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CHICAGO COUNCIL OF CARPENTERS v. REINKE INSULATION

August 1, 2005.

CHICAGO DISTRICT COUNCIL OF CARPENTERS PENSION FUND, et al. Plaintiff,
v.
REINKE INSULATION COMPANY and K. REINKE, JR. & COMPANY, Defendant. REINKE INSULATION COMPANY and K. REINKE, JR. & COMPANY, Counter-Plaintiffs, v. CHICAGO AND NORTHEAST ILLINOIS DISTRICT COUNCIL OF CARPENTERS and UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, LOCAL 1307 Joined Counter-Defendants.



The opinion of the court was delivered by: WAYNE ANDERSEN, District Judge

MEMORANDUM OPINION AND ORDER

Before the Court is the motion of Chicago and Northeast Illinois District Council of Carpenters and United Brotherhood of Carpenters and Joiners of America, Local 1307 for summary judgment. For the following reasons, the motion is granted.

BACKGROUND

  The defendants, K. Reinke and Reinke Insulation, both Illinois corporations under common ownership and control (collectively referred to as "Reinke"), are in the business of installing insulation at residential construction projects. Reinke employed insulation workers who were members of the United Brotherhood of Carpenters and Joiners of America, Local 1307, which was affiliated with and operated under the Northeast Illinois District Council of Carpenters (Local 1307 and the Northeast Council are collectively referred to as the "Union"). Between July 31, 1997 and July 13, 1998, Reinke entered into certain agreements with the Residential Construction Employers Council ("RCEC"), which had negotiated collective bargaining agreements with the Union.

  Reinke's agreement with the RCEC bound it to the terms of three collective bargaining agreements, which applied to all work performed by Reinke insulators within Cook, Lake, DuPage, Kane, Kendall, McHenry and Will Counties between July 1, 1998 and June 30, 2001. Among other things, the agreements provided that individual RCEC members would pay monthly fringe benefit contributions to the Chicago District Council of Carpenters' Trust Funds, including its apprentice and trainee program, and pension and welfare funds (collectively referred to as the "Trust Funds"). The Trust Funds could also cause the books and records of individual RCEC members to be reviewed and audited to confirm that the benefit contributions were properly remitted. On January 26, 2001, Reinke resigned from the RCEC and communicated its intention to negotiate a new collective bargaining agreement with the Union.

  In the spring of 2001, the Trust Funds exercised their right to audit Reinke's records and retained the accounting firm of James Egan & Associates ("Egan") to review the company's books for the period of July 1998 through June 2001. In October 2001, Egan prepared a preliminary compliance audit report, which concluded the company had underpaid its required contributions by $142,441. Egan determined that Reinke failed to pay its insulators for "drive time" in accord with the working rules of the residential insulation industry adopted in the collective bargaining agreements. Reinke carpenters who installed preformed batts of insulation were paid for drive time that depended on how far the job site was from the employer's supplier. Workers who drove to and from their supplier to pick up batts of insulation were paid for drive time, but carpenters who commuted from home were paid only for time at the installation sites. Under the collective bargaining agreement, every employee was required to complete and sign a "Uniform Daily Time Sheet" that separated actual time at work from drive time. The auditor concluded that most of the delinquent contributions came from Reinke's failure to remit contributions for travel time. Based on the final audit report, the Trust Funds sought $211,002 in contributions.

  On October 22, 2001, the Trust Funds and their trustees filed this lawsuit for the alleged underpayment. On November 13, 2001, Reinke answered the complaint and filed a counterclaim. In October 2001, at the same time plaintiffs filed their lawsuit, District Council Business Representative Bill Rabinak authorized the commencement of picketing. From October 2001 to May 2002, the Union picketed at company job sites accusing Reinke of a "failure to pay fringe benefit contributions." (Union Facts ¶ 9.) On May 16, 2002, U.S. District Judge Philip Reinhard entered an injunction against the picketing pursuant to a request by the National Labor Relations Board. (Id. ¶ 12.) After the picketing stopped, the Union engaged in handbilling. The handbills read: "The HARD working employees of Reinke have been cheated on their MEDICAL and RETIREMENT contributions!" (Id. ¶ 16.)

  In its counterclaim, Reinke alleges that, as a result of the Union pickets and the allegedly false allegations on the picketers' signs and handbills, the company had numerous contracts with its builders terminated and had been prevented from performing its existing contracts with builders. It also named Egan in several counts alleging, inter alia, accounting malpractice and negligent misrepresentation.

  From July 9 through July 12, 2002, plaintiffs tried the underlying benefits case in a bench trial. The Court entered judgment in favor of Reinke, having found the company made all contributions to the Trust Funds that were required of it during the audit period. Chicago District Council, et al. v. Reinke Insulation Co., et al., No. 01 C 8102 (N.D. Ill. Jan. 14, 2003). The Seventh Circuit affirmed the decision. Chicago District Council, et al. v. Reinke Insulation Co., 347 F.3d 262, 266 (7th Cir. 2003).

  However, when this Court notified the parties orally of its judgment on August 1, 2002, it noted on the record that Reinke's record keeping raised legitimate questions as to whether it paid all of its fringe benefit contributions. (Union Facts ¶ 22.) This Court had noted earlier that Reinke's record keeping as it related to the Uniform Daily Time Sheets was incredibly inconsistent. (Id. ¶ 23.) On December 3, 2002, this Court addressed the inconsistencies in keeping of the time sheets:
. . . Reinke screwed up their bookkeeping, raising in the minds of the Pension Funds reasonable questions with respect to what the true compensation was and, therefore, the contributions ought to be. And Egan came in, basically drew certain conclusions from screwed-up records. Actually came in twice. Ultimately I was persuaded by the testimony that you presented that your version of the truth was the truth. But as I sit here today, I do not blame either the Funds or Egan for feeling that they needed to audit, given the incredible inconsistencies. . . .
(Tr. at 8, Dec. 3, 2002, Reinke (No. 01 C 8102)).

  This Court had also noted that the Trust Funds' auditors acted in good faith and that the Trust Funds had very reasonable questions as to whether Reinke paid all required benefit contributions. (Union Facts ¶¶ 24, 25.) In August 2003, Reinke was granted leave to file a first amended counterclaim, which eliminated its claims against the accounting firm, but added others. In its amended counterclaim, Reinke has filed nine counts, which allege, respectively (1) civil conspiracy against the Trust Funds and the Union; (2) defamation against the Union; (3) false light against the Union; (4) trade libel against the Union; (5) tortious interference with contract against the Trust Funds and the Union; (6) tortious interference with prospective economic advantage against the Trust Funds and the Union; (7) violations of § 303 of the Labor Management Relations Act against the Union; (8) violations of the Illinois Consumer Fraud Act against the Union; and (9) violations of the Uniform Deceptive Trade Practices Act against the Union.

  In a stipulation dated September 20, 2004, Reinke agreed to dismiss count I, the civil conspiracy claim and agreed to dismiss the Trust Funds from counts V and VI, the tortious interference with contract and prospective economic advantage actions. As a result, there are no pending counterclaims against the Trust Funds. Before the Court is the Union's motion for summary judgment on the eight remaining counts.

  STANDARD OF REVIEW

  Under Federal Rule of Civil Procedure 56, summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The Court's function is "`not to weigh the evidence but merely to determine if `there is a genuine issue for trial.'" Jackson v. Illinois Medi-Car, Inc., 300 F.3d 760, 764 (7th Cir. 2002) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A ...


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