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Trustees of the N.E.C.A. - IBEW Local 176 Health, Welfare, Pension, Vacation and Training Trust Funds v. CM Management Services Co.

March 6, 2009

TRUSTEES OF THE N.E.C.A. - IBEW LOCAL 176 HEALTH, WELFARE, PENSION, VACATION, AND TRAINING TRUST FUNDS, PLAINTIFFS,
v.
CM MANAGEMENT SERVICES CO. D/B/A AMERISIGN GROUP, ILLINOIS CORPORATION AND ROBERT J. SCHLYER, INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Plaintiffs Trustees of the National Electrical Contractors Association ("NECA") -International Brotherhood of Electrical Workers ("IBEW") Local 176 Health, Welfare, Pension, Vacation and Training Trust Funds (collectively, the "Trustees"), filed a complaint against CM Management Services Co., d/b/a Amerisign Group, an Illinois corporation ("CM Management")*fn1 and Robert J. Schlyer (collectively, "defendants") alleging failure to make contributions to union welfare funds in accordance with the terms of certain collective bargaining agreements to which CM Management is bound. Count I seeks $21,964.31 from CM Management in contributions due to the funds, audit costs and liquidated damages. Count II seeks the same amount from Schlyer for willful violations of the trust agreements. Presently before the court are the parties' cross-motions for summary judgment. For the following reasons, the Trustees' motion for summary judgment [#21] is granted and CM Management's cross-motion for summary judgment [#23] is denied.

JURISDICTION

The court has jurisdiction to hear this case pursuant to 28 U.S.C. § 1331 and the National Labor Relations Act, codified at 29 U.S.C. § 185, as well as Section 502 of the Employee Retirement Income and Security Act of 1974 ("ERISA"), codified at 29 U.S.C. § 1132 et seq.

STANDARDS

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). While the court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986), where a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex Corp. v. Cartrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed. 2d 265 (1986). "[T]he burden on the moving party may be discharged by 'showing' - - that is, pointing out to the district court - - that there is an absence of evidence to support the nonmoving party's case." Id. at 325. The dispute in this case primarily concerns contract interpretation, a matter of law particularly suited to summary adjudication. See Automation by Design, Inc. v. Raybestos Prods. Co., 463 F.3d 749, 753 (7th Cir. 2006) ("Because the primary question is interpretation of a written contract, this matter is particularly amenable to summary judgment."); see also GCIU v. Employer Retirement Fund v. Chicago Tribune Co., 66 F.3d 862, 864 (7th Cir. 1995) (granting motion for summary judgment in a fringe benefits case where material facts were undisputed and the issue presented was solely one of contract interpretation) (citing Murphy v. Keystone Steel & Wire Co., 61 F.3d 560, 564-65 (7th Cir. 1995).

BACKGROUND*fn2

This case arises from CM Management's admitted failure to make certain contributions to fringe benefit funds required by a collective bargaining agreement to which it is bound. There are no disputed material facts and the remaining issue is a legal question: whether the persons on whose behalf the Trustees seek contributions are "employees" within the meaning of the collective bargaining agreement at issue. The collective bargaining agreement at issue is styled "IBEW Local Union 176 Sign Agreement" ("CBA") and was executed between IBEW Local 176 (the " Union") and NECA, a multi-employer bargaining association authorized to enter into such agreements by certain employers who employ Union members. See Ex. B to Pls.' L.R. 56.1 SoF. The CBA requires that signatory employers*fn3 make contributions on behalf of their employees*fn4 to certain fringe benefit funds, including welfare, pension and vacation funds ("the funds") established pursuant to declarations of trust. See Pls.' L.R. 56.1 SoF ¶¶ 5-7; Affidavit of David Udstuen, Business Manager of NECA-IBEW LOCAL176, attached to Pls.' L.R. 56.1 SoF as Ex. G. Article V of the CBA, which governs employee fringe benefits, provides that employers are to submit monthly reports documenting their contributions to the administrator of the funds ("contribution reports"). See CBA, attached as Ex. B to Pls.' L.R. 56.1 SoF § 5.05 ("The parties agree that all contributions and/or deductions referred to in this Article shall be reported on Form MPR-144."); Ex. I to Pls.' L.R. 56.1 SoF.

CM Management admits that it became bound by the CBA and the applicable declarations of trust on May 26, 2005, when it entered into a Letter of Assent with the Union. See Defs.' Reply to Pls.' L.R. 56.1 SoF ¶ 13; Letter of Assent, attached as Ex. A to Pls.' L.R. 56.1 SoF. CM Management also admits that it agreed to submit its books and records, upon reasonable notice by the Trustees, to an independent auditor to determine whether the company was in compliance with its duty to make fringe benefit contributions on behalf of its employees. Defs.' Reply to Pls.' L.R. 561 SoF ¶ 13. Furthermore, CM Management does not contest that in the event an audit disclosed "any willful violation" of the CBA and the declarations of trust, its owners and partners would be "personally liable for any underpayment or other pecuniary loss to the [funds] attributable to such conduct." See Defs.' Reply to Pls.' L.R. 56.1 SoF ¶ 22.

In early 2008, the Trustees sought an audit of CM Management to determine whether it was making fringe benefit contributions in accordance with the CBA. The audit was undertaken by the auditing firm of Levinson, Simon & Sprung P.C., which determined that CM Management had not made all of the required contributions on behalf of Saul Tinoco, a minority shareholder of CM Management.*fn5 The auditors determined that CM Management owed $14,558.93 in unpaid contributions, including liquidated damages and audit costs for the period between June 1, 2005 and February 28, 2006. See Audit, attached as Ex. E to Pls.' L.R. 56.1 SoF; Affidavit of Howard B. Levinson ¶ 6, attached as Ex. F to Pls.' L.R. 56.1 SoF; Affidavit of Kathy Layfield ¶¶ 9-10, attached as Ex. H to Pls.' L.R. 56.1 SoF.

CM Management does not deny that it failed to make fringe benefit contributions on behalf of Saul Tinoco. See Defs.' Reply to Pls.' R. 56.1 SoF ¶¶ 16-18. Rather, CM Management contends that it had no obligation to do so because Saul Tinoco was a minority shareholder and, therefore, an employer or owner rather than an employee of CM Management during the time period at issue. Defs.' L.R. 56.1 SoF ¶¶ 2-3. The parties agree that Saul Tinoco, Carlos Tinoco and Vincent Hernandez became shareholders of CM Management (collectively, "minority shareholders") through an agreement with Robert J. Schlyer, the sole shareholder and president of CM Management ("Schlyer"). See "Share Sale and Transfer Agreement" ("Shareholder Agreement"), attached as Ex. A to Ans.; Pls.' Resp. to Defs.' L.R. 56.1 SoF ¶ 2. The Shareholder Agreement was executed by the parties on October 15, 2004 and transfers to each minority shareholder 5% of the shares of CM Management.*fn6 See Ex. A to Def.'s Ans. ¶¶ 2-3,7.

The parties also agree that after Saul and Carlos Tinoco became shareholders, CM Management continued to submit contribution reports on their behalf to the administrator of the funds. See Defs.' Reply to Pls.' L.R. 56.1 SoF ¶ 23; Defs.' L.R. 56.1 SoF ¶ 5; Ex. I to Pls.' L.R. 56.1 SoF. The contribution reports were signed by Schlyer, as the President of CM Management, and identify Saul and Carlos Tinoco as employees. Id. The contribution reports contain the following statement above each signature line:

The undersigned hereby adopts and agrees to be bound by the Restated Employees Benefit Agreement and Trust for the National Electrical Benefit Fund and agrees to make required contributions to such funds as provided therein. I hereby acknowledge having received a copy of the above agreement. I further certify that the information contained in this report is a full and accurate statement of hours worked and wages earned of all employees subject to contributions . . . .

Ex. I to Pls.' L.R. 56.1 SoF (emphasis added). CM Management submitted contribution reports which identified Carlos and Saul Tinoco as employees until December 2005. See Ex. I to Pls.' L.R. 56.1 SoF. CM Management did not submit contribution reports on Saul Tinoco's behalf in January and February of 2006. See Def.'s Resp. to Pls.' L.R. 56.1 SoF ¶ 20 (citing Defs.' Ans. ¶ 4). Saul Tinoco, Carlos Tinoco and Vincent ...


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