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Trustees of the Chicago Plastering Institute Pension Trust v. R.G. Construction Services

July 24, 2009

TRUSTEES OF THE CHICAGO PLASTERING INSTITUTE PENSION TRUST, THE CHICAGO PLASTERING INSTITUTE HEALTH AND WELFARE TRUST, THE JOURNEYMEN PLASTERERS' P.&B. SOCIETY LOCAL NO. 5 APPRENTICE FUND, THE CHICAGO PLASTERING INSTITUTE, BY AND THROUGH JOHN MANLEY AND AS AGENT FOR THE CHICAGO LAND CONSTRUCTION SAFETY COUNCIL AND THE JOURNEYMEN PLASTERERS' PROTECTIVE AND BENEVOLENT SOCIETY OF CHICAGO LOCAL NO. 5, PLAINTIFFS,
v.
R.G. CONSTRUCTION SERVICES, INC., DEFENDANT.



The opinion of the court was delivered by: Susan E. Cox United States Magistrate Judge

Magistrate Judge Susan E. Cox

Memorandum Opinion and Order

Defendant, RG Construction Services, Inc. ("RG") has filed a motion for relief from this Court's order of June 23, 2009, pursuant to Federal Rule of Civil Procedure 60(b)(6) [dkt 123]. The motion also requests an extension of time to file its response to plaintiffs' supplemental submission on damages. RG's Rule 60(b)(6) motion is denied. RG is, however, given an additional two weeks from the date of this order to file its response to plaintiffs' submission on damages.

On June 16, 2009, this Court entered its findings of fact and conclusions of law on RG's liability to plaintiffs for contributions owed to employee benefit plans. Plaintiffs then filed a motion requesting that the Court clarify that the dues authorization issue (that plaintiffs could collect dues only on behalf of plasterers that had signed dues authorizations) would be limited to the Journeymen Plasterers' Protective and Benevolent Society of Chicago Local No. 5's ("Local 5") claim for dues and not the ERISA-fund plaintiffs' (hereinafter referred to as the "Funds") claims for contributions. The Court agreed and, on June 23, 2009, entered a minute order stating that, defendant is liable for all delinquent contributions in the audit for work performed within Local 5's jurisdiction, regardless of whether the work was performed by a Local 5 member. The Court understood RG's lack of standing argument, as reflected in the June 16, 2009 Order, to refer only to Local 5's claim for dues on behalf of employees that had not signed dues authorizations.*fn1 RG now submits that a recent case decided by the United States Court of Appeals for the Seventh Circuit, Trustees of the Chicago Plastering Institute Pension Trust v. Cork Plastering Company,*fn2 should change the Court's ruling. Specifically, RG claims that Cork stands for the proposition that the auditors' work papers should not have been admitted in evidence over RG's hearsay objection. RG then asserts that Cork supports its position that the reciprocity agreements between plaintiffs and other unions superseded RG's obligation to pay contributions.

Rule 60(b)(6) is a catch-all provision that allows courts to provide relief from "a final judgment, order, or proceeding for...any other reason that justifies relief."*fn3 The rule may not be "used to reopen an adverse decision" without the showing of exceptional circumstances.*fn4 The rule is designed to allow courts to address mistakes due to special circumstances, in contrast to Rule 59(e), which allows a court to correct its own error of law.*fn5

It should be noted that the Court has not yet entered final judgment. We will, nonetheless, address the substance of RG's motion.

I. Admissibility

As aptly pointed out by plaintiffs, in contrast to RG's position, the Cork decision supports this Court's evidentiary rulings. Cork was also an action to collect contributions owed to employee benefit plans and one which this Court relied upon in its findings issued on June 16, 2009. Similar to this case, Cork involved an employer that did not keep proper records, notwithstanding its contractual obligation to do so. The auditors, thus, "applied a set of assumptions to the data available to them and prepared what is known as a Report On Agreed-Upon Procedures, with the "procedures" being the assumptions..."*fn6 Like here, the audit attempted to determine the extent of the employer's outstanding liability to the funds. At trial, Judge Schenkier admitted the audit report into evidence and permitted a partner of the audit firm to testify about the report.*fn7

On appeal, the employer argued that the district court incorrectly admitted the audit report into evidence because it was founded on inadmissible hearsay.*fn8 The employer also claimed that it could not otherwise be admissible as a business record because the report was prepared in anticipation of litigation.*fn9 In response, the Seventh Circuit found that there was "no merit to this argument."*fn10 The court held that the assumptions applied in preparing the report were "very important in assessing the validity of the report's assertions" as to what the employer owed to the funds. To further explain the point, the court found that, the fact that those assumptions were conveyed to the auditors in out-of-court discussions is neither here nor there: the content of those discussions was not being offered into evidence, let alone for its truth, nor was it necessary to recount such conversations in order to evaluate the merit of any assumption that [the auditors] employed.*fn11

The court then went on to note that auditors are often asked to analyze data based on a set of assumptions. Further, the assumptions in the Cork audit were not a secret, the auditor was deposed before trial about the nature of the assumptions, and the assumptions were, in fact, derived from what the employer's own records disclosed - or failed to disclose - about its methodology in reporting hours and making contributions.*fn12 As a final point, the court held that

[i]t was that evidence, and not the content of any out-of-court communications between [the auditors] and its clients, that led Judge Schenkier to accept some of the assumptions as accurate and to reject others as unsubstantiated.*fn13

There was, therefore, no error in admitting the report simply because it reflected those assumptions.

The circumstances in Cork are strikingly similar to what happened here. We, therefore, see no basis for RG's contention that this ruling, somehow, warrants a different outcome. First, as noted by plaintiffs, the relief RG seeks does not even relate to this Court's June 23, 2009 Order. With respect to the admissibility of the audit papers, that was a decision made at trial and reflected in the Court's June 16, 2009 findings. Second, and more to the point, as stated by the Seventh Circuit, the fact that the audit report reflected assumptions did not determine its admissibility. We recognized this point prior to Cork, when RG's objection was overruled at trial. At trial I stated that, the Seventh Cicuit has found that an audit is certainly not inadmissible as a record because there are assumptions in the audit report...[o]f course, whether the Court will credit all of those assumptions remains the $64,000 question in this case.*fn14

As occurred in Cork, the validity of the auditors' assumptions was debated at trial and in light of the testimony and other evidence presented, this Court ...


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