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Plumbers & Pipefitters Local 99 Fringe Benefit Funds v. Watkins

June 5, 2008

PLUMBERS & PIPEFITTERS LOCAL 99 FRINGE BENEFIT FUNDS, AND PLUMBERS & PIPEFITTERS NATIONAL PENSION FUND, PLAINTIFFS,
v.
ROBERT E. WATKINS D/B/A UNION PLUMBING AND UNION PLUMBING, HEATING, AND ELECTRIC, DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Before the Court is Plaintiffs', Plumbers & Pipefitters Local 99 Fringe Benefit Funds and Plumbers & Pipefitters National Pension Fund, Supplemental Motion for Default Judgment against Defendants Robert E. Watkins d/b/a Union Plumbing and Union Plumbing, Heating, and Electric pursuant to Rule 55 of the Federal Rules of Civil Procedure. The Motion now is fully briefed, and the Court conducted an evidentiary hearing on March 11, March 19, and April 1 to receive evidence and hear arguments. For the reasons set forth below, the Supplemental Motion for Default Judgment [#13] is GRANTED IN PART and DENIED IN PART.

JURISDICTION

The Court has original jurisdiction over the case pursuant to 28 U.S.C. § 1331 because the claims asserted in the Complaint arise under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980.

BACKGROUND

1. Plaintiffs Plumbers & Pipefitters Local 99 Fringe Benefit Funds and Plumbers & Pipefitters National Pension Fund (collectively, "Funds") are employee benefit plans administered pursuant to the terms and provisions of the Agreements and Declarations of Trust creating these Funds and are required to be maintained and administered in accordance with the provisions of the Labor Management Relations Act of 1947 and the Employee Retirement Income Security Act of 1974 (as amended), 29 U.S.C. §§ 1001 et seq.

2. Defendants Robert E. Watkins and Union Plumbing, Heating, and Electric (collectively, "Union Plumbing") are Employers engaged in an industry within the meaning of ERISA, 29 U.S.C. §§ 1002(5), (11), (12), and (14). Union Plumbing employs individuals who are members of, and represented by Plumbers Local 99, a local labor organization, and said individuals are participants in the Funds' employee benefit fund pursuant to a collective bargaining agreement (the National Mechanical Equipment Service and Maintenance Agreement) by and between Union Plumbing and Plumbers Local 99 and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada.

3. Union Plumbing manifested assent to be bound by the terms of that agreement and successor collective bargaining agreements that require Union Plumbing to remit fringe benefit contributions to the Funds.

4. Union Plumbing never terminated the collective bargaining agreement.

5. Union Plumbing submitted monthly contribution reports and payments in which Union Plumbing affirmed and declared that it had a contractual contribution obligation to the Funds.

6. Union Plumbing was required to make contributions to the Funds in accordance with the terms and conditions of the Funds' agreements and declarations of trust. Under the agreements and declarations of trust, Union Plumbing is liable for twelve percent interest per annum on unpaid contributions, liquidated damages calculated as ten percent of actual damages, attorney fees, and audit costs.

7. On August 4, 2005, the Funds filed the Complaint seeking damages for unpaid contributions and seeking an audit to determine the amount of damages.

8. On June 28, 2006, Magistrate Judge John A. Gorman granted the Funds' Motion for Entry of Default.

9. By defaulting, Union Plumbing waived its right to raise defenses to the Complaint. Accordingly, Watkins and Union Plumbing, Heating, and Electric are bound by any collective bargaining agreement or participation agreement with the Funds.

10. The Funds sought an audit for the period from January 1, 2002 through December 31, 2005, as to wages received and hours worked by Union Plumbing's employees to determine amounts required to be paid to Funds.

11. On February 20, 2007, Plaintiffs filed their Supplemental Motion for Default Judgment, based upon the initial audit conducted by Romolo and Associates. In addition to other relief, they sought $159,707.20 in claimed unpaid contributions.

12. On April 24, 2007, the Court noted that Union Plumbing must be given the opportunity to challenge the Plaintiffs' calculation of actual damages, namely the amount of contributions due to the Funds based on covered employees performing covered work, as those terms are defined in the governing collective bargaining agreement.

13. On September 11, 2007, the parties filed a Joint Motion for Payroll Compliance Audit/Accounting, with the original auditor to specifically review additional documents produced to the Funds. Such re-audit was completed.

14. Based on the revised audit, the Funds claim that $77,987.15 is due to the National Pension Fund, and that $56,051.06 is due to the Local 99 Fringe Benefit Funds. The total claimed due is $134,038.21.

15. During the audit, auditor Tom Crotz visited Union Plumbing, Heating and Electric and was told verbally the scope of each employer's work. While Union Plumbing conceded that some individuals performed covered plumbing work, it alleged other workers performed electrical, telephone, general labor, and HVAC (heating, ventilation, and air conditioning) work. The hours for these other workers are challenged in this case.

DISCUSSION

A. Record-Keeping Obligation

16. Pursuant to ERISA, "[e]very employer who is obligated to make contributions to a multiemployer plan . . . under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of . . . such agreement." 29 U.S.C. § 1145. "Section 515 was intended to 'permit trustees of plans to recover delinquent contributions efficaciously, and without regard to issues which might arise under labor- management relations law." Laborers' Pension Fund v. A&C Envtl., Inc., 301 F.3d 768, 778 (7th Cir. 2002).

17. Pursuant to ERISA, employers must "maintain records with respect to each [employee] sufficient to determine the benefits due or which may become due to such employees." 29 U.S.C. § 1059(a)(1).

18. An employer's obligation to maintain records to determine benefits due includes maintaining contemporaneous time records reflecting the type of work performed, the date the work was performed, and the work location. See Laborers' Pension Fund v. RES Envtl. Serv., Inc., 377 F.3d 735, 739 (7th Cir. 2004).

B. Burden of Proof for Damages

19. Regarding a calculation of damages, the Funds have the burden of proof. See Chicago Dist. Council of Carpenters Pension Fund v. Reinke Insulation ...


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