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Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc.

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

March 31, 2017

Chicago Regional Council of Carpenters Pension Fund, et al., Plaintiffs,
Schal Bovis, Inc., Defendant.


          Manish S. Shah, Judge

         Plaintiffs are four carpenter union fringe benefit funds. They brought an action under the Employee Retirement Income Security Act and the Labor Management Relations Act against defendant, a general contractor and a signatory to collective bargaining agreements, for failing to make payments to the funds for work performed by nonunion labor. After Judge Coleman granted plaintiffs' partial motion for summary judgment on the issue of defendant's liability for four claims of unpaid fringe benefit contributions, I assessed damages and interest for the unpaid contributions, and I awarded plaintiffs' attorneys' fees. Both parties appealed the final order. The Seventh Circuit reversed the grant of summary judgment as to two claims of unpaid fringe benefit contributions and remanded the case for further proceedings. Defendant now moves for reasonable attorney's fees and to modify the earlier fee award to plaintiffs. For the following reasons, that motion is denied in part and granted in part.

         I. Background

         Since 1983, defendant has been a party to several collective bargaining agreements with the Chicago Regional Council of Carpenters. Through this original agreement and a later agreement that was effective from 2005 to 2008, defendant became a party to several trust agreements that created fringe benefit funds for the carpenters union. The later agreement forbade defendant from hiring subcontractors for “jurisdictional work” if the subcontractors had not signed the agreement. The agreement defined “jurisdictional work” in broad terms: it encompassed carpenter's work, but it did not include work done by other unions in the Building Trades. If defendant hired non-signatories to perform carpenter's work, the agreement obligated defendant to track the hours worked by the subcontractor and to pay the funds fringe benefit contributions for each of those hours.

         An audit of defendant's books from 2006 through 2007 led plaintiffs to demand from defendant eight million dollars in unpaid fringe benefit contributions, liquidated damages, and interest for thirty-six claims of work by non-signatory subcontractors. Plaintiffs pursued eight of those claims against defendant by bringing this action. Shortly thereafter, plaintiffs withdrew four claims. Defendant filed a motion for summary judgment, arguing that it was not liable to plaintiffs for unpaid contributions in the four remaining claims (Monda Window & Door, Edward Don & Company, Timothy Wright, and Canac). Defendant argued it was entitled to a judgment on the Monda Window & Door and the Edward Don & Company claims because those subcontractors performed non-jurisdictional work, which was permissible under the agreement. Defendant noted that plaintiffs exempted other similar claims against defendant when the work involved other trade unions, meaning it was non-jurisdictional work under the agreement. Judge Coleman rejected those arguments and held that defendant did not present enough evidence about the exemptions to lead to the conclusion that plaintiffs exempted those subcontractors because of the contractual language rather than because of individualized accommodations. See [45] at 1.[1]

         With respect to the Timothy Wright and the Canac claims, defendant argued that it should not be held liable because plaintiffs received the required fringe benefit contributions from both subcontractors. Even though Timothy Wright was unable to officially complete a union agreement because it did not secure a bond, defendant argued that Timothy Wright became a signatory through its conduct of making fringe benefit contributions to the funds. Defendant also argued that Canac was effectively the same employer as Qualifit, a union signatory, and since Qualifit made fringe benefit contributions to the funds, defendant could not be liable. Those arguments were rejected. See [45] at 1.

         The parties submitted competing briefs on the issue of damages. Plaintiffs calculated the amount of damages by taking one-third of the total amount of money defendant paid the subcontractors (a common approach for estimating the cost of labor) and multiplying that amount by the fringe benefit rate for the applicable time period. These calculations were presumed correct because defendant maintained substandard records. See Chicago Dist. Council of Carpenters Pension Fund v. Reinke Insulation Co., 347 F.3d 262, 264 (7th Cir. 2003). I relied on plaintiffs' calculations except for when there was other evidence in the record that provided a more precise accounting. I concluded that defendant was liable to plaintiffs for unpaid fringe benefit contributions in the following amounts: $12, 449.25 for the Monda Window & Door claim; $8, 910.00 for the Edward Don & Company claim; $7, 161.00 for the Timothy Wright claim; and $129, 225.50 for the Canac claim. I also held defendant liable to plaintiffs for $102, 799.90 in double interest; for $2, 849.04 in auditor's fees; and for $49, 226.44 in attorneys' fees and costs that plaintiffs accrued through its pre-suit investigation and post-suit efforts, see Montanez v. Simon, 755 F.3d 547, 555 (7th Cir. 2014); BCS Servs., Inc. v. BG Investments, Inc., 728 F.3d 633, 642 (7th Cir. 2013). See [62]; [66].

         Defendant appealed the grant of summary judgment with respect to the Edward Don & Company claim and the Canac claim. Plaintiffs cross-appealed the calculation of damages for the Canac claim. The Seventh Circuit reversed because: (1) the Edward Don & Company claim was non-jurisdictional work, as shown by the terms of the agreement and defendant's evidence that it was the existing practice of the Sheet Metal Workers union to install stainless steel kitchen equipment; and (2) it was an error of law to conclude that defendant could not rely on the single-employer doctrine solely because its contract was with Canac and not Qualifit, and that doctrine shielded defendant from being held liable for violating the agreement by assigning work to Canac. Chicago Reg'l Council of Carpenters Pension Fund v.

         Schal Bovis, Inc., 826 F.3d 397 (7th Cir. 2016), cert. denied, 137 S.Ct. 819 (2017). As a result of this holding, plaintiffs were not entitled to any damages from defendant on the Canac claim and therefore, plaintiffs' issue on appeal was rendered moot. Id. at 400. The Seventh Circuit remanded the case for further proceedings and defendant filed this motion.

         II. Analysis

         A. Defendant's Attorney's Fees

         Section 1132 of the Employee Retirement Income Security Act empowers plaintiffs to bring an action against defendant to recover unpaid fringe benefit contributions. It also permits a court to award attorney's fees in two distinct scenarios. See 29 U.S.C. § 1132(g).[2] Under § 1132(g)(1), a court may use its discretion to decide if reasonable fees and costs should be awarded “to either party” in any action under § 1132, except for the type of action described in (g)(2). Section 1132(g)(2) applies to actions to enforce § 1145, which governs delinquent contributions to multiemployer plans.[3] Under § 1132(g)(2), a court “shall award the plan” fees and costs for a § 1145 enforcement action “in which a judgment in favor of the plan is awarded.” Simply put, (g)(1) covers every action under § 1132 “other than” the type of action outlined in (g)(2), and (g)(2) describes actions to enforce § 1145 in which a judgment was awarded in favor of the plan; the award of fees and costs is discretionary under (g)(1) and mandatory under (g)(2); and, under (g)(1) the court may award fees and costs to “either party, ” but under (g)(2) a court awards fees and costs only to the benefit plan.

         The parties agree that this lawsuit constitutes an action to enforce § 1145 and that plaintiffs are entitled to some relief under § 1132(g)(2) as the prevailing party on the Monda Window & Door and the Timothy Wright claims. See [102] at 4; [106] at 3. The parties dispute whether defendant may nevertheless be entitled to attorney's fees and costs under § 1132(g)(1). Defendant argues that the Seventh Circuit “has often approved attorney's fees awards to successful defendants under either or both of these provisions.” See [101] at 3. Plaintiffs correctly note, however, that none of the cases defendant cites in support of that statement stand for the proposition that a defendant is entitled to attorney's fees when the action is one described by § 1132(g)(2).[4]

         Plaintiffs also argue that § 1132(g)(1) “by its express terms” does not apply to this action “[b]ecause judgment was entered in favor of [plaintiffs].” [102] at 4. Defendant responds that such an interpretation would be inconsistent with the legislative history of § 1132(g). According to defendant, Congress added paragraphs (g)(1) and (g)(2) “in order to make it easier for fringe benefit funds to collect penalties and attorney's fees as a matter of right and not something which previously had been within a court's discretion.” [106] at 5. Defendant emphasizes that “[n]owhere in this history did Congress state [. . .] that it intended to ...

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