-Cal Plumbing, 48 F.3d at 1471 (observing that appellees produced evidence demonstrating centralized labor by showing that the manger obtained contractor's licenses which required him to exercise control over day-to-day labor matters under California law). Additionally, Gagik recommended certain employees to Ani to hire at Cygnus, (Gagik Dep. 48:3-8), supervised the work of Cygnus employees on construction projects, (Gagik Dep 35:5-36:2), and acted as a "foreman" at Cygnus job sites in addition to inspecting to the work of Cygnus employees, (Ani Dep. 29:2-8); (MSJ 17:6-7). Accordingly, the Court finds that the centralized control of labor relations prong weighs in favor of Plaintiffs.
Defendants argue that Gagik only became the qualified person at Cygnus to expediate Cygnus' ability to obtain licenses to begin its operations. However, Defendants have not explained why Gagik is still the qualified person at Cygnus despite its contention that Ani bought out Gagik's interest in Cygnus in December 2019.
The Court again finds that because Ani's Declaration contradicts her own deposition testimony regarding her father's role at Cygnus, it cannot raise an issue of fact to avoid summary judgment. Orr v. Bank of Am., 285 F.3d 764, 780 n.28 (9th Cir. 2002).
E. Effort to Avoid Collective Bargaining Obligations
While Plaintiffs have provided evidence sufficient to satisfy the first prong of the alter-ego test, they must now show that Cygnus was created in "an attempt to avoid the obligation of [Pegasus Marble's] collective bargaining agreement through a sham transaction or a technical change in operations." A. Dariano & Sons, Inc. v. Dist. Council of Painters No. 33, 869 F.2d 514, 518 (9th Cir. 1989); see also S. Cal. Painters & Allied Trades v. Rodin & Co., Inc., 558 F.3d 1028, 1032 (9th Cir. 2009) ("The alter ego doctrine is designed to prevent employers from escaping their collective bargaining obligations by shifting work to non-union firms they also own." (quoting Nor-Cal Plumbing, Inc., 48 F.3d at 1475)).
As an initial matter, the fact that Pegasus and Cygnus both operated from 2017 to December 2019 does not preclude a finding that Cygnus was created to avoid Pegasus Marble's collective bargaining obligations. See Nor-Cal Plumbing, 48 F.3d at 1470 ("Although the 'alter ego' theory is commonly applied in successorship situations, it is not limited to this context. Indeed, some period of simultaneous operations is not uncommon even when the non-union firm is alleged to be the successor of the union firm."). To the contrary, the timing of Cygnus' formation, in addition to the similar nature and composition of the two enterprises, weighs in favor of finding that Cygnus is being used in a sham effort to avoid collective bargaining obligations. See Stardyne, Inc. v. N.L.R.B, 41 F.3d 141, 152 (3rd Cir. 1994) (observing that the alter ego doctrine "usually comes into play when a new legal entity has replaced the predecessor").
Plaintiffs argue that Gagik's union animus is evinced by his admission that he attempted to terminate Pegasus agreement with Plaintiffs "many times." (Gagik Dep. 54:23). In rebuttal, Defendants contend that Plaintiffs argument is negated by the fact that Gagik voluntarily rejoined the MLA in 2016. (Resp. 14:16-19); (Gagik Decl. ¶ 6, Ex. A to Resp., ECF No. 58-3). The Court finds this evidence weighs slightly in favor of Plaintiffs. The Court considers Gagik's decision to rejoin the MLA but finds that he cannot completely negate his admission by later offering a declaration which contradicts his deposition testimony. Orr v. Bank of Am., 285 F.3d 764, 780 n.28 (9th Cir. 2002).
Next, Plaintiffs rely on a related lawsuit filed against Pegasus around the time it ceased operations which accused Pegasus of using Las Vegas Management Group, LLC, to avoid its collective bargaining agreement. See Trustees of the Bricklayers & Allied Craftworkers v. Pegasus Marble, Inc., 2:19-cv-00362-GMN-DJA (D. Nev. 2019); (MSJ 21:9-18). This lawsuit was ultimately settled in July 2019. (Resp. 15:20-23). Because the parties settled, this case does not show that Pegasus has a pattern and practice of utilizing sham companies to avoid its collective bargaining obligations. Although it bears mentioning that this is not the first action initiated against Pegasus Marble for allegedly avoiding its collective bargaining obligations, the prior case cited by Plaintiff is at most a neutral factor.
Finally, Defendants contend that "[t]he undisputed reason" Pegasus closed was that Gagik wanted to retire and enjoy himself. (Resp. 15:2-9). However, contrary to Defendants argument, the undisputed evidence shows that Gagik did not retire once Pegasus closed. Instead, Gagik became the "qualified person" for Cygnus, a role he still serves in despite Ani purportedly buying out his interest in Cygnus. The evidence further shows that as the qualified person, Gagik performs a managerial role at Cygnus. (Gagik Dep. 35:5-36:2, 48:3-8); (Ani Dep. 29:2-8). Because Plaintiffs have provided evidence of Defendants' intent to use Cygnus to avoid Pegasus' union obligations, Plaintiffs have satisfied the second prong of the alter ego test.
Based on the foregoing, the Court finds that Pegasus is an alter ego of Cygnus.
IV. CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs' Motion for Summary Judgment, (ECF No. 53), is GRANTED in part.