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March 21, 2000


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


Thomas J. Moriarty as Trustee ("Moriarty") has sued two defendants on behalf of the Local Union No. 727 Pension Trust and the Teamsters Local Union No. 727 Health and Welfare Trust (collectively "Funds") pursuant to the Labor Management Relations Act (29 U.S.C. § 185) and the Employee Retirement Income Security Act of 1974 ("ERISA," 29 U.S.C. § 1132 (a)(3)), seeking to recover employer contributions allegedly owed to Funds. Moriarty and defendant Hills Funeral Home, Ltd. ("Hills") have filed cross-motions for summary judgment as to liability pursuant to Fed.R.Civ.P. ("Rule") 56. Moriarty has also filed a Rule 56 motion as to liability on his claims against defendant George Pepper ("Pepper").

In compliance with this District Court's LR 56.1, adopted to implement Rule 56 by facilitating the identification of the presence or absence of genuine issues of material fact, the litigants have filed the factual statements and responses called for by that LR.*fn1 They have also completed the required briefing on the motion and cross-motions. For the reasons set forth in this memorandum opinion and order, both of Moriarty's motions are granted, while Hills' motion is denied.

Summary Judgment Principles

Familiar Rule 56 principles impose on the movant the burden of establishing the lack of a genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). For that purpose this Court must "read[] the record in the light most favorable to the non-moving party," although it "is not required to draw unreasonable inferences from the evidence" (St. Louis N. Joint Venture v. P & L Enters., Inc., 116 F.3d 262, 265 n. 2 (7th Cir. 1997)). Where as in the Moriarty-Hills duel cross-motions for summary judgment are involved, it is necessary to adopt a dual perspective — one that this Court has often described as Janus-like — that sometimes involves the denial of both motions. That has not occurred here, because even from a pro-Hills perspective Moriarty's Rule 56 motion succeeds.


Pepper's Funeral Home Operation

Funds are employee benefit plans that 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 Drivers and Helpers, Taxicab Drivers, Miscellaneous Garage Employees, Car Washers, Greasers, Polishers and Wash Rack Attendants Union, Local No. 727, I.B.T. ("Union") (Pepper Stmt. ¶¶ 28, 31). Moriarty is a trustee of both Funds (id. ¶ 30).

Association is a multi-employer organization of funeral homes located in the Chicago metropolitan area (id. ¶ 40). Among other things, it negotiates labor agreements for its members and also provides them with a pre-need funeral arrangement trust fund and continuing education programs (id. ¶¶ 43-44). Association communicates with its members through a monthly newsletter (id. ¶ 45) that provides members with a variety of information, including information about labor relations (id. ¶ 46). Approximately 80% of the newsletters contain information about Association's relationship with Union (id. ¶ 50).

Pepper operated a funeral home business in Palos Hills, Illinois from approximately February 1979 to January 1998 (id. ¶ 32-35). From 1979-82 Pepper operated his business under the name Olympic Hill Chapel (id. ¶ 33). Then from 1982-98 Pepper operated his business as Hills Funeral Home (id. ¶¶ 33-34)*fn2

In December 1978 Moriarty had sent Pepper an application for membership in Association in connection with his contemplated acquisition of the funeral home business (id. ¶ 54). Pepper signed and returned the application, which stated in part (id. ¶¶ 55-56):

[I] agree[], if elected to membership, to abide by and be bound by the provisions of the Constitution, By-Laws, Rules and Regulations of the Association.

One of the then-existing provisions of Association's Constitution (its Art. X, § 2) read (id. ¶ 59):

Labor Negotiations. The Association, through action by the General Executive Board, shall authorize the President to appoint a committee to represent the members of the Association in labor negotiations or any dispute or grievance which may arise from such labor negotiations and to enter into such agreements as a result of the negotiations, subject to the approval of the membership.

In February 1979 Pepper was elected to Association membership (id. ¶ 57).

Association negotiates CBAs with Union through a negotiating committee (id. ¶ 70). Those CBAs require Association members to whom they apply "to contribute to the Funds for work performed by bargaining-unit employees, including amounts per month for each funeral director and embalmer and driver" (id. ¶ 67; Moriarty Stmt. ¶ 67). Association does not require its members to delegate on an individualized basis such authority for Association to bargain or to ratify negotiated contracts — instead, consistently with the Association Constitution, Association's members as a body ratify the contracts at special membership meetings (Pepper Stmt. ¶¶ 74, 77). As an Association member, Pepper was consistently notified of those special membership meetings, but he chose not to attend them (id. ¶¶ 78-80).

After a CBA is approved, Association distributes a copy of the contract to each member with a cover letter that says "[t]he Agreement applies to every member of the Association" (id. ¶ 82). Pepper received copies of the approved CBAs and the cover letters from Association (id. ¶ 83). In addition he received copies of Association's monthly newsletters, but he did not read them (Moriarty Stmt. Ex. O, Pepper Dep. 70).

Four people worked for Pepper at Hills Funeral Home: Greg Peppas, Peter Talso, Jovita Simmermon and John Schultz (Moriarty Stmt. ¶ 176). Those employees performed covered bargaining unit work as defined by the CBAs (Pepper Stmt. ¶ 69). Pepper did not have a health or pension plan for any of them (id. ¶ 92).

In January 1998 Pepper submitted his resignation to Association (id. ¶ 64), and on February 18, 1998 it approved his resignation (id. ¶ 65). At no time before that date had Pepper told Association that it was not authorized to bargain on his behalf, nor did he tell Union that Association was not authorized to do so (id. ¶¶ 90-91).

Funds' Audit of Pepper's Funeral Home

On July 25, 1997 Funds' auditor, Thomas Havey LLP, notified Pepper that Funds wanted to conduct an audit of the Hills Funeral Home payroll records (id. ¶ 122). On August 14, 1997 Havey conducted the audit covering the period from January 1, 1990 through June 30, 1997 (id. ¶ 124). On October 22, 1997 Havey issued his audit report, which found that Pepper owed $38,575.53 to the Pension Fund and $65,780.24 to the Health and Welfare Fund in contributions, interest, liquidated damages and ...

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