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November 19, 2004.

SALMA DARWAN d/b/a ROYAL, INTERNATIONAL & DECORATING, INC., a putative corporation n/k/a ROYAL INTERNATIONAL DRYWALL & DECORATING, INC., an Illinois corporation, Defendant.

The opinion of the court was delivered by: REBECCA PALLMEYER, District Judge


Plaintiffs, Trustees of the Chicago Painters and Decorators Pension, Health and Welfare, and Deferred Savings Plan Trust Funds, brought this action for unpaid contributions against Defendant Salma Darwan, d/b/a Royal International & Decorating, Inc., n/k/a Royal International Drywall & Decorating, Inc. Plaintiffs claim Defendant under-reported the number of hours its employees worked taping and finishing drywall in Cook County residential construction projects. The complaint, brought under section 301 of the Labor Management Relations Act ("LMRA"), as amended, 29 U.S.C. § 185(a), and §§ 502 and 515 of the Employee Retirement Security Act of 1974, as amended, 29 U.S.C. §§ 1132 and 1145, seeks an order requiring Defendants to make the appropriate contributions, as well as an award of interest, fees, costs, liquidated damages, and an equitable accounting.

Plaintiffs presented a novel theory: They argue that the court should disregard Defendant's payroll records as inaccurate and instead calculate the number of hours worked based on the amount of raw material Darwan used throughout the period. Following an eight-day bench trial, the court adopted this theory and found in favor of the Plaintiffs. Trustees of the Chicago Painters and Decorators Pension v. Darwan, No. 01-C-2458, 2004 WL 1459553 (N.D. Ill., June 29, 2004) Specifically, the court concluded that Defendant's records were incomplete and unreliable, and that Plaintiffs had adequately established that use of a formula would permit a more accurate determination of the number of hours worked by Defendant's employees. Because the court was nevertheless unable to determine the appropriate award from materials in the record, the court stayed entry of judgment in order to give the parties the opportunity to submit briefs specifically addressing the proper calculation of damages. The parties have since submitted such briefs, and the matter is before the court for ruling.


  Plaintiffs' suit arose out of a series of collective bargaining agreements ("CBAs") between Defendant Royal and the Painter's District Council No. 14 ("PDC 14"), the Chicago affiliate of the International Brotherhood of Painters and Allied Trades, and the Agreement and Declaration of Trust establishing the Plaintiff Funds (the "Declaration") (together with the CBAs, the "Agreements"). Plaintiffs claimed that Defendant breached the Agreements during the period October 1, 1998 through March 31, 2000 by failing to report and contribute the required pension amounts for some of the hours worked by Union employees on drywall taping and finishing work. Defendant claimed that its records accurately reflected the number of hours worked by the covered employees and that its corresponding fund contributions fulfilled its obligations under the Agreements.

  Defendant Royal's business involves drywall installing, taping, and painting for residential tract housing projects. The evidence showed that, at least through March 31, 2000, Defendant paid its employees on a piecework basis, with each employee receiving a set dollar amount for each piece of drywall taped and installed, rather than for the actual hours worked as required by the CBAs. In addition, as described more fully in the court's earlier opinion, there was evidence that the records Defendant submitted, purporting to reflect the actual number of hours worked by its employees, were unreliable.*fn2 In the absence of accurate records, Plaintiffs proposed that Defendant's contributions to the fund be calculated by establishing an average productivity rate (i.e. number of boards taped and installed per hour) and dividing the total number of boards installed by Defendant's covered employees by that figure.*fn3 The estimate, Plaintiffs argued, would provide a more accurate statement of the total hours actually worked by Plaintiffs' employees and, hence, contributions owed to the Funds by Defendant. The parties submitted a number of productivity estimates, based on expert testimony, industry manuals, and even a videotaped installation.*fn4 The estimates ranged from 1.89 to 4.25 boards per hour; and for the reasons explained in its earlier opinion, the court ultimately settled on an average productivity estimate of 2.86 boards per hour as proper.


  After finding that Defendant's payroll records were inaccurate, the court observed that neither party had adequately addressed the issue of damages. Darwan, 2004 WL 1459553 (N.D. Ill.), at *20. The court asked the parties to submit briefs on the damage issues, using the 2.86 boards per hour rate, and also addressing the issue of interest, liquidated damages, and damages outside of the material audit period. Although, in the court's view, neither party adequately addresses these issues in their supplemental briefs, the court recognizes that three matters are in dispute: (1) the amount of unpaid contributions Defendant owed to the Pension, Welfare and Savings Funds during the material audit period of October 1, 1999 through March 31, 2000; (2) whether Plaintiffs are entitled to an equitable accounting for the period from October 1, 1998 through September 30, 1999 pursuant to 29 U.S.C. § 1132(g)(2)(E); and (3) whether an award of liquidated damages is warranted and, if so, the proper measure of those damages. The court will address these issues in turn.

  I. Calculation of Unpaid Contributions During Material Audit Period

  In support of its claims that Defendant Royal's payroll records and Fund contributions did not accurately reflect the number of hours worked by covered employees, Plaintiffs conducted a "material audit" to compare Defendant's reported taper hours to the amount of drywall materials Defendant had purchased between October 1, 1999 through March 31, 2000. (Pls.' Ex. 12, at 2.) In the material audit, certified public accountants compared invoices showing the number of boards shipped to Defendant with the number of hours recorded on the time sheets during the material audit period. During this period, Defendant had reported that its taping employees worked 44,582.5 hours while taping 166,890 boards (an average of 3.74 boards per hour). (Pls.' Ex. 13, at 4; Pls.' Ex. 20.) Using the more accurate 2.86 boards per hour rate, Plaintiffs calculated that Defendant should have reported 58,353.12 hours. Defendant thus underreported 13,770.62 hours during the material audit period. Applying the contribution rates set forth in the CBAs, the audit concluded that Defendant owes $51,641.25 to the Pension Fund, $6,885.50 to the Savings Fund, and $54,395.45 to the Welfare Fund — a total of $112,922.20. (Pls.' Ex. 12, at 2.)*fn5

  In its June 29, 2004 opinion, the court accepted the 2.86 boards per hour rate as a conservative estimate of average taper productivity. Darwan, 2004 WL 1459553 (N.D. Ill.), at *19. The court also found that the material audit conducted by Plaintiffs provided a "plausible estimate" of the number of hours actually worked by Defendant's employees during the audit period (October 1, 1999 through March 31, 2000). (Id.) In its supplemental brief, Plaintiffs rely entirely on the material audit figures in order to calculate the unpaid contributions during this period. (Pls.' Mem., at 2-3.) Defendant, however, objects to the material audit's calculation of unpaid contributions on the grounds that the audit does not take into account the amount of work performed outside of the geographic jurisdiction of PDC 14, for which, according to Defendant, the Funds cannot recover. (Def.'s Mem., at 3.) Defendant also asserts that the audit failed to include a number of tapers who were employed by Defendant during the audit period. (Id. at 3.) The court addresses these objections below.

  A. Contributions for Hours Worked Outside of the Geographic Jurisdiction of PDC 14

  Defendant argues that the records permit a determination of the projection of hours its workers were employed at jobs within the jurisdiction, and that it is liable to make contributions for those hours only. Plaintiffs challenge this position, ...

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