Carpenters Health and Welfare Trust Fund v. Acme Industries, Inc.

In this case we hold that Civil Code section 1717 is preempted by section 301(a), of the Labor Management Relations Act (LMRA) ( 29 U.S.C. § 185 (a)) as to an employer not a party to a collective bargaining agreement, but claimed to be a party’s alter ego.

This appeal by several employee benefit plans and express trusts (hereafter the Trust Funds) challenges an award of attorney fees under Civil Code section 1717. Various collective bargaining agreements between the Trust Funds and employers required the employers to make fringe benefit contributions to the Trust Funds. Acme Industries, Inc., was a party to one of those agreements, which authorized the Trust Funds to audit employers’ payroll records to ensure compliance with the contribution requirements.

The Trust Funds sued to compel an audit of Acme’s payroll records. The complaint was later amended to allege that The Garage Door Store, Inc. (GDS), should be compelled to submit to an audit because GDS was Acme’s alter ego. Acme was dismissed from the action, and the case went to trial against GDS. The court ruled for GDS, finding it was not Acme’s alter ego.

The collective bargaining agreement provided, “Any…