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Musson Brothers, Inc. v. Central States, Southeast and Southwest Areas Health and Welfare Fund

United States District Court, N.D. Illinois, Eastern Division

March 31, 2014

MUSSON BROTHERS, INC., Plaintiff,
v.
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, CHARLES A. WROBLEY, JERRY YOUNGER, GEORGE J. WESTLEY, MARVIN KROPP, ARTHUR H. BANTE, JR., GARY F. CALDWELL, RONALD DESTEFANO, GARY R. MAY, and TEAMSTERS GENERAL UNION LOCAL 662, Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT W. GETTLEMAN, District Judge.

Plaintiff Musson Brothers, Inc. ("Musson") filed this action under 28 U.S.C. § 2201 for declaratory judgment and injunctive relief[1] against defendants Central States Health and Welfare Fund, a multiemployer benefit plan, its trustees[2] (collectively, the "Fund"), and the Teamsters General Union Local 662 ("the Union"). Musson seeks a declaration that it does not owe contributions to the Fund on behalf of seven of its employees under agreements that it entered with defendants. The Fund filed a counterclaim, which alleges in Count One that Musson failed to pay contributions due for two employees covered by the collective bargaining agreements with the Union and the bargaining unit participation agreements, in violation of Section 515 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1145, the collective bargaining agreements, the bargaining unit participation agreements and the Health and Welfare Fund Trust Agreement ("Trust Agreement"). In Count Two, the Fund alleges that Musson owes contributions for seven non-covered employees under an agreement (the "Non-Bargaining Unit Participation Agreement") between the Fund and Musson and the Trust Agreement.

Musson initially admitted liability on Count One of the Fund's counterclaim and asserted a defense to Count Two that the employees in question were excluded from participation in the Fund because of their various employment positions. The Fund then filed a motion for partial summary judgment on the issue of liability on both counts of the counterclaim. Concurrent with its response to the Funds' motion, Musson filed a Motion for Leave to File an Amended Answer to the Fund's counterclaim to withdraw its admission of liability on Count One and assert a new defense to the Funds' claims of delinquent contributions.

For the reasons described below, plaintiff's motion to amend its answer is denied. The Fund's motion for partial summary judgment is granted.

FACTS

Musson and the Union are parties to multiple collective bargaining agreements that span the period of April 1, 2001, through March 31, 2013 ("the CBAs")[3], as well as Participation Agreements in 2001 and 2007 ("the 2001 Bargaining Unit Participation Agreement" and "the 2007 Bargaining Unit Participation Agreement, " respectively). These agreements required Musson to contribute to the Fund for each "covered employee." The participation agreements defined "covered employee" as:

[A]any full-time or part-time employee covered by a collective bargaining agreement requiring contributions to the Fund... Covered Employee shall not include any person employed in a managerial or supervisory capacity...

In 2001, Musson also entered into the Non-Bargaining Unit Participation Agreement directly with the Fund, to which the Union was not a party. That agreement required Musson to contribute to the Fund for "each and every individual employed by the employer on either a full-time or part-time basis who is not covered by the collective bargaining agreement between the Employer and the Union." The terms of the agreement stated that it would remain in effect "until 30 days after service of a written notice served by either the Health and Welfare Fund or the Employer of their intent to terminate this Participation Agreement." Musson gave notice to terminate the agreement on October 15, 2012, and elected March 31, 2013, as the date of termination.

In September 2012, the Fund conducted an audit of the work history records of Musson's employees, pursuant to the provisions of the Trust Agreement that permitted such an audit. The audit encompassed the time period between January 1, 2008, and December 31, 2010. As a result of that audit, the Fund alleges that Musson failed to accurately report the work history of its employees and demanded contributions for nine employees. Two of the employees, Gary Robinson and Robert Langeberg, were covered employees under the participation agreements, and the Fund demanded at least $71, 000 for unpaid contributions related to those two covered employees. The remaining seven employees were employees not covered by the CBAs, [4] and the Fund demanded contributions for those employees under the Non-Bargaining Unit Participation Agreement.

On October 15, 2012, in response to the Fund's demand letter (which preceded this litigation), Musson stated that contributions were not due on five of the seven non-covered employees because they had other health coverage, and that the two other non-covered employees were ineligible because the Union agreements excluded part-time employees from the bargaining unit. Musson conceded that contributions were due for the remaining two covered employees.

On December 19, 2012, however, Musson revised its position and indicated that it did not owe contributions for the seven non-union employees because the 2001 Non-Bargaining Unit Participation Agreement was "trumped in spades" by the 2007 Bargaining Unit Participation Agreement and the 2007-2010 CBA. On December 26, 2012, Musson instituted the instant action in the Western District of Wisconsin, seeking a declaratory judgment that Musson did not owe the amounts alleged by the Fund in their demand.

On January 23, 2013, the dispute over the contributions was presented to the Board of Trustees of the Fund at their regularly scheduled meeting. The Board of Trustees determined that the 2001 Non-Bargaining Unit Participation Agreement was not superseded by the 2007 Bargaining Unit Participation Agreement or the CBAs, and that contributions were due for those seven non-covered employees.

In its January 2014 response to the Fund's motion for summary judgment and in its motion to amend its answer, Musson now argues that it did not have proper notice of the January 2013 meeting, that it should have been given the opportunity to present its case to the Board, and that no deference should be awarded to the Trustees' "findings." Musson argues that, had it been given the chance, Musson would have argued to the Board that John Kaiser, a Union representative, acted as the Fund's agent in the 2010 negotiations between the Union and Musson. Musson alleges that Kaiser orally agreed in those negotiations that Musson could ...


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