In the
United States Court of Appeals
For the Seventh Circuit
No. 16‐2322
CREMATION SOCIETY OF ILLINOIS, INC.,
Plaintiff‐Appellant,
v.
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS LOCAL 727,
Defendant‐Appellee.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 14 C 2017 — Jorge L. Alonso, Judge.
ARGUED FEBRUARY 22, 2017 — DECIDED AUGUST 28, 2017
Before BAUER and WILLIAMS, Circuit Judges, and DEGUILIO,*
District Judge.
*
Of the United States District Court for the Northern District of Indiana,
sitting by designation.
2 No. 16‐2322
BAUER, Circuit Judge. Sullivan Olson, Inc. (“Sullivan
Olson”), which is now Cremation Society of Illinois, Inc., filed
suit against the International Brotherhood of Teamsters Local
No. 727 (“the Union”), under Section 301 of the Labor Manage‐
ment Relations Act (“LMRA”), 29 U.S.C. § 185(a), seeking a
declaration that it had properly repudiated and was no longer
bound by the collective bargaining agreement with the Union.
The Union counterclaimed for a confirmation of an arbitration
award and to compel arbitration pursuant to the LMRA and
the Federal Arbitration Act, 9 U.S.C. §§ 4 and 6. It also filed a
third‐party complaint against Cremation Society. The district
court ruled in the Union’s favor on cross‐motions for summary
judgment. Cremation Society appeals the district court’s
rulings. For the following reasons, we affirm.
I. BACKGROUND
A. Parties
Sullivan Olson operated a funeral home known as Olson
Burke/Sullivan Funeral & Cremation Center (“OBS”) in
Chicago, Illinois, until it was purchased by Cremation Society
on December 31, 2013, merged into Cremation Society in April
2014, and ceased to exist as an entity thereafter. The Com‐
pany’s President and sole shareholder was Gerald Sullivan.
Sullivan is also the President and one of two shareholders of
Cremation Society (the other shareholder being his wife).
Cremation Society also conducts business in the funeral
services industry under the name OBS, and has nine other
locations in northern Illinois.
The Union is a labor organization affiliated with the
International Brotherhood of Teamsters. Sullivan Olson’s
No. 16‐2322 3
relationship with the Union began after a settlement stemming
from an unrelated lawsuit brought by the trustee of the
Union’s benefit funds. The Union’s bargaining relationship
with Cremation Society terminated in 2007.
B. Compliance Agreement and Collective Bargaining
Agreement
On October 7, 2003, Sullivan Olson executed a Compliance
Agreement, binding it to the terms and conditions of the
Union’s collective bargaining agreement (“CBA”) with the
Funeral Directors Services Association of Greater Chicago
(“FDSA”). The Compliance Agreement provided that it would
remain in effect until June 30, 2007, and from year to year
thereafter. However, it could be terminated by either party
upon written notice to the other at least 60 days prior to
June 30 of 2007, or any subsequent year.
The CBA between the Union and the FDSA recognized that
the Union was the exclusive collective bargaining agent for all
employees performing “bargaining unit work.” As defined in
the CBA, “bargaining unit work” is “the performance of
embalming, whether in training or licensed, funeral directing,
whether training or licensed, and auto livery chauffeur
services.” The definition also explicitly includes “removals,
transportation of remains, embalming, funeral directing and all
other work historically done by the bargaining unit.”
Article 19 of the CBA set out a grievance and arbitration
procedure for “[a]ny complaint, grievance or dispute arising
under or concerning the meaning, application, or compliance
with the terms of this Agreement between the Employer and
the Union and/or an employee.” This article provides that, if
4 No. 16‐2322
the employer cannot resolve the dispute in two required
meetings, then the grievance may be referred to the Grievance
Board (“Board”), which is made up of three individuals
selected by the FDSA and three individuals selected by the
Union. The Board is required to conduct a hearing and render
a decision on the referred grievance. If the Board fails to hold
a hearing or issues a split decision, the Union or employer may
submit the matter to arbitration. Either a majority decision of
the Board or a decision of the arbitrator is final and binding
upon the parties.
C. Grievances
On November 30, 2013, Sullivan Olson sent a letter to the
Union, informing them that it was repudiating the Compliance
Agreement and CBA. On December 19, 2013, a Union repre‐
sentative called Sullivan Olson to inquire about dues. Sullivan
Olson responded by letter from its counsel on December 29,
2013, referencing the November 30, 2013, repudiation letter. In
response, the Union sent a letter denying that the Compliance
Agreement and CBA were no longer in effect. On February 13,
2014, the Union filed a grievance (“Grievance 3930”), com‐
plaining that Sullivan Olson had attempted to improperly
repudiate the Compliance Agreement and CBA. The Union
also alleged that Sullivan Olson failed to respond to the
Union’s request for documentation on the individuals perform‐
ing bargaining unit work.
In January 2013, Sullivan Olson had a single employee on
its payroll, funeral director Douglas Klein, who was a member
of the bargaining unit represented by the Union. On Decem‐
ber 16, 2013, Vicki Grantham, Cremation Society’s Comptroller,
No. 16‐2322 5
sent Klein an email stating that, as of December 30, 2013, he
would be employed by Cremation Society, not Sullivan Olson.
On March 10, 2014, Sullivan gave Klein a long‐term termina‐
tion memorandum, referencing a February 2014 incident,
where Klein left the doors to his van wide upon while it
contained a deceased person, and ongoing performance
difficulties. The memorandum also notified Klein that Crema‐
tion Society would terminate him, effective August 31, 2014.
On March 14, 2014, the Union filed another grievance (“Griev‐
ance 3621”). In this grievance, the Union alleged that Sullivan
Olson violated the discipline and discharge provisions of the
CBA.
Both grievances were referred to the Board because the
parties were unable to come to a resolution on Grievance 3930
after the two required meetings, and Sullivan Olson com‐
pletely refused to follow the grievance procedure for Griev‐
ance 3621. The Board scheduled a hearing for May 1, 2014;
Sullivan Olson was provided notice but did not attend the
hearing.
On May 2, 2014, the Board issued its decision. The Board
sustained Grievance 3930, finding that the November 30, 2013,
termination notice was not given within the time period of at
least 60 days prior to June 30th of any subsequent contract
year. The Board determined that Sullivan Olson was still
bound by the Compliance Agreement until June 30, 2017, and
from year to year thereafter until it provides timely notice to
the Union. As for Grievance 3621, the Board ordered Sullivan
Olson to meet with the Union to process the grievance within
30 days. After the Board’s ruling, Sullivan Olson and Crema‐
tion Society refused to recognize the Union as the collective‐
6 No. 16‐2322
bargaining representative of any employees and have failed to
process Grievance 3621.
D. Procedural History
After the Union filed Grievance 3621, Sullivan Olson filed
a complaint on March 21, 2014, seeking a declaration that it
had properly repudiated the CBA, and no longer was bound
by the agreement with the Union. On May 23, 2014, the Union
counterclaimed and filed a third‐party complaint against
Cremation Society, seeking to compel arbitration and enforce
the Board’s awards. The parties filed cross‐motions for
summary judgment.
The basis of Sullivan Olson’s declaratory action was the
National Labor Relations Board’s “one‐man unit rule,” which
allows an employer, who employs one or fewer unit employees
on a permanent basis, to repudiate its contract with a union
without affording it an opportunity to bargain. See J.W. Peters,
Inc. v. Bridge, Structural & Reinforcing Iron Workers, Local
Union 1, 398 F.3d 967, 973 (7th Cir. 2005). Sullivan Olson
argued that it properly repudiated the CBA because it termi‐
nated the agreement when it had only one bargaining unit
employee.
The Union alleged that Sullivan Olson and Cremation
Society constituted a “single employer” before the two compa‐
nies merged. The Union argued that the repudiation was
unlawful because the bargaining unit was never down to one
employee when one considers the Cremation Society employ‐
ees as conducting bargaining unit work. It also claimed that the
repudiation was untimely under the provisions of the CBA and
that Cremation Society remained bound by Article 19’s
No. 16‐2322 7
grievance procedure. In response, Sullivan Olson argued that,
because the Union had operated as if Sullivan Olson and
Cremation Society were two separate entities for at least a
decade, the Union had impliedly waived, or was equitably
estopped from asserting, the single‐employer theory.
The district court granted summary judgment in favor of
the Union on the cross‐motions. First, the district court found
that Sullivan Olson and Cremation Society failed to cite any
pertinent authority in support of their implied waiver and
equitable estoppel arguments or indicate that this is an area in
which federal common law borrows from state law. Assuming
that either of the defenses were applicable to this type of case,
the district court found that there was no evidence to support
their application here. Second, the district court concluded that
Sullivan Olson and Cremation Society constituted a single
employer. Third, it found that the Sullivan Olson and Crema‐
tion Society failed to rebut the Union’s evidence that Klein was
not the only permanent employee who performed bargaining
unit work. Fourth, since there was no genuine dispute of
material fact that Sullivan Olson and Cremation Society
constituted a single employer prior to their merger and had
more than one employee who performed bargaining unit
work, Sullivan Olson’s unilateral repudiation was not effective
under the one‐man unit rule. Therefore, Cremation Society was
not relieved of its contractual obligation to arbitrate. Lastly, the
district court determined that Grievances 3930 and 3621 were
covered within the CBA, and confirmed the Board’s awards.
Cremation Society moved to reconsider under Federal Rule
of Civil Procedure 59(e), providing new arguments based on
federal common law to support their waiver and equitable
8 No. 16‐2322
estoppel defenses. The district court denied the motion, finding
that all their arguments could have been presented before. This
appeal followed.
II. DISCUSSION
We begin with a brief word about our jurisdiction. The
LMRA provides for federal subject‐matter jurisdiction over
“[s]uits for violation of contracts between an employer and
a labor organization … without respect to the amount in
controversy or without regard to the citizenship of the parties.”
29 U.S.C. § 185(a). Our review is limited and “strictly confined
to the question [of] whether the reluctant party did agree to
arbitrate the grievance or did agree to give the arbitrator power
to make the award he made.” United Steelworkers v. Warrior &
Gulf Nav. Co., 363 U.S. 574, 582 (1960). The question is only of
arbitrability. United Steel v. TriMas Corp., 531 F.3d 531, 535 (7th
Cir. 2008). Therefore, we are “not to rule on the potential
merits of the underlying claims, even if it appears to the court
to be frivolous.” Lippert Tile Co. v. Int’l Union of Bricklayers &
Allied Craftsmen, Dist. Council of Wis. & Its Local 5, 724 F.3d 939,
944 (7th Cir. 2013) (citation and alterations omitted).
We review a district court’s grant of summary judgment
de novo. Rupcich v. UFCW Int’l Union, Local 881, 833 F.3d 847,
853 (7th Cir. 2016) (citation omitted). Where, as here, the
parties filed cross‐motions for summary judgment, “we
construe all inferences in favor of the party against whom the
motion under consideration is made.” Id. (citation omitted).
Summary judgment is proper only “if the movant shows that
there is no genuine dispute as to any material fact and the
No. 16‐2322 9
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a).
Cremation Society provides two arguments that merit
discussion: first, that the district court erred in concluding that
Cremation Society and Sullivan Olson were a single employer;1
and second, that the district court erred in finding that Douglas
Klein was not the only permanent employee at Sullivan Olson
performing bargaining unit work.
A. Single‐Employer Doctrine
First, Cremation Society argues that the district court erred
in granting summary judgment to the Union because disputes
of material fact remain in regards to the single‐employer
finding. Under the single‐employer doctrine, “when two
entities are sufficiently integrated, they will be treated as a
single entity for certain purposes.” Lippert Tile, 724 F.3d at 946
(quoting Moriarty v. Svec, 164 F.3d 323, 332 (7th Cir. 1998)).
To determine whether two entities constitute a single em‐
ployer, we consider four factors: “(1) interrelation of opera‐
tions, (2) common management, (3) centralized control of labor
relations, and (4) common ownership.” Id. (citation omitted).
No single factor is dispositive; we must weigh the totality of
the circumstances. Id. at 946–947 (citation omitted). “Ulti‐
mately, single employer status is characterized by the absence
1
Cremation Society also contends that the district court erred in denying
its motion for summary judgment because the Union had impliedly waived,
or is equitably estopped from asserting, a single‐employer theory. Its
argument is without merit, and thus we decline to consider it.
10 No. 16‐2322
of an arm’s length relationship found among unintegrated
companies.” Id. at 947 (citation omitted).
We conclude that the two companies are a single employer.
First, when analyzing the interrelation of operations, the “day‐
to‐day operational matters” are the most relevant. Id. Crema‐
tion Society and Sullivan Olson operated out of the same
building; Cremation Society paid rent to Sullivan Olson for the
use of space. The companies operated in the same geographic
market, and both offered end‐of‐life services, but different
products: Sullivan Olson predominately offered traditional
burials while Cremation Society predominately offered
cremation. However, Grantham’s deposition testimony was
that Cremation Society did some burials and some traditional
funerals. The companies even kept charts of work titled
“Cremation Society Work done by [Sullivan] Olson staff” and
“[Sullivan] Olson Work done by Cremation Society staff.” The
companies shared the same time clock and computers. Both
companies used the same phone number, although Cremation
Society also advertised and used a toll‐free phone number. The
companies paid taxes separately under different tax identifica‐
tions and maintained separate bank accounts, but this is not
determinative. See Moriarty v. Svec, 994 F. Supp. 963, 970 (N.D.
Ill. 1998) (concluding there was a single employer even though
the owner maintained separate bank accounts), aff’d, Moriarty,
164 F.3d at 335. We conclude that the operations are more than
sufficiently interrelated.
Second, the “common management” factor looks at “actual
or active control, as distinguished from potential control, over
the other’s day‐to‐day operations … .” Lippert Tile, 724 F.3d at
947 (citation omitted). Here, both Sullivan Olson and Crema‐
No. 16‐2322 11
tion Society employees reported up the chain to the same
managers and executives. The employees of both entities were
part of the same organizational chart. Additionally, Cremation
Society had an executive board that consisted of Gerald
Sullivan, Donald Fritz, Mary Sullivan, and Katie Sullivan;
Sullivan Olson did not have a separate executive board or
board of directors. While a formal job title is not necessarily
indicative of a person having actual management responsibil‐
ity, see id., Cremation Society admits its executive board was
involved in managing both entities (and this is also evidenced
by Grantham’s deposition). We find that the common‐manage‐
ment factor weighs in favor of a single‐employer finding.
Third, we consider the centralized control of labor relations.
In analyzing this factor, we consider who is responsible for
hiring, firing and evaluating employees. See id. Grantham
provided Human Resources services for both entities, includ‐
ing the process of hiring, firing, and evaluating employees. She
also provided accounting, payroll, and information technology
services for both entities. She updated the employee handbook
and training materials. She did not keep track of her time
working for one entity versus the other, but Sullivan Olson
was not charged for her services and paid no part of her salary.
We conclude that this factor also favors the Union.
Fourth, Sullivan Olson and Cremation Society had common
ownership. Sullivan solely owned Sullivan Olson, and he and
his wife jointly owned Cremation Society. Based on the totality
of the circumstances, Sullivan Olson and Cremation Society
12 No. 16‐2322
did not maintain an arm’s‐length corporate relationship.2 For
these reasons, we conclude that the district court properly
determined that Sullivan Olson and Cremation Society
constituted a single employer.
B. Bargaining Unit
Next, Cremation Society contends that the district court
erred in granting summary judgment for the Union because
there are disputed issues of material fact as to the bargaining
unit work. Cremation Society contends that, even if Sullivan
Olson and Cremation Society were found to be a single
employer, the repudiation of the CBA would still be proper
under the one‐man unit rule because Klein was the only
permanent employee performing bargaining unit work.
Specifically, Cremation Society argues there is a “great dispute
between the parties as to the definition of bargaining unit work
in the Compliance Agreement.”
This argument raises two issues:3 whether Sullivan Olson
and Cremation Society’s combined employees constitute an
2
In its reply brief, Cremation Society argues that the district court made
improper negative inferences in reviewing the evidence. However, we do
not consider arguments raised for the first time in the reply brief. Alam v.
Miller Brewing Co., 709 F.3d 662, 668 n.3 (7th Cir. 2013); Washington v. Ind.
High Sch. Ath. Assʹn, 181 F.3d 840, 846 n.9 (7th Cir. 1999).
3
An underlying issue is whether the one‐man unit rule is applicable under
these circumstances regardless of whether Sullivan Olson and Cremation
Society are a single employer. We have not universally applied the one‐man
unit rule in all instances involving collective bargaining. For instance, we
rejected the one‐man unit rule as a defense to ERISA liability. See Central
States, Se. & Sw. Areas Pension Fund v. Schilli Corp., 420 F.3d 663, 671 (7th Cir.
2005) (citing Martin v. Garman Const. Co., 945 F.2d 1000, 1004 (7th Cir. 1991)
(“The district court properly refused to permit the one‐man rule to impair
the contract’s validity under 29 U.S.C. § 1145.”)). The parties have not
provided us with prior instances of the one‐man unit rule applying under
remotely similar circumstances. Because neither party addresses this, we
will assume without deciding it is applicable here.
No. 16‐2322 13
appropriate bargaining unit; and, if so, whether, at the time of
Sullivan Olson’s repudiation of the agreement, more than one
employee performed bargaining unit work. Cremation Society
addresses only the second issue. The Union argues that,
because Cremation Society does not contend that the combined
employees would constitute an inappropriate unit for collec‐
tive bargaining, they have waived the argument. We agree
with the Union that any challenge to the appropriateness of the
bargaining unit has been waived. See Arlin‐Golf, LLC v. Vill. of
Arlington Heights, 631 F.3d 818, 822 (7th Cir. 2011).
The remaining issue, which is the limited focus of Crema‐
tion Society’s argument on appeal, is whether this unit of
combined employees contained more than one employee
performing bargaining unit work. As noted above, the CBA
provides that “bargaining unit work” explicitly includes
removals, transportation of remains, embalming, funeral
directing, and all other work historically done by the bargain‐
ing unit. The Klein affidavit identified three funeral directors,
Mary Sullivan (who is Klein’s wife), Eric Klemundt, and
Katherine Howes, who were Cremation Society employees
working exclusively at OBS and regularly performing work,
such as transportation of remains, embalming, preparing
bodies for cremation, and conducting funeral services. As the
district court found, Klein based his affidavit on personal
knowledge; he was employed by Sullivan Olson for sixteen
years, including a brief period of employment by Cremation
Society. We reject Cremation Society’s assertion that Klein’s
statements are “bare” and “unsupported.” Cremation Society
fails to present any evidence to rebut Klein’s affidavit. More‐
over, Grantham’s deposition testimony also corroborates
Klein’s affidavit and supports the conclusion that Cremation
Society’s funeral directors performed covered work at the time
of Sullivan Olson’s repudiation. The undisputed evidence
shows that, as a single employer, Cremation Society and
Sullivan Olson had more than one employee engaged in
bargaining unit work. Therefore, Sullivan Olson’s unilateral
14 No. 16‐2322
repudiation was not lawful under the one‐man unit rule.
Accordingly, the district court properly granted summary
judgment in the Union’s favor.
III. CONCLUSION
The district court’s judgment is AFFIRMED.
Cremation Society of Illinois v. International Brotherhood of T
Combined Opinion