The opinion of the court was delivered by: Shadur, Senior District Judge.
MEMORANDUM OPINION AND ORDER
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. ¶
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.
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