
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 97-1133                             SANDRA CRANE, FUND MANAGER,                                Plaintiff, Appellant,                                          v.                    GREEN & FREEDMAN BAKING COMPANY, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                     Coffin and Campbell, Senior Circuit Judges.                                          _____________________                                 ____________________            David  C.  Jenkins,  with  whom  Matthew  E. Dwyer,  Christine  L.            __________________               _________________   _____________        Nickerson and Dwyer & Jenkins, P.C. were on brief for appellant.        _________     _____________________            Adam S. Elman for appellees.            _____________                                 ____________________                                   January 20, 1998                                 ____________________                      CAMPBELL, Senior  Circuit Judge.   The  terms of  a                                _____________________            collective  bargaining agreement  required  Green &  Freedman            Baking Company, a Massachusetts corporation, to make periodic            payments  on  behalf of  its  unionized  drivers to  the  New            England Teamsters  and Baking  Industry  Health Benefits  and            Insurance Fund.   After experiencing financial  difficulties,            Green & Freedman ceased to make the agreed-upon contributions            and  transferred all remaining  assets to a  successor entity            named Boston  Bakers, Inc.   The Fund  Manager of  the Health            Benefits and Insurance  Fund (referred to hereinafter  as the            "Health Fund") thereupon sued Green & Freedman, Boston Bakers            and the  two  corporations'  principals,  Richard  Elman  and            Stanley Elman, in the district  court to recover the payments            owed by Green & Freedman with interest, costs  and penalties.                      Both  corporate defendants  conceded liability  for            the delinquent  contributions owed by Green & Freedman to the            Health  Fund.     The  Elmans,  however,  denied   they  were            personally liable for these corporate debts, and a jury trial            took place to  determine that issue.   After the presentation            of evidence, and before submission to the jury, the  district            court entered judgment  as a matter  of law  in favor of  the            Elmans,  pursuant to Federal  Rule of Civil  Procedure 50(a).            The Health Fund appeals.   We affirm in  part and reverse  in            part.                                          -2-            I.        Background                      __________                      Defendant-Appellee Green &  Freedman Baking Company            ("Green  &  Freedman")   was  a  family-owned   Massachusetts            corporation formed in 1934 that produced and sold baked goods            until,  on  January  15,  1993,  its  remaining  assets  were            transferred  in bulk to Appellee Boston Bakers, Inc. ("Boston            Bakers").    Boston  Bakers  operated  essentially  the  same            business as Green & Freedman until its demise in 1995.                        Starting  in  1975,  responsibility   for  Green  &            Freedman's affairs  rested with  Defendants-Appellees Stanley            Elman  and Richard  Elman, grandsons  of one  of the  company            founders.  Stanley Elman started working for Green & Freedman            in  1959 and  by 1969  became its  treasurer and  a director,            positions  he occupied through  the end of  the corporation's            and  its successor's  existence.   Richard  Elman began  with            Green &  Freedman in 1964 and  served as its President  and a            director from 1975.                        Prior to  transferring its assets  to Boston Bakers            as of January 15, 1993,  Green & Freedman employed between 12            and 18 truck  drivers who were members of  the Bakery Drivers            and Helpers Local 494.   The union drivers' wages, hours, and            conditions  of  employment  were  governed  by  a  collective            bargaining  agreement between the Union and Green & Freedman,            effective from May 5,  1991 to May 1,  1994.  That  agreement            required Green  &  Freedman to  contribute $88  per week  for                                         -3-            every  covered worker to the New England Teamsters and Baking            Industry  Health Benefits  and Insurance  Fund.   The  Health            Fund's  contractual  right to  contribution  was additionally            protected by   515 of the Employee Retirement Income Security            Act ("ERISA"),  29 U.S.C.    1145 (1985),  which doubles  the            obligation  of  any  employer who  promises  in  a collective            bargaining agreement to make contributions to a multiemployer            benefits or pension plan.                      From  1991, Green &  Freedman began to  suffer what            the  Elmans   described   as  a   serious,   and   ultimately            irreversible, decline  in sales  and profits.   Beginning  in            April  1992, and continuing until its business was terminated            in  January 15,  1993, Green  & Freedman  stopped making  its            required  contributions  to   the  Health  Fund.     Green  &            Freedman's  unpaid  contributions for  this  period, totaling            $39,776, are  the  basis for  the liability  the Health  Fund            seeks to impose in this action.                      By  December  1992,  the  Elmans  had  decided   to            transfer all of  Green & Freedman's assets to  a newly-formed            corporate shell entitled Boston Bakers, Inc., pursuant to the            bulk  transfer  provisions   of  the  Massachusetts   Uniform            Commercial Code.  See Mass. Gen. Laws ch. 106,    6-101 to 6-                              ___            110 (1990), repealed,  Mass. Acts 1996 ch. 160,    3 (1996).1                        ________                                            ____________________            1.  Although  repealed  in  1996,  the  former  Massachusetts            U.C.C. Article 6  still applies to bulk  transfers that, like            the  Boston Bakers transaction, occurred prior to the repeal.                                         -4-                      Boston  Bakers was simply a continuation of Green &            Freedman's  business.  Its  nominal and sole  shareholder was            Claire  Lank, a long-time Green & Freedman employee installed            by  the  Elmans.   The  Elmans  were  designated as  the  new            corporation's  officers and, along  with their wives,  as its            directors.   A voting trust  with Lank enabled the  Elmans to            continue exercising  complete control  of Green  & Freedman's            assets, once transferred, in the form of Boston Bakers.                      The bulk transfer shifted all of Green & Freedman's            assets,  which were then worth somewhere between $480,000 and            $500,000,  to  Boston  Bakers.   In  exchange,  Boston Bakers            assumed Green  & Freedman's secured debt.   The secured debt,            which totaled $498,498.17, was owed to two secured creditors:            U.S.  Trust, the company's  institutional lender, and  the 75            Old  Colony Avenue Realty Trust  (the "Realty Trust"), a real            estate trust that owned the  company's plant for the  benefit            of the Elmans.  U.S. Trust held a security interest in all of            Green &  Freedman's property, both  then-owned and thereafter            acquired, while  the  Realty Trust  held  a mortgage  on  the            plant.                        As  part of the  bulk transfer, Boston  Bakers gave            Green & Freedman a promissory  note, which Boston Bakers held            for  the benefit of  Green & Freedman's  unsecured creditors,            worth  $32,798.99.  That amount left the unsecured creditors,                                            ____________________            See 1996 Mass. Acts ch. 160,   5.            ___                                         -5-            including the  Health Fund,  with claims  worth roughly  five            cents on the dollar.                       As  required by law,  Green & Freedman,  after some            hesitation,  announced the bulk transfer to creditors in late            December 1992 and  provided a list of its assets.   See Mass.                                                                ___            Gen. Laws  ch. 106,     6-104 to 6-106, repealed,  Mass. Acts                                                    ________            1996  ch. 160,    3.   The Health Fund  responded by bringing            this  action in  the  federal district  court  which, in  its            initial form, sought,  inter alia,  a preliminary  injunction                                   _____ ____            against the transfer  of Green & Freedman's  assets, alleging            the transfer to  violate ERISA   515,  29 U.S.C.   1145.   On            January  12,  1993,  the  district  court  denied  injunctive            relief.  Three days later, the bulk transfer was consummated.                      Boston Bakers thereafter carried on business in the            same manner as Green &  Freedman.  Employing the same workers            and equipment at  the same plant, it produced  the same kinds            of baked goods for the same customers.  Boston  Bakers was as            unprofitable as Green & Freedman.  After two-and-a-half years            of  continued difficulties, U.S. Trust foreclosed, and Boston            Bakers closed its doors in August 1995.  According to Richard            Elman's  testimony, which  was not  contradicted, the  Elmans            personally received no distribution in settling the company's            affairs.                                           -6-                      Following the liquidation of Boston Bakers' assets,            the  Health Fund filed an amended complaint2 seeking recovery            of  the delinquent contributions  from both corporations, and            from Richard  Elman and Stanley  Elman as well.   As Green  &            Freedman  had   done  previously,   Boston  Bakers   conceded            liability  for the contributions  Green & Freedman  failed to            make  to the  Health  Fund  from April  1992  until the  bulk            transfer on January 15, 1993.   With the assets of both Green            &  Freedman  and  Boston  Bakers completely  liquidated,  the            Health Fund looked  to the Elmans personally for  recovery of            Green & Freedman's delinquent contributions.   Count 3 of the            Health Fund's  Second  Amended  Complaint  alleged  that  the            Elmans were personally  liable as the "'alter  egos' of Green            and  Freedman."    Count  4  premised  the  Elmans'  personal            liability  on their  disregard for  Boston Bakers'  corporate            identity,  alleging  that  the Elmans  completely  controlled                                            ____________________            2.  An  amended complaint dated March 1, 1995, was superseded            by a  Second Amended Complaint dated July  14, 1995.  In both            complaints,  the  Health  Fund sought  recovery  for  Green &            Freedman's  defaulted  payments   due  under  the  collective            bargaining  agreement  for  the  period  April  1992  through            January 15, 1993,  totaling $39,770,  exclusive of  interest,            costs and liquidated damages.  Recovery from Green & Freedman            was sought under the contract,  and from Boston Bakers on the            theory  that, as  a  successor entity  to  Green &  Freedman,            Boston  Bakers was obligated to remit the latter's delinquent            contributions.  Recovery  from the two Elmans  personally was            sought because  they were allegedly  "alter egos" of  Green &            Freedman,  and  because  they  allegedly  established  Boston            Bakers  with  fraudulent intent,  exercised  complete control            over  it  (although  owning no  stock),  and  disregarded its            corporate identity.                                         -7-            Boston  Bakers and created  it with fraudulent  intent.  Both            parties requested a trial by jury.                      At trial,  the  Health Fund  called Stanley  Elman,            Richard  Elman,   and  Richard's  wife,   Barbara  Elman   as            witnesses.  Counsel for the Elmans declined cross-examination            at  the time, planning to call  the Elmans later as their own            witnesses.   The Health  Fund also introduced  the deposition            testimony  of   Claire  Lank,  who  had  served  as  Green  &            Freedman's secretary before being installed as Boston Bakers'            nominal  shareholder.  In addition, the parties stipulated to            the  admission of  many  documents recording  the  collective            bargaining  agreement, the creation of Boston Bakers, and the            operation of Green & Freedman.                       At the  close of  the Health  Fund's case-in-chief,            the Elmans moved for  judgment in their favor as  a matter of            law pursuant to  Rule 50(a).  The district  court granted the            motion  with respect to Count 3  and the liability of Green &            Freedman, ruling that the Health  Fund had failed to meet the            criteria  stated in  Alman v.  Danin,  801 F.2d  1 (1st  Cir.                                 _____     _____            1986), for  corporate veil-piercing  in an  ERISA case.   The            court left  open for the  time being the Health  Fund's claim            that the  Elmans were  personally liable  for Boston  Bakers'            liability.                       The defense then called as its only witness Richard            Elman,  who testified  about the  creation  and operation  of                                         -8-            Boston  Bakers.  The Elmans renewed their motion for judgment            as a matter  of law.   Again relying  on Alman, the  district                                                     _____            court allowed the motion.                        The  Health  Fund  now  appeals  from  the district            court's grant of judgment as a matter of law.            II.       Standard of Review                      __________________                      To review a  grant of judgment as a  matter of law,            we stand in the district court's shoes and may affirm only if            the evidence did not furnish a  "legally sufficient basis for            a reasonable jury to find" for the non-moving party.  Fed. R.            Civ.  P. 50(a)(1);  see  also Coyante  v.  Puerto Rico  Ports                                _________ _______      __________________            Auth.,  105 F.3d  17,  21  (1st Cir.  1997).   This  standard            _____            requires more than "a mere scintilla" of evidence in the non-            moving party's favor.   Fashion House, Inc. v.  K Mart Corp.,                                    ___________________     ____________            892 F.2d  1076,  1088  (1st Cir.  1989).    Every  reasonable            inference, however, must be drawn in favor  of the non-moving            party.   See Favorito v. Pannell,  27 F.3d 716, 719 (1st Cir.                     ___ ________    _______            1994).                       In the instant appeal, we must decide whether there            was a legally sufficient basis  in the evidence presented for            a reasonable jury to have  pierced the corporate veils and to            have imposed  personal liability  on the  two Elmans  for the            conceded indebtedness to the Health Fund of both companies.                      The legal standard  for when it is proper to pierce            the corporate  veil is notably  imprecise and fact-intensive.                                         -9-            Leading commentators state that "no  hard and fast rule as to            the  conditions under  which the  [corporate]  entity may  be            disregarded  can  be stated  as  they vary  according  to the            circumstances  of each case," William M. Fletcher, 1 Fletcher                                                                 ________            Cyclopedia of the Law of Private Corps.   41.30, at 662 (1990            _______________________________________            rev.   ed.),  and,  more  skeptically,  that  "[t]here  is  a            consensus  that  the  whole area  of  limited  liability, and            conversely of  piercing the corporate veil, is among the most            confusing in corporate law," Frank H. Easterbrook & Daniel R.            Fischel, Limited Liability and the Corporation, 52 U. Chi. L.                     _____________________________________            Rev. 89, 89 (1985).                        Because a rigid test could not account for all  the            factual variety, the  federal common law standard  adopted in            our Circuit for measuring  an ERISA plaintiff's veil-piercing            claim is somewhat  open-ended.  We said in  Alman that courts                                                        _____            should  consider  "the  respect  paid   by  the  shareholders            themselves  to   [the]  separate   corporate  identity;   the            fraudulent  intent of  the  [individual defendants];  and the            degree of injustice that would be visited on the litigants by            recognizing the corporate  identity."  Alman, 801  F.2d at 4.                                                   _____            Of these three elements, "a finding of some fraudulent intent            is a sine qua non to the  remedy's availability."  See United                                                               ___ ______            Elec.,  Radio  and  Machine Workers  v.  163  Pleasant Street            ___________________________________      ____________________            Corp., 960 F.2d 1080, 1093 (1st Cir. 1992).              _____                                         -10-                      Before  examining the  district court's  Rule 50(a)            ruling in  light of these  criteria, we need to  consider yet            another problem.   The ERISA cause of action  under which the            Health  Fund sued here, ERISA   515(a)(1)(3), authorizes only            injunctive or  "other  appropriate  equitable  relief."    29                                                _________            U.S.C.      1132(a)(1)(3)  (emphasis  added).    Courts  have            interpreted this cause  of action as providing no  right to a            jury trial,  even when the  relief sought is monetary.   See,                                                                     ____            e.g., Spinelli v. Gaughan, 12  F.3d 853, 855 (9th Cir. 1993).            ____  ________    _______            As a  result, Alman  and other federal  precedent were  bench                          _____            proceedings in  which the judge  determined both the  law and            the  facts.   No  consideration  was  given to  the  separate            responsibilities of judge  and jury in the  applying of veil-            piercing criteria.                        The  jury trial  here,  not  being  of  right,  was            undertaken  by the judge  with the  consent of  both parties.            Federal Rule  of Civil  Procedure 39(c),  allows  a judge  to            order a  consensual jury trial  in actions not triable  as of            right by a  jury.  In such  cases, the "verdict has  the same            effect as if trial by  jury had been a matter of right."  Id.                                                                      ___            Accordingly,  in reviewing  the district  court's Rule  50(a)            determination, we are  supposed to apply the  same principles            as if the jury  trial had been one  of right.  We must  do so            here,  however,  without  the  benefit  of   ERISA  precedent            instructing on whether, and to  what  degree, the jury rather                                         -11-            than  the judge is  responsible for applying  the Alman veil-                                                              _____            piercing factors.                        While the absence of ERISA precedent on this aspect            is somewhat troubling, we conclude that, in a consensual jury            trial, it  is principally the  jury's function,  and not  the            court's, to  decide whether  or not  the Alman  veil-piercing                                                     _____            standards  were  met.    The  jury,  to  be  sure,  can  find            individual  liability  only  if  the  evidence  is  minimally            sufficient  to  do  so under  Alman  criteria.   Whether  the                                          _____            evidence reaches  that threshold is  a question of law.   But            given the issue's fact-intensive nature, the legal  threshold            of evidentiary sufficiency is a relatively low one.                      In reaching the above conclusion, we are influenced            by  the fact that federal courts,  outside the ERISA context,            have  held that veil-piercing  "is the sort  of determination            usually made by a jury because it is so fact specific."   Wm.                                                                      ___            Passalacqua  Builders, Inc. v.  Resnick Developers  S., Inc.,            ___________________________     ____________________________            933 F.2d  131, 137 (2d Cir. 1991); see also FMC Finance Corp.                                               ________ _________________            v. Murphree, 632 F.2d 413, 421 & n.5 (5th Cir. 1980) (holding               ________            that, as  a matter of  federal procedure in  diversity cases,            "the  issue  of corporate  entity  disregard is  one  for the            jury").   Most state courts  adopt a similar approach.   See,                                                                     ____            e.g., Pepsi-Cola Metropolitan Bottling Co. v. Checkers, Inc.,            ____  ____________________________________    ______________            754  F.2d 10, 14 (1st Cir. 1985)(applying Massachusetts law);            Castleberry  v. Branscum,  721 S.W.2d  270,  277 (Tex.  1986)            ___________     ________                                         -12-            (treating  veil-piercing  as  factual  and,  therefore,  jury            question).    Courts in  these jurisdictions  have emphasized            that  "[t]he conditions under which the corporate entity will            be disregarded vary according to the circumstances present in            each  case."    Electric  Power  Bd.  v.  St.  Joseph  Valley                            ____________________      ___________________            Structural Steel  Corp., 691  S.W.2d 522,  526 (Tenn.  1985).            _______________________            Even  where veil-piercing  is decided  by  judge rather  than            jury,  the  courts   have  held  that  the   question,  while            equitable, is one of fact.   See, e.g., Smetherman v. Wilson,                                         _________  __________    ______            626 So.2d 71,  73 (La. Ct. App. 1993)  (explaining that trial            judge  decides   whether  to  pierce   corporate  veil  after            examining the "totality  of the circumstances").   Indeed, in            Alman we  reviewed the  district court's determinations  that            _____            the  individual defendants "had acted in  bad faith" and "had            not   respected  [corporation's]   separate  existence   even            minimally" as  "inferences" subject to  the clearly-erroneous            review accorded issues of fact.  801 F.2d at 4; see also Pipe                                                            ________ ____            Fitters Health and Welfare Trust v. Waldo, R., Inc., 969 F.2d            ________________________________    _______________            718, 721  (8th  Cir.  1992)  (reviewing  ERISA  veil-piercing            decision for clear error).                        In  assigning  veil-piercing  here  largely to  the            jury,  we are  also  influenced by  the  fact that,  although            entitled  to a  bench  trial, the  parties agreed  to proceed            before a jury.  This choice would be next to meaningless were            we  now to  hold that  the principal  contested issue  -- the                                         -13-            Elmans' personal liability  -- remained one for the  court to            determine.   Given a Rule  39(c) election to proceed  by jury            trial,  other courts  have held that  the district  court may            relegate all factual  determinations to the jury,  even those            normally  treated as equitable.  See,  e.g., Gloria v. Valley                                             __________  ______    ______            Grain  Prods.,  Inc., 72  F.3d  497,  499  (5th  Cir.  1996);            ____________________            Thompson v.  Parkes, 963 F.2d  885, 888 (6th Cir.  1992); cf.            ________     ______                                       ___            McCain  Foods, Inc.  v. St.  Pierre, 463  A.2d 785,  787 (Me.            ___________________     ___________            1983)(holding that veil-piercing,  while normally in Maine  a            matter for the court, was  properly submitted to jury under a            state rule parallel  to Fed. R. Civ. P. 39(c)).  The point of            Rule 39(c)'s jury-by-consent provision has been said to be to            allow parties who  so wish to have  disputed facts, including            ultimate facts, resolved by a  jury.  See generally 9 Charles                                                  _____________            A. Wright &  Arthur R. Miller, Federal Practice and Procedure                                           ______________________________              2333 (1995).                       As the  veil-piercing determination  is principally            for the  jury to make,  we shall affirm the  district court's            grant  of judgment  for the  individual  defendants only,  as            previously  noted,  if  we determine  there  was  no "legally            sufficient  basis  for a  reasonable  jury to  find"  for the            plaintiff  Health Fund.  (Our review standard would obviously            be different  were veil-piercing  regarded as  a legal  issue            relegated to the judge even in a jury trial.)                                         -14-                      We  turn  now  to  the  evidence  presented  below,            inquiring whether jury  issues were presented concerning  the            Elmans' personal  liability,  first, for  Green &  Freedman's            obligations to the Health Fund, and, second for Boston Bakers            responsibility for those same obligations.            III.      Piercing the Corporate Veil: Green & Freedman                      _____________________________________________                      We hold  that, on  the record  before the  district            court  its decision to take from the jury the question of the            Elmans'   liability   for  Green   &   Freedman's  delinquent            contributions was  erroneous and  must be vacated.   We  find            ample  evidence to  afford a  reasonable  jury, applying  the            Alman  criteria,  801 F.2d  at  4, and  exercising  its broad            _____            authority  over  the  veil-piercing issue,  supra,  a legally                                                        _____            sufficient basis to reach beyond Green & Freedman's corporate            identity and  hold the  Elmans liable  for the  corporation's            unpaid contributions.                        A.   Fraudulent Intent                           _________________                      As previously  noted, "the cases  that permit  veil            piercing in the ERISA milieu  all emphasize that a finding of            some  fraudulent intent  is a  sine qua  non to  the remedy's            availability."   United Elec., Radio and Machine Workers, 960                             _______________________________________            F.2d at  1093.  We explained in that  case that, in the ERISA            veil-piercing  sense, fraud need  not reach the  level needed            for  criminal or even  independently actionable  civil fraud.            Still, it has to be more than "invisible."  Id.                                                         ___                                         -15-                      There was  evidence that the Elmans,  through their            domination of  Green &  Freedman, caused  the corporation  to            make  payments to  themselves and their  relatives at  a time            when the  corporation was  known to be  failing and  could be            expected to  default,  or  was  already in  default,  on  its            obligations  to the  Health Fund.   These  payments  could be            found  to lack  any  business  justification.    Courts  have            routinely viewed  the wrongful diversion of  corporate assets            to  or  for  controlling  individuals  at  a  time  when  the            corporation  is in  financial distress  as  a fraud  that can            justify  piercing the corporate  veil.  See,  e.g., Laborers'                                                    __________  _________            Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d            __________________    _____________________________            702, 705  (6th Cir.  1988) (per  curiam)(piercing veil  where            shareholder withdrew corporate funds at time of dissolution);            Lowen v. Tower  Asset Management, Inc.,  829 F.2d 1209,  1221            _____    _____________________________            (2d   Cir.  1987)   (holding   individuals  responsible   for            fiduciary's  ERISA  violations  on  evidence  of   "extensive            intermixing  of  assets  . .  .  among  the corporations  and            individual  defendants"); Labadie Coal Co. v. Black, 672 F.2d                                      ________________    _____            92,  98-99 (D.C.  Cir.  1982)  (instructing  trial  court  to            consider  defendants'  diversion   of  corporate  assets   to            personal  uses); I.A.M.  National Pension  Fund v.  Wakefield                             ______________________________     _________            Indus.,  Inc., 14 Employee  Benefits Cas. (BNA)  1890 (D.D.C.            _____________            1991)  (piercing employer's corporate  veil under ERISA based            in  part on "selective  diversion of corporate  assets"); see                                                                      ___                                         -16-            generally 1  William M.  Fletcher, Cyclopedia of  the Law  of            _________                          __________________________            Corporations    41.30, at 663 (listing among relevant factors            ____________            "siphoning  of corporate funds  by dominant stockholders" and            "the use of corporate funds  to pay personal expenses without            proper accounting").                      The  Health Fund introduced a series of checks that            the  Elmans made out  to themselves  from Green  & Freedman's            corporate accounts.   These checks dated from January 1991 to            January 1993,  a period  during which,  according to  Richard            Elman,  Green &  Freedman "was  in  trouble," "los[ing]  some            money,"  and experiencing a  "decline in profits  and sales."            In the  last few  months of this  period,   Green &  Freedman            ceased to  be able  to pay its  debts including  its required            contributions to  the Health Fund.   It then  transferred its            assets to Boston Bakers.                      Meanwhile, the  Elmans had been  writing themselves            and their relatives checks  for no business purpose that  the            Elmans could adequately  explain.  When questioned  about one            of   these  payments,   Richard  Elman  testified   that  the            corporation was  repaying him  an unrecorded  loan --  itself            evidence  weighing in favor  of piercing the  corporate veil,            see United States v.  Pisani, 646 F.2d 83, 88 (3d  Cir. 1981)            ___ _____________     ______            (piercing   corporate   veil  on   basis   of   repayment  of            shareholders' loan at  time when corporation was  failing) --                                         -17-            before stating that he could  not remember the purpose of the            payment.                        Particularly  flagrant  was   the  evidence  of   a            personal  vacation that  the  Elmans financed  with corporate            funds.  In  January 1991, the Elmans caused  Green & Freedman            to pay for them to travel to New Orleans, where they attended            the  Super  Bowl.    On  direct  examination,  Stanley  Elman            testified that  the checks  in question  represented "payment            for expenses and conducting business."  On cross-examination,            however,  Stanley Elman admitted that Green & Freedman had no            customers in Louisiana and did no business in connection with            the  Super  Bowl.    Nothing  in  Stanley  Elman's  testimony            rehabilitated his initial claim that he conducted business on            the Super Bowl trip.                        In  addition, the Elmans caused Green & Freedman to            pay Eleanor Elman, Stanley Elman's  wife, three checks for  a            total of  $4,500.   Stanley Elman  initially explained  these            payments as wages.   However, the Elmans did  not report this            amount on  their tax  return and there  was no  evidence that            Green &  Freedman reported  it as wages.   Moreover,  Green &            Freedman's receptionist, Claire Lank,  testified that Eleanor            Elman did not work at Green & Freedman during 1992.                      Finally, just days before Green & Freedman executed            the bulk transfer to  Boston Bakers, and at  a time when  the            company had  ceased  to meet  its obligations  to the  Health                                         -18-            Fund,  the  Elmans   caused  the  corporation  to   write  an            unexplained check  for cash in  the amount of $10,000,  and a            second check payable to Stanley Elman for $2,500.                        The payments made by Green & Freedman to the Elmans            and their  relatives during 1991  and 1992  with no  apparent            business justification amounted to $30,109.  In ruling on the            Elmans' Rule 50(a) motion, the district court was required to            draw all reasonable inferences and resolve credibility issues            in favor of  the non-movant Health  Fund.  Looked at  in this            light,   the  evidence  was  sufficient  to  support  a  jury            determination  that the Elmans  had used corporate  funds for            personal  purposes at  times when they  knew either  that the            company was inadequately capitalized to meet its obligations,            or  that,  in  fact,  it had  stopped  doing  so  --  and, in            particular,  had ceased to  pay its Health  Fund obligations.            We add  that the jury's  ability to conclude that  the Elmans            had acted  in a knowingly  fraudulent manner would  have been            bolstered by  inconsistencies in the  Elmans' testimony about            the payments,  particularly their  testimony  that the  Super            Bowl trip and Eleanor Elman's "wages" had business purposes.                      The  Elmans protest  that  the  amount of  arguable            self-dealing evidenced  at trial  was too  little to  justify            sending the Health Fund's case to the jury.  The Elmans point            out  that the payments described  above amounted to less than            one percent of the corporation's gross annual sales, and that                                         -19-            the trip to New Orleans was, after all, only one trip.  While            it  is  difficult to  quantify  nicely  the amount  of  fraud            required,  the  Elmans's  self-dealing  occurred  on  several            occasions,  at  a time  when  the  company was  in  financial            straits.   We cannot  say that this  conduct and  the amounts            involved were  de minimis,  to the  point that no  reasonable            jury could find that the fraudulent intent prong of the Alman                                                                    _____            standard was established.                      B.   Disregard of Corporate Identity                           _______________________________                      The  fraudulent  self-dealing  just  discussed  was            probative not only  of fraudulent intent but  also of another            Alman  element,  disregard  of corporate  identity.    On the            _____            latter  score, there was  additional evidence.   For example,            the Elmans appear to have mixed their own finances with those            of Green &  Freedman's.  At a  time that the Elmans  owed the            corporation $141,000 in  loans, they also loaned  it $170,000            through  their real estate trust.  These unexplained dealings            suggest that money  was being moved around with  little or no            regard for  the corporate identity.   There was no  record of            the  terms of  the purported  loans nor  of any  agreement to            repay.  Undocumented  and interest-free loans could  be found            to  show a  disregard for  the  corporate form.   See,  e.g.,                                                              __________            Uriarte, 736 F.2d  at 524 (treating unrecorded  and interest-            _______            free loans from  shareholders to the corporation  as evidence            of shareholders' disrespect for corporate form).                                           -20-                      Beyond the  undocumented loans, there  was evidence            of  inadequate and, indeed,  fraudulent record keeping.   The            Elmans admittedly  falsified  Green &  Freedman's minutes  to            state  that their  wives, who  served  as nominal  directors,            attended and  authorized corporate  borrowing,  when in  fact            their wives did neither.                        We accept  the Elmans'  contention that  a closely-            held corporation need not hew to every corporate formality in            order  to  maintain  its  shareholders'   immunity  from  the            corporation's debts.    A veil-piercing  plaintiff  will  not            prevail  if the  evidence shows  only  that the  closely-held            defendant  corporation was run without the strict formalities            of its publicly-held  counterpart.  But the  evidence adduced            at trial, viewed most favorably  to the Health Fund, could be            found  to show practices that went beyond mere informalities.            Important  transactions  between   the  corporation  and  its            controlling  shareholders  went  undefined,  and  the  Elmans            appear  to  have created  false minutes.   These  facts, when            added  to the  financial self-dealing  and  when viewed  in a            light most favorable to the Health Fund, support a reasonable            inference by a  jury that the Elmans, in the two years before            Green & Freedman's demise, did  not treat Green & Freedman as            a separate entity.                        C.   Manifest Injustice                           __________________                                         -21-                      The  evidence just  described under  the first  two            Alman factors could also allow  a reasonable jury to conclude            _____            that  sheltering the Elmans from Green & Freedman's liability            to  the Health  Fund  would  be manifestly  unjust.   As  one            commentator has explained,  courts have found this  prong met            when "a corporation  is so undercapitalized that it is unable            to meet debts that may reasonably be expected to arise in the            normal course of business."  Note, Piercing the Corporate Law                                               __________________________            Veil:   The Alter Ego  Doctrine Under Federal Common  Law, 95            _________________________________________________________            Harv.  L. Rev. 853,  855 (1982).   Thus, a jury  would not be            unreasonable  in viewing  as  manifestly unjust  the  Elmans'            decision  to  issue themselves  payments  for personal,  non-            corporate purposes, as well as other unexplained payments, at            a time when the corporation could not meet its obligations to            the  Health Fund.  Of course, the mere non-payment of debt is            not,  by itself,  enough to  justify  piercing the  corporate            veil.  However, a jury could reasonably conclude on the basis            of  the  evidence below  that  the Elmans  both  placed their            personal    interests    ahead   of    their    corporation's            responsibilities  and   did  not  themselves  honor  Green  &            Freedman's corporate form.  As  a result, it could be thought            manifestly  unjust  to   insist  that  the  Health   Fund  be            restricted by the corporate form.            IV.       Piercing the Corporate Veil:  Boston Bakers                      ___________________________________________                                         -22-                      Whether  the evidence sufficed  for a jury  to find            the Elmans personally liable for Boston Bakers' successorship            obligation  to pay Green & Freedman's indebtedness for Health            Fund  contributions missed  in  April 1992,  through  January            1993,  is  more  problematic.   Given  the  Elmans' potential            direct liability, supra, for Green & Freedman's debts on this                              _____            score, the question of their tangential exposure for the same            debt via Boston Bakers  may seem more theoretical than  real.            Still, the court's ruling on  count 4 of the complaint raises            the issue, and we must address it.                      For  the showing of  fraud needed to  pierce Boston            Bakers' corporate  veil, the  Health Fund  relies inter  alia            upon the  Elmans' transfer  of Green  & Freedman's  assets to            Boston   Bakers,  a   transaction  said   to  be   inherently            fraudulent.   Yet we can  see nothing in the  transfer itself            that further disadvantaged the Health Fund in  its ability to            realize   its   claim   for   Green   &   Freedman's   unpaid            contributions.           Had the Elmans chosen simply to shut            down  the  operations of  Green  &  Freedman  in early  1993,            instead of undertaking the bulk  transfer to Boston Bakers, a            jury would have  to conclude that the Health  Fund would have            received nothing.  At  the time of the bulk transfer,  it was            undisputed that Green  & Freedman had no more  than $2,000 in            cash  on  hand,  and liabilities  to  secured  creditors that                                                  _______            outweighed  its assets.  The firm's primary secured creditor,                                         -23-            U.S.  Trust, held  a  security  interest in  all  of Green  &            Freedman's  assets.   Once  a  debtor  grants  an  all-assets            security  interest, unsecured creditors  like the Health Fund            are  made no worse off  by a bulk  transfer:  the transferred            assets were already  encumbered and therefore  unavailable to            the Health Fund regardless of the bulk transfer.                      We  note   that  neither  in  its   second  amended            complaint  nor in  arguments on  appeal, has the  Health Fund            claimed  that Boston Bakers, as Green & Freedman's successor,            was liable under the latter's collective  bargaining contract            for  payments  after  January  15, 1993,  the  date  Green  &                           _____            Freedman shut  down.  Rather  the damages sought are  for the            period from  April 1992,  until January  15, 1993,  being all            based on  defaulted contributions  owed by  Green &  Freedman            while it was  still operating.   Boston Bakers' liability  is            premised  solely  on its  inherited responsibility  for these            earlier  debts of  its predecessor.    As said,  had Green  &            Freedman simply shut  down on  January 15,  1993, the  Health            Fund would  apparently have been  no better off.   (It might,            arguably,  have  been  worse off.)    Plaintiff  propounds no            concrete  theory  as   to  how  the  bulk   transfer  further            diminished  its prospects  for recovering  the  sums owed  by            Green & Freedman between April 1992 and January 15, 1993.                      It is  significant  that, from  the outset,  Boston            Bakers continued openly  to carry on the  business of Green &                                         -24-            Freedman.    Lank,  Boston Bakers'  nominal  shareholder  and            receptionist, even continued  to answer the phone  "Green and            Freedman" after the bulk sale.  A company does not extinguish            its  ERISA obligations  simply by  changing the  name on  its            letterhead.   See  Hawaii Carpenters  Trust  Funds v.  Waiola                          ___  _______________________________     ______            Carpenter  Shop,  Inc., 823  F.2d  289, 294  (9th  Cir. 1987)            ______________________            (holding  that alter ego  test is  met when  two corporations            share a  "substantial continuity"); cf. Guzman  v. MRM/ELGIN,                                                ___ ______     _________            409  Mass. 563, 566  (1991) (explaining exception  to general            rule of  successor non-liability  for a  transferee that  "is            merely a  continuation of  the seller  corporation").   Thus,            Boston Bakers  was  available  throughout  its  existence  to            answer for the liabilities of its predecessor.                      At trial, the  Health Fund produced no  evidence as            to  how the  bulk transfer  worked to  its disadvantage.   As            Richard Elman's uncontradicted testimony put  it, by December            1992,  Green & Freedman was in  such dire straits that it had            to choose between liquidation and reorganization.  The Elmans            chose the  latter  course,  and  undertook  a  reorganization            through the bulk transfer.                        Further undercutting the  contention that the  mere            fact of the bulk transfer demonstrates the Elmans' fraudulent            intent is  the fact that  they did not conceal  the transfer.            As  required  by  statute,  Green  &  Freedman  notified  its            creditors, including  the Health Fund,  before executing  the                                         -25-            bulk  transfer.   The district  court  thereafter denied  the            Health Fund's motion  to enjoin the transfer,  an action from            which no appeal was taken.                      We are  thus unable to  find, on this  record, that            the   bulk  transfer  provided  the  Elmans  with  an  unfair            advantage,  amounting  to  a fraud,  material  to  the Health            Fund's  current claim.   Under Alman, fraudulent  intent is a                                           _____            necessary element in  order to piece the corporate  veil.  We            do not think a jury  could properly derive a relevant finding            of  fraudulent intent material  to the harm  alleged from the            transfer  by itself.   See  United Elec.,  Radio and  Machine                                   ___  _________________________________            Workers,  960  F.2d   at  1094  (approving  "good   faith  if            _______            ultimately  unsuccessful  attempt  to  resurrect  a  moribund            company"); Laborers  Clean-Up Contract  Admin. Trust  Fund v.                       _______________________________________________            Uriarte Clean-Up  Serv., Inc.,  736 F.2d  516, 525 (9th  Cir.            _____________________________            1984)  (noting  difference  between  a corporation  that  was            unable  to pay its debts from  the outset and one that simply            "fell upon bad times").                        Besides the fact  of the bulk transfer,  the Health            Fund points to other factors as a supposed basis for piercing            Boston Bakers'  veil.  In  its complaint it alleged  that the            nominal and sole  shareholder, Claire Lank, was  "unaware" of            her  obligations and rights as a  shareholder and, instead of            following  her  independent  judgment,  followed the  Elmans'            instructions.   Also alleged was the Elmans' complete control                                         -26-            over  Boston Bakers,  even though  they  owned no  stock; the            Elmans'   disregard   of   corporate   identity;   and    the            incorporation of Boston Bakers with fraudulent intent.  These            allegations, however,  to the extent  legally material,  must            stand  or  fall  on  the  existence in  the  record  of  some            supporting   evidence.      Moreover,   proof  of   corporate            informalities, standing  alone, are insufficient.   Plaintiff            may  not prevail without  some evidence of  fraudulent intent            material to the harm suffered.              _____________________________                      There  is no evidence  of financial self-dealing in            the  case of  Boston Bakers  such  as occurred  with Green  &            Freedman.  None  of the checks introduced by  the Health Fund            as  payable to  or for  the Elmans  came from  Boston Bakers'            accounts.                      In respect to the  claimed "undercapitalization" of            Boston  Bakers, all the  latter's capital came  from the bulk            transfer; there was  no unmet agreement by the  Elmans to add            more, nor  evidence that,  after transfer  to Boston  Bakers,            they diverted the bulk transfer funds to personal objectives.            The mere  fact that  Boston Bakers  eventually failed  or had            less  capital than  needed is  not a  basis for  reaching the            Elmans personally, absent fraud.                      Much  is  made  of  the  fact  that  Richard  Elman            indicated  ignorance as  to how  he was  named  president and                                         -27-            director of Boston  Bakers3 or whether Boston Bakers  held an            annual  shareholders'  meeting.    Stanley  Elman  failed  to            recognize  the firm's  stock  ledger.    And Lank,  the  sole            shareholder, appears  to have  been a  straw for  the Elmans,            allegedly so as to make it harder for creditors to reach them            personally.     None  of  these  items,  however,  singly  or            together, provide  a sufficient  evidentiary basis  to pierce            the  corporate  veil.   While  they  may  suggest a  lack  of            attention  to  corporate  formalities,  they do  not  reflect            fraudulent intent  material to  the harm alleged,  nor is  it            clear  how  any  of them,  even  slightly,  disadvantaged the            plaintiff.                      There  was also evidence that the Elmans' wives did            not know  they were directors;  did not participate  in board            meetings, although corporate  records falsely indicated  they            did; and  did not  know that Lank  was the  sole stockholder.            But  these  snippets  do  little  to  demonstrate  more  than            corporate informality.   Even if the false  corporate records            concerning the wives'  attendance at directors'  meetings are            characterized as a  "fraud," there is no  evidence the Health            Fund knew or  relied on this information to  its detriment or                                            ____________________            3.   Q:   And would you acknowledge, sir, that you don't know                      by  what authority you  were elected a  director of                      Boston Bakers?                 A:   The attorneys set up the corporation.  I don't know                      the direction.    I  know I  was  an  officer,  the                      president.                                         -28-            sustained any injury  whatever as a result.   The "fraudulent            intent  of  the  individual  defendants" mentioned  in  Alman                                                                    _____            requires some meaningful relationship between the  intent and            the harm visited upon plaintiff.  We add that even the Health            Fund  itself does  not  argue that  the incorrect  records by            themselves show fraudulent intent sufficient under Alman.                                                               _____                      We  conclude that the district court was correct in            granting the Elmans'  motion for judgment as a  matter of law            with  respect to the  Elmans' alleged personal  liability for            Boston  Bakers' corporate  obligation to  make  good Green  &            Freedman's delinquent payments to the Health Fund.            V.        Conclusion                      __________                      The  district court's grant of judgment as a matter            of law is vacated with  respect to Count 3 and affirmed  with                      vacated                              affirmed                      _______            respect to Count 4.  The case is remanded for a new trial and            other proceedings consistent herewith.                                         -29-
