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Laborers Pension Fund v. Sanchez Paving Co.

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

April 23, 2014

LABORERS' PENSION FUND, et al., Plaintiffs,
v.
SANCHEZ PAVING COMPANY, et al., Defendants.

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, Magistrate Judge.

The Construction and General Laborers' District Council of Chicago and Vicinity, its related pension funds, and the administrator of those funds (collectively, "the Union") bring this action against Sanchez Paving Co. and related entities and individuals ("Sanchez Paving") asserting that Sanchez Paving violated the terms of the parties' collective bargaining agreement by failing to pay contract wages, failing to remit monthly benefit contributions to the Union's pension funds, and failing to submit dues reports to the Union. According to Count IV of the Second Amended Complaint, the Union obtained a $2, 731, 227.84 award against Sanchez Paving through the collective bargaining agreement's grievance and arbitration mechanism, and the Union now seeks to enforce that award as a matter of law. Sanchez Paving has filed a cross motion for summary judgment, arguing that the arbitration award is not enforceable because of errors in the Union's crafting of the Second Amended Complaint and procedural failings in the arbitration process. For the reasons stated below, the Court grants the Union's motion for summary judgment as to Count IV, and denies Sanchez Paving's cross motion for summary judgment.

BACKGROUND

The following facts are undisputed unless otherwise indicated.

Sanchez Paving is an Illinois-based construction company specializing in asphalt and concrete work. The Union is a labor organization representing construction professionals in and around Chicago; it also administers pension plans for those professions. (Pls. Rule 56.1(a)(3) Statement (hereinafter "Pls. St.") ¶¶ 1-3).

In June 2006, Sanchez Paving and the Union entered into a collective bargaining agreement (the Independent Construction Industry Collective Bargaining Agreement, or "ICICBA"). (Defs. Rule 56.1(b)(3)(C) Statement (hereinafter "Defs. St.") ¶3). Under its terms, Sanchez Paving was required to pay union workers certain pre-set wages and to remit monthly benefit contributions and dues reports to the Union. (Pl. St ¶¶ 7, 21, 22). The ICICBA also incorporated a joint agreement between the Union and the Illinois Small Pavers Association ("Joint Agreement, " effective June 1, 2010 through May 31, 2013), which set forth a grievance and arbitration procedure for the resolution of any dispute between Sanchez Paving and the Union. (Defs. St ¶¶ 5-7).[1]

The Union alleges that on or about July 21, 2011, it filed a written grievance against Sanchez Paving accusing it of failing to pay previously agreed upon wages and benefit contributions from June 15, 2006 through March 31, 2011.[2] (Pl. St ¶ 11). Pursuant to Article XVII of the Joint Agreement, the grievance was addressed to a Joint Grievance Committee ("JGC"). The JGC is comprised of three employer representatives and three union representatives, convenes monthly to hear disputes, and has authority to adopt its own rules of procedure. (Dkt. 90-1 at 44-45). Article XVII, Paragraph 2 provides that that a "determination of the JGC shall be governed by majority vote, provided that the Employer representatives and Union representatives shall have equal voting power. If decided by majority vote, the grievance determination and any relief determined to be appropriate shall be final and binding upon all parties." (Pl. St ¶ 10).

The JGC set a November 17, 2011 hearing date for the Union's grievance against Sanchez Paving. (Def. St. ¶ 25). Leading up to the hearing, on October 4, 2011, the Department of Labor and the Federal Bureau of Investigation executed a search warrant against Sanchez Paving, seizing its computers and business records. (Def. St. ¶ 22). On November 10, 2011, Sanchez Paving informed the Joint Grievance Committee that it was dispossessed of the records it needed to defend itself at the hearing and requested a continuance. The Joint Grievance Committee refused that request, and the hearing went forward on November 17, 2011. (Def. St. ¶ 27).

On Thursday, November 17, 2011, the Joint Grievance Committee, by majority vote, entered an award upholding the Union's grievance in its entirety and requiring Sanchez Paving to pay $1, 463, 972.24 in unpaid benefits and $1, 267, 255.60 in unpaid wages, for a total of $2, 731, 227.84. (Pl. St ¶ 12).

ANALYSIS

The Union argues that this Court should enforce the JGC award against Sanchez Paving as a matter of law because, under Merryman Excavation, Inc. v. Int'l Union of Operating Eng'r, Local 150, 639 F.3d 286 (7th Cir. 2011), this Court is without authority to second guess the JGC's determination so long as the Union's claim was covered by the parties' collective bargaining agreement. Sanchez Paving argues that the Union cannot prevail under Merryman because the Union did not properly craft its Complaint, and because the process Sanchez Paving received before the JGC was both procedurally flawed and fundamentally unfair.

A. The Applicable Legal Standard

In Merryman, supra , the International Union of Operating Engineers brought a series of grievances against a union employer, Merryman Excavation, for violations of the parties' collective bargaining agreement. The grievances were argued before a Joint Grievance Committee, which resulted in a JGC award for the union in the amount of $96, 364.72. Merryman filed suit seeking to vacate the award, and the union counterclaimed to enforce it. The District Court granted summary judgment for the union, and the employer appealed. Id. at 287.

In affirming the District Court's ruling, the Seventh Circuit clarified that review of a JGC award is not like review of "a genuine arbitration" under the Federal Arbitration Act, which requires consideration of impartiality. Id. at 290. Instead, "[a] failure to comply with a joint committee award is a breach of a federal labor contract subject to Section 301 [of the Labor Management Relations Act] jurisdiction." Id. 29 U.S.C. § 185. Judicial review in that situation is much narrower: "as long as the parties agreed that a method of dispute resolution would be binding, it is not open to the courts to reweigh the merits of the grievance.'" Id. at 289 ( quoting Gen. Drivers, Warehousement and Helpers, Local 89 v. Riss & Co., 372 U.S. 517, 519 (1963)). Courts can only consider whether the party seeking to avoid the JGC judgment received the procedures agreed upon in the collective bargaining agreement. Accord Lippert Tile Co., Inc. v. International Union of Bricklayers and Allied Craftsmen, Dist. Council of Wisconsin and Its Local 5, 724 F.3d 939, 944 (7th Cir. 2013) ("[T]he judicial inquiry under § 301 must be strictly confined to the question ...


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