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Line Construction Benefit Fund v. Allied Electrical Contractors

November 25, 2008

LINE CONSTRUCTION BENEFIT FUND, A HEALTH AND WELFARE FUND, PLAINTIFF,
v.
ALLIED ELECTRICAL CONTRACTORS, INC., A TENNESSEE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiff Line Construction Benefit Fund, a Health and Welfare Fund ("Lineco" or "Fund") administers the coverage for medical and drug expenses incurred by certain union members employed by Defendant Allied Electrical Contractors, Inc. ("Allied"). Lineco brings suit under Sections 502(a)(3), (g)(2), and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(3), (g)(2), and § 1145, claiming that Allied owes Lineco delinquent contribution payments for the months of July, August, and December 2006, and January and February 2007.

Defendant moves to dismiss this action on grounds of Plaintiff's lack of standing. In the alternative, Defendant moves for partial summary judgment, arguing that it was not bound by the terms of the Collective Bargaining Agreement during all the time periods at issue, and Plaintiff moves for summary judgment in its favor on that issue. For the reasons stated below, this court grants Plaintiff's motion for summary judgment.

FACTS*fn1

Plaintiff Lineco is a multiemployer employee benefits fund located in Illinois that receives contributions from employers pursuant to collective bargaining agreements negotiated between employers and unions. (Plaintiff's Complaint ("Pl.'s Compl.") ¶¶ 3, 4.) Lineco is administered in accordance with Section 302(c)(5) of the Labor Management Relations Act ("LMRA") as well as the Employee Retirement Income Security Act of 1974 ("ERISA"). (Def.'s 56.1 [27] ¶ 1.)

In 2005, the Southeastern Line Constructors Chapter of the National Electrical Contractors Association ("NECA") and the International Brotherhood of Electrical Workers, Local Union 474 ("IBEW/Local 474") entered into a collective bargaining agreement ("the CBA") detailing the terms under which the Lineco Fund receives contributions pursuant to the Trust Agreement that established the Fund. (Pl.'s 56.1 [42] ¶ 1; Def.'s Resp. [43] ¶ 1.) Specifically, the CBA requires employers to pay into the Lineco Fund the sum of $4.75 per hour for each hour worked for the Employer by all employees covered by the CBA. (Def.'s 56.1 [27] ¶ 6.) The CBA further provides that "[i]t shall apply to all firms who sign a Letter of Assent to be bound by the terms of this Agreement." (Def.'s 56.1 [27] ¶¶ 4-5.)

Defendant Allied Electrical Contractors, Inc. ("Allied") is a Tennessee corporation that provides electrical contracting services in Tennessee and on occasion in other states not specified by either party. (Def.'s 56.1 [27] ¶ 2; Eskridge Dep. 9:13-10:2, Amended Ex. C [48] to Pl.'s 56.1 [42].) Its President is Michael Eskridge, a Tennessee resident. (Def.'s 56.1 [27] ¶ 2; Eskridge Dep. 6:16-17, Amended Ex. C [48] to Pl.'s 56.1 [42].) Allied has been a member of the NECA since about November 2002. (Def.'s 56.1 [27] ¶¶ 2-3, Amended Ex. C [48] to Pl.'s 56.1 [42].) Allied's NECA Application for Membership, signed August 28, 2002, does not mention a collective bargaining agreement or a benefit plan, nor does it bind the applicant to the terms of either a collective bargaining agreement or a benefit plan agreement. (Def.'s 56.1 [27] ¶¶ 10-11; Pl.'s Resp. [42] ¶¶ 10-11.) In his deposition, however, Mr. Eskridge acknowledged the NECA's role in collective bargaining on behalf of its members; he stated, "when you're a member of NECA, NECA negotiates the contracts." (Eskridge Dep. 14:25-15:4, Amended Ex. C [48] to Pl.'s 56.1 [42].) In addition, the letter accompanying Defendant's application for membership in the NECA, signed and dated by Mr. Eskridge on August 28, 2002, stated that one of Defendant's goals in joining the NECA was to become involved in the negotiating committee. (Def.'s 56.1 [27] ¶¶ 8, 12; Letter Accompanying Defendant's Application for member, Ex. G. to Def.'s 56.1 [27].)

Around October 2006, Eskridge did attend a negotiation session between the National Electrical Contractor's Association ("NECA") and IBEW/Local 474, but was informed that his failure to sign a Letter of Assent to the CBA made him ineligible to participate in the negotiations.*fn2 (Def.'s 56.1 [27] ¶¶ 8-9.) Two months later, on December 7, 2006, Defendant did execute a Letter of Assent to be bound by the CBA. (Def.'s 56.1 [27] ¶ 7.) In that letter, Allied authorized the NECA to represent Allied in all collective bargaining matters and agreed "to comply with, and be bound by, all of the provisions contained in said current and subsequent approved labor agreements." (Letter of Assent, Ex. E to Def.'s 56.1 [27]; Pl.'s Compl. ¶ 7.) Under the Letter's own terms, it became effective on December 7, 2006 and remains in effect until NECA and IBEW/Local 474 receive written notice of termination from Allied at least 150 days prior to the anniversary date of the current approved labor agreement. (Letter of Assent, Ex. E to Def.'s 56.1 [27].)

It is undisputed that Defendant did not submit contribution reports and payments to Lineco pursuant to the CBA for the months of July, August, and December 2006, nor for January and February 2007.*fn3 (Pl.'s 56.1 [42] ¶ 2; Def.'s Resp. [43] ¶ 2.) Defendant admits that it employed members of IBEW/Local 474 covered by the CBA before December 7, 2006, when Eskridge signed the Letter of Assent. (Eskridge Dep. 12:4-7, Amended Ex. C [48] to Pl.'s 56.1 [42].) Defendant further admits that it made monthly contribution payments to the Lineco fund before becoming a member of NECA. Defendant began making payments as early as 1993 and continued to do so through February 15, 2008, with the exception of July, August, and December 2006, and January and February 2007. (Pl.'s 56.1 [42] ¶ 7; Eskridge Dep. 23:2-7, Amended Ex. C [48] to Pl.'s 56.1 [42].) During 2006, Eskridge signed at least one of the contribution payment checks to Lineco, dated June 15, 2006. (Cancelled Check, Ex. C1-3 to Pl.'s 56.1 [42].) There is no evidence that Allied ever sought to withdraw from NECA prior to the filing of this lawsuit.*fn4 (Eskridge Dep. 18:21-10, Amended Ex. C [48] to Pl.'s 56.1 [42].)

Plaintiff alleges that, pursuant to the CBA and the Trust Agreement, Defendant owes the Lineco Fund a total of $138,605.25 in delinquent payments for July, August, and December 2006 and for January and February 2007. (Def.'s 56.1 Resp. [43] ¶ 3.) Plaintiff seeks summary judgment in its favor on those claims. Defendants contends that it does not owe payments for July, August, and December 2006 because it did not sign the Letter of Assent required by the CBA until December 7, 2006. (Id.) Defendant moves to dismiss the complaint on the ground that Plaintiff lacks standing and, in the alternative, for partial summary judgment as to whether Defendant owes contributions to the Lineco Fund for periods predating December 7, 2006.

DISCUSSION

I. Standing

Defendant Allied has moved to dismiss this action pursuant to FED. R. CIV. P. 12(b)(1), contending that as a health and welfare fund, Lineco lacks standing to bring suit under ERISA. Defendant argues that Plaintiff is not a fiduciary under ERISA and that this court must therefore dismiss the complaint for lack of subject matter jurisdiction. In ruling on a motion to dismiss for lack of standing, the court accepts the allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003).

Section 502(a)(3) of ERISA grants "a participant, beneficiary, or fiduciary" standing to enforce any ERISA provisions.*fn5 29 U.S.C.A. § 1002(21)(A). In a separate subsection, it also states that "an employee benefit plan may sue or be sued under this under this subchapter as an entity." 29 U.S.C. § 1132(d)(1). Finally, 29 U.S.C. § 1132(e)(1) states, "the district courts of the United States shall have exclusive jurisdiction of civil actions under ...


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