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Trustees of the Chicago Regional v. Union Payroll Agency

August 15, 2011


The opinion of the court was delivered by: Magistrate Judge Michael T. Mason


Michael T. Mason, United States Magistrate Judge.

Plaintiffs, Trustees of the Chicago Regional Council of Carpenters Pension Fund, Chicago Regional Council of Carpenters Welfare Fund, and Chicago Regional Council of Carpenters Apprentice & Trainee Program ("plaintiffs"), filed this action under Section 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §1132, and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. §185. Plaintiffs contend that defendant Union Payroll Agency, Inc. ("UPA" or "defendant") owes plaintiffs $35,417.80 in additional benefit contributions on behalf of one individual, Christopher J. Rademacher, covering the period of December 2003 through March 2007. (Pls.' Mot. for Summ. J. at 2 [27].) Specifically, plaintiffs contend that, based on his salary and supervisory functions, Rademacher fell under certain "160 hour rule" provisions in the applicable Commercial Area Agreement, and thus defendant should have reported him at the minimum monthly amount of 160 hours for that time period.

Plaintiffs also seek to recover $12,711.01 in interest and $7,083.56 in liquidated damages, and request an award of their reasonable fees and costs. (Id.)

In September 2010, the parties consented to the jurisdiction of the undersigned judge for all future proceedings in this matter pursuant to 28 U.S.C. §636(c) [14]. This matter is currently before the Court on the parties' motions for summary judgment. For the reasons set forth below, plaintiffs' motion [27] is granted and defendant's cross-motion [25] is denied.


To state that this is "not a typical ERISA case" is an understatement. (See Def.'s Reply at 3 [45].) Here, defendant is not a construction contractor directly employing individual union members such as carpenters. (Id.) In fact, defendant provides payroll services to businesses employing union labor in the entertainment, tradeshow, and sporting events industries nationwide. Those services include processing weekly payroll and, in certain situations, submitting monthly benefit report forms and contributions to union fringe benefit funds based on hours reported directly by clients via telephone or recorded on weekly time sheets. In exchange for defendant's services, defendant's clients agree to pay defendant an administrative fee along with payment for certain employees' wages, benefits, state and federal taxes, and insurance necessary to cover the clients' payroll.

The Chicago Regional Council of Carpenters (the "Union") negotiated a collective bargaining agreement (the "Commercial Area Agreement") with the Mid-America Regional Bargaining Association that was in effect from June 1, 2005 through May 31, 2008. (Pls.' Ex. 10 [30-11].) Among other things, that agreement states that it is "effective ... for and on behalf of the present and future members, together with such other employers who become signatory to this Agreement (referred to herein as "Employer or Employers") ...." (Id. at 1.)

In October 1998, defendant signed a Memorandum of Agreement with the Union, wherein defendant agreed to be bound by the Commercial Area Agreement. (Pls.' Ex. 13 [30-14].)*fn2 The Memorandum of Agreement defines defendant as the "EMPLOYER." (Id. at 1.) Under that agreement, defendant agreed, among other things, "to make prompt payments for the per hour contributions with respect to each Trust Fund for all Employees performing bargaining unit work and/or covered by the Agreement including nonbonded and nonsignatory subcontractors as required by the applicable provisions of each agreement." (Id. ¶ 3.)

In December 2003, defendant and Performance Tradeshow Group ("PTG"), a non-party in this case, entered into an agreement whereby defendant agreed to process payroll and union benefit contributions for PTG. PTG operated out of Las Vegas, Nevada, in the business of installing and dismantling tradeshow exhibits. From December 2003 through April 2007, Rademacher was president and 50% shareholder of PTG. Defendant and PTG's contract consisted of a one-page form, signed on behalf of PTG by Rademacher with the surname "John," with PTG named as the "Client." (Pls.' Ex. 4 [30-5].) Directly above that signature, the contract states: "Client agrees to abide by all terms and conditions of Union Bargaining Agreement." (Id.) PTG has never been signatory to a collective bargaining agreement with the Union. Rademacher first held a Union membership card in 1986 and was reported as a journeyman carpenter by signatory employers before December 2003. During periods relevant to this lawsuit, Rademacher was a member of the Union, Local 10.

The parties do not dispute that the Commercial Area Agreement required defendant to pay monthly fringe benefit contributions to plaintiffs on behalf of covered employees. Defendant expressly states as much in its cross-motion, and cites pages 14-22 of the Commercial Area Agreement as support. The parties also agree that the Commercial Area Agreement required defendant to make contributions measured by the hours worked by subcontractors that are not signatory to an agreement with the Union. Further, the parties do not dispute that defendant reported hours on behalf of Rademacher at the consistent rate of 80 and 100 hours per month from December 2003 through March 2007; that defendant paid benefit contributions to plaintiffs on behalf of Rademacher during that time period; and that by reporting at or around the minimum quarterly eligibility requirement of 250 hours, defendant enabled Rademacher to maintain health and welfare benefits through the Trust Funds on a weekly basis for approximately three years.*fn3 Finally, the parties agree that, by way of state wage reports, payroll checks, W-2 statements, and Trust Fund contribution reports, defendant represented to plaintiffs, among others, that Rademacher was defendant's employee. (Pls.' Ex. 9 [30-10]; Pls.' Ex. 7 ¶11 [30-8].)*fn4

At the heart of this case is the parties' disagreement regarding whether three particular provisions of the Commercial Area Agreement, each embodying the so-called "160 hour rule," require defendant to make additional contributions on Rademacher's behalf. The first such section states:

The EMPLOYER may make contributions for all hours worked by Superintendents and other management personnel for whom contributions to the Health and Welfare Fund were heretofore made when such individuals were employed as journeymen Carpenters. Such contributions shall be made in a monthly amount equal to at least 160 times the hourly contribution rate specified in this Article. (Pls.' Ex. 10 §12.8.) Sections 13.6 and 14.6 contain identical reporting and payment requirements relative to plaintiffs' Pension Fund and Training Fund, respectively. (Id. §§13.6, 14.6.) According to the parties, "[t]he purpose of the '160 hour rule' is to allow employees who previously participated in the Trust Funds to continue to participate in the Plaintiffs' Health and Welfare Plans after they become supervisory or management employees of a signatory Employer and no longer perform bargaining unit work." (Pls.' Ex. 6 - J. Libby Decl. ¶ 7 [30-7]; Pls.' LR 56.1(b)(3) Resp. to Def.'s LR 56.1 Statement of Material Facts ¶ 31 [34].)

Additionally, the parties disagree in their characterizations of Rademacher's job responsibilities during the relevant time period. However, after reviewing the evidence submitted on that issue, we find no material issue of disputed fact. As a result, rather than parse the parties' submissions under Local Rule 56.1, this Court will summarize the pertinent evidence in the record before it.*fn5 During his deposition, when asked about his "personal responsibilities with" PTG (without any time period specified), Rademacher testified as follows:

A. I had a variety of duties, Dave, sometimes I would be on the floor checking the labor in, making sure the guys were ...

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