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Mayer Electrical Contracing, Inc v. Foley et al

April 4, 2012

MAYER ELECTRICAL CONTRACING, INC
v.
FOLEY ET AL



Name of Assigned Judge Sitting Judge if Other or Magistrate Judge Amy J. St. Eve than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

The Court grants the Trustees' motion for a protective order under Rule 26(c). [29]

O[ For further details see text below.] Notices mailed by Judicial staff.

STATEMENT

Before the Court is Defendant Trustees' Motion for a Protective Order pursuant to Federal Rule of Civil Procedure ("Rule") 26(c). For the reasons set forth below, the Court grants the Trustees' motion and orders that discovery in this case is limited to the administrative record.

BACKGROUND

On September 1, 2011, Plaintiff Mayer Electrical Contracting, Inc. ("Mayer") filed its Complaint against Defendants Timothy Foley, Michael Caddigan, Lawrence Crawley, Samuel Evans, James North, William T. Divane, Kenneth Bauwens, Steven Diamond, Kevin M. O'Shea, and Michael Walsdorf, in their capacity as the Electrical Insurance Trustees (collectively, the "Trustees"). (R. 1.) Mayer asks the Court to enter a declaratory judgment declaring that Mayer does not owe $44,436.46 in delinquent fringe benefit contributions under a plan (the "Plan") created pursuant to an agreement between the Electrical Contractors Association of the City of Chicago ("ECA") and Local 134, International Brotherhood of Electrical Workers ("Local 134").

Mayer alleges that the ECA and Local 134 are parties to a collective bargaining agreement (the "Principal Agreement") and an Insurance Agreement relating to the administration of the Plan. (Id. ¶ 6.) On February 4, 1988, Mayer signed a Letter of Assent to the Principal Agreement, which required it to make certain fringe benefit contributions to the Plan. (Id. ¶¶ 7-8.)

According to Mayer, two of its employees and part-owners, John and Vincent Mayer, worked for Mayer from January 1, 2007 through July 5, 2007, but did not work for Mayer after that time. (Id. ¶ 10.) Mayer allegedly reported to the Trustees that John and Vincent Mayer worked 1,060 and 1,600 hours, respectively, for the 2007 calendar year. (Id. ¶¶ 10, 11, 16.)

In 2008, James Egan & Associates, Ltd. (the "Auditor") audited Mayer on behalf of the Trustees to determine whether the number of hours worked by Mayer's Local 134 employees was consistent with the number of hours Mayer reported for the 2007 calendar year (the "Audit"). (Id. ¶ 9.) The Auditor allegedly determined that Mayer had ceased paying wages to John and Vincent Mayer on July 5, 2007 and that it did not know, based on Mayer's records that it had reviewed, whether John and Vincent Mayer had continued to work for Mayer after July 5, 2007. (Id. ¶¶ 12, 13.) Mayer alleges that the Auditor determined that a review of John and Vincent Mayer's personal income tax returns for 2007 was necessary to verify whether they were employed by another company or whether they received unemployment compensation after July 5, 2007. (Id. ¶ 14.) After the Auditor spoke with Michael D. Krantz, a Contributions Collection Manager acting on behalf of the Trustees, however, the Auditor declined to review the 2007 personal income tax returns for John and Vincent Mayer. (Id. ¶ 15.)

The Trustees thereafter determined that Mayer underpaid the fund contributions in the amount of $47,334.32, which was later reduced to $44,436.46. (Id. ¶ 19.) According to Mayer, the Trustees did not examine the relevant evidence showing the hours that John and Vincent Mayer actually worked in 2007 and instead assumed that they "must have worked a total of 1,920 hours each (40 hours per week for 48 weeks) in 2007." (Id. ¶¶ 17-18.)

On January 20, 2009, Mayer sent the Trustees a letter challenging the underpayment determination, and Mr. Krantz responded three days later that 1) John and Vincent Mayer fell within the owner-in-fact clause of the Principal Agreement and accordingly must be listed on Mayer's payroll as having worked 1,920 hours per calendar year regardless of their actual hours worked; and 2) if Mayer intended to appeal the results of the Audit, it must submit a letter and any supporting documentation by February 16, 2009. (Id. ¶ 21.) On February 11, 2009, Mayer sent an appeal letter to the Trustees along with copies of John and Vincent Mayer's unemployment records for 2007. (Id. ¶ 22.) The Trustees denied Mayer's appeal, allegedly ignoring the plain language of the Principal Agreement and the "conclusive evidence" of hours worked by John and Vincent Mayer. (Id. ¶ 23.) Because Mayer was unable to remit the $44,436.46 in fringe benefit fund contributions, the surety company through which Mayer obtained its Wage and Benefit Performance Bond canceled Mayer's bond, effectively puting Mayer out of business. (Id. ¶¶ 25-27.)

On December 1, 2011, the Court denied the Trustees' motion to dismiss, and on January 19, 2011, the Court denied the Trustees' motion for reconsideration of the Court's December 1, 2011 order. (R. 19, 26.) Mayer has since served its first requests for the production of documents and several deposition notices on the Trustees. (R. 29-3.) The Trustees seek entry of a ...


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