United States District Court, N.D. Illinois, Eastern Division
August 19, 2005.
TRUSTEES OF THE GLAZIERS, ARCHITECTURAL METAL AND GLASS WORKERS LOCAL UNION NO. 27 WELFARE AND PENSION FUNDS, Plaintiffs,
THE GLASS HOUSE, INC., an Illinois Corporation, Defendant.
The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs are fiduciaries and plan sponsors of the Glaziers
Architectural Metal and Glass Workers Local Union No. 27 (the
"Union") Welfare Fund and Pension Fund (the "Funds"). They bring
this action under the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. § 1001 et seq., to recover delinquent
Funds' contributions that Defendant, The Glass House, Inc.
("Glass House"), allegedly owes under the parties' collective
bargaining agreement (the "CBA"). Before the Court are
Plaintiffs' and Defendant's cross motions for summary judgment.
In 1999, Glass House's President Steven Holwell discussed Union
membership with the Union's business agent, Michael O'Donnell,
and its business manager, Leonard Mathias. Holwell entered into the CBA with the Union on August 2, 1999. After
signing the CBA, Glass House employed both Union and non-Union
workers to perform glazing work on residential and commercial
projects within the CBA's trade and geographic jurisdictions.
(See CBA, arts. 6 & 8).
The CBA's "Union Recognition" Clause outlines the parties'
The Employer recognizes the Union as the sole and
exclusive collective bargaining representative of all
Glazier and Apprentice Glazier employees (performing
work hereinafter described in Article 6 and within
the geographical area covered in Article 8 of this
Agreement) for the purpose of collective bargaining
in respect to rates of pay, wages, hours of
employment, employment practices, standards of
workmanship, safety practices and other conditions of
(Id., Art. 1 § 1). Additionally, the CBA explicitly binds Glass
House to the companion "Declaration of Trust," which establishes
the Union's Funds. (Id., Art. 18 § 3, ¶ 1e ("The Employer
hereby agrees to be bound by and to the said Agreement and
Declaration of Trust, as though he had actually signed the
same.")). Under the Declaration of Trust, Defendant must make
periodic contributions to the Funds on behalf of specified
employees and submit all necessary books and records to
Plaintiff's accountant to conduct compliance audits. (Id., Art.
18 § 3, ¶ 3).
The Union employed Richard Wolf and Company (the "Firm") to
conduct the compliance audits. The Firm audited Glass House for the glazing work performed by its employees on three separate
occasions August 2, 1999 through September 20, 2001; October 1,
2001 through May 31, 2003; and June 1, 2003 through August 31,
2004. During the audit process, the Firm first confirmed the
accuracy of the hours reported for Glass House employees. (Pl.
56.1(b) Resp., ¶ 16). Next, the Firm assessed the hours and
determined whether there were additional employee hours for which
Glass House still needed to make contributions. (Id.) The Firm
addressed their questions concerning Glass House record keeping
to Glass House management before asking the Union. In the three
audit reports of Glass House, the Firm excluded contributions for
any employee hours if Glass House identified the hours as
"in-shop" or "administrative." The present dispute concerns
$50,060.26 in outstanding Funds' contributions for the period
between June 1, 2003 and August 31, 2004.
II. LEGAL STANDARD
Summary judgment is appropriate where "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." FED. R. CIV. PROC.
56(c). In deciding a motion for summary judgment, the court
"review[s] the record in the light most favorable to the
nonmoving party and to draw all reasonable inferences in that
party's favor." Vanasco v. Nat'l-Louis Univ., 137 F.3d 962, 964 (7th Cir. 1998). Once the
moving party has produced evidence to show that it is entitled to
summary judgment, the party seeking to avoid such judgment must
affirmatively demonstrate that a genuine issue of material fact
remains for trial. See LINC Finance Corp. v. Onwuteaka,
129 F.3d 917, 920 (7th Cir. 1997). When the opposing party cannot
demonstrate a genuine issue of material fact, summary judgment
for the moving party is appropriate. FED. R. CIV. PROC. 56(c).
Plaintiffs claim that from June 1, 2003 through August 31,
2004, Glass House failed to pay required contributions to the
Funds for CBA work performed by four employees Timothy Medved,
Ronald Nickles, Bob Pechtold, and Michael Russell. The actual
hours worked by the four employees are undisputed. (Plaintiffs
are not seeking contributions for employees Adam Rogalny and Mark
Salazer, whose hours also were identified in the audit.) Glass
House contends that the CBA only requires contributions on behalf
of employees who are Union members, Journeyperson Glaziers or
Apprentices, and who perform commercial glazing work. Glass House
argues that the employees in question are not covered by the CBA
because they are not Union members or Journeyperson Glaziers or
Apprentices. Additionally, Glass House asserts that Holwell's
precontract discussions with Union representatives carved out a
contribution exemption for residential work hours. A. Residential Worker Exemption
Glass House insists that contributions to the Funds are not
required for "residential workers," a phrase first mentioned by
Holwell in his deposition and peppered throughout Glass House's
summary judgment briefing. (See Def. 56.1, ¶ 18). Glass House
asserts that extrinsic evidence of the Firm's past auditing
practices and precontract conversations between Holwell and Union
representatives establish a residential work exemption. However,
the CBA's plain language and Seventh Circuit case law undermine
any use of extrinsic evidence.
1. The CBA
The CBA's language is unambiguous and does not provide a
contribution exemption for residential work. If no ambiguity is
found in the terms of the CBA, "then, in determining its meaning
as a matter of law, we need not review extrinsic evidence
suggesting how those terms should be interpreted." Mazzei v.
Rock-N-Around Trucking, Inc., 246 F.3d 956, 960 (7th Cir. 2001).
Article 6 of the CBA "Classification/Scope of Work" states
that "[i]t is mutually understood and agreed that none but
Journeyperson Glaziers or Apprentices will be employed on the
following classifications: general glazing, including setting,
cutting, preparing. . . ." (CBA, Art. 6). Article 6 continues on
for nearly a page and covers an extensive list of glazing work.
The list does not specify a residential glazing work exemption.
In fact, Article 6 actually lists glazing work that appears to be characteristically
residential: "Door and window frame assemblers such as patio
sliding or fixed doors, vented or fixed windows, shower doors,
bath tub enclosures. . . ." (Id.) No other section of the CBA
discusses the character of work covered.
2. Past Auditing Practice
Glass House asserts that the auditors acknowledged an exemption
for employees working on residential projects because they
treated them as employees who were not covered by the CBA and
therefore, not included in contribution hours. Glass House's
argument is not supported by the record. Article 6 is unambiguous
in its exhaustive coverage of what glazing work falls within the
CBA. The CBA makes no distinction between residential versus
commercial or industrial glazing work with respect to the Funds'
Likewise, Glass House management never used the label
"residential" work to describe its employees' hours to the
auditing firm. Contrary to Glass House's argument, the auditors
only excluded certain work hours based on Glass House's
representation that those hours consisted of "shop" and
"administrative" work, as opposed to "installation [or repair] in
the field" work. (Holwell Dep. at 32; Richard Wolf Dep. at 24;
Daniel Coakley Dep. at 24). Consequently, past auditing practices
are immaterial in light of the unambiguous contract and substantively unsupportive of Glass
3. Oral Extrinsic Evidence
Glass House also argues that conversations between Holwell and
two Union representatives altered the CBA's plain language by
omitting residential glazing work from required Funds'
contributions. However, federal law and Seventh Circuit precedent
ERISA obligates employers to make contributions to a pension
fund when contractually bound. 29 U.S.C. § 1145. The Seventh
Circuit expands on this, adding that oral understandings between
employers and local unions cannot be used to evade pension
promises made in collective bargaining agreements. Central
States, S.E. & S.W. Areas Pension Fund v. Gerber Truck Serv.,
Inc., 870 F.2d 1148, 1152-53 (7th Cir. 1989); see also Central
States, S.E. & S.W. Areas Pension Fund v. Joe McClelland, Inc.,
23 F.3d 1256, 1258 (7th Cir. 1994). "No matter what an employer
and local union agree orally, the collective bargaining and
contribution agreements establish the employer's obligation to
the pension fund, which is not party to local understandings and
limitations." Joe McClelland, 23 F.3d at 1258.
The CBA's plain language controls here. Oral promises to
disregard the CBA's language do not invalidate the actual
contractual promise to a pension plan. See Gerber Truck, 870 F.2d at 1153. Article 18 of the CBA "Heath and Pension and Annuity
Contributions" outlines Glass House's obligation to the Funds
for glazing work performed within the CBA's trade and geographic
jurisdictions. It states that "[c]ontributions shall be paid on
behalf of any Employee starting with the Employee's first day of
employment in a job classification, covered by this Agreement."
(CBA, Art. 18 § 3, ¶ 1d).
The CBA is unambiguous in its classification of glazing work
and explanation of Glass House's obligation to the Funds.
Likewise, Seventh Circuit case law is decisive on the issue of
extrinsic evidence. Accordingly, Glass House's extrinsic evidence
is immaterial to the dispute.
B. Employee Coverage Under the CBA
Glass House asserts that the CBA covers employees only if
they are both (1) "Union members" and (2) "Journeyperson Glaziers
or Apprentices." (See CBA, arts. 1 & 6). Glass House argues
that the four employees in question did not meet these
requirements. Conversely, Plaintiff contends that the CBA
contribution obligations include all employees who perform work
within the proper geographic area, without regard to Union
membership or glazier status.
1. Union Membership Requirement
Glass House suggests that the CBA only covers an employee if he
is a Union member. If true, this assertion renders the CBA unenforceable. Federal law curtails the ability of employers to
limit their pension fund obligations by hiring non-union
employees. 29 U.S.C. § 158(a)(3) ("[n]o employer shall justify
any discrimination against an employee for nonmembership in a
labor organization."). Put a different way, employers such as
Glass House have the freedom, if not the obligation, to hire
irrespective of Union membership. Nonetheless, the underlying
purpose of pension funds is served best when contributions are
made based on the hours of collective bargaining work performed,
rather than the membership status of the employee. Otherwise,
employers could easily shirk their pension fund responsibilities
by only hiring nonunion employees.
Contracts are presumptively legal and "should not be
interpreted to render them illegal and unenforceable where the
wording lends itself to a logically acceptable construction that
renders them legal and enforceable." Walsh v. Schlecht,
429 U.S. 401, 408 (1977). In Joe McClelland, the Seventh Circuit
held that private understandings between a coal company and
Teamsters union did not override the text of their collective
bargaining agreement, especially when the oral agreements invoked
an illegal understanding. Joe McClelland, 23 F.3d at 1258. The
court held that "[e]mployers may not distinguish between members
of a bargaining unit who belong to the union and those who do
not." Id. (citing 28 U.S.C. 158 (a) (3)). In addition to the Seventh Circuit precedent, the CBA is clear
in requiring contributions to the Funds for all work performed in
the proper trade and geographic jurisdictions, without regard to
Union membership. (See CBA, Art. 1 § 1). The CBA must comport
with federal and Seventh Circuit law. Accordingly, employee Union
membership does not affect Glass House's contribution obligations
to the Funds.
2. Journeyperson Glazier and Apprentice Glazier Requirement
Glass House also cannot rebut the Plaintiffs' claim for arrears
by claiming that the four employees are not Journeyperson
Glaziers or Apprentices. Similar to the issue of Union
membership, the CBA demonstrates an intent that Glass House hire
qualified Journeyperson Glaziers or official Apprentices. (CBA,
Art. 6 § 1 ("It is mutually understood and agreed that none but
Journeyperson Glaziers or Apprentices will be employed on the
following [work] classifications.")). However, because federal
law forbids discrimination in hiring, the CBA also states that
"the Employer has the final right to select the employees to be
hired." (Id., Art. I § 2). Despite an employer's hiring
flexibility, the Seventh Circuit concludes that pension fund
contributions are a non-negotiable aspect of an employer's union
membership. Joe McClelland, 23 F.3d at 1258.
In Trustees of the Glaziers Local Union No. 27 Welfare and
Pension Funds v. Glass Masters, Ltd, this Court held: An employer may not choose persons to perform covered
work which has the effect of excluding persons
covered by the collective bargaining agreement and
thereby avoiding obligations to make contributions. . . .
In other words, if the CBA provides that Glaziers
are to perform glazing work, an employer cannot avoid
the fund obligations by assigning work to non-union
members or members of another union.
No. 02 C 3503, 2003 WL 1903991, at *1-2 (N.D. Ill. Apr. 17,
2003), aff'd, 99 Fed. Appx. 740 (7th Cir. 2004). The Court held
that if an employer sidesteps the collective bargaining
agreement's provisions that require it to assign all glazing work
to "Journeyperson Glaziers or Apprentices," then the employer may
not claim that it is no longer obligated to make contributions to
pension funds for those employee hours. Id.
Accordingly, Glass House must contribute to the Funds for the
hours of work covered by the CBA irrespective of Journeyperson
Glazier or Apprentice Glazier status.
C. Amount of Contributions Owed to Plaintiffs
The Court requires additional submissions from both parties
that specifically calculates the outstanding Funds' contributions
for the four employees during the disputed time frame June 1,
2003 through August 31, 2004. These calculations should be based
on the Firm's third audit report.
D. Defendant's Motion to Strike O'Donnell Affidavit
In considering the parties' cross motions to strike, the Court
disregarded the Michael O'Donnell Affidavit. Plaintiff references O'Donnell's affidavit in response to Glass House's extrinsic
evidence arguments, which evidence is immaterial to resolution of
the dispute. Thus, the motion is denied as moot.
For the reasons stated herein, Plaintiffs' Motion for Summary
Judgment is GRANTED and Defendant's Motion for Summary Judgment
is DENIED. The Motion to Strike O'Donnell Affidavit is
IT IS SO ORDERED.
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