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Boudreau v. Gentile

August 19, 2009

FRED BOUDREAU, TRUSTEE ON BEHALF OF THE CHICAGO TRUCK DRIVERS, HELPERS AND WAREHOUSE WORKERS UNION (INDEPENDENT) HEALTH AND WELFARE FUND, PLAINTIFFS,
v.
JAMES GENTILE, AN INDIVIDUAL, MIDLAND TRANSPORTATION GROUP, INC. F/K/A MIDLAND TRANSPORTATION, INC., MIDLAND LOGISTICS, INC., MIDLAND TRANSPORTATION SERVICE GROUP, LTD., STELLMAN DIRECT, INC., USMDS, INC., MIDLAND DIRECT, INC., MIDLAND DIRECT TRANSPORTATION GROUP, INC., MIDLAND DIRECT GROUP COMPANY, MIDLAND CONTAINER TRANSPORT COMPANY, MIDLAND INTERMODAL COMPANY, AND U.S. MAIL DELIVERY SYSTEMS, INC., DEFENDANTS.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund (the "Fund") and Fred Boudreau ("Boudreau"), the Fund's trustee and fiduciary, filed a five count complaint under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and the Labor Management Relations Act ("LMRA"), 20 U.S.C. § 141 et seq, against Midland Transportation Group, Inc. f/k/a Midland Transportation, Inc. ("Midland Transportation Group"), Midland Logistics, Inc. ("Midland Logistics"), Midland Direct, Inc. ("Midland Direct"), U.S. Mail Delivery Systems, Inc. ("U.S. Mail Delivery"), USMDS, Inc. ("USMDS"), Midland Transportation Service Group, Ltd. ("Midland Transportation Service Group"), Stellman Direct, Inc. ("Stellman Direct"), Midland Direct Transportation Group, Inc. ("Midland Direct Transportation Group"), Midland Direct Group Company ("Midland Direct Group"), Midland Container Transport Company ("Midland Container"), Midland Intermodal Company ("Midland Intermodal")(collectively, the "Corporate Defendants"), and James Gentile ("Gentile"), the sole officer, director, and shareholder of the Corporate Defendants. Gentile was also the sole officer, director, and shareholder of Stellman, Inc. ("Stellman"), a bankrupt, non-party.

Midland Transportation Group, Midland Logistics, Midland Direct, and U.S. Mail Delivery are or were at some point engaged in the business of providing trucking, shipping, freight forwarding, and transportation brokerage services. USMDS is a real estate holding company, with no transportation related operations. The remaining corporate defendants are or were at all times non-operating holding companies, existing without assets, employees, or active business operations. Defendants Midland Transportation Group, Stellman Direct, and U.S. Mail Delivery all involuntarily dissolved in 2008.

Plaintiffs seek to hold Gentile and the Corporate Defendants liable for benefit contributions allegedly owed to the Fund, having accrued between January 1, 2002 and December 31, 2007 in the amount of $791,153.00. Plaintiffs move for summary judgment on all counts.*fn1 The motion is granted.

I.

The Fund is a multi-employer welfare benefit plan governed by ERISA, which receives contributions for and provides benefits to covered employees pursuant to collective bargaining agreements ("CBA") between employers and unions. In short, the CBAs bind employers to the Fund's trust agreement, which requires them to contribute to the Fund on behalf of covered employees. In return, those employees are eligible for benefits under Fund plans, as are their dependents.

The Fund works on a self-reporting system that requires a participating employer to identify a base group of employees for whom contributions are due. Thereafter, the employer is required to notify the Fund on a monthly basis of any changes in the employment status (e.g., termination, new hire, etc.) of individuals covered by the CBA. The Fund relies on work history reports from employers to prepare monthly remittance reports, which detail contribution amounts owed for covered employees.

Stellman, prior to its bankruptcy filing in August 2007, was a unionized trucking business whose four to eight bargaining-unit employees drove trucks and worked under the terms of CBAs negotiated on their behalf by two different unions -- the Chicago Truck Drivers, Helpers, and Warehouse Workers Union ("CTDU") and later Teamsters Local Union No. 710 ("Local 710") when CTDU merged with Local 710 (collectively, the "union"). Gentile, the only person authorized to execute agreements on behalf of Stellman and the Corporate Defendants, entered into three CBAs with the union, effective April 1, 1998 through March 31, 2003, April 1, 2003 through March 31, 2007, and April 1, 2007 through March 31, 2011, respectively.*fn2 Gentile signed the 1998 and 2007 CBAs on behalf of Stellman. The 2003 CBA references Stellman as the employer in the preamble, but Gentile wrote "Midland" in the employer signature block. All three CBAs focus on the "trucking industry" and cover "all local cartage operations of the Employer." Pursuant to the CBAs, only bargaining unit employees are allowed to perform covered work and the subcontracting, transfer, leasing, diversion, assignment, or conveyance of covered work is prohibited.

From January 1998 through May 2007, the Fund received work history reports from Stellman, which in turn were used to determine contribution amounts due under the CBAs and trust agreement. Those amounts due were then submitted to Stellman by the Fund by way of remittance reports. Stellman never paid contributions to the Fund itself, but rather checks for the amounts due were issued by various Corporate Defendants, namely, Midland Transportation, Midland Transportation Group, Midland Stellman, Midland Logistics, and "Midland."

In 2006, after Stellman fell several months behind in payments, the Fund sued to collect the delinquent amounts and moved to compel an audit. The resulting audit for the period from January 1, 2002 through March 31, 2007 found Stellman owed the Fund $101,423.00. When the Fund attempted to collect, it learned that Stellman had not conducted business for over five years and had no assets, income, documents, or employees. Stellman filed for bankruptcy about a week later.

The Fund then sued the Corporate Defendants and moved to have them audited. This second audit revealed, among other things, that many of the individuals who were reported to the Fund as having performed covered work for Stellman actually worked for various Corporate Defendants. Moreover, a number of the reported personnel were not truck drivers.

In the present action, plaintiffs seek Fund contributions owed for truck drivers located within the jurisdiction of the CBAs. Although the parties agree that at least Stellman was liable for delinquent contributions to the Fund, they dispute whether Gentile and/or the Corporate Defendants are liable in Stellman's stead. Defendants also dispute the claimed amount of contributions owed.

II.

Summary judgment is appropriate where the record shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The "court's role is not to evaluate the weight of the evidence, to judge the credibility of witnesses, or to determine the truth of the matter, but instead to determine whether there is a genuine ...


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