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Chicago Area International Brotherhood of Teamsters Severance & Retirement Fund v. Sebert Landscaping Co.

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

October 27, 2016

CHICAGO AREA INTERNATIONAL BROTHERHOOD OF TEAMSTERS SEVERANCE AND RETIREMENT FUND, et al., Plaintiffs,
v.
SEBERT LANDSCAPING CO., Defendant.

          MEMORANDUM OPINION AND ORDER

          Andrea R. Wood United States District Judge.

         Plaintiffs Chicago Area International Brotherhood of Teamsters Severance and Retirement Fund (“the Fund”) and its Trustees have brought this action under the Employee Retirement Income Savings Act (“ERISA”), 29 U.S.C. § 1001 et seq.[1] The Fund and the Trustees allege that Defendant Sebert Landscaping Company (“Sebert”) improperly refused to allow the Fund to audit its records and also failed to make certain payments to the Fund as required by the multiemployer collective bargaining agreements (“CBAs”) to which Sebert was a party. In its defense, Sebert contends that some of the employees for whom the Fund seeks contributions were not in fact entitled to contributions. After Sebert finally submitted to an audit, the parties filed cross-motions for summary judgment. For the reasons that follow, the Court grants summary judgment in favor of the Fund.

         BACKGROUND

         I. The Parties and the CBAs

         The Fund is a multiemployer severance and retirement benefit plan located in Illinois.[2]Sebert is a small landscaping company located in Illinois. Sebert must contribute to the Fund pursuant to a series of multiemployer CBAs into which it entered with the International Union of Operating Engineers Local 150, AFL-CIO (“Local 150”) and the International Brotherhood of Teamsters Local 703 (“Local 703”). (See Def.'s Resp. Pls.' Statement of Undisputed Material Facts (“SOF”) ¶ 2, Dkt. No. 64.) Neither local is party to this lawsuit.[3]

         The CBA required Sebert to contribute to the Fund for each hour that a member of Local 150 or Local 703 worked in certain job titles, provided that the member “had completed his or her probationary period.” (See, e.g., 2010 CBA Art. VII(D) at 30 of 36, Dkt. No. 45-4.)) Those job titles include Truck Driver, Water Truck Operator, and Installer. (Id.)

         The CBA describes an Installer as a worker “engaged primarily in the non-mechanized laying of, mechanized cutting of and/or non-mechanized decorative arrangement of paving bricks; building of retaining walls; and the non-mechanized laying of, installation of and/or assembly of irrigation pipe.” (2010 CBA Art. IV at 5 of 36.) The CBA required Sebert to maintain at least one Installer “on any job requiring work building retaining walls or brick paving” and at least two Installers “[o]n any landscape project for which [Sebert] contract[ed] solely for work requiring the building of retaining walls or brick paving.” (2010 CBA Art. II(c) at 2 of 36.)

         The CBA describes a Landscape Helper as “work[ing] with and assist[ing] Installers, ” among other job titles, “in the performance of all landscape work covered by” the CBA. (2010 CBA Art. IV at 5-6 of 36.) The CBA further prohibits Landscape Helpers from “perform[ing] any duties that are assigned exclusively to other classifications in this agreement.” (Id.) In addition, after completing three seasons as a Landscape Helper, a worker is “eligible for promotion to the Plantsmen or Installer Trainee classification provided the employee meets” certain other criteria. (Id. at 9 of 36.)

         Pursuant to the CBA, the Trustees have adopted procedures for collecting delinquent contributions (“Collections Procedures”).[4] The Collections Procedures define what makes a contribution delinquent and dictate what additional payments Sebert must make if its contributions are delinquent. Finally, the Trust Agreement provides that an employer must pay the Fund's expenses incurred in collecting delinquent contributions from that employer, including attorneys' fees. (See Def.'s Resp. Pls.' SOF ¶¶ 13-21.)

         II. Sebert's Purported Classification of Employees

         At issue in this case are Sebert's classifications of certain employees during several different years. In 2009, Sebert classified three employees as Installers: Adalberto Correa- Hernandez, Alberto Lopez, and Pedro Garcia. Sebert also classified Agustin Rivera as a Water Truck Driver and two other employees as Landscape Helpers. (Id. ¶ 35.)

         According to Sebert, these classifications changed for 2010. Either in late 2009, early 2010, or both, Sebert's Construction Manager, Gary Stofcheck, and its Human Resources Manager, Maria Alfaro, met with Mario Martinez, the Local 703 business agent assigned to Sebert. (Def.'s Resp. Pls.' SOF ¶ 52.) Stofcheck and Alfaro told Martinez that because Sebert's revenue was declining, it would either have to reclassify as Landscape Helpers certain employees who had been Installers or decline to recall those employees from layoff for the 2010 landscaping season. (Id. ¶ 53.)

         Although the parties now agree that Martinez indicated that the reclassification might be acceptable, they dispute the conditions of his acceptance. (See Def.'s Resp. Pls.' SOF ¶ 55.) According to the Fund and the Trustees, Martinez stated that the Fund would accept the reclassification only if the reclassified employees did not continue to perform the job duties of Installers. (Id.) Sebert, on the other hand, contends that Martinez conditioned consent only on Sebert's commitment to give the affected employees an opportunity for reinstatement to the Installer position when business improved. (Id.) Sebert further asserts that, “Martinez knew that, as a result of the reclassification, there were no employees classified as Installers and that installation work therefore had to be done by employees classified as Landscape Helpers.” (Id. ¶ 56.) Whether or not Martinez actually knew this-and whether or not that knowledge makes a difference-the parties agree that Sebert never actually informed Local 703 that the employees reclassified from Installers to Landscape Helpers would continue to install paving bricks and retaining walls. (Id. ¶ 56.)

         On or about March 31, 2010, Sebert notified Local 703 that it had reclassified Correa-Hernandez, Lopez, and Garcia as Landscape Helpers. (Id. ¶ 57.)[5] Sebert classified no employees as Installers in 2010. (Id. ¶ 49.) In 2011, Sebert classified Lopez and Garcia as Landscape Helpers and no employees as Installers. (Id. ¶ 37). Because it classified no employees as Installers in 2010 or 2011, Sebert refused to remit any contributions to the Fund for those years. (Id. ¶ 49.) Finally, in 2012, Sebert classified two employees as Installers: Lopez and Carlos Quinones. (Id. ¶ 38.) That year, Sebert also classified three employees as Landscape Helpers. (Id.)

         III. The Audit

         On April 29, 2013, the Fund notified Sebert that the Fund would be conducting an audit of its books and records to confirm that it had contributed to the Fund as required by the CBA. (Id. ¶ 25.) On July 30, 2013, an auditor for the Fund, Tim Heilenbach, notified Sebert that for the audit Sebert would have to provide certain records for the period January 1, 2009 through December 31, 2012. (Id. ¶ 26.) Sebert admits that its “initial response to the auditors” was to “refus[e] to provide” certain records. (Id. ¶ 27.) The Fund and the Trustees then commenced this action on January 17, 2014.[6] The initial complaint alleged that Sebert had failed to pay contributions owed to the Fund. A few weeks later, Sebert indicated that ...


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