The opinion of the court was delivered by: ROBERT GETTLEMAN, District Judge
MEMORANDUM OPINION AND ORDER
In their second amended complaint,*fn1 plaintiffs, the Trustees of
the Midwest Operating Engineers Welfare Fund, the Midwest Operating
Engineers Pension Trust Fund, the Operating Engineers Local 150
Apprenticeship Fund and the Local 150, I.U.O.E., Vacation Savings Plan
("Trustees") allege that defendants Carl M. Quanstrom, individually and
doing business as ("d/b/a") Monee Nursery Co. ("Monee Nursery"), also
known as Monee Nursery and Landscape Company, and Monee Nursery, LLC, are
liable under the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1132, 1145, for neglecting obligations to an
executed Landscaping Memorandum of Agreement with International Union of
Operating Engineers Local 150, AFL-CIO ("Local 150"). Defendants have
moved to dismiss the second amended complaint, arguing that (1) res
judicata bars the claims for fringe benefits prior to September 20,
2000; and (2) plaintiffs failed to plead in accordance with FED. R.
CIV. P. 10(b). For the reasons stated below, the court denies the
defendants' motion to dismiss in its entirety.
According to plaintiffs' second amended complaint, Monee Nursery was
initially owned by defendant Quanstrom's parents as co-owners and then by
Quanstrom as sole proprietor. On July 12, 1984, Quanstrom's mother,
Myrene Quanstrom, executed a Landscaping Memorandum of Agreement (the
"Agreement") with Local 150 as "co-owner" of Monee Nursery. The
Agreement, attached as Exhibit A to the second amended complaint, was
entered into by Monee Nursery, its successors and assigns. The Agreement
incorporated the Master Agreement with Local 150, which set the wages,
benefits and grievance procedures between Local 150 and a member
contractor. According to the second amended complaint, the Master
Agreement provides that the employer agrees to be bound by the terms of
the Trust Agreement of the Fringe Benefit Funds and to make prompt
payment of the per-hour contributions with respect to each Trust
Fund. Plaintiffs allege that Monee Nursery never contributed to the
Midwest Operating Engineers Fringe Benefit Funds.
Concerned that Monee Nursery was performing bargaining unit work
without using Local 150 unit operating engineers, Local 150 requested
arbitration of a collective bargaining agreement with Monee Nursery in
December 1993. Monee Nursery subsequently filed suit in the Circuit Court
of Cook County, Illinois, to stay the arbitration proceedings, arguing
that the Agreement was invalid and, alternatively, had been abandoned by
the parties. The circuit court ruled that the Agreement bound Monee
Nursery. In October 1998, the Illinois Appellate Court affirmed the
circuit court's decision.
On September 19, 2000, an arbitrator found that Monee Nursery violated
the underlying Master Agreement and failed to properly terminate the
Agreement pursuant to its terms. On December 14, 2000, Monee Nursery
filed a Complaint against Local 150 and the American Arbitration
Association in the Circuit Court of Cook Country to vacate the
arbitration award. On January 26, 2001, Local 150 filed a Notice of
Removal, and the case was subsequently removed to this court. On
September 12, 2002, Judge Norgle denied Monee Nursery's motion for
summary judgment seeking to vacate the arbitration award and granted
Local 150's cross-motion for summary judgment seeking enforcement of
the arbitration award. Monee Nursery & Landscape Co. v. Int'l
Union of Engineers, Local 150 AFL-CIO, 2002 WL 31085091 (N.D. III.
2002). On November 7, 2003, the United States Court of Appeals for
the Seventh Circuit affirmed Judge Norgle's decision. Monee Nursery
& Landscape Co. v. Int'l Union of Operating Engineers, Local 150,
AFL-CIO, 348 F.3d 671 (7th Cir. 2003).
On June 10, 2002, Monee Nursery organized under the Illinois Limited
Liability Company Act. Plaintiffs allege that Monee Nursery, LLC
maintains its offices at the same address and engages in the same
business as Monee Nursery, and that Monee Nursery, LLC never contributed
to the Midwest Operating Engineers Fringe Benefit Funds. Plaintiffs
allege that defendant undertook to continue the business of Monee Nursery
through Monee Nursery, LLC to avoid the obligations of Monee Nursery,
cognizant of Monee Nursery's continuing liability to the funds.
Plaintiffs' second amended complaint alleges that Monee Nursery, LLC is a
successor and/or alter ego of Monee Nursery, which renders the LLC bound
to the same contract with Local 150.
On October 20, 2003, plaintiffs filed their second amended complaint
against defendants Quanstrom, individually and d/b/a Monee Nursery, and
Monee Nursery, LLC, seeking delinquent fringe benefit contributions and
an audit pursuant to ERISA.
Defendants have moved to dismiss plaintiffs' second amended complaint,
invoking the doctrine of res judicata. "Under res
judicata, a `final judgment on the merits bars further claims by
parties or their privies based on the same cause of action.'" Brown
v. Felsen, 442 U.S. 127, 131 (1979) (quoting Montana v. United
States, 440 U.S. 147, 153 (1979)). A successful res
judicata defense must meet three elements: "1) an identity of the
parties or their privies, 2) an identity of the causes of action, and 3)
a final judgment on the merits." People Who Care v. Rockford Bd.
of Educ., 68 F.3d 172, 177 (7th Cir. 1995).
In their motion,*fn2 defendants argue that the prior arbitration award
to Local 150 bars the present ERISA action by the Trustees. Specifically,
defendants assert that: 1) Local 150 and the plaintiffs are in privity
because plaintiffs, not Local 150, are the true beneficiaries of the
arbitration award for fringe benefits and the Trustees were represented
by Local 150 in the arbitration; 2) the causes of action are identical
because the present ERISA action seeks the same fringe benefits awarded
in the arbitration; and 3) the arbitration award, affirmed by both the
district court and court of appeals, is a final judgment.
With respect to his privity argument, defendants direct the court's
attention to Chicago Dist. Council of Carpenters Pension Fund v.
Pientka, 1985 WL 2320 (N.D. Ill. 1985). In Pientka, the
plaintiffs were multiple union trust funds, trustees of the trust funds
and the union that established the trust. Id. The defendants
were a corporation and its president, who were obligated to make
contributions to the trust funds pursuant to a collective bargaining
agreement. Id. When the defendants failed to make the
contributions, the plaintiffs sued pursuant to ERISA and Section 301 of
the Taft Hartley Act (29 U.S.C. § 185 and 1132) to collect
delinquent benefit payments ("Suit 2") Id. However,
prior to Suit 2, a default judgment had already been entered against the
corporation in a separate action brought by the trust funds to recover
the missing contributions ("Suit 1"), Id. The defendants
successfully argued that res judicata barred Suit 2.
The Pientka court stated that privity of parties is often
determined by the interest that is litigated and not merely by the names
of the parties as they appear in the pleadings. Pientka 1985 WL
2320. The rule is that "a person whose interest is put in litigation by
one entitled to represent him is bound by the judgment as though he was
named as a party." Id. In finding privity between the parties,
the court noted that the trust funds were nominally and effectively
parties to both actions. Id. Merely joining additional
plaintiffs in Suit 2 did not change the fact that a judgment was already
entered against the defendants in favor of the trust ...