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Trustees of Sheet Metal Workers Local No. 1 Welfare Trust v. Meyer Climate Control

December 8, 2006

TRUSTEES OF SHEET METAL WORKERS LOCAL NO. 1 WELFARE TRUST, PLAINTIFF
v.
MEYER CLIMATE CONTROL, INC., DEFENDANT



The opinion of the court was delivered by: John A. Gorman United States Magistrate Judge

ORDER

The parties have consented to have this case heard to judgment by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and the District Judge has referred the case to me. Now before the court are the parties' cross motions for summary judgment. For the following reasons, the plaintiffs' motion [#12] is granted and the defendant's motion [#10] is denied.

FACTS

The parties have stipulated to most of the pertinent facts, as follows. (See Doc. #8). All or part of the transactions which are at issue in this matter occurred in the County of Peoria in the State of Illinois.

Plaintiffs are Trustees of a Trust Fund (the "Fund") created pursuant to an August 31, 1961 Agreement and Declaration of Trust entered into by the Central Illinois Chapter of Sheet Metal and Air Conditioning Contractors National Association ("SMACNA") and the Sheet Metal Workers International Association Local No. 1 ("the Union"). A Supplementary Agreement dated July 31, 1985, restates and amends the 1961 Agreement in its entirety.

The Fund is an employee welfare benefit plan as defined by ERISA, 29 U.S.C. § 1002(1)(A).

Meyer Climate Control, Inc. ("Meyer") is an Illinois corporation with its principal place of business in Peoria County. James E. Brown and Frank R. Meyer originally incorporated Meyer on or about September 25, 1990; each was a 50% owner of the company. Kevin S. Brown is the son of James E. Brown. Although defendant asserts that Kevin became a 50% owner on June 30, 2004, there is no documentary support of that assertion, and Plaintiff therefore disputes the assertion.

Defendant, through one of its officers, agreed to the terms of a "Standard Form of Union Agreement" with the Union on September 14, 1990 (the "1990 Agreement"). Under Article XIII, Section 5 of the 1990 Agreement, the Defendant authorized the Central Illinois Chapter of SMACNA, Inc. ("SMACNA") to act as its collective bargaining representative for all matters relating to the 1990 Agreement. In that same section, Defendant also agreed (with immaterial contingencies) that it would be a member of the multi-employer bargaining unit represented by SMACNA. After the 1990 Agreement, SMACNA and the Union entered into successive Agreements in 1992, 1997 and 2002. There is a Contract Addendum 2002-2007 which provides that "[f]or each hour worked by a journeyman and apprentice employee covered by the Agreement, the employer of each employee shall pay" the agreed amount to the Fund. A similar requirement exists in the 2002 Agreement, Section 5, requiring payment to the Plaintiffs' Health and Welfare Supplement Fund based on each hour of work by a journeyman and apprentice employee.

Defendant made welfare benefit contributions to the Fund on behalf of its covered employees to and through June of 2004. Defendant has made no contributions to the Fund for any period after June 30, 2004. Defendant has not filed any monthly reports with the Plaintiff Fund since July of 2004. After June 30, 2004, the only person performing any work for Defendant was Kevin Brown.

Defendant submitted to a review of its books and records by Gordon, Stockman and Waugh, P. C., Plaintiffs' accountants (the "Auditor"). The Auditor delivered its "Agreed Upon Procedures Report of Trust Contributions of Meyer Climate Control, Inc." for the period July 1, 2004 through December 31, 2005 (the "Report")*fn1 on June 19, 2006. The parties agree that the Report accurately states the rates at which persons or entities bound by the 1990 and subsequent Agreements are required to contribute to the Fund.

DISCUSSION

Plaintiffs bring this action under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq, against Meyer Climate Control Inc., seeking to recover contributions allegedly due, under the provisions of the collective bargaining agreements and participation agreements entered into by Meyer, on the basis of hours worked by Kevin Brown*fn2 after June 30, 2004. The Plaintiffs maintain that Brown was an employee doing covered work, while Defendant argues that Brown was an owner as of July 1, 2004, not an employee, and therefore did not trigger any obligation to contribute to the Fund. In the alternative, the Fund argues that even if Brown was an employee, he did not perform the amount of covered work claimed by the Plaintiffs, while Defendant argues in the alternative that it was statutorily exempt for contributing on Kevin Brown's behalf because he is the child of an owner.

Kevin S. Brown is the natural born son of James Brown, one of the original founders of the company. During the relevant time period, Kevin was the only person who did any work on behalf of the defendant company. Defendant contends in its motion for summary judgment that Kevin Brown became a fifty per cent owner of Defendant in July 2004 and therefore that no contributions were required for him from Defendant thereafter. There is, however, no documentary support of that assertion, and Plaintiff disputes it. Summary judgment cannot be granted for Defendant on that basis.

Defendant argues that, even if Kevin Brown was not an owner, he was an individual employed by a parent and was therefore not an "employee" under the LMRA, 29 U.S.C. § 152(3), which excludes from the definition of "employee" "any individual employed by his parent."*fn3 Since he was not an employee, defendant asserts that Kevin was precluded by law - LMRA 29 U.S.C. ยง 186(a) - from participating as a beneficiary of the trust funds; as a result, contributions on his behalf would also be contrary to law. Section 186 of the LMRA makes it unlawful for an employer to pay to a union (or for the ...


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