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LABORERS' PENSION FUND v. LOUCON CONSTRUCTION

September 28, 2004.

LABORERS' PENSION FUND and LABORERS' WELFARE FUND OF THE HEALTH AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL LABORERS' DISTRICT COUNCIL OF CHICAGO AND VICINITY, Plaintiffs,
v.
LOUCON CONSTRUCTION, INC., a dissolved Illinois Corporation, Defendant.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs, Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity ("the Funds"), have sued under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1145, to recover delinquent contributions, union dues, interest, liquidated damages, and audit costs allegedly owed to them by dissolved Loucon Construction, Inc. ("Loucon") and its now deceased principal, Chris Tynan.*fn1 The Funds allege that Tynan paid employees in cash "under the table" in order to avoid having to make benefit contributions of behalf of these employees. Before the Court is Defendant's objection to Magistrate Judge Mason's Minute Order of November 4, 2003 denying Defendant's Motion to Bar Steve Krasnowski's Testimony and Report and Plaintiffs' unopposed motion for summary judgment. For the reasons set forth below, the Court rejects Defendant's objection to the denial of its motion to bar, adopts Magistrate Judge Mason's ruling with modification, and grants Plaintiffs' summary judgment motion.

FACTS

  During the relevant time period, Chris Tynan was the President of Loucon. (Pls.' LR 56.1(b)(3)(A) ¶ 5.) On June 13, 1992, Loucon signed the first in a succession of collective bargaining agreements ("CBAs") with the Construction and General Laborers' District Council of Chicago and Vicinity ("Union") and Laborers' Local Union Number 118. (Id. ¶¶ 6, 11.) These agreements obligated Loucon to pay union dues and make contributions on behalf of its employees covered by the agreement to pension and health and welfare funds, as well as to maintain a surety bond guaranteeing the payment of these benefits. (Id. ¶¶ 7, 8.) These agreements also obligated Loucon to submit its books and records to the Funds for periodic audits to determine whether Loucon was complying with these benefit contribution provisions. Finally, these agreements bound Loucon to the Funds' respective Agreements and Declaration of Trusts. (Id. ¶ 11.) Loucon primarily performed masonry construction and driveway paving work. (Id. ¶ 10.) Accordingly, the Loucon laborers covered by the agreements would be engaged generally in mixing mortar, assembling scaffolding, unloading and distributing materials to masons on a job site, and cleaning up a job site. (Id.; see Pls.' Mem. Supp. Summ. J. at 3.) The Funds state that they are owed a total of $296,942.76 based on three calculations. First, an audit of Loucon's cash disbursement journals for the period of January 1, 1997 through March 31, 1998 shows that Loucon owes unpaid union dues and contributions to the Funds for hours worked by four employees, which together with liquidated damages, interest, and audit costs provided for in the CBAs, total $3,179.45. (Pls.' LR 56.1(b)(3)(A) ¶¶ 17, 20.) Next, an audit of Loucon's books and records and its cash disbursement journals for the period of April 1, 1998 through July 31, 1999, show unpaid union dues and contributions to the Funds, which when combined with liquidated damages, interest, and audit costs, total $8,287.25. (Id. ¶¶ 19, 21.)

  Finally, Plaintiffs state that Loucon was engaged in paying at least some of its employees with cash "under the table" and estimate that it owes an additional $285,476.06 in unpaid union dues and contributions to the Funds, liquidated damages, interest, and audit costs. (Pls.' Mem. Supp. Summ. J. at 4.) On this point, Plaintiffs rely on Martin Flanagan, President of Laborers' Local Union Number 118, who reported that he observed both Miguel Bernal and Ernesto Junez performing work within the scope of the CBAs during a time period covered by the agreement. (Id. ¶ 14.) Tynan also admitted in a deposition that one of these workers, Miguel Bernal, performed covered work for him. (Id. ¶ 15.) Loucon's records reveal that it never submitted any benefit contributions to the Funds on behalf of either Bernal or Junez. (Id. ¶ 16.)

  Based on these facts, the Funds retained the services of Steve Krasnowski, owner of Fox Estimating & Consulting, in order to review the number of hours Loucon submitted to the Masonry Institute Welfare Fund and estimate the total number of hours for laborers employed by Loucon during the period of January 1, 1994 through July 30, 1999. (Id. ¶¶ 22-24.) Patrick Lynch, a payroll compliance auditor employed by the auditing firm of Richard J. Wolf and Co., U.S.C. § 636(b)(1)(A); see also United States v. Raddatz, 447 U.S. 667, 673 (1980). This standard means that a magistrate judge's ruling can be modified by a district court judge only if the district court judge "is left with the definite and firm conviction that a mistake has been made." Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir. 1997).

  In reviewing Magistrate Judge Mason's denial of Defendant's Motion to Bar Steve Krasnowski's Testimony and Report, this Court cannot say that it is left with the definite and firm conviction that a mistake has been made. The Court agrees with Magistrate Judge Mason's denial of defendant's motion to bar Krasnowski's testimony but for different reasons.

  It is clear to this Court that Krasnowski's opinion relies on specialized knowledge within the scope of Fed.R. Evid. 702. Krasnowski's opinion as to the industry practice of employing two laborers to every three bricklayers, which is outside of the realm of lay testimony, was disclosed to Defendant prior to the discovery deadline of July 25, 2003, and Defendant did not move to extend the discovery period prior to the cut-off date and does not argue that it attempted to depose Krasnowski prior to the deadline. Further, Plaintiffs fulfilled the essential requirements of Fed.R. Civ. P. 26(a)(2)(B). His report contained a complete statement of his opinion, the basis and reasons underlying his opinion, the data on which he relied in part to form his opinion (which, together with his knowledge of industry practice, form the whole of his opinion), and his qualifications to make his conclusion. The Court notes that Defendant does not contend that it was not provided or was unaware of the bricklayer reports on which Krasnowski relied or that the documents subpoenaed from general contractors for which Loucon performed projects during the relevant time period were not made available to Loucon. Moreover, the Court finds that the omissions were not made in bad faith and that Defendant suffered little or no prejudice as a result. Loucon, for whatever reason, chose not to respond to the summary judgment motion, discussed below, and took great risk in doing so. In sum, the Court rejects Defendant's objections and adopts as modified Magistrate Judge Mason's denial of Loucon's Motion to Bar Steve Krasnowski's Testimony and Report.

  II. Plaintiffs' Motion for Summary Judgment

  When considering a motion for summary judgment, the Court seeks to determine whether there is a genuine issue of material fact necessitating resolution by a trial or whether there is no such issue and one party is entitled to prevail as a matter of law. Fed.R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The failure of a nonmoving party to respond to a motion for summary judgment does not automatically result in a judgment in favor of the moving party; the moving party must still demonstrate that there is no genuine issue of material fact and only then is it entitled to a judgment as a matter of law. Tobey v. EXTEL/JWP, Inc., 985 F.2d 330, 332 (7th Cir. 1993). In determining whether a genuine issue of material fact exists, the Court draws all reasonable inferences in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

  Under local rules for the Northern District of Illinois, a party moving for summary judgment must file a statement of material facts to which the moving party contends there genuine issue and which entitle the moving party to judgment as a matter of law. LR 56.1(a)(3). The failure of the nonmoving to respond to a motion for summary judgment and its accompanying statement of material facts to which there is no genuine issue constitutes an admission of those facts. LR 56.1(b)(3); see also Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003) ("We have consistently held that a failure to respond by the nonmovant as mandated by the local rules results in an admission."). Here, Defendant has failed to respond to the motion for summary judgment. Accordingly, all properly supported facts in the Plaintiffs' statement of material facts as to which there is no genuine issue are deemed admitted for the purposes of the motion for summary judgment.

  Section 1145 of ERISA states: "Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement." 29 U.S.C. § 1145. Further, "ERISA requires an employer to keep records of its employees' hours sufficient to permit the calculation of benefits." Trs. of the Chi. Painters & Decorators Pension, Health & Welfare, & Deferred Savings Plan Trust Funds v. Darwan, No. 01 C 2458, 2004 U.S. Dist. LEXIS 11967, at *72 (N.D. Ill. June 29, 2004) ("Darwan"); see 29 U.S.C. § 1059(a)(1); Ill. Conference of Teamsters & Employers Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361, 1367 (7th Cir. 1995). "At least some authorities hold that where a trust fund proves the employer is liable for delinquent contributions . . ., and the employer has failed to keep adequate records, the burden shifts to the employer to demonstrate that the fund's calculations are not accurate." Darwan, 2004 U.S. Dist. LEXIS 11967, at *72; see Steve Gilbert, 71 F.3d at 1367; Brick Masons Pension Tr. v. Indus. Fence & Supply, Inc., 839 F.2d 1333, 1337-39 (9th Cir. 1988); Combs v. King, 764 F.2d 818, 825-27 (11th Cir. 1985).

  In this case, an audit of Loucon's cash disbursement journals for the period of January 1, 1997 through March 31, 1998 revealed that Loucon owed unpaid union dues and contributions to the Funds for hours worked by four employees, which when combined with liquidated damages, interest, and audit costs required by the CBAs, total $3,179.45. (Pls.' LR 56.1(b)(3)(A) ¶ 20.) Tynan admitted that Loucon owed the Funds 34.5 hours of benefit contributions for Alberto Cortez for August 1997, 37 hours for Raul Espinoza for August 1997, 40 hours for Enrique Lopez for August 1997, 40 hours for Paul Holzman for October 1997, 40 hours for Holzman for January 1998, and 40 hours form Holzman for March 1998. (Id. ¶ 17.) Even if he had not conceded as much, Loucon's failure to respond to the motion for summary judgment results in the Court's deeming admitted the well-documented fact that Loucon owes the Fund $3,179.45 for this time period. Accordingly, there exists no genuine issue of material fact regarding liability or this calculation that requires resolution by a trier of fact.

  Similarly, an audit of Loucon's books and records, as well as its cash disbursement journals, for the period of April 1, 1998 through July 31, 1999, establishes that Loucon owed unpaid union dues and contributions to the Funds, that, when added to the liquidated damages, interest, and audit costs due under the CBAs, total $8,287.25. (Id. ¶ 21.) This estimation is well supported, and Defendant has offered no evidence to suggest that this calculation is incorrect. Thus, ...


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