United States District Court, N.D. Illinois, Eastern Division
November 17, 2004.
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and HOWARD McDOUGALL, Trustee, Plaintiffs,
KABBES TRUCKING COMPANY, an Illinois Partnership, and EFFINGHAM ASPHALT COMPANY d/b/a KABBES TRUCKING COMPANY, Defendants.
The opinion of the court was delivered by: CHARLES NORGLE, District Judge
OPINION AND ORDER
Plaintiff Central States, Southeast and Southwest Pension Fund
("Fund") is an employee benefit plan and trust. The Fund and its
Trustee bring this action pursuant to the Employee Retirement
Income Security Act of 1974 ("ERISA"), alleging that Defendants
owe contributions to the Fund for the period from October 1990 to
January 2002. Counsel submitted, and the court reviewed, pretrial
proposed findings of fact and conclusions of law. The court then
conducted a bench trial on June 18, 2003. The court heard
evidence from both parties, and entered an Order asking the
parties to submit post trial findings of fact and conclusions of
law. Based on the totality of the evidence, the court adopts the
findings of fact and conclusions of law proffered by the
Plaintiffs, which are recited as follows. II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Facts Relating To Parties And Relationships.
1. The Pension Fund is an employee benefit plan and trust
funded by contributions remitted by multiple participating
employers pursuant to negotiated collective bargaining agreements
with local unions affiliated with the International Brotherhood
of Teamsters ("IBT") on behalf of employees of those same
employers. All principal and income from such contributions and
investments thereof is held and used for the exclusive purpose of
providing pension benefits to participants and beneficiaries of
the Pension Fund and paying the administrative expenses of the
Pension Fund (Trial Transcript at pp. 11-12 and Art. I, Sec. 1,
Art. II, Sec. 1, Art. III, Sec. 1 and Art. IV, Sec. 16 of
Plaintiffs' Ex. 4).*fn1
2. Operation of the Pension Fund is governed by the Pension
Fund Trust Agreement ("Trust Agreement") (R 8; PX 4). The Pension
Fund is managed by a Board of Trustees consisting of an equal
number of employer and union selected representatives (Art. II,
Sec. 2 of PX 4).
3. The Trustees of the Pension Fund have adopted a defined
benefit plan (R 262; §§ 4.01 to 4.09 of PX 5). The Pension Plan
establishes approximately 40 schedules of benefits, called
benefit classes, which differ in amount of retirement benefits
provided, amount of associated contribution rate and on the
availability of certain deferral privileges (R 262; § 3.01(d)(1)
and (2) of PX 5). For each benefit class, the Trustees have
published specified contribution rates which are negotiated by
the local unions and employers (such as the Defendants and Local
26) (R 262; § 3.01(c) and (d)(1) and (2) of PX 5). The contribution rates associated with each benefit class do not
change over time (R 265; § 3.01(c) of PX 5). To acquire higher
benefits from the Pension Fund, the collective bargaining parties
must negotiate a higher contribution rate that is associated with
a higher benefit class (R 265; § 3.01(c) of PX 5).
4. Local Union 26 ("Local 26") of the IBT is a labor
organization which, at all relevant times, represented, for the
purposes of collective bargaining, certain employees of Kabbes
and Effingham (R 34, 120).
5. Kabbes is an Illinois partnership (R 114). All of the
partners in the Kabbes Trucking partnership are members of the
Kabbes family (R 114).
6. Effingham is an Illinois corporation (R 115). The current
shareholders of Effingham are the Richard J. Kabbes Family
Limited Partnership, the John R. Kabbes Family Limited
Partnership and the Hoene Family Limited Partnership (R 114-115).
The partners of the Hoene Family Limited Partnership are Robert
J. Hoene and Mary K. Hoene (R 115). The partners of the Richard
J. Kabbes Family Limited Partnership are Richard J. Kabbes and
Carolyn Kabbes (R 115). The partners of the John R. Kabbes Family
Limited Partnership are John R. Kabbes, Jane C. Kabbes, Douglas
J. Kabbes, Gregg A. Kabbes, Brad W. Kabbes, and Todd A. Kabbes (R
7. The officers of Effingham are John Kabbes, Richard Kabbes,
Mary Hoene and Robert Hoene (R 115-116).
8. Mary Hoene is the sister of John and Richard Kabbes (R 115).
B. Facts Relating To The Labor Agreements.
9. Kabbes signed a collective bargaining agreement with Local
26 covering the period from July 1, 1980 to June 30, 1983 (the
"1980 Agreement") (PX 1). 10. Article I, Section 2 of the 1980 Agreement indicates that
covered employees are "truck drivers and all yard help." (PX 1).
11. Article XVIII of the 1980-1983 Agreement requires Kabbes
and Effingham to pay to the Pension Fund contributions on behalf
of each covered employee who works two (2) days or parts of two
(2) days during the week (PX 1).
12. Under Article XVII of the 1980 Agreement, Kabbes also
agreed to pay contributions to the Illinois Conference of
Teamsters Welfare Fund on behalf of covered employees (PX 1).
13. Article XIX of the 1980 Agreement provides as follows with
respect to the duration of the 1980 Agreement:
ARTICLE NO. XIX TERMINATION OF AGREEMENT
This Agreement shall be in full force and effect from
July 1, 1980 to and including June 30, 1983 and shall
continue in full force and effect from year to year
thereafter unless written notice of desire to cancel
or terminate the Agreement is served by either party
upon the other at least sixty (60) days prior to
annual date of expiration.
It is further provided that where no such
cancellation or termination notice is served and the
parties desire to continue said Agreement but also
desire to negotiate changes or revision in this
Agreement, either party may serve upon the other a
notice, at least sixty (60) days prior to June
30th, of any contract year, advising that such
party desires to continue this Agreement but also
desires to revise or change terms or conditions of
(PX 1). A clause in a labor agreement such as Article XIX of the
1980 Agreement that indicates that the contract will continue in
effect from year to year after a specified earliest possible
expiration date absent a written notice of termination is known
as an "Evergreen Clause." (R 206).
14. John Kabbes, on behalf of Kabbes, signed an agreement
extending the 1980 Agreement (the "1983 Extension Agreement").
The 1983 Extension Agreement contains an Evergreen Clause which indicated that it would remain "in full
force and effect from July 1, 1980 through April 30, 1989 and
each year thereafter unless written notice of termination or
desired modification is given at least sixty (60) days but no
more than ninety (90) days prior to the expiration date by either
of the parties hereto." (the "1983 Extension Agreement") (PX 2).
15. John Kabbes, on behalf of Kabbes, signed an agreement
extending the 1980 Agreement from May 1, 1989 to April 30, 1992
(the "1989 Extension Agreement") (PX3). The 1989 Extension
Agreement did not contain an Evergreen Clause. Instead, it
provided as follows with respect to duration:
TERMINATION OF THIS MODIFIED EXTENSION
This Agreement shall be effective May 1, 1989 and
remain in effect and full force through April 30,
1992. It is agreed that throughout the month of April
1992 this Agreement shall be open for changes and
modifications if negotiations are on going but not
settled by April 30, 1992, a thirty day extension
shall be in effect if agreed to in writing by both
16. The 1983 Extension Agreement and the 1989 Extension
Agreement are undated. The evidence establishes that these
documents were signed contemporaneously in early 1992. This is
established by the following:
a. In a telephone conversation on September 3, 1987,
Local 26 advised the Pension Fund that the parties
had agreed to extend the 1980 Agreement (DX GG). In a
telephone conversation on September 10, 1987, Local
26 indicated that it was still trying to get a
renewal agreement (DX GG). These conversations
establish that the 1983 Extension was not signed as
of September 1987.
b. In a telephone conversation on or about September
8, 1988, Local 26 advised the Pension Fund that it was still trying to get a
contract renewal and Kabbes was working under expired
contract (DX B). This establishes that as of
September 6, 1988, neither the 1983 Extension or the
1989 Extension were signed.
c. As of August 12, 1991, the Pension Fund's computer
record indicated that Kabbes' contract expired on
June 30, 1983 (p. 2 of DX D). If the Pension Fund had
the 1983 Extension Agreement and/or the 1989
Extension Agreement as of that date, the computer
record would have reflected an expiration date of
April 3, 1989 or April 30, 1992 (R 212-13).
d. A log of a telephone conversation between the
Pension Fund and Local 26 dated August 23, 1991
indicates that the Pension Fund was calling because
it "need[ed] CBAs since 1983" (p. 3 of DX D). The log
indicates that Local 26 advised the Pension Fund that
neither Kabbes nor Effingham had signed a contract
since 1983 and the employees would not go on strike
so as far as Local 26 was concerned, the Pension Fund
"should and can terminate them." (p. 3 of DX D).
Based upon this conversation, the Pension Fund
employee suggested to her supervisor that it may be
advisable to ask the Trustees to consider terminating
Kabbes and Effingham's participation (p. 1 of DX D).
This establishes that as of August 23, 1991, the 1983
Extension Agreement and the 1989 Extension Agreement
had not been signed.
e. One of the Pension Fund's managers (Thomas Baxa)
testified that the Pension Fund initially received
both the 1983 Extension Agreement and the 1989
Extension Agreement on April 30, 1992 (R 222-26).
This testimony is supported by the "April 30, 1992
[Date] Received" stamped on both the 1983 Extension Agreement and the 1992 Extension Agreement by the
Pension Fund's Pension Department (PX 42b and 42c).
The Contract Update Checklist that the Pension Fund's
Contracts Department prepares upon receipt of a
contract was not completed until May 1992 and
indicates that the Contracts Department received the
1982 Extension Agreement and the 1989 Extension
Agreement on May 8, 1992 (DX I and R 222-24).
f. The 1989 Extension Agreement increased the pension
contribution rate to be paid by Kabbes effective May
1, 1989 (PX 42(c)). After processing the 1989
Extension Agreement, the Pension Fund retroactively
billed Kabbes and Effingham $5,000 in May 1992 to
account for the increased pension rate in April 1992
(R 227-229). Kabbes and Effingham paid the
retroactive billing in June 1992 (R 227, 228).
17. Effingham was also a signatory to a collective bargaining
agreement with Local 26 that required it to contribute to the
Pension Fund on behalf of its truck drivers (R 121, 155; p. 3 of
18. The parties have stipulated neither the Pension Fund nor
Effingham can locate copies of the agreements signed by Effingham
19. Effingham signed the same 1983 Extension Agreement and the
1989 Extension Agreement that were signed by Kabbes (R 122-23).
This is established by Effingham's conduct since 1992. The
employees of both Kabbes and Effingham are reported to the
Pension Fund on the same reporting forms that identify Kabbes as
the employer (R 129-30; PX 7-18, 35-38). Several Effingham
employees were reported to the Pension Fund on these reports for
the period covered by the rebill that resulted from the higher contribution rates set forth in the 1989 Extension Agreement (R
129-30; PX 7-9, 37) so these employees were necessarily included
in the rebill. The fact that Effingham paid the rebill on its
employees at the same time as Kabbes and contributed to the
Pension Fund after April 1992 at the higher rate required by the
1989 Contract Extension, establishes that Effingham signed the
1983 Extension Agreement and the 1989 Extension Agreement.
20. By letter dated April 15, 1986, Local Union 26 advised
Kabbes that it "desire[d] to negotiate certain changes and
modifications in our now existing collective bargaining . . .
[that] expires on June 30, 1986." [DX HH).
21. However, no collective bargaining agreement between Local
Union 26 and Kabbes had an expiration date of June 30, 1986 (PX 1
22. The April 15, 1986 letter indicated that Local 26 wanted to
negotiate "changes or modifications", it did not indicate that
Local 26 desired to cancel or terminate any agreement (DX HH). No
evidence was presented that a written notice to terminate or
cancel the 1980 Agreement was provided at trial.
23. As indicated above, the 1983 Extension Agreement was not
signed until 1992 (¶ 16, infra), therefore, the April 15, 1986
letter could not have terminated the 1983 Extension Agreement.
24. No evidence of a written notice of a desire to terminate or
modify the 1983 Extension was been presented at trial.
25. No evidence that Effingham provided a written notice of its
desire to cancel or terminate its 1980 Agreement or the 1983
Extension Agreement has been presented.
26. After April 30, 1992, there were no collective bargaining
negotiations between Local 26 and Effingham or Kabbes (R 151).
27. The audit that triggered this case was initiated by a
request from Pat Gleason of Local 26 in 2000 (R 61; DX J & K).
Gleason advised the Pension Fund that Kabbes and Effingham had at
least 5 unreported eligible employees (DX J & K). Gleason advised
the Pension Fund that the labor agreement "expired in 1992,"
however, he advised the Pension Fund that Local 26 believed that
the contract had continued in effect under the Evergreen Clause
(DX M). Gleason also advised the Pension Fund that he believed
contributions were owed to the Pension Fund on all employees
regardless of union membership (DX M). Gleason must have believed
that the Defendants were still contractually obligated to
contribute to the Pension Fund or there would have been no reason
for him to request an audit.
28. On July 28, 2000, Bill Bounds of Local 26 also advised the
Pension Fund's auditors that the Defendants' employees had
refused to strike so the Defendants no longer had a contract with
Local 26. As a result, he had issued union "withdrawal cards" to
the 6 union employees "covered by the contract" (DX V). However,
Bounds did not indicate when this alleged action occurred.
C. Facts Relating To Contribution Payments.
29. The Pension Fund relies upon participating employers to
self-report the work history of their eligible employees. Based
upon the reports submitted by the employers, the Pension Fund
sends a monthly contribution bill. The Pension Fund has created
reporting forms for participating employers to use to report
changes in the covered workforce (e.g., layoffs, new hires, sick
leaves, etc.) which are known as "Billing Change and Corrections
Forms" or "Employee Billing Change and Corrections Forms"
(hereinafter collectively referred to as "EBCC Forms"). Sometime after 1999, another
reporting form known as a Turnaround Document ("TAD Form") was
used. It is only necessary for an employer to submit an EBCC Form
or a TAD Form for a month where there has been a change in the
covered workforce; if an EBCC Form or a TAD Form has not been
submitted, the Pension Fund assumes that there has been no change
in the covered workforce and bills the same amount for each week
that was billed for each week of the prior month (R 10-20).
30. Kabbes and Effingham submitted EBCC Forms to the Pension
Fund prior to April 30, 1992, which as noted above (see ¶ 19,
infra.), identified only Kabbes as the employer (R 129-30; PX
7-9, 35-38). Although Kabbes and Effingham now claim that their
contractual obligation to contribute to the Pension Fund ended on
April 30, 1992, they submitted EBCC Forms and TAD Forms reporting
the work history of certain eligible employees for the period of
May 1992 through April 2003 (R 133; PX 9-19, 35-38).
31. Kabbes and Effingham completed EBCC Forms by entering the
names of their employees, the employees' social security numbers,
and the employees' current status (e.g., laid off, on sick leave,
rehired, etc.). On the TAD Forms, the employees on whose behalf
the Pension Fund was billing were listed and Kabbes and Effingham
noted any changes or additions on the TAD Form (R 10-20, 133; PX
32. The EBCC Forms, the TAD Forms as well as the monthly bills
submitted to employers by the Pension Fund contain a
Certification Clause which states:
The employer hereby reaffirms his obligation to make
contributions required by the Collective Bargaining
Agreement and further represents that all employees
eligible to participate in the Fund, in accordance
with the rules of the Fund and the `Employee
Retirement Income Security Act of 1974' are being
reported and only those eligible employees are being
reported." (R 10-20; PX 7-19).
33. The EBCC Forms submitted by Kabbes and Effingham from 1990
through March 2003 were regularly, but not always, signed by John
or Richard Kabbes directly below the Certification Clause (PX
7-15). The TAD Forms submitted after 1999 were signed by Jane
Sudkamp or Richard Goldstein (PX 16-17; R 134-136). Goldstein was
delegated the responsibility for preparing the EBCC Forms and the
TAD Forms that were submitted to the Pension Fund until his death
in 2001 (R 119, 146-7). After Goldstein's death, Jane Sudkamp was
delegated the responsibility for submitting the TAD Forms to the
Pension Fund (R 118).
34. The purpose of requiring employers to reaffirm their
obligation to contribute under the Certification Clause is to
insure that the employer is contractually obligated to continue
making contributions to the Pension Fund (R 17, 19, 221, 252).
35. After April 30, 1992, Kabbes and Effingham did not alter
either the manner in which they had previously submitted EBCC
Forms (and TAD Forms after 1999) or the manner in which they
remitted contributions (R 136).
36. After April 30, 1992, Rich Goldstein was delegated the duty
to communicate with the Pension Fund on behalf of Kabbes and
Effingham (R 118-119).
37. Kabbes and Effingham continue, to the present day, to
report work history and pay contributions to the Pension Fund for
some of their truck drivers (R 80, 129, 130; PX 18-19).
38. During the period after April 1992 until some time in 2000,
Kabbes and Effingham also remitted contributions to the Illinois
Conference of Teamsters Welfare Fund on behalf of the same
employees who were listed on the reporting forms that were
submitted to the Pension Fund (R 127).
39. The Pension Fund provides pension credit to employees based
upon the work history reported by participating employers. The
Pension Fund has awarded credit to the employees of Kabbes and
Effingham based upon the work history reported for the period of
April 1992 through the present (R 262, 266; PX 37, 38; pp. 430-37
of DX F).
40. The benefit entitlement of David Althoff and David Carroll
will be significantly reduced if the credit they earned after
April 1992 based upon the work history reported by Effingham on
their behalf is eliminated. Neither of these individuals have
retired. The impact on their benefit would be as follows:
BENEFIT AS OF 5/31/03, BENEFIT AS OF 5/31/03
INCLUDING POST 4/30/92 EXCLUDING POST 4/30/92
NAME AGE CREDIT CREDIT
D. Althoff 50 19.20 years 8.775 years
$312.14 at age 65 $98.54 at age 65
D. Carroll 58 24.525 years 14.125 years
$400.00 at age 60 $148.90 at age 65
(R 267, 269; PX 37).
41. The benefit entitlement of Kenneth Hollscher and Leroy
Wente will be significantly reduced if they lose the credit they
earned after April 1992 based upon the work history reported by
Kabbes on their behalf. Neither of these individuals have
retired. The impact on their benefit would be as follows:
BENEFIT AS OF 5/31/03, BENEFIT AS OF 5/31/03
INCLUDING POST 4/30/92 EXCLUDING POST 4/30/92
NAME AGE CREDIT CREDIT
K. Hoelscher 63 33.050 years 14.400 years
$434.59 at current age $167.46 at age 65 L. Wente 69 29.111 years 18.661 years
$400 at current age $149 at current age
(R 269; PX 38).
42. William Pals was an employee of Kabbes from 1968 to 1999
(pp. 430-38 of DX F).
43. Pals applied for retirement benefits in March, 1999 (pp
438-42 of DX F).
44. At that time, he represented that he was a member of
Teamsters Local 26 (p. 438 of DX F).
45. William Pals retired on May 12, 1999 and began receiving a
monthly pension benefit for life of $421.07 (R 269; PX 38).
46. Without credit earned based upon his employment by Kabbes
from April 1992 to May 12, 1999, Pals' monthly benefit would be
$400.00 and he would owe the Pension Fund the difference between
the $421.07 he has received since May 1999 and the $400 he would
be entitled to receive (50 months x $21.07 = $1,053.50) (R 269;
PX 38). This prospective benefit reduction and liability for the
overpayment would probably impose a significant hardship on a 69
year old individual who is receiving a relatively small monthly
D. Facts Relating To the Pension Fund's Audit.
47. The Trust Agreement permits the Pension Fund to audit the
records of participating employers (R 8; Art. III, § 5 of PX 4;
48. Central States' Special Bulletin 85-6 issued to
participating employers and local unions on August 1, 1985 (which
would include Kabbes and Effingham), informed participating
employers and unions that audits conducted by the Pension Fund
would conform to Article III, Section 5 of the trust agreements,
as interpreted by the Supreme Court (DX KK). 49. Special Bulletin 85-6 does not require non-participating
employers to permit an audit of their records (DX KK).
50. On or about May 23, 2000, the Pension Fund sent a letter to
Kabbes which notified Kabbes that the Pension Fund intended to
perform an audit of its records to verify that all required
contributions had been paid for the period from December 29, 1996
to December 25, 1999 (R 34, 35; PX 20).
51. The May 23, 2000 letter notified Kabbes that the Pension
Fund was entitled to the audit pursuant to the Pension Fund Trust
Agreement, Article III, Section 5 and that the purpose of the
audit review was to identify all eligible plan participants and
verify that contributions were properly reported for all eligible
plan participants (R 36; PX 20).
52. To conduct the audit, payroll ledgers, individual earning
cards, IRS forms, seniority lists, personnel files, time cards
and daily driver logs are reviewed (R 36).
53. Rich Goldstein was delegated the authority to represent
Kabbes and Effingham in relation to the audit, including making
statements to the auditors (R 38, 138; PX 21).
54. This delegation was made with the knowledge that Mr.
Goldstein was in poor health (R 154-155).
55. The audit was postponed twice at the request of Kabbes due
to Goldstein's health which prohibited him from participating in
the audit (R 44).
56. The audit was conducted on December 5 and 6, 2000, and
included a review of both Kabbes' and Effingham's payroll records
(R 45, 46; PX 24).
57. At no time did Kabbes or Effingham object to the audit or
question the Pension Fund's right to review the records of either
Kabbes or Effingham (R 45, 46; PX 21).
58. Goldstein told the auditors that both Kabbes and Effingham
employed truck drivers who were not being reported to the Pension Fund because they were not
union members (R 48; PX 22, 25, 26).
59. Goldstein advised the Pension Fund's auditors that he
believed that union membership was a requirement for eligibility
to participate in the Pension Fund (R 42, 43; PX 22, 25, 26).
60. Goldstein advised the Pension Fund's auditors that
contributions would have been made on behalf of the non-union
employees if he had known that union membership was not a
requirement (R 47; PX 25, 26).
61. John Kabbes and Goldstein were present at the "audit
closing meeting" which occurred after the auditors had reviewed
the payroll records of Kabbes and Effingham. At the meeting, the
auditors advised John Kabbes and Goldstein that contributions
were owed on behalf of the unreported Kabbes and Effingham
employees (R 51).
62. The Pension Fund's auditors testified, and Jack Kabbes
confirmed, that at no time were the Pension Fund's auditors
advised that either Kabbes or Effingham believed that they did
not owe anything on the unreported employees because they had no
contractual obligation to contribute to the Pension Fund or
because either Kabbes or Effingham believed that their contract
had expired (R 48, 53-54, 101-02, 136-37; PX 22, 25 and 26). In
fact, Jack Kabbes advised the auditors that he would be willing
to prospectively contribute on the non-union employees (PX 27).
The first time either Kabbes or Effingham asserted that there was
no contractual obligation to contribute to the Pension Fund was
after this case was filed. Despite asserting that there is no
existing contractual relationship, Kabbes and Effingham, as noted
above (¶¶ 30, 37, infra.), continued to remit contributions to
the Pension Fund through the date of the trial (R 80, 129, 130;
PX 18-19). 63. The Pension Fund's audit was eventually expanded back to
1990 and forward through June 14, 2003 (R 55-6, 171, 179; PX 29,
64. The audit revealed that for all or part of the period of
October 1990 through June 14, 2003, Kabbes employed Jed Goeckner,
David Hess, Norbert Hille, Douglas Kinkelaar and Lee Meinhart as
truck drivers (R 51-53, 98, 179; PX 29, 43). Payroll records were
not available for the period prior to May 1994 so findings were
estimated for the two employees who were employed before May 1994
(Hille and Kinkelaar) (R 56-7). Kabbes has never challenged the
accuracy of the estimated audit amounts (R 57-58).
65. Kabbes did not report Goeckner, Hess, Hille, Kinkelaar and
Meinhart as employees on EBCC Forms or TAD Forms and did not pay
any contributions on their behalf because Kabbes believed that
they were not union members and assumed that eligibility for
benefits turned on union membership (R 55-57, 179; PX 7-19, 29,
66. Kabbes failed to report the following weeks of work for the
following truck drivers for the period of October 21, 1990
through June 14, 2003:
Jed Goeckner 89 weeks
David Hess 131 weeks
Norbert Hille 353 weeks
Douglas Kinkelaar 486 weeks
Lee Meinhart 169 weeks
(R 55-57, 98, 99, 179; PX 29, 43).
67. During all or part of the period of June 1994 through June
14, 2003, Effingham employed Tom Dasenbrock and William Wernsing
as truck drivers (R 55-57, 98, 99, 179; PX 29, 43).
68. Effingham did not report Dasenbrock and Wernsing as
employees on EBCC Forms or TAD Forms and did not pay any
contributions on their behalf because Effingham did not believe
that they were union members (R 55-57, 98, 99, 179; PX 29, 43).
69. Effingham failed to report the following weeks of work for
the following truck drivers for the period of June 1994 through
June 14, 2003:
Tom Dasenbrock 155 weeks
William Wernsing 295 weeks
70. In addition, the audit revealed minor reporting errors with
respect to Effingham truck drivers David Carroll, Donald Miller
and Michael Thoele had been misreported and as a result, one week
of additional contributions was owed on each of these individuals
(R 55-57; PX 29).
71. Contributions were due to the Pension Fund from Kabbes and
Effingham at a rate of $21.00 per week for the period of October
21, 1990 through April 27, 1991 and $24.00 per week for the
period of April 28, 1991 through June 14, 2003 (R 55-57, 179; PX
1, 2, 3, 29, 43). At these rates the contributions owed to the
Pension Fund by Kabbes and Effingham total as follows:
72. Interest on the amounts owed by Kabbes and Effingham for
1990 through 1999 was $10,548.86 through February 15, 2001 (PX
73. John Kabbes was informed of the audit findings for 1990 to
1999 by letter dated January 23, 2001 (R 54-55; PX 29). 74. Despite his medical condition, Goldstein continued to
actively work for Kabbes and Effingham until at least mid-April
2001 (PX 17(c)).
75. Kabbes and Effingham wanted to pay contributions on behalf
of all of their non-reported truck drivers, but did not do so
because they believed they were ineligible since they were not
union members (R 130, 141-42; PX 27).
76. The audit fees and costs incurred by the Pension Fund total
$3,524.00 (R 177-179; PX 39).
77. Prior to the initiation of this lawsuit, neither Kabbes nor
Effingham ever informed the Pension Fund that they believed that
the 1980 Agreement or Extension Agreements had expired and had no
force or effect (R 48, 53-4, 101-02, 136-137, 139, 164-5, 203; PX
78. At no time prior to the audit in 2000 was the Pension Fund
aware that Kabbes and Effingham had not reported all of their
eligible employees to the Pension Fund (R 99).
79. No employee of the Pension Fund ever told the Defendants
that they did not need a collective bargaining agreement in order
to contribute to the Pension Fund or that contributions only had
to be made on behalf of union members (R 131, 138).
80. The Pension Fund has never received a written notification
of an intent to terminate from the Fund, Kabbes and Effingham
continued to report employees and otherwise acted as though they
are currently obligated to contribute to the Pension Fund (R 80,
97, 191-2; PX 7-19).
E. Facts Relating to Pension Fund Documents.
81. When a collective bargaining agreement is initially
submitted to the Pension Fund, it is reviewed by the Contracts
Department which enters the stated initial term into the Pension Fund's computer system. The date specified as the last
day of the initial term of the contract is entered as the
"Cont[ract] Expire Date", even though the contract may rollover
pursuant to an Evergreen Clause (R 211-12; p. 435 of DX F). This
date is entered at the time the contract is processed by the
Contracts Department which is typically long before the initial
term of the agreement could end (R 211-12). For example, the 1980
Agreement was received by the Contracts Department on May 7, 1982
(p. 6 of PX 1) so at or about that date, the "Cont[ract] Expire
Date" of June 30, 1983 was entered in the Pension Fund's
computer, even though the 1980 Agreement contained an Evergreen
82. The Pension Fund's computer also separately reflects the
"Contract Status" of an employer's agreement (R 209; DX F). If an
employer terminates its obligation to contribute to the Pension
Fund, the computer screen shows the employer's contract status as
"Terminated", if an employer has not terminated its obligation to
contribute, the computer indicates that the "Contract Status" is
"Active". (R 212). In addition, if an employer has terminated its
obligation to contribute to the Pension Fund, the computer
indicates a "withdrawal code" other than "01" and reflects the
date of the employer's withdrawal (R 211-12; p. 435 of DX F). The
withdrawal information appears in connection with the assessment
of withdrawal liability.
83. After the earliest expiration date of a collective
bargaining agreement is reached, the Pension Fund does not
perform an independent investigation to determine whether the
contract is continuing pursuant to an Evergreen Clause because it
is not cost effective for it to do so (R 220).
84. On May 4, 1999, the Pension Fund's ICON screen showed that
the Defendants' "Contract Status" was "Active", its withdrawal code was "01" and its
withdrawal date was a fall back date of 0/1/01 (p. 435 of DX F).
This means that as of May 4, 1999, the Pension Fund's records did
not indicate that Kabbes and Effingham's contractual obligation
to contribute to the Pension Fund had terminated (R 209, 211-13;
p. 435 of DX F).
85. At the same time, the Pension Fund's computer records
showed that the "Cont[ract] Expire Date" of April 30, 1992 (pp.
430, 433 and 435 of DX F). This occurred as a result of the
earliest expiration date being entered on the computer in May
1992 when the 1983 Extension Agreement and the 1989 Extension
Agreement were processed and does not indicate that the Pension
Fund believed that Kabbes and Effingham's contracts had expired
(R 209-13). It simply reflects that the earliest possible
expiration date had passed.
86. Ultimately the term "expired" and "terminated" do not have
the same meaning to the Pension Fund. In the Pension Fund's view,
an agreement that has passed its earliest expiration date is
"expired" even though it rolls over from year to year under an
Evergreen Clause. On the other hand, if an agreement has been
properly terminated and the parties' bargaining relationship is
ended, the Employer is designated as "Terminated" on the Pension
Fund's records (R 211-12). It is apparent that Local 26 also
shares this understanding since it advised the Pension Fund that
Kabbes and Effingham's contracts had "expired" but it assumed
they had rolled over under the Evergreen Clause (p. 620 of DX M).
87. The Pension Fund's records also showed that from June 30,
1983 through at least September 6, 1988, the Collective
Bargaining Agreement between Local Union 26 and Kabbes and
Effingham had "expired" (DX B & D). This was not changed until
1992 when the 1983 Extension Agreement and the 1989 Extension
Agreement were received by the Pension Fund (R 209-13; DX B & D).
During this 9-year period from June 30, 1983 through April 30,
1992, Kabbes and Effingham continued to contribute to the Pension
Fund and the Pension Fund accepted the contributions and provided
pension credit to the covered employees (R 70, 97, 129-30, 136,
191-92, 214; PX 7-19, 37, 38; DX F).
88. Just like it did not believe the Defendants' obligation to
contribute ended when the Pension Fund's computer records began
to reflect a "Contract Status" of "Expired" from June 1983 to
April 1992, the Pension Fund has never believed that the
Defendants' labor agreements with Local 26 terminated in 1992 (R
60, 70, 80, 97, 100, 247 and pp. 436, 447 of DX F). The Pension
Fund has always believed that agreements have rolled over from
year to year under the Evergreen Clauses of the 1980 Agreement
and the 1983 Agreement (R 70, 191-92; p. 636 of DX K; p. 620 of
89. The fact that the Pension Fund does not believe that the
Defendants' obligation to contribute has ceased is also
established by the fact that the Pension Fund has never assessed
withdrawal liability (p. 623 of DX M).
F. Facts Relating To Single Employer Issue.
90. Both Kabbes and Effingham are engaged in the trucking
industry with a principal business address of 1601 West Wabash
Avenue, P.O. Box 307, Effingham, Illinois 62401 (R 116).
91. Kabbes and Effingham perform primarily the same work (DX
92. Kabbes and Effingham both spread materials at job sites (R
93. Kabbes and Effingham both stockpile materials at job sites
(R 282; PX 26). 94. Kabbes and Effingham both deliver materials to job sites (R
282; PX 26).
95. Kabbes and Effingham use the same types of trucks (PX 26).
96. When a job bid comes in, whichever company is available to
do the work will get the job, and the work is interchangeable (PX
97. The property known as 1601 West Wabash Avenue, Effingham,
Illinois, is owned by Effingham Asphalt (R 116).
98. During the 1990's, John and Richard Kabbes delegated much
of the day-to-day management of Kabbes Trucking to Richard
Goldstein (R 119, 163).
99. During the 1990's much of the day-to-day operations of
Effingham were delegated to Richard Goldstein (R 119).
100. Kabbes and Effingham share the same business telephone
number (R 116).
101. Effingham office employees answer the phone and set up
jobs for Effingham and Kabbes, without distinguishing between
their work for the two entities (R 117-120).
102. Effingham's office manager, Jane Sudkamp, performs work
for both Kabbes and Effingham, but is only paid wages from
Effingham (R 117, 285, 286).
103. After Goldstein died, Jane Sudkamp's duties have included
the preparation of contribution reports, for both Kabbes and
Effingham, that are submitted to the Pension Fund (R 135, 136).
104. General office supplies purchased by Effingham are used by
both Effingham and Kabbes, but the cost of these supplies is paid
solely by Effingham (R 286, 287).
105. These costs are not allocated between Effingham and Kabbes
(R 119, 120, 287).
106. Effingham pays the phone bill and the electric bill for
1601 West Wabash (R 117-118).
107. Seventy (70%) or seventy-five (75%) percent of Kabbes'
work is performed for Effingham (R 154).
108. For the period at issue, medical insurance for those
employees of Kabbes for whom contributions were not paid to the
Illinois Conference of Teamsters Welfare Fund, was provided under
a policy with Pekin Insurance that is issued in the name of
Effingham Asphalt (R 127-128, 283).
109. Drivers for Kabbes and Effingham are paid at the same wage
rate (R 126).
110. Union and non-union drivers for Kabbes and Effingham are
paid at the same wage rate (R 126, 127).
111. The duties of union and non-union drivers are the same (R
112. Kabbes does not reimburse Effingham for services rendered
by Effingham employees, for rent or for general office supplies
113. Neither Kabbes nor Effingham keep any records of the value
of services provided by Effingham to Kabbes (R 156-159).
114. Neither Kabbes nor Effingham keep any records of any
payment or benefit given by Kabbes to Effingham for services
rendered or expenses (R 156-159).
115. John Kabbes handles the union negotiations on behalf of
Kabbes and Effingham (R 120).
CONCLUSIONS OF LAW
i. Section 306(a) of the Multiemployer Pension Plan Amendments
Act of 1980, adding § 515 to ERISA, provides:
Sec. 515. 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.
ii. Under 29 U.S.C. § 1132(e)(1), this Court has jurisdiction
over the Pension Fund's suit to collect contributions allegedly
owed by Effingham and Kabbes under the collective bargaining
agreements and the Pension Fund Trust Agreement.
II. CONTRACTUAL LIABILITY.
A. Liability For The Period Prior To April 30, 1992.
i. Kabbes does not dispute its contractual obligation to
contribute to the Pension Fund through April 1992 under the 1989
Extension Agreement. Therefore, there is no dispute about Kabbes'
liability for contributions on behalf of Douglas Kinkelaar at
least for the period of October 21, 1990 through April 30, 1992.
B. Liability For Contributions After April 30, 1992.
ii. An employer can contribute to a multiemployer trust fund
such as the Pension Fund only if the basis upon which the
payments are being made is specified in a binding written
agreement. 29 U.S.C. § 186(c)(5); Central States Pension Fund v.
Gerber Truck Service, Inc., 870 F.2d 1148, 1153-54 (7th Cir.
1989) (en banc). However, the written agreement does not have
to be a collective bargaining agreement. Id. For example, this
Court has previously held that the Pension Fund's Trust Agreement
is sufficient to obligate an employer to contribute to the
Pension Fund after collective bargaining agreement termination.
Central States Pension Fund v. Beelman Truck Co.,
653 F.Supp. 678, 680 (N.D. Ill. 1987) (Norgle, J.). The Seventh
Circuit has also held that the writing requiring contributions does not
have to be a collective bargaining agreement. Gariup v. Birchler
Ceiling Co., 777 F.2d 370, 375 (7th Cir. 1985). Further, the
written agreement does not have to be a signed agreement; all
that is required is that there be sufficient conduct to manifest
an intent to be bound to a writing. Capitol-Husting Co. V.
NLRB, 671 F.2d 237, 243 (7th Cir. 1982).
iii. The Pension Fund has advanced three theories in support of
its claim that the Defendants were contractually obligated to
contribute to the Pension Fund for the disputed period of April
1992 through June 2003. First, they maintain that both Kabbes and
Effingham are bound by the pension clause of the 1980 Agreement,
the 1983 Extension Agreement and the 1989 Extension Agreement by
virtue of the Certification Clause contained on the reporting
forms submitted by the Defendants. Second, the Pension Fund
argues that the 1980 Agreement and the 1983 Extension Agreement
has never terminated and continue in effect to this day. Third,
the Pension Fund contends that the Defendants adopted the
provisions of the 1980 Agreement, the 1983 Extension Agreement
and the 1989 Extension Agreement through their course of conduct.
iv. In evaluating the Pension Fund's theories, it is important
to remember that the federal courts are to liberally apply
contract law in determining whether an enforceable labor
agreement exists in order to effectuate federal labor and pension
policies. Capital-Husting, 671 F.2d at 242; Trustees of
Atlanta Iron Workers Pension Fund v. Southern Stress Wire Co.,
724 F.2d 1458, 1459 (11th Cir. 1983). The primary policy
relevant in this case is the objective of ERISA and the NLRA of
insuring that the Defendants' employees receive promised
benefits. 29 U.S.C. § 1001(a), Gariup, 777 F.2d at 375. If the
Defendants' assertion that they have no contractual obligation to
contribute to the Pension Fund is accepted, this goal will be
frustrated because the pension credit earned by the Defendants'
employees from April 1992 through the present must be cancelled.
Moriarty v. Larry G. Lewis Funeral Home Directors, Ltd.,
150 F.3d 777, 776-77 (7th Cir. 1998). As shown above, the benefit
reductions would have a catastrophic effect on the Defendants' employees. Moreover, Defendants never questioned the
existence of their liability and the Pension Fund reasonably
believed that there was a contractual basis for the payment of
contributions. As a result, the Defendants paid contributions and
the Pension Fund provided pension credit to the Defendants'
employees and it has paid pension benefits to retired employees
based upon the contributions. It is not fair to the Pension Fund
or the Defendants' employees for the Defendants to now belatedly
assert there is no contract.
v. Four other factors also significantly undercut the
Defendants' contract defense. First, under the NLRA, it is a
criminal offense punishable by a fine and imprisonment for an
employer to remit contributions to a fund such as the Pension
Fund unless there is a contract that requires the contributions.
29 U.S.C. § 186(c)(5)(B) and (D). The Defendants continued to
remit contributions to the Pension Fund after April 1992 in
fact, they continued to remit contributions after they asserted
their contract defense in this case through the date of trial.
The Court will not lightly infer the commission of a felony by
vi. Second, the Defendants never disputed the existence of a
contract requiring contributions until after this case was filed.
It is true that they refused to pay the contributions revealed to
be owed by the audit but that was because they believed that
their liability was limited to employees who were union members.
Only after the Defendants learned that the union membership
defense was invalid under controlling authority, Gerber Truck,
870 F.2d at 1150; Central States Pension Fund v. Central Cartage
Co., 69 F.3d 1312 (7th Cir. 1995), did they devise the
contract defense. It is clear the contract defense is merely a
pretext to get around the invalidity of the union membership
defense. vii. Third, the Defendants admit that they wanted to contribute
to the Pension Fund on behalf of all of the individuals included
in the Pension Fund's audit, but they have now inexplicitly
changed their minds.
viii. Fourth, it is significant that the Defendants have not
filed a counterclaim seeking the return of the contributions they
paid after April 1992. As indicated above, the credit earned by
the Defendants' employees after April 1992 must be cancelled if
there was no contract. Larry T. Lewis Funeral Directors, Ltd.,
150 F.3d at 776-77. If the Defendants really believed that there
was no contract, they would have filed the mandatory counterclaim
seeking the return of the contributions they paid after April
1. The Certification Clause obligated the Defendants to
contribute after April 1992.
ix. An employer can be contractually obligated to contribute to
a fund after collective bargaining agreement termination under
plan documents such as a trust agreement, Central States Pension
Fund v. Beelman Truck Co., or a participation agreement.
Central States Pension Fund v. Behnke, Inc., 883 F.2d 454
(6th Cir. 1989). Further, an employer can create a right to
provide fringe benefits that survives termination of a collective
bargaining relationship. See, e.g., Bidlack v. Wheelabrator
Corp., 993 F.2d 603 (7th Cir. 1993) (en banc) (employer
can be obligated to provide retiree health benefits after end of
x. Under the Certification Clause contained on the billing
forms submitted to the Pension Fund, the Defendants reaffirmed
their obligation to contribute to the Pension Fund. This very
same Certification Clause has been held to bind an employer to
contribute to the Pension Fund after termination of a collective
bargaining agreement. Central States Pension Fund v. Joe
McClelland, Inc., 1993 WL 243409 (N.D. Ill. 1993), aff'd 23 F.3d 1246 (7th Cir. 1994) (copy attached as Exhibit A), see
also, Operating Engineers Local 139 Benefit Fund v. Gustafson
Construction Co., 258 F.3d 645, 650 (7th Cir. 2001) (The
certification clause is "boilerplate . . . but it was entitled to
some weight . . . and maybe a lot, as we suggested in Moriarty
v. Larry G. Lewis Funeral Directors, Ltd., 150 F.3d 773, 775
(7th Cir. 1998). People generally are held to the agreements they
sign and are not permitted to fob them off as `boilerplate'
without invoking fraud, unconscionability or material mistake.").
Other courts have also held that payment of contributions in
accordance with a certification clause creates an enforceable
contractual duty to pay contributions. Central Pennsylvania
Teamsters Pension Fund v. Frey's Motor Express, Inc., 1994 WL
2533 (E.D. Pa 1994) (copy attached as Exhibit B); Laborers
Pension Fund v. E. Guerra Co., 2000 WL 1349148 (N.D. Ill. 2000)
(copy attached as Exhibit C); Chicago Tile Institute Pension
Fund v. Picha Tile Co., 1995 W 584231 (N.D. Ill. 1995) (copy
attached as Exhibit D); Trustees of the Flint Michigan Laborers
Pension Fund v. In-Puls Const. Co., 835 F.Supp. 972 (E.D. Mi.
1993); Trustees of the Hotel Motel & Restaurant Employees Fund
v. Wright, 1985 WL 17678 (W.D. Wa. 1985) (copy attached as
Exhibit E); Weber v. Anspach, 473 P.2d 1011 (Or. Sup. Ct.
xi. The Defendants cite a number of cases where the courts
indicated that an employer did not adopt a collective bargaining
agreement by merely remitting contributions to a fund. These
cases are easily distinguishable because there was no
certification clause mentioned in any of the cases cited by the
Defendants. Caporale v. Mar Les, Inc., 656 F.2d 242 (7th
Cir. 1981); Carpenters Amended Health Benefit Fund v. Holleman
Construction Co., 751 F.2d 763 (5th Cir. 1981); Moglia v.
Geoghegan, 403 F.2d 110 (2nd Cir. 1968); Brown v. Dominic
Prisco Transport, Inc., 1997 U.S. Dist. LEXIS 23709 (E.D.N.Y. 1997); Sullivan v. Cirone, 1995 U.S. Dist. LEXIS 874
(N.D. Ill. 1995); Bevona v. Galbreath-Ruffin Co.,
690 F.Supp. 234 (S.D.N.Y. 1988); IGL WU Retirement Fund v. Levy Bros.
Frocks, Inc., 1987 U.S. Dist. LEXIS 7731 (S.D.N.Y. 1987),
reversed, 846 F.2d 879 (2nd Cir. 1988); Giordono v. Jones,
1987 U.S. Dist LEXIS 13227 (N.D. Ill. 1987) aff'd 867 F.2d 409
(7th Cir. 1989); Robbins v. Mainline Hauling Co.,
590 F. Supp. 1050 (E.D. Mo. 1984).
xii. The Defendants also argue that the Certification Clause is
not a sufficient basis for the Pension Fund's claims for four
reasons, none of which have merit. First, the Defendants argue
that the clause is insufficient to obligate them to contribute to
the Pension Fund because there is evidence that they were not in
compliance with the other provisions of the labor agreement and
the union allegedly agreed that the collective bargaining
relationship had ended. The Defendants assert that the payment of
contributions in accordance with a certification clause is only
one factor to be considered in determining whether an employer
has adopted a labor contract which can be overcome by other
evidence, such evidence of its non-compliance with other
provisions of the collective bargaining agreement.
xiii. The alleged termination of the collective bargaining
relationship is irrelevant because an employer can agree to pay
contributions after the relationship ends. Bidlack v.
xiv. Nor is it necessary for the Court to decide whether a
certification clause alone is sufficient to adopt a collective bargaining agreement in its entirety
because the unique language in the certification clause in this
case only required the Defendants to adopt the pension clause of
the labor agreements and did not require adoption of the labor
agreements in their entirety. Since the Certification Clause did
not incorporate the labor agreements as a whole, evidence that
the Defendants failed to comply with other provisions of the
collective bargaining agreement is irrelevant. The only relevant
evidence is that each month, the Defendants reaffirmed the duty
to contribute to the Pension Fund in accordance with the labor
agreements and paid contributions to the Pension Fund thereby
creating a contractual obligation limited to the duty to
contribute to the Pension Fund.
xv. Second, the Defendants dismiss the Certification Clause as
"boilerplate." However, it does not invoke fraud,
unconscionability or material mistake, so it cannot avoid the
Certification Clause for this reason. Operating Engineers Local
130 Fund v. Gustafson Const., Co., 258 F.3d at 650. Moreover,
the Certification Clause is actually critically important to
participating employers, employees and the Pension Fund. Absent
an affirmation of liability, it may be a crime for am employer to
make payments and a fund to accept employer payments; the
Certification Clause eliminates any doubt about the legality of
payments by creating a contractual commitment between the
employer and the Pension Fund. This contractual commitment
eliminates the risk of erroneous benefit payments by the Pension
Fund and insures that employee expectations are not frustrated
(as they will be in this case if the Defendants' defense is
accepted). Further, the Certification Clause reduces the Pension
Fund's litigation costs by eliminating the need to litigate the
issue of whether an employer that has contributed to the Pension
Fund (like the Defendants) was contractually required to do so
(which is good for both employers and employees because it means more money is available for
benefits at lower contribution rates). Since the Certification
Clause is critically important to the Pension Fund as well as
employers and employees, and certainly is not unconscionable, it
should be enforced. Id.
xvi. The Defendants' third argument about the Certification
Clause is based upon the decision in Caporale v. Mar Les, Inc.,
656 F.2d 242 (7th Cir. 1981). In Mar Les, a non-union
employer signed two memorandums of understanding that
incorporated an industry wide collective bargaining agreement,
but the employer never received a copy of the collective
bargaining agreement. Over a two year period, the employer paid
contributions to the union fund on behalf of only one of its 10
employees. The Seventh Circuit held that there was no mutual
assent to the labor contract because a copy was never delivered
to the employer so it did not know the terms of its undertaking
and the employer did not comply with any of the terms of the
agreement other than partial compliance with the obligation to
contribute to the Pension Fund.
xvii. The Mar Les decision is easily distinguishable because
it was brought under the LMRA, not ERISA. 656 F.2d at 242-3. In
subsequent decisions, the Seventh Circuit has repeatedly held
that an employer's claim that it did not subjectively believe
that it had a contract is not a valid defense in an ERISA trustee
suit like this case because § 515 of ERISA makes such funds "like
a holder in due course in commercial . . . entitled to enforce
the writing [it receives] without regard to understanding or
defenses applicable to the original parties." Gerber,
870 F.2d at 1149, see also, Robbins v. Lynch, 836 F.2d 330 (7th
Cir. 1988). Mar Les was not an ERISA case, so while the
decision may still be valid in a suit between a union and
employer, it does not apply to a trustee suit under ERISA to collect delinquent contributions. Giordono v. Jones,
867 F.2d 409, 416 (7th Cir. 1989) (Easterbrook, J. concurring)
(district court's determination that funds contribution claims
was barred under almost identical fact pattern and legal claims
as Mar Les, was wrong under Robbins v. Lynch); Illinois
District Council of Bricklayers v. R & R Masonry, Inc., 1996 WL
627635 *4 n. 7 (N.D. Ill. 1996). (While Mar Les appears to be
viable in suit between unions and employers, "Mar Les
repeatedly has been questioned, criticized and/or ignored in the
context of suits brought by funds to recover unpaid
contributions") (copy attached as Exhibit F); Divane v. Krull
Electric Co., 1996 WL 41686 *3 (N.D. Ill. 1996) ("[T]he
continued precedential value of Caporale [v. Mar Les] may be
questionable in light of [the] more recent (although
distinguishable) cases [of] . . . Gerber Truck [and] . . .
Robbins v. Lynch") (copy attached as Exhibit G); Carpenters
Fringe Benefit Fund v. Able Bros. Const., 813 F.Supp. 643, 649
(N.D. Ill. 1993) ("[I]n light of . . . holdings in [Robbins v.]
Lynch [and] Gerber Truck . . . the value of Caporale [v. Mar
Les] is questionable"); Murphy v. Gullo Int'l. Development
Co., 1989 WL 51168 *2 (N.D. Ill. 1989) ("Mar Les has been
often distinguished or ignored and seldom, if every followed . . .
The present status of Mar Les is uncertain at best [due to] . . .
Gerber Truck . . . [and] Robbins v. Lynch" (copy attached
as Exhibit H).
xviii. Mar Les is also distinguishable for several reasons
other than the statute under which the case was filed. First,
unlike the employer in Mar Les, the Defendants had a
longstanding relationship with the union and they did have a copy
of the underlying labor agreements so at the time they signed the
Certification Clause, what they were agreeing to do was clearly
spelled out. Second, in Mar Les, there was no evidence of any
certification clause like the one at issue in this case so
contrary to the Defendants' claim, Mar Les does not indicate that such a clause cannot be enforced. Third, the
memorandums of understanding in Mar Les incorporated the entire
"lengthy contract" between the union and several contractor
associations so the Court believed that evidence of
non-compliance with the other provisions of collective bargaining
agreement showed that there was no assent to the contract.
642 F.2d at 243. In this case, the Certification Clause only
incorporates the duty to remit contributions to the Pension Fund,
so evidence of the Defendants' non-compliance with the provisions
of the collective bargaining agreement is irrelevant.
xix. The Defendants final argument is that the Certification
Clause is not significant because they did not always sign the
reporting forms. This argument has no merit because so many forms
were signed that the Defendants clearly manifested their intent
to be bound. Further, as noted above, the intent to be bound by
an agreement does not necessarily require that an employer
actually sign the agreement; all that is necessary is conduct
which manifests the intent to be bound. Capitol-Husting, Inc.,
671 F.2d at 243. Even when the Defendants did not sign the
reporting forms, they manifested their intent to be bound by the
Certification Clause by completing the reporting forms and
submitting their checks (which were signed) that paid the amounts
that were revealed to be owed by the reporting form. In Chicago
Tile Institute Welfare Fund v. Picha Title Co., 1995 WL 54231
(copy attached as Exhibit D), the court held that the employer
had manifested its intent to be bound by signing only 6 of 18
reporting forms. This Court agrees that the Defendants manifested
their intent to be bound by the Certification Clause by
completing the reporting form and remitting payment, regardless
of whether the forms were signed.
xx. Since the Certification Clause created a valid contract
between the Pension Fund and the Defendants, the Defendants were obligated to contribute to the
Pension Fund from April 1992 to June 2003.
xxi. The Pension Fund has not waived any theory of recovery
based upon this theory. A complaint need not allege a particular
legal theory. Albiero v. City of Kankakee, 122 F.3d 417, 419
(7th Cir. 1997). In this case, the Amended Complaint alleged that
the Defendants had failed to accurately report work history for
all covered employees and, therefore, delinquent contributions
were owed. Legal theories supporting this wrong can be
interchanged without altering the complaint.
xxii. In addition, the Defendants have always been fully aware
of the Plaintiffs' theories of recovery including the
Certification Clause claim.
2. Even If The Certification Clause Is Disregarded, The
Defendants Were Obligated To Contribute Because The Labor
Agreement Was Never Terminated.
xxiii. The Defendants claim that their contractual relationship
with Local 26 ended April 30, 1992 and therefore, the Pension
Fund cannot collect anything after that date. Termination of a
contract is not presumed, and the Defendants bear the burden of
establishing that termination occurred. Armour Co. v. Celic,
294 F.2d 432, 436 (2nd Cir. 1961). Moreover, § 515 of ERISA
severely limits employer defenses in ERISA cases.
29 U.S.C. § 1145; Gerber Truck Co. The Defendants' termination defense is
only available if the termination of the agreements is
incontestable from the face of the agreement. Where, as here, the
contract is either unclear or termination is disputed, § 515 of
ERISA bars consideration of the contract termination defense.
Carpenters Health & Welfare Trust v. Bla-Delco Const., Inc.,
8 F.3d 1365, 1369 (9th Cir. 1993); Residential Roofers Welfare
Fund of Philadelphia v. A & B Metal, Inc., 976 F.Supp. 341, 348
(E.D. Pa. 1997); Central States Pension Fund v. Steel Express, Inc., No. 99 C
877 (N.D. Ill. 2000) (copy attached as Exhibit I).
xxiv. The Defendants argue that the termination defense can be
considered because it is so obvious that the labor contracts
terminated. This argument is based upon the 1989 Extension
Agreement which does not contain an Evergreen Clause and provides
that it would only "remain in effect and full force through April
30, 1992". However, this section of the 1992 Extension is
captioned "Termination of this Modified Extension" (emphasis
added) and nothing indicates that the underlying 1980 Agreement
or the 1983-1989 Extension were also being terminated. Where
"clear and specific language" is used in the termination clause
of a labor agreement, the federal courts are uniform in their
strict interpretation of such language." Trustees of BAC Local
32 Ins Fund v. Fantin Enterprises, Inc., 163 F.3d 965, 969
(6th Cir. 1998). Here, the duration of the 1989 Extension
Agreement clearly extinguishes only the Extension Agreement and
does not effect the 1983 Extension Agreement or the 1980
Agreement. As indicated above, the 1983 Extension Agreement and
the 1989 Extension Agreement were signed at the same time in 1992
(see, ¶ 16, infra.). The Evergreen Clause in the 1983 Extension
Agreement requiring a written notice to terminate is meaningless
if termination was automatic under the 1989 Extension Agreement
as the Defendants contend. At best, the duration clause of the
1989 Extension Agreement is unclear and the Defendants' claim
that the entire agreement (including the 1980 Agreement and the
1983 Extension Agreement) expired is not a valid defense to the
Pension Fund's claim. Bla Delco Const.; A & B Metal, Inc.;
Steel Express, Inc.
xxv. The Defendants provided no evidence of the required
written notice of termination of the 1983 Extension Agreement. Therefore, that agreement and the
underlying 1980 Agreement must be presumed to be still in effect
and obligate the Defendants to contribute to the Pension
xxvi. The Defendants' claim that the termination of at least
the 1980 Agreement is obvious based upon the April 15, 1986
letter from Local Union 26 to Kabbes. However, this letter was
signed before either the 1983 Extension Agreement and the 1989
Extension Agreement were signed. Therefore, these agreements must
supercede the April 15, 1986 letter. Moreover, the April 15, 1986
letter indicates that Local 26 sought to modify a collective
bargaining agreement that purportedly expired on June 30, 1986.
Neither the 1980 Agreement or the 1983 Extension Agreement
expired on that date, so the notice could not possibly terminate
xxvii. Further, the April 15, 1986 letter requesting contract
modifications does not comport with the duration clauses of the
1980 Agreement, which indicates that termination will occur only
if a notice indicated a desire to terminate the contract is
service. A notice to terminate a collective bargaining agreement
must be clear and explicit. Louisiana Bricklayers Welfare Fund
v. Alfred Miller Contracting Co., 157 F.3d 404, 409 (5th
Cir. 1998); Office & Professional Employees Local 42 v. United
Automobile Workers Local 174, 524 F.2d 1316, 1317 (6th Cir.
1975). The April 15, 1986 letter does not purport to cancel the
contract, it merely invites Kabbes to negotiate modifications to
some terms of the contract. Where, as here, the contract requires a notice of
termination, a notice that does not purport to cancel the
contract is ineffectual. Central States Pension Fund v. Gerber
Truck Service, Inc., 870 F.2d 1148, 1156 (7th Cir. 1989)
(en banc); Office & Professional Employees Local 42 v.
United Automobile Workers Local 174, 524 F.2d 1316, 1317
(6th Cir. 1975); Steel Express, at pp. 12-14 (Exhibit I);
Luden's, Inc. v. Local Union No. 6, 805 F.Supp. 313, 322 (E.D.
Pa. 1992 vacated on other grnds, 28 F.3d 347 (3rd Cir.
1994)); Central States, Southeast and Southwest Areas Pension
Fund v. McLain Trucking, Inc., 1990 WL 141426 at *3 (N.D. Ill.
Sept. 21, 1990) (copy attached as Exhibit J); In re: Eazor
Express, Inc., No. 84-130 (Bkrcy. W.D. Pa. Dec. 5, 1985) (copy
attached as Exhibit K).
xxviii. The Defendants next argue that termination is obvious
because the Pension Fund's computer records indicate the contract
status was "expired." This very same argument was rejected by
Judge Holderman in Steel Express for several reasons. First,
whether the contract terminated is an issue of law so the Pension
Fund's alleged legal opinion on the issue is irrelevant. Steel
Express at p. 15 (Exhibit I). Indeed, the Pension Fund is not
even a party to the labor contract so its alleged opinion could
not be probative. Id. Because the contract language itself is
clear, any alleged misunderstanding by the Pension Fund is
irrelevant. Illinois Conference of Teamsters Welfare Fund v.
Mrowicki, 44 F.3d 451, 459-60 (7th Cir. 1994). Further, the
records relied upon by the Defendants do not even indicate that
the Pension Fund believed that the contract was terminated. The
"expiration" date for a labor contract is entered on the Pension
Fund's computer records at the time the contract is received and
after that date passes, the Pension Fund's computer records
automatically reflect to the contract as "expired" regardless of
whether there is an Evergreen Clause. As a result, a contract that is designated as
"expired" frequently has actually rolled over under an Evergreen
Clause. What is really significant is the fact that the Pension
Fund's records describe the Defendants' contract as "Active".
Steel Express, at p. 15 (Exhibit I). Third, the date entry
relied upon by the Defendants was made by a low level Pension
Fund employee without any management responsibility and does not
bind the Pension Fund. Id., see also, MCI Communications v.
AT & T, 708 F.2d 1081, 1143 (7th Cir. 1983) ("opinions of [low
level] employees without management responsibility are not
properly considered to be admissions of the corporation.")
xxix. The Defendants' argument about the Pension Fund's
computer record documents is ultimately based upon semantics
only. There is no question that the initial term of the
Defendants' extended contract "expired" by 1983, but because no
notice of termination was sent, the agreement was renewed from
year to year thereafter. As Judge Holderman held in Steel
Express, the characterization of the contract as "expired" in
the Pension Fund's records is not inconsistent with the Pension
Fund's assertion that it was renewed each year after that date.
Steel Express, Inc., at 15. The Pension Fund does not equate
"expired" with "terminated" nor does Local 26 (see Fact Findings
¶ 86) and this understanding comports with the common labor law
usage of these terms. See e.g., Trinidad Corp. v. National
Maritime Union, District 4, 81 F.3d 769, 771 (8th Cir. 1996)
("duration clause' labor provided that after the expiration
date, the collective bargaining agreement would continue in
effect from year to year"); Se-Ma-No Electric Co., 284 NLRB
1006, 1007 (1987) (Evergreen Clause "keeps the contractual terms
in effect beyond the expiration date"); KWC Furniture Co.,
247 NLRB 541 (1980) ("The April 1 expiration date passed
without either party giving a notice of termination . . . [so the agreement] automatically renewed itself"); cf. Bright v.
Coastal Lumber Co., 962 F.2d 365, 368 (4th Cir. 1992) (lease
provided that "at the expiration of . . . ten years the
contract remains renewable from year to year").
xxx. The Defendants also argue that it is obvious that the
contracts terminated because Judge Scott held in Illinois
Conference of Teamsters Welfare Fund v. Kabbes Trucking Co.,
Case No. 01-3297 at p. 54 (C.D. Ill. June 25, 2003) that "There
is no issue of proper termination in this case because the 1989
[Extension Agreement], the last CBA which Kabbes Trucking was
signatory, expired in 1992." This statement is dicta because the
fund in that case did not seek to bind Kabbes to the 1989
Extension Agreement, but instead to significantly higher
contribution rates that were required by the 1995-1998 and
1998-2001 labor contracts that had been paid by the Defendants
($2.50 per hour vs. $4.36 per hour). Moreover, Judge Scott
clearly misread the 1989 Extension Agreement as noted above,
the duration clause of the 1989 Extension Agreement indicates
that it was the only writing that would have ended in 1992. She
was also unaware of the fact that the 1983 Extension Agreement
was signed at the same time as the 1989 Extension Agreement so
her reading would improperly render the duration clause of the
1983 Extension Agreement surplusage. Thus the dicta in that case
should not be followed.
xxxi. Ultimately, there is no evidence supporting the
Defendants' claim that the 1980 Agreement or the 1983 Extension
Agreement had terminated. Therefore, these contracts remain in
effect and mandate payment of the contributions sought by the
Pension Fund. Alternatively, termination has certainly not been
clearly established so the termination defense is barred by § 515
of ERISA. Bla-Delco, Inc.; Steel Express. C. The Defendants Have Reaffirmed The Collective Bargaining
Agreements Through Their Course Of Conduct.
As indicated above, an employer can adopt a labor contract
through its course of conduct. Capitol Husting, Inc., Kabbes
and Effingham have adopted the 1989 Extension Agreement (and the
underlying 1980 Agreement) and the 1983 Extension Agreement by
a. Remitting contributions to the Pension Fund
through the present date in accordance with the
b. Remitting contributions to the Illinois Conference
of Teamsters Welfare Fund until 2000;
c. Cooperating with the audit in accordance with the
trust agreement which was incorporated in the 1980
d. Indicating that they desired to provide pension
benefits to their employees.
It is not necessary for the Pension Fund to show that the
Defendants adopted the contract in their entirety an employer
can adopt through its conduct parts os an agreement such as the
pension clause, Local 9925 W/F v. Sunbelt Sales, Inc.,
932 F. Supp. 1135, 1141 (M.D. Fla. 1990) aff'd, 932 F.2d 977
Cir. 1991). Cf., Caporale v. Mar Les, Inc. (recognizing
existence of limited contractual obligation to contribute to a
fund). At a minimum, the above conduct demonstrates that the
Defendants adopted the pension clause of the labor agreements.
Therefore, they are contractually obligated to remit the
contributions sought by the Pension Fund.
D. Effingham Is Liable For Contributions Under Kabbes'
Contracts Because Kabbes And Effingham Are A Single Employer.
xxxii. This Court has jurisdiction to determine whether the
terms of Kabbes Collective Bargaining Agreement should be applied
to the employees of Effingham. There is no dispute concerning
union representation, nor are there allegations of unfair labor practices. Larry G. Lewis Funeral Directors, Ltd.,
150 F.3d at 775; Moriarty v. Svec, 164 F.3d 323, 334 (7th Cir. 1998).
xxxiii. Alternatively, if Effingham is not bound by a
Collective Bargaining Agreement because the parties have not
located copies of these Agreements, it is bound by Kabbes'
Agreements (i.e., the 1980 Agreement, the 1983 Extension
Agreement and the 1989 Extension Agreement) because it is a
single employer with Kabbes. These entities share common
management and common ownership and have an interrelation of
operations and a centralized control of labor relations. Thus,
Kabbes and Effingham are a single employer and Effingham is
obligated to make contributions to the Pension Fund to the same
extent as Kabbes. Moreover, because Kabbes and Effingham are a
single employer, they are both jointly liable for the full
amounts owed to the Pension Fund by both entities.
III. LACHES DEFENSE IS WITHOUT MERIT.
A. Laches Does Not Apply To A Claim By A Multiemployer Plan
For Contributions Under ERISA.
xxxiv. ERISA does not mention equitable defenses such as
laches. While the federal courts have the power to create federal
common law, this can occur "only where the federal statute does
not expressly address the issue before the court [and only if the
proposed common law] is consistent with the policies underlying
the federal statute in question." Nachwalter v. Christie,
805 F.2d 956, 959-60 (11th Cir. 1986); cf. Upholsterers' Union
Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323,
1327 (7th Cir. 1990) (common law "successorship" liability
doctrine created based upon the "congressional policies
underlying ERISA"). Laches is a species of estoppel. Teamsters
Employees Welfare Fund v. Gorman Bros. Ready Mix, 283 F.3d 877
(7th Cir. 2002). Where the proposed common law is estoppel,
it is necessary to examine the relevant statutory provisions and objective with particular care because "rules of
estoppel will not be permitted to thwart the purposes of the
statutes of the United States." Kaiser Steel Corp. v. Mullins,
455 U.S. 72, 81 n. 6 (1982). The defense of laches should not be
created in ERISA contribution cases because the defense is
inconsistent with the language of ERISA and the LMRA and will
frustrate the policies underlying the statutes.
xxxv. As noted above, Section 302(c)(5) of the Labor Management
Relations Act prohibits payments by employers to multiemployer
funds unless "the detailed basis on which such payments are to be
made is specified in a written agreement with the employer."
29 U.S.C. § 186(c)(5). Section 302 mandates that written fringe
benefit promises be enforced as written to prevent "corruption of
collective bargaining through bribery of employee representatives
by employers, extortion by employee representatives, and the
possible abuse by union officers of the power which they might
achieve if welfare funds were left to their sole control."
Arroyo v. United States, 359 U.S. 419, 425-26 (1959). Based
upon Section 302(c)(5), the Supreme Court indicated in NLRB v.
Amax Coal Co., 453 U.S. 322 (1981), that trustees of
multiemployer funds are powerless to modify an employer's written
The management-appointed and union-appointed trustees
[of multiemployer funds] do not bargain with each
other to set the terms of the employer-employee
contract; they can neither require employer
contributions not required by the original
collectively bargained contract, nor compromise the
claims of the union or the employer with regard to
the latter's contributions. Rather, the trustees
operate under a detailed written agreement,
29 U.S.C. § 186(c)(5)(B) . . . Indeed, the trustees have an
obligation to enforce the terms of the Collective
Bargaining Agreement regarding employee fund
contributions against the employer "for the sole
benefit of the beneficiaries of the fund."
Id. at 336-37 (emphasis added). Since Section 302(c)(5)
eliminates the authority of trustees to explicitly agree to a
reduction or cancellation of an employer's pension contribution
obligation, the trustees cannot possibly forfeit their ability to collect a
promised payment because of their conduct (or inaction).
xxxvi. ERISA also imposes strict duties upon trustees including
the duty to operate the funds in strict conformity with the
governing writings. Central States Pension Fund v. Central
Transport, Inc., 472 U.S. 559, 572-73 (1985); see also,
Prohibited Transaction Exemption 76-1, 41 Fed. Reg. 12740
(Trustees who fail to collect promised contributions from a
solvent employer violate prohibited transactions provisions of
ERISA). Like the LMRA, the ERISA written agreement requirement
prohibits trustees from explicitly forgiving an employer's
written contribution promises so the liability cannot be excused
by virtue of the trustees' conduct.
xxxvii. Additionally, the creation of equitable defenses will
undermine Congress' goal of insuring the solvency of
multiemployer funds. With ERISA, Congress sought to protect "the
continued well-being and security of millions of employees and
their dependents" by establishing "minimum standards . . .
assuring the equitable character of such plans and their
financial soundness." 29 U.S.C. § 1001(a). Congress' objective
was to "mak[e] sure that if a worker has been promised a defined
pension benefit upon retirement and if he has fulfilled
whatever conditions are required to obtain a vested benefit he
actually will receive it." Nachman Corp. v. Pension Benefit
Guaranty Corp., 446 U.S. 359, 375 (1980). Section 302(c)(5) of
the LMRA is also designed to insure the employees actually
receive promised benefits. Gariup v. Birchler Ceiling Co.,
777 F.2d 370, 375 (7th Cir. 1985).
xxxviii. When it added Section 515 to ERISA in 1980, Congress
sought "to alleviate certain problems which tend to discourage the maintenance and
growth of multiemployer plans." 29 U.S.C. §§ 1001(a)(1) and
1001(c)(2). Congress indicated that unpaid employer contributions
as well as the lengthy, complex and costly litigation that was
required to collect promised payments was a "serious problem" and
a principal cause of the financial instability of multiemployer
funds.*fn4 To alleviate this problem, Congress "gave
statutory status to employers' contribution duties under
multiemployer plans," Artistic Furniture, 920 F.2d at 1328, and
substantially narrowed the range of available employer defenses
in order to enhance accurate actuarial planning and reduce the
costs associated with employer delinquencies. Central States
Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148 (7th
Cir. 1989) (en banc). Further, the sponsors of § 515
explicitly endorsed the decision in Lewis v. Mill Ridge Coals,
298 F.2d 552 (6th Cir. 1962) where the court held that defenses
based upon alleged trustee misconduct could not be recognized,
thereby further demonstrating that Congress intended Section 515
to foreclose defenses premised upon fund conduct. 126 Cong. Rec.
23039, August 25, 1980 (Rep. Thompson); 126 Cong. Rec. 23288,
August 26, 1980 (Sen. Williams).
xxxix. Congress' explicit desire to protect employee
expectations and assure the financial soundness of funds cannot
be reconciled with the creation of equitable defenses to trustee
collection suits. Such defenses are premised upon the assumptions
that: (1) the employer is contractually obligated by its
collective bargaining agreements to pay the contributions sought by the fund but (2) the equitable doctrine relieves the
employer of the duty to pay. The Seventh Circuit recognized in
Gerber Truck that it is the Department of Labor's view that a
defined benefit pension plan such as the Pension Fund must
provide pension credit to employees regardless of whether
employers fulfill their duty to pay corresponding contributions.
870 F.2d at 1153. Thus, if equitable defenses are allowed and
proved, ERISA funds will probably be required to pay benefit
claims without receipt of the corresponding contribution payment.
Ultimately, the shortfall will be borne by other employers. Such
a result will certainly undermine the financial soundness of
multiemployer funds which ERISA and the LMRA were designed to
xl. Teamsters & Employers Welfare Trust of Illinois v. Gorman
Brothers Ready Mix, 283 F.3d 877 (7th Cir. 2002) suggested
that a defense of laches could apply to an ERISA claim for
contributions. However, that Court relied upon the fact that the
plan in that case had failed to point to any plan language that
would be violated by the invocation of laches. Id. at 883.
xli. Here, the Defendants' laches defense must be rejected
because it is inconsistent with the provisions of the trust
agreement requiring Kabbes and Effingham to pay all required
contributions to the Pension Fund and requiring the Trustees to
collect all contributions owed to the Pension Fund.
xlii. In addition, as noted by the Teamsters dissent, the
parties in that case did not brief the issue of whether courts
may decline to enforce the terms of an ERISA plan based on
equitable grounds. Id. at 888.
B. Kabbes And Effingham Have Not Established The Elements Of
xliii. Laches requires a showing of unreasonable delay in
filing suit and prejudice to the defendant as a result of the unreasonable delay. Gorman Bros.
Ready Mix, 283 F.3d at 880. To establish laches, the Defendants
must show that the Pension Fund did something to reasonably
induce them into believing that they would not be sued. Id. at
882. As shown above, the Pension Fund was unaware of its claim
until the audit in December 2000 and suit was filed in March
2002. The Pension Fund demanded payment in January 2001 (PX 29)
and followed up with phone calls seeking payment (R 174-5). The
Defendants could not possibly have reasonably believed that the
claim had been dropped after only 15 months so it did not
unreasonably delay in filing suit.
xliv. Further, the laches defense fails because the Defendants'
failure to pay the contributions at issue in this case had
nothing to do with the Pension Fund's delay. At no time did the
Pension Fund ever suggest to the Defendants that it would not
collect the contributions at issue in this case. Instead, the
Pension Fund demanded payment (PX 29) and followed up with
demands for payment (R 174-5).
xlv. Moreover, the reliance of the Defendants on the Pension
Fund's delay must be reasonable. Gorman Bros. Ready Mix,
283 F.3d at 883-84. As direct parties to the collective bargaining
agreements, the Defendants could not have reasonably relied on
the Pension Fund's silence when the collective bargaining
agreement and controlling law establish that contributions must
be paid on all employees regardless of union membership status.
cf. Central States Pension Fund v. Kroger Co., 226 F.3d 903,
915 (7th Cir. 2000) (rejecting estoppel defense because
"Kroger, the party asserting estoppel, obviously knew of its
practice of designating the [permanent] employees in question as
[ineligible] casuals and, therefore, it was in a better position
than the Fund to know the truth that its practice did not comport
with the CBA.") 226 F.3d at 915. xlvi. Nor can the Defendants establish prejudice as a result of
any delay caused by the Plaintiffs. They claim prejudice as a
result of statements attributed to Goldstein which they now claim
are inaccurate. They claim that as a result of Mr. Goldstein's
subsequent death, his testimony related to the audit is
unavailable to them. The only alleged inaccurate statements by
Goldstein relate to the representations he made to the Pension
Fund's auditors concerning the relationship between Kabbes and
Effingham so there could only be prejudice if the court rules in
the Pension Fund's favor based upon the single employer doctrine.
Since the court believes that Effingham is obligated to
contribute based upon the Certification Clause and its admission
that it signed the same contracts as Kabbes that were not
terminated, there is no prejudice at all.
xlvii. Further, any prejudice sustained by the Defendants has
been caused by their own acts, rather than any delay of the
Plaintiffs. The Defendants delegated to Goldstein the duty to
assist with the audit with the knowledge of his serious medical
condition. The audit was conducted in December 2000 and the
findings provided to the Defendants in January 2001. Goldstein
continued working for the Defendants until at least the middle of
April 2001. The Defendants took no steps to question him
concerning statements or information he provided to the Pension
Fund in relation to the audit in the 4 months following the
audit, or the 3 months following the audit findings, even though
they knew the Pension Fund was demanding payment. Goldstein was
available to the Defendants during this entire time. Any
prejudice that is caused by their inability to question him now
is the result of their own conduct.
Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2), provides: (2) In any action under this subchapter by a
fiduciary for or on behalf of a plan to enforce
section 1145 of this title in which a judgment in
favor of the plan is awarded, the court shall award
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan
in an amount not in excess of 20 percent (or such
higher percentage as may be permitted under Federal
or State law) of the amount determined by the court
under subparagraph (A),
(D) reasonable attorney's fees and costs of the
action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court
For purposes of this paragraph, interest on unpaid
contributions shall be determined by using the rate
provided under the plan, or, if none, the rate
prescribed under section 6621 of Title 26.
xlviii. The Pension Fund trust agreement provides that:
Non-payment by an Employer of any moneys due shall
not relieve any other Employer from his obligation to
make payment. In addition to any other remedies to
which the parties may be entitled, an Employer shall
be obligated to pay interest on any contributions,
withdrawal liability or other moneys due to the
Trustees from the date when the payment was due to
the date when the payment is made together with all
expenses of collection incurred by the Trustees,
including, but not limited to, attorneys' fees and
such fees for late payment as the Trustees determine
and as permitted by law. The interest payable by an
Employer, in accordance with the preceding sentence,
shall be computed and charged to the Employer at an
annualized interest rate equal to two percent (2%)
plus the prime interest rate established by Chase
Manhattan Bank (New York, New York) for the fifteenth
(15th) day of the month for which the interest is
charged. Any judgment against an employer for
contributions or withdrawal liability owed to this
Fund shall include the greater of (a) a doubling of
the interest computed and charged in accordance with
this section or (b) single interest computed and
charged in accordance with this section plus
liquidated damages in the amount of 20% of the unpaid
contributions or withdrawal liability. The interest
rate after entry of a judgment against an Employer
for contributions or withdrawal liability shall be
due from the date the judgment is entered until the
date of payment, shall be computed and charged to the
Employer on the entire judgment balance at an
annualized interest rate equal to two percent (2%)
plus the prime interest rate established by Chase
Manhattan Bank (New York, New York) for the fifteenth
(15th) day of the month for which the interest is
charged and shall be compounded annually.
(R 8; Art. XIV, Sec. 4 of PX 4).
xlix. Kabbes owes delinquent contributions to the Pension Fund
totaling $27,297, plus interest in the amount of an annualized
interest rate equal to two percent (2%) plus the prime interest
rate established by Chase Manhattan Bank (New York, New York) for
the fifteenth day of the month for which the interest is charged.
l. Effingham owes delinquent contributions to the Pension Fund
totaling $12,936, plus interest in the amount of an annualized
interest rate equal to two percent (2%) plus the prime interest
rate established by Chase Manhattan Bank (New York, New York) for
the fifteenth day of the month for which the interest is charged.
li. The interest owed by the Defendants totaled $10,548.86
through February 15, 2001. The Pension Fund shall submit a
schedule detailing interest through the date of judgment within 7
days of the entry of the Court's Findings of Fact and Conclusions
lii. Kabbes owes to the Pension Fund liquidated damages under
Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2) in the amount
of doubling of the interest or single interest plus 20% of the
unpaid contributions, whichever is greater.
liii. Effingham owes to the Pension Fund liquidated damages
under Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2) in the
amount of doubling of the interest or single interest plus 20% of
the unpaid contributions, whichever is greater. liv. Kabbes and Effingham are liable to the Pension Fund
attorneys fees and costs associated with prosecuting this action.
Attorneys' fees and costs will be handled in accordance with
Local Rule 54.
lv. Kabbes and Effingham are liable to the Pension Fund the
audit fees and costs of $3,524 associated with conducting the
For the foregoing reasons, judgment is entered for Plaintiffs
in the amount of $54,305.86.
IT IS SO ORDERED.