FINDINGS OF FACT AND CONCLUSIONS OF LAW
Following a bench trial in this ERISA-based action, counsel for the litigants tendered their respective revised sets of proposed findings of fact ("Findings") and conclusions of law ("Conclusions") for consideration by this Court. In accordance with Fed. R. Civ. P. 52(a), what are set out here will constitute this Court's Findings and Conclusions. To the extent (if any) that the Findings as stated may be deemed conclusions of law, they shall also be considered Conclusions. In the same way, to the extent (if any) that matters later expressed as Conclusions may be deemed findings of fact, they shall also be considered Findings. In both those respects, see Miller v. Fenton, 474 U.S. 104, 113-14, 88 L. Ed. 2d 405, 106 S. Ct. 445 (1985).
Findings of Fact
1. Thomas J. Moriarty ("Moriarty") is a Trustee and a fiduciary of the International Brotherhood of Teamsters ("Teamsters") Local Union No. 727 Health and Welfare Trust and its Pension Trust (collectively "Funds"). Both Funds are "employee benefit plans" within the meaning of Employee Retirement Income Security Act of 1974 as amended ("ERISA") § 1002(3).
As a fiduciary of an employee benefit plan, Moriarty is authorized to commence a civil action under ERISA § 1132(a)(3) to enforce the obligations that ERISA imposes upon employers (Fact P2;
D. Ans. P4).
2. Funds are third-party beneficiaries of collective bargaining agreements ("CBAs") entered into between the Funeral Directors Services Association of Greater Chicago ("Association") and the Auto Livery Chauffeurs, Embalmers, Funeral Directors, Apprentices, Ambulance Directors, Apprentices, Ambulance Drivers and Helpers, Taxicab Drivers, Miscellaneous Garage Employees, Car Washers, Greasers, Polishers and Wash Rack Attendants Union, Local No. 727 of the Teamsters ("Union")(Fact P1).
3. Moriarty began his employment with Association's predecessor in 1950 as an accountant and office manager (Tr. 26). In 1960 Moriarty became Association's Executive Director, and he held that position until December 31, 1993 (Fact P2). Moriarty then remained employed by Association as a consultant between January 1, 1994 and December 1995 (Tr. 27). Since 1963 Moriarty has served, and he continues to serve, as Trustee of the Health and Welfare Trust, and since 1964 Moriarty has served, and he continues to serve, as Trustee of the Pension Trust (Tr. 25).
4. Association is a multiemployer association that comprises, and that represents, approximately 250 members (Fact P6). Association and its predecessor organizations have represented employers in the Chicago metropolitan area funeral home industry in collective bargaining negotiations with Union since approximately 1915 (Tr. 28). Association's activities include but are not limited to negotiating labor contracts, representing employers in labor matters, participating in group insurance programs, educational programs and social programs and seminar tours, and obtaining copies of death certificates for its members (Tr. 29).
5. Although it is neither useful nor critical to determine the principal activity in which Association engages,
it cannot be gainsaid that collective bargaining and other labor matters constitute a principal activity of Association. That is established both by the importance of that activity to Association and its employer-members and, relatedly, by the significant (though not every-day) amount of time that Association spends on those matters. Association and its predecessor organizations have acted as the bargaining agent for the industry's employers for at least 80 years (Tr. 28, 133). Moriarty and several leaders in Association's membership testified to a widespread understanding, based on their experience, that all Association's employer-members are bound by Union's CBAs with Association (see, e.g., Tr. 69, 31, 240, 258, 465).
6. Glueckert Funeral Home, Ltd. ("Glueckert") is an Illinois corporation providing services typical of the funeral industry in this judicial district. Glueckert engages in an industry affecting commerce, as defined by Labor Management Relations Act ("Act"
) § 185(a). Glueckert is an "employer" within the meaning of ERISA § 1002(5)(Fact P3).
7. Union is a labor organization representing employees in an industry affecting commerce as defined by Act §§ 152(5) and 185(a)(Fact P4).
8. In 1970 John Glueckert, Sr. ("Glueckert, Sr.") purchased an already-established funeral home, which he later incorporated in 1975 as Glueckert Funeral Home, Ltd. In March 1987 Glueckert, Sr. moved the funeral home location to 1520 N. Arlington Heights Road, Arlington Heights, Illinois 60004. At all relevant times Glueckert, Sr. has been the joint owner of 99% of the Glueckert stock, with the remaining 1% being owned by Cecelia Ardo (FPTO Modification filed December 10, 1996).
9. By 1988 Glueckert, Sr. began to consider becoming a member of an association in order, among other reasons, to remain current in developments in the funeral home industry (Fact P5). In late 1988 or early 1989 Glueckert, Sr. filled out an application for membership in Association. Under that application Glueckert agreed to abide and be bound by the provisions of the "Constitution, By-laws, Rules and Regulations of the Association" (Fact P18; J. Ex. 2).
10. When Glueckert applied for membership in Association, it received a "full privileged" membership applicable to entities engaged in the funeral directing and embalming and related transportation activities (Fact P19). At all material times Glueckert has employed individuals who have performed work covered by the CBAs between Association and Union ("covered work")(Fact P32).
11. Glueckert's application for full privileged membership was approved by Association on March 22, 1989, and Glueckert maintained that membership continuously through September 1994. Glueckert, Sr. signed Association's membership record on or about March 22, 1989 (Fact P20). Association's membership record card stated that the signer (id.):
acknowledged receipt of a copy of the Constitution, By-Laws, Rules and Regulations of the Funeral Directors Services Association of Greater Chicago, and agreed, as a condition of becoming a member of said Association, to abide and be bound by the Constitution, By-laws, Rules and Regulations now in force or that may hereafter be adopted.
Glueckert regularly paid Association's membership dues from March 1989 through September 1994 (Fact P19; Tr. 51).
12. During the course of Glueckert, Sr.'s initial course of considering a possible application for Association membership on Glueckert's part, Moriarty sent Glueckert, Sr. some materials that were typically sent to potential members. That transmittal included a July 7, 1988 letter that provided some background information and, in addition to enclosing a partially completed membership application, was accompanied by the previous six months of Association newsletters (Tr. 35; J. Ex. 1; Tr. 58-60). Among those newsletters, the February 1988 newsletter included a reference to the Association's agreements with Union and another union, discussed the forthcoming increases in wage rates for chauffeurs and cleaning personnel ("effective in the upcoming contract year, March 1, 1988 to February 28, 1989, the final year of the current 3 year agreements"), stated that "additional information regarding the above is included in the copy of the agreements which have been forwarded to you" and went on to say (emphasis in original):
If you have any questions, or need an additional copy of the agreements, please call our office. It should be remembered that employees who are paid overscale are still entitled to the full negotiated increase. A final reminder--in the event of a question on a contract clause, or an interpretation of same, please contact the Association office. We are your representative--the unions represent your employees. Many times, we can head off a problem area if we are consulted in advance, rather than after the fact.
Immediately after that discussion the February 1988 newsletter went on with a reminder ("you are no doubt aware") that the health and welfare contribution schedule for the funeral directors, embalmers and chauffeurs contracts likewise entered the third year effective March 1. As part of the same newsletter package sent to Glueckert, Sr., the June 1988 newsletter began with a report that "your Embalmer Negotiating team continues to meet with representatives of Teamster Local Union No. 727 on a new wage agreement...," explained the difficulty in the negotiations in light of what were said to be "extreme demands" presented by Union and gave notice that "[a] special Meeting of the Membership will be scheduled later in the month in order to receive and consider a report from your Negotiating Team."
13. It is frankly disingenuous for Glueckert to disclaim knowledge that a major function of Association on behalf of its membership was and is the negotiation and execution of CBAs--including the customary provisions for employee benefit plan contributions--on behalf of Association's members. Leaving aside Association's contention that such knowledge was universal throughout the industry (something that, although in all likelihood true of most industry participants, could not be susceptible to proof in technical terms), Glueckert, Sr. had to have that knowledge from the very outset of his discussions with Moriarty (including by reason of his review of the materials referred to in Finding 12, which this Court finds Glueckert, Sr.--who by his testimony demonstrated himself to be a careful businessman--must have read through before applying for membership). Indeed, the very fact that Glueckert, Sr. posed the question that he did before joining (see Finding 20), though he framed it only in terms of whether he would have "to be a member of the union" by becoming a member of Association (which it will be remembered is an association of employers, not employees), really confirms his understanding that an integral part of Association's activities consisted of dealing with Union and negotiating CBAs, with all of the concomitant provisions entailed in such agreements.
And just as Glueckert cannot persuasively disclaim that knowledge that it had at the very outset of its relationship with Association, so the later effort of John Glueckert, Jr. ("Glueckert, Jr.") to distance himself from an Association meeting that dealt with its contractual arrangements with Union and with their binding effect on all Association members (see Findings 37-38) further demonstrates both a like degree of knowledge and an effort to play ostrich in an attempt to avoid the necessary impact of that knowledge on Glueckert's obligations.
14. It is true but irrelevant that the formal documents that were provided to Glueckert did not contain provisions that embodied Association's authority in the respect at issue here. Before 1988, as part of an effort to simplify Association's Constitution and By-laws, its Constitution and By-laws Committee transferred from the Constitution and By-laws then in effect to Association's Official Statements of Policy the language that granted its labor committee the authority to negotiate and, subject to membership approval, to enter into labor agreements (Tr. 37). Those references to collective bargaining were removed from the Constitution and By-laws merely to simplify those documents and to make them more readable (Tr. 40).
Thereafter the references to Association's role in collective bargaining appeared in its Official Statements of Policy (Tr. 37; J. Exs. 6, 7). Those Official Statements of Policy authorize its President to appoint a committee representing Association's membership to enter into labor negotiations and to enter into such agreements subject to membership approval, as well as to resolve any disputes or grievances that may arise from such labor agreements (J. Exs. 6 at 40 and 7 at 48).
15. Association and Union have been signatories to a series of CBAs that were effective both before March 1989 and thereafter through and including the present. Those CBAs are in writing and are signed by representatives of Association and Union (Fact P12). They cover all of Association's employer-members (Tr. 33) and have never covered fewer than all of those members (Tr. 33, 240, 241, 258, 466). Indeed, at the beginning of the negotiation of every CBA entered into between Association and Union from 1967 through 1994, and throughout each negotiation process, Association has uniformly notified Union that Association was bargaining on behalf of all of its employer-members (Tr. 65).
16. It is true but again irrelevant that Association does not solicit or require individual employer-members to provide specific written authorization permitting Association to engage in collective bargaining on their behalf, nor does it seek specific written ratification of negotiated CBAs by Association's individual employer-members (Fact P13). That authority is conferred both by the fact of membership in Association and by its standard operating procedure, under which the ratification of each CBA occurs during a special membership meeting called for that purpose. At each such meeting Association's negotiating committee presents to the membership the contract proposal negotiated by that committee with Union, after which the members present discuss the proposal and take action to ratify it. That standard operating procedure for ratification is consistent with Association's governing documents (Tr. 52).
17. Glueckert never notified either Association or Union that Association did not represent Glueckert in its negotiations of labor agreements (Tr. 62, 63). Accordingly Association could not, and did not, at any time notify Union that Association did not represent Glueckert (Tr. 65)--entirely understandably, for as already stated Association at all times recognized (and expressly notified Union) that it represented all of its employer-members (necessarily including Glueckert).
18. Association publishes an annual Reference Guide that it sends to each employer-member. That Guide contains a calendar, Federal Trade Commission regulations, Illinois public health regulations, advertisements, a list of Union registered chauffeurs and trade embalmers, and a list of each of Association's employer-members (including its name, business address and telephone number) (J. Ex. 12; Fact P8). Association affirmatively communicated the fact of Glueckert's membership beginning in January 1990 to Union by sending it a copy of the Reference Guide (Tr. 222, 65, 155). Glueckert continued to be listed as an Association member in the 1994 Reference Guide (J. Ex. 12 at 349), at a time when Glueckert, Jr. was a member of Association's Reference Guide committee (Fact P28). Glueckert received the Reference Guide annually (Fact P26).
19. Moriarty, who was a totally credible witness, testified that he would never avoid discussing the ramifications of Association membership with its potential employer-members (Tr. 66). In particular, Moriarty never deliberately concealed the fact or extent of Association's participation in labor negotiations with Union (Tr. 66-67).
20. Before Glueckert decided to become an Association member, Moriarty met with Glueckert, Sr. to discuss that prospect (Tr. 337, 485). Glueckert, Sr. testified that he then asked Moriarty:
...by being a member of the FDSA would I have to be a member of the union. Moriarty answered by saying no, that the FDSA served in negotiations but no more was expressed about it and the fact that I didn't have to be a member of the union was fine with me.
(Glueckert, Sr. Dep. 46-47; accord, Tr. 338). In another demonstration of his credibility, Moriarty did not dispute that--he testified that he had no recollection of that exchange but that it is possible that he told Glueckert, Sr. that he would not individually have to become a union member if Glueckert joined Association (Tr. 489-90).
21. Glueckert, Jr. testified very differently from his father. According to his testimony, Glueckert, Jr. was present at the discussion between Glueckert, Sr. and Moriarty before Glueckert joined Association (Tr. 287). Glueckert, Jr. further testified that Glueckert, Sr. then asked Moriarty whether "we had to become a union firm" and that Moriarty responded by saying "no" (Tr. 289, 330). That testimony is inconsistent with the testimony of both Glueckert, Sr. and Moriarty, and this Court finds it totally lacking in credibility. To the contrary, Moriarty (who was fully aware of the fact that Association always negotiated CBAs on behalf of its entire membership) would not have told, and he did not tell, Glueckert, Sr. that the Glueckert business could be an Association member but not be bound by the terms of the CBAs with Union (Tr. 487). Glueckert Jr.'s noncredible version of the conversation is also inconsistent with Association's correspondence and notices that always informed its employer-members of their obligations under the CBAs with Union (P. Exs. 1, 2; J. Exs. 1, 14).
22. Glueckert, Sr. also testified that during his conversation with Moriarty before Glueckert joined Association, Moriarty told him that Association participates in labor contract negotiations (Tr. 341). As Finding 13 and n. 8 indicate, Glueckert, Sr. already knew about Association's CBAs with Union and knew that by definition the bargaining relationship affected Association's employer-members (knowledge that was implicitly confirmed by Glueckert, Sr.'s having asked Moriarty whether Glueckert's joining Association would require Glueckert, Sr. himself to be a Union member). Even Glueckert, Jr. confirms that during the same conversation he heard Moriarty say "that the FDSA does participate in negotiating a contract..." (Tr. 290), although Glueckert, Jr. also tried to put a different spin on that statement (Tr. 290-91) to conform to his just-discredited testimony referred to in Finding 21. Again this Court discredits Glueckert, Jr.'s version of the conversation, during which he was an observer rather than an active participant.
23. As an Association employer-member during the period from March 1989 through September 1994, Glueckert regularly received Association newsletters, some of which (like those sent to Glueckert, Sr. before Glueckert joined) referred not only to labor negotiations between Union and Association but also to the CBAs' contractual wage and benefit rates (Tr. 48). Those newsletters, furnished to each employer-member, made it clear that Association represented all of its employer-members. Glueckert, through its President and primary shareholder Glueckert, Sr. and its manager Glueckert, Jr., received and read the Association newsletters (J. Ex. 14; Fact P26).
24. Association maintained a standard operating procedure regarding notices and correspondence to its membership, reporting both that CBAs were open for negotiation and also as to new terms and conditions negotiated in the CBAs, including salary increases and health and welfare contribution rates (Tr. 41-45). All such notices and correspondence were drafted by Moriarty and submitted to Association's President for signature and were then routinely sent to all Association employer-members (Tr. 42, 44). In accordance with that procedure, after March 1989 Glueckert periodically received notices from Association that the CBAs were open for negotiation and, after the negotiation of new CBAs, Glueckert likewise received notices of the new terms and conditions of employment for the bargaining units covered by the revised CBAs (Fact P27).
25. Association sent a copy of the signed CBAs to every Association member for each CBA that Association negotiated (Tr. 46-47). Each CBA was accompanied by a cover letter that stated "the agreement applies to every member of the Association" (P. Ex. 1 at 761). Glueckert received copies of all such CBAs negotiated after 1989 through 1994 (Tr. 47; Fact P27). Glueckert unquestionably must have known--and it is hereby held to have known--from Association's newsletters (received both before and after Glueckert joined Association) and from other Association correspondence that Association bargained with Union exclusively on behalf of all Association employer-members and that it entered into CBAs on behalf of all Association employer-members (necessarily including Glueckert). In that respect, Glueckert could not reasonably rely on Glueckert Sr.'s inquiry, about what he himself (as the owner of an employer-member) would individually be required to do in terms of Union membership, as somehow limiting what Glueckert should have known as to its obligations related to its non-owner employees that were created by reason of the CBAs between Association and Union.
26. Although Glueckert notified Association that it was terminating its Association membership in September 1994, Glueckert never gave Union (either then or later) any written notice seeking to modify or to terminate the CBAs as to Glueckert (Tr. 222). Union had no knowledge of Glueckert's notice to Association.
27. Local 727's Secretary-Treasurer and chief Union officer John Coli testified that negotiations for the 1995 Chauffeurs Agreement began in April 1994 (Tr. 224, 235), and this Court so finds. By the terms of the various CBAs, all Association employer-members are bound by the Trust Agreements establishing the two Funds. Thus the 1994 Embalmers CBA (P. Ex. 10 Art. IV § 6) and the 1995 Chauffeurs CBA (P. Ex. 13 Art. V § 6) provide (emphasis added):
By the execution of this Agreement each employer member authorized the Employer [Association] to enter into appropriate trust agreements necessary for the administration of such funds, and to designate the Employer Trustees under such agreement[s] hereby waiving all notice thereof and ratifying all actions already taken or to be taken by such Trustees within the scope of their authority.
Like all other employer-members of Association, Glueckert is bound by the terms of all those CBAs that have--during the relevant time frame (see Conclusions 13-14)--authorized Association to enter into Trust Agreements necessary for the administration of Funds. In that respect the amendments to the Trust Agreements effective May 1, 1995 (P. Exs. 16 and 19) have been adopted by reference in the 1994 Embalmers and the 1995 Chauffeurs CBAs.
28. Each CBA provides that Association's employer-members are obligated to contribute to Funds for the work performed by various classifications in the covered bargaining unit, including amounts per month for each embalmer and full-time driver (with increases effective March 1 of each calendar year)(P. Exs. 6-13). Association's employer-members that do not employ employees performing covered work are not expected to contribute to Funds (Tr. 89-91), nor are employer-members that have no non-owner employees (such as single person owner-operators) expected to contribute to Funds (Tr. 89). In addition to those examples, Moriarty further testified to an industry practice that had been worked out between Association and Union, under which the principal owners of funeral homes that are Association members are not viewed or treated as "employees" of the funeral homes for purposes of requiring contributions to Funds based on their compensation. That testimony, which is uncontroverted in the record, is credited by this Court--and it explains and validates the answer that Glueckert, Sr. says he received from Moriarty in response to Glueckert, Sr.'s question as to whether he himself had to join Union (Finding 20).
29. Glueckert never submitted any contributions or reports to Funds as to its employees who were performing covered work (Tr. 202). Union first learned that Glueckert had such employees in July or August 1994 when a Union business agent visited Glueckert and discovered that it had employees who were performing covered work (Tr. 231; Fact P52). Funds in turn learned about Glueckert from Union, for Glueckert never advised Funds of the names, job classifications or dates of hire of any of its employees (Tr. 202).
30. Invoices or billings from Funds are initiated in one of two ways:
(a) Employers may call Funds (the most frequent means by which Funds learns about an employer obligated to make contributions for its employees performing covered work). In any such instance personnel employed by Funds will take the names of all employees performing covered work who are employed by the employer, enter those names in Funds' computer and generate a bill to the employer (Tr. 197).
(b) Less frequently a Union business agent may notify an agent of Funds that an employer is utilizing employees who are performing covered work. It is standard practice that Union business agents will periodically go out to employer locations (Tr. 227-28). That is how Funds learned about Glueckert (Tr. 200). It is not feasible, however, for Funds to place major reliance on such business agents to provide effective regular policing or identification of ERISA-violating employers such as Glueckert: Union has only 3 business agents, there are fully 700 to 800 employers within Union's jurisdiction, and the business agents have multifarious duties in relation to those employers (Tr. 228). Nor do Funds themselves have the personnel to engage in such policing or identification.