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Teamsters and Employers Welfare Trust of Illinois v. Gwillim Trucking, Inc.

United States District Court, C.D. Illinois, Springfield Division

February 14, 2017

TEAMSTERS AND EMPLOYERS WELFARE TRUST OF ILLINOIS, Plaintiff,
v.
GWILLIM TRUCKING, INC., Defendant.

          OPINION

          SUE E. MYERSCOUGH, UNITED STATES DISTRICT JUDGE

         Now before the Court is Plaintiff Teamsters and Employers Welfare Trust of Illinois' Combined Motion and Memorandum of Law for Summary Judgment Against Gwillim Trucking, Inc. (Mot. for Summ. Judg.) (d/e 14). Plaintiff's motion is GRANTED IN PART and DENIED IN PART. There is no genuine dispute of material fact regarding the amount owed to Plaintiff by Defendant Gwillim Trucking, Inc. for the time period beginning on January 1, 2007, and ending on June 30, 2014. However, Defendant has raised a genuine dispute of material fact regarding the amount it owes Plaintiff for the time period beginning on July 1, 2014, and ending on September 30, 2015.

         I. INTRODUCTION

         Plaintiff is a trust fund administered to provide participating employees with health and welfare benefits. Plaintiff receives contributions from employers and employer associations pursuant to agreements, including participation agreements and collective bargaining agreements, between local unions and employers and employer associations. Defendant employs individuals who are members of, and represented by, Chauffeurs, Teamsters, Warehousemen, and Helpers, Local Union No. 525 (Local 525).

         On December 11, 2014, Plaintiff filed a three-count Complaint (d/e 1) alleging that Defendant had failed to pay Plaintiff contributions as required by collective bargaining agreements and the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. Count I of Plaintiff's Complaint alleges that Defendant is liable to Plaintiff for unpaid contributions that came due between February 2014 and October 2014. Count II alleges that Defendant is liable to Plaintiff for unpaid contributions that came due between January 2007 and December 2009. Count III alleges that Defendant is liable to Plaintiff for unpaid contributions that came due after December 2009. Plaintiff also seeks liquidated damages, audit costs, and attorney's fees.

         Plaintiff seeks summary judgment on Counts II and III of its Complaint. Plaintiff argues that Defendant owes it money as a result of failing to make payments required by collective bargaining agreements and a participation agreement, a point that Defendant does not dispute. Plaintiff also argues that Defendant has not raised any genuine dispute of material fact regarding the amount owed by Defendant to Plaintiff, an amount derived from audit reports prepared at Plaintiff's request and based on Defendant's tax and payroll records. In response, Defendant argues that criminal charges recently filed against its business manager raise a genuine dispute of material fact regarding the amounts owed to Plaintiff. Plaintiff disagrees that the pending criminal charges create a genuine dispute of material fact as to the amount it is owed.

         II. BACKGROUND

         The parties do not dispute the majority of the facts relevant to this action. Defendant was a signatory to three collective bargaining agreements with Local 525. See Mot. for Summ. Judg., Exs. 2A, 2B, 2C. The three agreements covered, respectively, the time periods from October 2, 2006 to September 30, 2009; from October 2, 2009 to September 30, 2012; and from October 1, 2012 to September 30, 2015. All three collective bargaining agreements required Defendant to make weekly contributions to Plaintiff for each covered employee who had been on Defendant's payroll at least 31 days and had worked any portion of a payroll week. Mot. for Summ. Judg., Ex. 2A, Article 20; Ex. 2B, Article 20; Ex. 2C, Article 20. The agreements also required employers who were delinquent in their contributions to pay attorney's fees and collection costs.

         The rates at which the Defendant was obligated to contribute to Plaintiff varied not only from agreement to agreement, but also from year to year. For example, in the collective bargaining agreement covering October 2, 2006 through September 30, 2009, Defendant was obligated to pay $160.00 per week per qualifying employee in the first year, $183.00 per week the second year, and $210.00 per week the second year. Mot. for Summ. Judg., Ex. 2A, Article 20. The agreement covering October 2, 2009 through September 30, 2012, imposed rates for each year at $176.00 per week, $202.00 per week, and $231.00 per week, respectively. Mot. for Summ. Judg., Ex. 2B, Article 20. The agreement covering October 1, 2012 through September 30, 2015, imposed rates for each year at $200.00 per week, $229.00 per week, and $262.00 per week, respectively. Mot. for Summ. Judg., Ex. 2C, Article 20. If Defendant paid a qualifying employee wages for any portion of a payroll week for work performed under a collective bargaining agreement, the full weekly contribution amount was due from Defendant to Plaintiff for that employee; no pro rata payments were contemplated by the parties.

         In addition, Defendant was a signatory to a participation agreement with Plaintiff during the time frame covered by the collective bargaining agreements. Under this agreement, Defendant was required to remit contributions to Plaintiff for employees that did not fall under the purview of the collective bargaining agreements. Mot. for Summ. Judg., Ex. 3A. The rates at which these contributions for non-bargaining employees were to be paid and the formula applied to determine whether payments were due were identical to those imposed on Defendant by the collective bargaining agreement in effect at the time. Id. ¶ 6.

         The collective bargaining agreements entered into by Local 525 and Defendant and the participation agreement entered into by Plaintiff and Defendant imposed the terms of Plaintiff's trust agreement on Defendant. Mot. for Summ. Judg., Ex. 2A, Article 20; Ex. 2B, Article 20; Ex. 2C, Article 20; Ex. 3A, ¶ 1. The trust agreement authorizes Plaintiff to audit an employer's employment and payroll records, recover liquidated damages from delinquent employers in the amount of 10% of the total owed, and recover costs and expenses, including attorney's fees and audit costs. Mot. for Summ. Judg., Ex. 1A, Section 4.4.

         As authorized by the trust agreement, Plaintiff hired Zenith American Solutions (Zenith) to conduct an audit of Defendant's payroll records from January 1, 2007 to December 31, 2009. The audit report prepared by Zenith concluded that Defendant owed Plaintiff $33, 201.00 in unpaid contributions. Mot. for Summ. Judg., Ex. 3B. Adding $3, 320.10 in liquidated damages (10 percent of the total owed) and $617.50 in audit charges, Defendant owed Plaintiff a total of $37, 138.60 for the time period of January 1, 2007 to December 31, 2009. Id. Payments subsequently made by Defendant lowered its obligation to Plaintiff for this time period to $24.138.60. A copy of Zenith's audit report was sent to Defendant with a letter explaining that Defendant could challenge the report's findings.

         Plaintiff subsequently hired Zenith to examine Defendant's payroll records from January 1, 2010 to December 30, 2015. Defendant did not provide all the documents requested by Zenith with respect to the audit. Nevertheless, based on the documents Defendant did produce-various tax forms and a payroll transaction report-Zenith prepared another audit report, which concluded that Defendant owed Plaintiff $640, 743.00 in delinquent contributions, $64, 074.30 in liquidated damages, and $6, 370.00 for audit costs, for a total of $711, 187.30. See Mot. for Summ. Judg., Ex. 5B. However, the most recent collective bargaining agreement between Local 525 and Defendant expired on September 30, 2015; therefore, Defendant was not obligated to make contributions to Plaintiff in October, November, or December of 2015. According to the second audit report, Defendant owes Plaintiff $639, 186.80 for the time period starting on January 1, 2010, and ending on September 30, 2015. This revised total amount breaks down as follows: $575, 288.00 in delinquent contributions, $57, 528.80 in liquidated damages, and $6, 370.00 for audit costs. A copy of this second Zenith audit report was sent to Defendant with a letter explaining that Defendant could challenge the report's findings.

         On October 17, 2016, the Macoupin County State's Attorney charged Kari A. McKinney, Defendant's office manager, with one count of theft, alleging that Ms. McKinney stole between $100, 000 and $500, 000 from Defendant. Def. Response Mot. for Summ. Judg. (d/e 20), Ex. 1, p. 6. Approximately one month later, on November 16, 2016, the Macoupin County State's Attorney filed 98 additional counts against Ms. McKinney. See Def. Response Mot. for Summ. Judg., Ex. 1, pp. 7-113. These counts allege that from July 2014 to February ...


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