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Upshaw v. Akal Security

March 20, 2008

CARRIE UPSHAW, ON BEHALF OF HERSELF AND OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
AKAL SECURITY, INC., AND SECURITY POLICE AND FIRE PROFESSIONALS OF AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiff Carrie Upshaw filed a six-count*fn1 third amended class action complaint against defendants Akal Security, Inc. ("Akal") and Security Police and Fire Professionals of America ("SPFPA"), seeking unpaid wages and health and welfare benefits.*fn2 Count I alleges that defendant Akal wrongfully withheld wages and health and welfare benefits in violation of § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Count II alleges a quantum meruit claim in the alternative. Count III alleges that the 401(k) plan into which defendant Akal deposited money for plaintiff and other class members is structurally deficient because employer and employee representatives are not "equally represented" in important decisions regarding the management of the plan, in violation of § 302(c)(5) of the LMRA. Counts V and VI allege violations of § 404 of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1104 and 1105, based on the establishment and maintenance of the 401(k) plan and on defendants' failure to pay health and welfare benefits directly to employees. All parties have filed motions for summary judgment pursuant to Fed. R. Civ. P. 56. For the reasons discussed below, the court denies plaintiff's motion for summary judgment. Defendant SPFPA's and defendant Akal's motions for summary judgment are granted.

FACTS*fn3

Plaintiff is a resident of Illinois and an employee of defendant Akal. Akal employs security guards working at federal office buildings in Illinois, Indiana, Wisconsin, and Minnesota. Defendant SPFPA is a labor organization representing plaintiff and other security guards in the same four states.

Original Four-State Contract

Prior to July 1, 2004, plaintiff and other class members were employees of the General Security Services Company ("GSSC"), which held a service contract (the "Four-State Contract") with the Federal Protective Service ("FPS") to provide security services and personnel at various federal facilities in Illinois, Indiana, Wisconsin, and Minnesota. The Four-State Contract was governed by the Service Contract Act ("SCA"), 41 U.S.C. § 351 et seq., which requires contractors to pay their employees "prevailing wages and benefits."

Plaintiff and other class members were also members of the Independent Security Police Union ("ISPU"), which had a collective bargaining agreement ("CBA") with GSSC effective from October 1, 2000, to September 30, 2003 ("2000-03 CBA"). Under the CBA, GSSC paid its bargaining members an hourly wage ranging from $14.00 to $15.95 per hour, depending on job classification and work location, and a $2.30-per-hour health and welfare benefit. The 2000-03 CBA stated that GSSC could, at its discretion, pay the health and welfare benefit directly in cash to employees' paychecks or to a employer- or union-sponsored health care plan. GSSC opted to pay the $2.30 per hour benefit in cash directly to employees' paychecks.

On June 10, 2003, the ISPU and GSSC signed a new collective bargaining agreement for 2003-05 ("2003-05 CBA"). That CBA eliminated GSSC's discretion to pay the health and welfare benefit to a health care plan and instead required GSSC to make payments directly to employees' paychecks. The CBA also included higher hourly wages to be paid to employees, as well as a $2.70-per-hour health and welfare benefit payment, rather than $2.30. Although the 2003-05 CBA stated that it would become effective on October 2, 3003, GSSC did not implement the majority of the terms included in the 2003-05 CBA. At no point before GSSC's contract expired on June 30, 2004 did it raise employees' hourly wages to those specified in the 2003-05 CBA or raise the health and welfare benefit to $2.70 per hour, paying that benefit only at the $2.30 per hour rate. GSSC did begin, however, paying the health and welfare benefit directly to employees' paychecks, as it had discretion to do under the 2000-03 CBA, the last CBA in place.

Defendant Akal Bids for Four-State Contract

In early 2003, FPS sought bids for the Four-State Contract served by GSSC by issuing a Request For Quotes ("RFQ"). Shortly thereafter, FPS issued an amendment to the RFQ to include the 2000-03 CBA between GSSC and the ISPU. RFQs typically include the CBA governing the existing contract because successor contractors are required under § 353 of the SCA, 41 U.S.C. § 353, to pay at a minimum the wages and benefits set forth in the CBA already in place.*fn4

Defendant Akal submitted its initial bid to FPS in March 2003, based on information included in the RFQ, including the 2000-03 CBA. GSSC also submitted a bid to the FPS. GSSC later attempted to supplement its bid with pricing from the negotiated 2003-05 CBA, but FPS refused to accept the supplemented bid because it was submitted after the bid deadline. At no point did FPS provide bidders with the 2003-05 CBA or inform bidders of its contents. In February 2004, Akal placed its final bid for the Four-State Contract. FPS awarded the contract to defendant Akal in March 2004.

Wage and Benefits Dispute

In June 2004, before Akal assumed the duties of the Four-State Contract, the members of the ISPU voted to merge with defendant SPFPA. As a result of that merger, the members of the ISPU became members of the SPFPA Local 200, and defendant SPFPA became the collective bargaining representative of the employees covered by the Four-State Contract.

On or about June 7, 2004, SPFPA Vice President Bobby Jenkins ("Jenkins") called Janet Gunn ("Gunn"), Director of Human Resources and Labor Relations for defendant Akal, to request negotiations between Akal and SPFPA for a new CBA governing the employees under the Four-State Contract. According to plaintiff, Gunn told Jenkins that she thought Akal could adopt the negotiated 2003-05 CBA between ISPU and GSSC as the CBA between Akal and SPFPA. Also on or about June 7, 2004, Gunn asked a SPFPA representative for a copy of the negotiated 2003-05 CBA.

On July 1, 2004, Akal began operations under the Four-State Contract, employing plaintiff and approximately ninety-eight percent of the former GSSC employees who had worked under the prior contract. Akal began paying employees the hourly wages set out in the 2000-03 CBA, not the higher wages set out in the 2003-05 CBA.

Akal also informed employees that it would no longer pay health and welfare benefits directly to employees, but instead contribute the health and welfare payments to a benefit plan sponsored by SPFPA. Gunn had learned on June 30, 2004, that GSSC had previously paid the health and welfare benefit directly to employees' paychecks instead of depositing it into a plan. Akal, however, had placed its bid for the Four-State Contract with the intention of ...


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