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PAUL v. LINDGREN

United States District Court, Northern District of Illinois


April 23, 1974

JOHN PAUL, JR., ET AL., PLAINTIFFS,
v.
GERALD LINDGREN AND RICHARD LINDGREN, INDIVIDUALLY AND D/B/A LINDGREN CONSTRUCTION COMPANY, A PARTNERSHIP, DEFENDANTS.

The opinion of the court was delivered by: Bauer, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes on the defendants' motion to dismiss and in the alternative for summary judgment, and the plaintiffs' cross motion for summary judgment.

This action is brought under 29 U.S.C. § 185 for an alleged violation of a contract between an employer and a labor organization. The plaintiffs are the Trustees of the Laborers' Pension Fund, Laborers' Welfare Fund, and the Laborers' Vacation Fund, which trusts apparently were created and exist in accordance with the provisions of 29 U.S.C. § 186(c) and pursuant to a certain Agreement and Declaration of Trust.

The defendants Gerald Lindgren and Richard Lindgren, individually and d/b/a Lindgren Construction Company, a partnership (hereinafter referred to as "Lindgren") are employers engaged in an industry affecting commerce, as defined by the Labor Management Act of 1947.

The plaintiffs, in their amended complaint, allege, inter alia, the following facts:

  1. Gerald Lindgren and Richard Lindgren have agreed
  to be bound by the terms of the Collective Bargaining
  Agreement, the Welfare Trust and the Pension Fund
  Trust by virtue of executing a signed Memorandum of
  Understanding with the Construction and General
  Laborers District Council of Chicago and vicinity on
  June 9, 1971. Further, said defendants have been
  members of the Mason Contractors Association, a
  signatory to the Collective Bargaining Agreement
  since 1961, which association was the bargaining
  agent with the Construction and General Laborers
  District Council of Chicago and vicinity on behalf of
  the defendants herein. Defendants, Gerald Lindgren
  and Richard Lindgren, individually and d/b/a Lindgren
  Construction Company, a partnership, knew and
  acquiesced to the terms of the Trust Agreements by
  virtue of signing report forms which provides as
  follows:

    "We hereby certify that this report includes all
    hours worked by all laborers in our employ for the
    month shown above and further that the employer
    hereby subscribes to and agrees to be bound by the
    provisions and terms of the Trust Agreements
    between Construction and General Laborers' District
    Council of Chicago and Vicinity and Builders'
    Association, et al, for the Health and Welfare
    Department of the Construction and General
    Laborers' District Council of Chicago and Vicinity
    dated May 25, 1950, and Laborers' Pension Fund
    dated June 1, 1963, and the Laborers' Holiday

    or Vacation Fund dated May 31, 1968, and accepts
    all of them fully as though the same were herein
    contained and further agrees to accept as a
    personal obligation for himself and on behalf of
    his firm to oversee the payment of the established
    rates of contributions to the aforesaid Funds."

  The report forms have all been duly forwarded and
  executed by the defendants and the reports have been
  forwarded by each defendant to the plaintiffs in
  consecutive monthly fashion for a long period of
  time. By this course of conduct, defendants impliedly
  contracted with the plaintiffs herein to abide by the
  terms of said Trust Agreement; the plaintiff Trustees
  relied upon the representations made by defendants in
  reporting on the forms that they would be bound by
  said Trust Agreements; and that they are a
  contractual party to the Trust Agreement. The
  employees through the years have made claims and
  claims have been paid by plaintiffs herein in
  reliance upon defendants being bound to the terms of
  the said Trust Agreements. The defendants herein knew
  of and acquiesced to be bound to said written Trust
  Agreements by virtue of the fact that they bid its
  jobs and charged the owners and general contractors
  on its projects based upon the fact that they would
  have to pay pension and welfare benefits to their
  employees based upon the Trust Agreements. The
  defendants further acquiesced and agreed to be bound
  by the terms of the Trust Agreements by virtue of
  language in its contracts with general contractors
  wherein they agreed to pay all union benefits due.
  The defendants on numerous occasions discussed
  reports and payments with the Administrators of the
  Trust Funds and indicated to said Administrators they
  agreed to be bound by said Trust Agreement and
  further, the Administrators of the Trust Funds relied
  upon the representations of the defendants by and
  through its duly authorized and acting agents in the
  scope and course of their authority. The defendants
  herein recognized and agreed to be bound by said
  Trust Funds due to their conduct in underreporting
  hours and underreporting number of men working;
  because if the defendants considered that they are
  not bound by the Trust Agreements, they would not
  take a course of conduct deliberately understating
  liability under the Trust Fund Agreements.

  2. As provided in the Agreement and Declaration of
  Trust, plaintiffs, as Trustees aforesaid, are
  required to receive, hold and manage all moneys
  required to be contributed to Laborers' Pension Fund,
  Health and Welfare Department of the Construction and
  General Laborers' District Council of Chicago and
  Vicinity, and Laborers' Vacation Fund, in accordance
  with the provisions of the then applicable collective
  bargaining agreement, as a Trust Fund, for the uses
  and purposes set forth in the Agreement and
  Declaration of Trust governing the Fund to which the
  contributions are made. By virtue of provisions
  contained in the Collective Bargaining Agreements to
  which defendants are bound, defendants did promise
  and become obligated to make contributions, in
  certain amounts as set forth in the Agreements, to
  said funds on behalf of their employees for each hour
  worked or for which wages were received by such
  employees. Defendants further agreed that all amounts
  required to be paid into the respective funds, shall
  be paid not later than the 10th day of the month next
  succeeding the month in which an employee covered by
  the collective bargaining agreement worked or
  received wages. Defendants further agreed to furnish
  to the Trustees of the Laborers' Pension Fund, the
  Health and Welfare Department of the Construction and
  General Laborers' District Council of Chicago

  and Vicinity, and Laborers' Vacation Fund, a monthly
  contribution report, setting forth therein:

(a) the names of employees;

    (b) hours for which wages were received by the
    employee;

    (c) contributions required to be made on behalf of
    each employee,

  or in such cases where no employee worked or received
  wages, a statement to that effect and indicating no
  contributions were required to be made for such
  period. Each employer bound by the Collective
  Bargaining Agreement has agreed that a failure by an
  employer to make payment of contributions required to
  be made thereunder shall constitute a violation of
  said agreement by such employer.

  3. Pursuant to provisions contained in the Agreement
  and Declaration of Trust, the Trustees acting
  thereunder are authorized and empowered to examine
  and copy the payroll books and records of an employer
  to permit such Trustees to determine whether an
  employer is making full payment as required under the
  applicable Collective Bargaining Agreement. It is
  further provided therein, that in the event upon an
  audit made by the Trustees and/or upon other evidence
  it shall be found that an Employer has failed to make
  all contributions required on such employer's part to
  be made, Trustees shall impose the following upon
  such delinquent employer:

    a. all costs of such audit shall be paid by such
    employer;

    b. as provided in the Agreement and Declaration of
    Trust such employer shall pay, in addition to the
    amounts determined to be due, a sum equal to ten
    per cent thereof;

    c. all costs, expenses and attorney's fees incurred
    by the Trustees; and

    d. to furnish to Trustees, as a guarantee for the
    making of monthly payments an amount equal to three
    times the monthly payments of an employer as
    estimated by the Trustees and to further require
    that such guarantee be continuously maintained.

  4. Notwithstanding the foregoing, defendants have
  violated the obligations on defendant's part
  undertaken, in that the defendants failed:

    a. to permit an audit of his payroll books and
    records as required by the Trust Agreements;

    b. to make timely and complete payments to
    plaintiff Trustees herein.

  The above described omissions and breaches of
  Agreement by the defendant will have the following
  consequences:

    The Trustees of the Laborers' Pension Fund will be
    required to deny the employee-beneficiaries of such
    Fund, for whom required contributions have not been
    made, the benefits provided thereunder, thereby
    causing to such employee-beneficiary substantial
    and irreparable damage.

    The Trustees of the Health and Welfare Department
    of the Construction and General Laborers' District
    Council of Chicago and Vicinity will be required to
    provide to employees of defendant benefits provided
    hereunder, notwithstanding the failure of defendant
    to make required contributions thereto, thereby
    reducing the corpus of such Fund and endangering
    the rights of employee-beneficiaries thereunder on
    whose behalf contributions are being made, all to
    their substantial and irreparable injury. The
    Trustees of the Laborers' Vacation Fund will be
    unable to make full payment of vacation pay to
    laborers as the same becomes due.

  5. Plaintiffs, in their behalf and on behalf of all
  employees for whose benefit the Laborers' Pension
  Fund, the Health and Welfare Department of the
  Construction and General Laborers' District Council
  of Chicago and Vicinity, and Laborers' Vacation Fund

  have been established, have requested defendant to
  perform its obligations, but defendants have refused
  and failed to perform. Plaintiffs are without an
  adequate remedy at law and will suffer immediate,
  continuing and irreparable injury, loss and damage
  unless defendants are ordered to specifically perform
  all obligations on defendants' part required to be
  performed under the Collective Bargaining Agreement
  and Agreement and Declaration of Trust, and are
  restrained from continuing to refuse to perform as
  thereunder required.*fn1

The defendants, in support of their motion to dismiss and in the alternative for summary judgment, contend that:

  1. This Court does not have jurisdiction over the
     instant action pursuant to 29 U.S.C. § 185.

  2. The defendants have not been members of the Mason
     Contractors Association of Cook County since 1968
     and thus cannot be liable to the trustees or to
     the union based upon any agreement between that
     Association and the union.

  3. The purported Memorandum of Understanding was not
     executed by the Trustees of the Pension Fund,
     Welfare Fund or Holiday or Vacation Fund, and is
     therefore not a valid and binding Agreement.

  4. The Holiday or Vacation Trust Fund has been
     terminated and therefore the plaintiff-trustees of
     the Fund have no authority to sue thereon.

  5. Defendants have ceased to be an employer, if
     indeed, they ever were, as defined in Article XI,
     Section 1, of the Laborers' Pension Fund and
     therefore by the terms thereof are not obligated
     to make contributions thereto. In addition, this
     Court would not have jurisdiction under Chapter 7,
     29 U.S.C. § 185 in that there would be no employer
     as required by that Section.

  6. Plaintiffs' allegation of implied contract,
     estoppel and reliance are invalid as a matter of
     law. Further the alleged liability based on the
     alleged implied contract is limited to the period
     of the prior five years according to the
     applicable Illinois Statute of Limitations.

The plaintiffs, in opposition to the defendants' motion to dismiss or in the alternative for summary judgment and in support of their motion for summary judgment, contend that:

  1. This Court has jurisdiction over an action against
     an employer brought by Trustees of funds created
     in accordance with the Labor Act.

  2. Lindgren is an employer and thus subject to suit
     under Section 301 of the Labor Act.

  3. As third party beneficiaries of labor agreements,
     the Trustees may derive benefits therefrom and sue
     thereunder, even if it is assumed that they have
     not properly executed the Memorandum of Agreement.

  4. The District Council is not an indispensable party
     to this action.

  5. Lindgren is obligated to all Trust Fund
     requirements described in the Collective
     Bargaining Agreement for the past ten years, by
     virtue of:

     a. Lindgren's membership, which they have never
     disavowed, in the

     District Council and in the Association;

     b. Lindgren's execution of a Memorandum of
     Agreement incorporating the applicable labor
     agreement, and reaffirming obligations under prior
     agreements, in 1971 and again in 1973; and

     c. Lindgren's adoption and ratification of all
     obligations to the Funds by the payment of
     benefits thereto and by other acts and conduct
     inconsistent with non-affirmation.

It is the opinion of this Court that it has jurisdiction over the instant action, that the instant amended complaint adequately states a claim upon which relief can be granted, but that there exist genuine issues of material fact which preclude summary judgment at this time.

The consideration of the following additional facts supplied by affidavits and documents submitted by the plaintiffs are important to the proper disposition of the instant motions.

On March 30, 1961 Lindgren joined the Mason Contractors' Association of Cook County ("Association").*fn2 The primary function of the Association is to negotiate collective bargaining agreements with building trade unions. In negotiating these agreements, the Association represents all of the employers who are its members. Such member-employers are bound to the agreements negotiated by the Association.*fn3

Lindgren remained a member of the Association until May 13, 1969 when the Association terminated its membership for nonpayment of dues.*fn4 During the term of Lindgren's membership in the Association, the Association on behalf of its members entered into a series of labor agreements with the District Council, as follows: June 1, 1957 through May 31, 1962; June 1, 1962 through May 31, 1967; June 1, 1967 through May 31, 1972. Subsequently the 1967-1972 agreement was amended, for wages and benefits only, on June 1, 1972 for one year and again on June 1, 1973 for two years.

The District Council was notified that Lindgren was a member of the Association.*fn5 At no time, however, was the District Council notified that Lindgren's membership in the Association had been terminated or that Lindgren had withdrawn from the Association. As far as the District Council was concerned, therefore, Lindgren remained a party to the 1972 and 1973 agreements. In any event, on June 9, 1971 Lindgren and the District Council entered into a Memorandum of Agreement which incorporated the 1967 agreement and specifically required Lindgren to pay "the amounts under [this] agreement" to the Funds.*fn6

Lindgren contributed to the Funds for the month of June, 1968 through September, 1969, and April through October, 1971.*fn7 On October 31, 1973 Lindgren signed another Memorandum of Agreement which, like the 1971 Memorandum, incorporated the 1967 agreement, specifically required Lindgren to contribute to the Funds in accordance with this agreement, and "affirm[ed] said agreement from June 1, 1967 together with all amendments."*fn8

As shown in Mr. Caporale's affidavit, the 1971 Memorandum was procured only because Lindgren had ceased making all of the required Trust Fund contributions. The 1973 Memorandum was secured only after Lindgren had claimed, in response to the Trustees' efforts to require Lindgren to adhere to his Trust obligations, that, for the first time, he was no longer a member of the Association.

I. THE PLAINTIFFS MAY MAINTAIN THEIR ACTION IN THIS COURT
   PURSUANT TO 29 U.S.C. § 185.

This Court's jurisdiction over the instant action is predicated on Section 301 of the Labor Management Relations Act (29 U.S.C. § 185) which provides in relevant part:

  "Suits for violation of contracts between an employer
  and a labor organization representing employees in an
  industry affecting commerce as defined in this
  chapter, or between any such labor organizations, may
  be brought in any district court of the United States
  having jurisdiction of the parties, without respect
  to the amount in controversy or without regard to the
  citizenship of the parties."

In the instant action the employer (Lindgren) is a party to the Collective Bargaining Agreement,
*fn9 as a consequence of agreements its Association negotiated on its behalf, the two Memoranda of Agreement one of its partners signed and the ratification of the labor agreements. Looking at the substance of the relationship between the parties there is nothing to be gained by requiring a suit by the union rather than by the Trustees of its Funds.*fn10

  The United States Supreme Court has directed that Section 301
is not to be given a narrow meaning; Section 301 is designed to
vindicate individual employees rights arising from a collective
bargaining contract. Smith v. Evening News Association,
371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). Vindication of such
rights is the purpose of this suit, and thus the jurisdiction of
this Court over the instant matter is proper and appropriate.
This finding follows similar rulings by Federal Courts in other
districts. See Trustees v. Wolhsberger Roofing Works, Civ. No.
67-300, 66 LRRM 2047 (E.D.N.Y. 1967); Hann v. Harlow, 271 F. Supp. 674
 (D.C.Or. 1967); Schlect v. Hiatt, supra; Calhoun v. Bernard,
supra; Owen v. One Stop Food & Liquor Store, Inc., 359 F. Supp. 243
 (N.D.Ill. 1973); Thomas v. Old Forge Coal Co., 329 F. Supp. 1000
 (M.D.Pa. 1971); Carpenters Pension Fund v. Wachsberger
Roofing, 66 LRRM 2682 (D.C.Or. 1967). It is clear that the labor
union (District Council) is not an indispensible party to

this litigation and that this Court has jurisdiction over the
instant action.

The defendant contends that since, under the Pension Trust, an "Employer shall cease to be an Employer . . . `when' . . . as determined by the Trustees, . . . he is delinquent in his contributions or reports to the Pension Fund", the Trustees by filing this suit have determined that the defendants are delinquent and thus they cease to be an employer and this Court ceases to have jurisdiction over the instant action. This contention of the defendants is without merit.

Article V, Section 4 of the Pension Trust provides in relevant part:

  "The Trustees may take any action necessary to
  enforce payment of contributions and penalties due
  thereunder, including, but not limited to,
  proceedings at law and in equity."

While under the provision of Article XI, Section 1 of the Pension Trust the Trustees may "determine that an Employer shall cease to be an Employer" because of his delinquencies, the mere filing of a suit pursuant to Article V, Section 4 is not tantamount to such "determination". Were this not so, the Trustees would be foreclosed from exercising their discretion because every employer could avoid his liability by claiming that the filing of a suit to establish liability automatically terminated his obligations. Such a result would be contrary to the intent and purpose of the respective Trust Funds.

Further, even if the defendants were to cease to be an employer pursuant to the Pension Trust, they still appear to be an employer for the purpose of a suit under Section 301. Section 301(a) of the Labor Act, 29 U.S.C. § 185(a), sanctions a suit ". . . for violation of contracts between an employer and a labor organization." Section 2(2) of the Act, 29 U.S.C. § 152(2), defines an employer in the broadest possible terms as any "person" acting "as an agent of an employer . . .". This broad, all encompassing statutory definition of "Employer" cannot be displaced by self-limiting, private definitions. N.L.R.B. v. E.C. Atkins & Co., 331 U.S. 398, 67 S.Ct. 1265, 91 L.Ed. 1563 (1947), rehearing denied, 331 U.S. 868, 87 S.Ct. 1725, 91 L.Ed. 1872. To permit such a self-limiting, private definition would be to permit an employer, in a labor agreement or other private agreement to define himself as "non-employer" and so exculpate himself from liability in a suit brought by a labor organization or, as here, by the beneficiary of a labor agreement. This result was clearly not contemplated by Congress when it permitted actions for breach of a labor agreement. The plaintiff has adequately alleged that the defendants are an employer pursuant to 29 U.S.C. § 152(2).

The defendants also contend that the Memorandum of Understanding, which was only signed by the Administrator of the Funds, is unenforceable against the trustees and by virtue of the doctrine of mutuality of obligation, is unenforceable against the defendants. This contention of the defendants is not well taken.

It is clear that the signature of the Administrator amounts to a simple acknowledgement that the Trustees have received the Memorandum of Agreement. The defendants' obligation is predicated upon the labor agreements to which they are a party, as well as the underlying Pension Trust Agreement to which the defendants and all the Trustees apparently are a party. The plaintiff has adequately alleged a violation of a labor contract between an employer and a labor organization.

It is well settled that an employer is bound to contracts negotiated by an association by virtue of its membership and its authorization to the association to negotiate the contracts. Garment Workers v. Miami Casuals, Inc., 456 F.2d 799 (5th Cir. 1972). It is not necessary that the defendants, as an employer, sign the agreement, if they are a member of an employers' association. Garment Workers v. Miami Casuals, Inc., supra; Farina Bros. Co. v. Carpenters, Local 107, 152 F. Supp. 423 (D.C.Mass. 1957).

The plaintiffs adequately allege in their instant amended complaint that the defendant partnership did join the putative association in 1961 and at no time did the defendants notify the District Council in writing or otherwise of the defendants' attempted withdrawal from the multi-employer Association unit. It is well settled that an employer may not withdraw from a duly established multi-employer bargaining unit, except upon adequate written notice, given prior to the date set by the contract for modification or to the agreed upon date to begin the multi-employer negotiations. N.L.R.B. v. Jefferson Banknote Co., 281 F.2d 893 (9th Cir. 1960); N.L.R.B. v. Sheridan Creations, Inc., 357 F.2d 245 (2nd Cir. 1966), cert. denied, 385 U.S. 1005, 87 S.Ct. 711, 17 L.Ed.2d 544 (1967); Detroit Newspaper Publishers Association v. N.L.R.B., 372 F.2d 569 (6th Cir. 1967). Such timely notice must be conveyed to the union. Universal Insulation Corporation v. N.L.R.B., 361 F.2d 406 (6th Cir. 1966); N.L.R.B. v. Sklar, 316 F.2d 145 (6th Cir. 1963); N.L.R.B. v. Sheridan Creations, Inc., supra. It is clear to this Court that the defendants have failed to adequately establish, at this time, that they had effectively withdrawn from the Association.

The defendants finally contend that on the face of the complaint any liability prior to a period of five years from the filing of the instant action is barred by the Illinois Statute of Limitations governing actions on implied contracts. See Chapter 83, Section 17 of the Illinois Revised Statutes.

It is clear to this Court that the plaintiffs' amended complaint, on its face, does not violate the relevant Illinois Statute of Limitations.

The plaintiffs adequately contend that:

  1. Liability attached on March 30, 1961, the date the
     defendant joined the Association, thus accepting a
     written contract.

  2. It is undisputed that starting in June, 1968, and
     continuing at intervals through October 1971,
     defendant made payments to the Funds and written
     promises to pay in the form of signed reports,
     thereby reiterating their obligation and
     evidencing their previous promises.

  3. On June 1, 1967 and October 10, 1973, defendants,
     by executing the respective Memoranda of
     Agreements, again promised to pay their prior
     obligation.

  4. Thus the 10 year Illinois Statute of Limitations
     applies to the instant action because there were
     payments, coupled with numerous promises in
     writing, to pay the pre-existing obligations
     required under written Collective Bargaining
     Agreements, reviving the 1961 promise.

It is apparent that the 1961-1963 obligations are not barred because the defendants' later payments and written promises to pay have revived them. See Kopel v. Board of Education of the City of Chicago, 1 Ill. App.3d 1083, 275 N.E. ed 772 (1971); In re Jorgensen, 70 Ill. App.2d 398, 217 N.E.2d 290 (1966).

It is clear to this Court that the plaintiffs in the instant amended complaint have adequately stated a cause of action against the defendants and that this Court has jurisdiction over this Action.

II. THE CROSS-MOTIONS FOR SUMMARY JUDGMENT SHOULD BE DENIED.

It is the opinion of this Court, after carefully examining the relevant pleadings, memoranda, affidavits and exhibits that there exist genuine issues of material fact which preclude this Court from granting summary judgment of this time.

This ruling should not be interpreted as barring the parties, after adequate pre-trial discovery, from bringing whatever motions they may deem appropriate. If, after adequate discovery, the parties wish to proceed by way of a motion for summary judgment, it is advisable that the parties submit, in addition to the appropriate memoranda, exhibits and affidavits filed in support of their respective positions, a stipulation of facts and legal issues to be determined by this Court.

Accordingly, it is hereby ordered that the defendants' motion to dismiss is denied and the cross-motions for summary judgment are denied.


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