Defendant Steve Gilbert Trucking is an employer in an industry
affecting commerce within the meaning of ERISA.
29 U.S.C. § 1102(5), (11), (12), and (14).
The Articles of Agreement constitute a binding obligation upon
Defendant to, inter alia, make contributions to the Illinois
Conference of Teamsters and Employers Welfare Fund in accordance
with the terms and conditions of the Articles, Participation
Agreement, and Declaration of Trust.
The Articles of Agreement are unambiguous and therefore resort
to extrinsic evidence (including purported industry custom) is
not appropriate to interpret those Articles' scope provision.
See Central States, Southeast and Southwest Areas Pension Fund
v. Joe McClelland, Inc., 23 F.3d 1256, 1259 (7th Cir. 1994)
("[E]xtrinsic evidence may not be used to create an ambiguity in
a pension or welfare fund agreement subject to ERISA."); see
also Central States Southeast and Southwest Areas Pension Fund v.
Central Cartage Co., 69 F.3d 1312, 1315 (7th Cir. 1995) ("[A]
multi-employer pension agreement is not a normal two-party
contract for which evidence of idiosyncratic meaning may be used
to depart from the objective meaning of the words."), cert.
denied, ___ U.S. ___, 116 S.Ct. 1419, 134 L.Ed.2d 544 (1996).
Defendant had an obligation under ERISA to maintain adequate
records of the number of hours of covered work performed by his
employees in order to permit a determination of the amount of
contributions due the Fund. 29 U.S.C. § 1059(a)(1) ("Except as
provided by paragraph (2) every employer shall, in accordance
with regulations prescribed by the Secretary, maintain records
with respect to each of his employees sufficient to determine the
benefits due or which may become due to such employees.");
Central States Pension Fund v. Central Transport, Inc.,
472 U.S. 559, 573, 105 S.Ct. 2833, 2841, 86 L.Ed.2d 447 (1985);
Michigan Laborers Health Care Fund v. Grimaldi Concrete, Inc.,
30 F.3d 692, 696 (6th Cir. 1994); Carpenters Fringe Benefit
Funds v. Able Bros. Const., 813 F. Supp. 643, 650 (N.D.Ill.
Defendant breached his obligation to maintain records
sufficient to determine the benefits due to his employees. Under
the Articles of Agreement, the amount of benefits due to
employees are determined based on the number of hours of covered
work an employee performs. As the evidence amply demonstrated,
Steve Gilbert Trucking does not have nor has it ever maintained
records that might allow an auditor to determine with any
certainty the number of hours of covered work each employee
performed. Defendant argues that some of the required information
can be derived from a review of the freight bills. But that
methodology does not yield the desired results in every case and
would frequently depend on Mr. Gilbert's ability to remember
which employee drove which truck on which date.
Because Defendant did not keep the records required by statute,
it is impossible to determine the exact number of hours of
covered work performed by Defendant's employees for which
contributions are due the Fund.
The individuals listed as receiving 1099 forms on Plaintiff's
Exhibits 29-30 were owner-drivers within the scope of Article 25
and the decision in Illinois Conference of Teamsters and
Employers Welfare Fund v. Mrowicki, 44 F.3d 451 (7th Cir. 1994)
and were not subcontractors within the scope of Article 8.
Contributions for those owner-drivers are owing in the same
manner as for Defendant's employees receiving W-2 forms.
Defendant argues that the number of hours worked by
owner-drivers should be determined by dividing their gross pay by
the standard hourly lease rate for a truck and driver. At first
blush, this argument seems sensible. One might think that drivers
who were paid both for their truck and their services (compared
to employees who were paid only for their services) would earn an
amount approximately equal to the standard hourly lease rate for
a truck and driver. But Defendant offered no evidence to suggest
that this was the case. Instead, the evidence showed that
Defendant paid owner-drivers on a commission basis — they received
between 76% and 90% of the price of each load they delivered.
Thus, it is just as difficult to determine the number of hours
the owner-drivers worked as it is to determine
the number of hours worked by the other drivers paid on
commission. The Court finds that the Fund's method for
calculating the number of hours worked by owner-drivers (gross
pay minus bonuses divided by the prevailing wage) is reasonable
under the circumstances.
The Fund's audits of Defendant's payroll records were performed
in accordance with the procedures recommended by the American
Institute of Certified Public Accountants Guide and were in all
respects reasonable and appropriate in light of the Defendant's
failure to maintain adequate records. In the Fund's revised
calculations, all reasonable assumptions were made in favor of
Defendant. The only solid evidence of inaccuracy in the Fund's
calculations Defendant presented is evidence that some employees
were paid bonuses and that most employees received less than the
prevailing wage. The auditor's calculations take both these
factors into account. First, the amount of all bonuses paid have
been subtracted from each employee's gross salary before
computing the number of hours worked. Furthermore, the auditor
used the highest available prevailing wage category to compute
the number of hours worked. Thus, Defendant is held accountable
for fewer hours of covered work than it would be if each
employee's actual wage rate had been used to calculate the number
of hours worked.
The Fund's audits of Defendant's payroll records established an
amount of delinquent contributions of $399,014.24. Once the Fund
established to the best of its ability the number of hours of
covered work performed by Defendant's employees for which
contributions are owing by the Defendant, the burden shifted to
the Defendant to present evidence of the precise number of hours
of covered work performed by his employees or evidence to negate
the reasonableness of the inference to be drawn from the Fund's
The Court agrees with the Sixth Circuit's position in Michigan
Laborers Health Care v. Grimaldi Concrete, 30 F.3d 692, 697 (6th
The benefits calculations under the collective
bargaining agreement depend on knowledge of the
specific number of hours worked by each employee on
projects covered under the collective bargaining
agreement. Give these calculation constraints, and
Grimaldi Concrete's violation of its statutory duty,
it is impossible to determine with any precision the
amount of contributions due to the funds. We agree
with the Ninth Circuit that, under these
circumstances, an employer is liable for
contributions on all hours worked during a period in
which it has been demonstrated that some covered work
See also Combs v. King, 764 F.2d 818, 825 (11th Cir. 1985);
Brick Masons Pension Trust v. Industrial Fence and Supply,
Inc., 839 F.2d 1333 (9th Cir. 1988); Michigan Laborers'
District Council Pension Fund v. Van Sullen Construction, Inc.,
825 F. Supp. 165 (E.D.Mich. 1993). Defendant's employees performed
some covered work during each period in question. Thus, under
Grimaldi Concrete, 30 F.3d 692, 697, Defendant is liable for
contributions for every hour worked during those periods.
The Defendant failed to meet his burden of producing evidence
as to the precise number of hours worked that were covered by the
agreement or to negate the reasonableness of the Fund's
calculations. Defendant argues that the Fund's calculations are
inaccurate and thus insufficient to support a judgment. The Court
agrees that the Fund's calculations represent only an
approximation of the amount of delinquent contributions. But
resorting to approximation is a result of Defendant's stark
failure to obey the dictates of 29 U.S.C. § 1059(a)(1). The
Court, therefore, finds that the amount of delinquent
contributions owing the Fund by the Defendant is $399,014.24. The
Articles of Agreement and Declaration of Trust further provide
for a late payment charge of 12% of the delinquent amount which
The Articles of Agreement and Declaration of Trust further
provide that an employer shall pay the costs of collection
including the cost of performing the audit and attorney's fees.
The reasonable costs of performing the audits in this case were
An award of attorneys' fees, including fees incurred on appeal,
is mandatory under 29 U.S.C. § 1132(g)(2)(D) once judgment is
entered in favor of an employee benefit plan. See Illinois
Conference of Teamsters and Employers Welfare Fund v. Steve
Gilbert Trucking, 71 F.3d 1361, 1368 n. 6 (7th Cir. 1995).
Plaintiff has submitted a fee petition and Bill of Costs. Upon
resolution of any disputes regarding those fees, a final
judgment, including attorneys' fees and costs, shall be entered.
Ergo, the Court finds in favor of Plaintiff, Illinois
Conference of Teamsters and Employers Welfare Fund, and against
the Defendant, Steve Gilbert Trucking, and further finds that
Defendant is indebted to the Fund for delinquent contributions of
$399,014.24, liquidated damages of $47,881.71, audit charges of
$1,600.00, and reasonable attorney's fees and costs to be
determined pursuant to 29 U.S.C. § 1132(g)(2)(D) and Local Rule