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Central States, Southeast and Southwest Areas Health and Welfare Fund v. Team Financial Federal Credit Union

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

September 1, 2017

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND; and ARTHUR H. BUNTE, JR., as TRUSTEE, Plaintiffs,
v.
TEAM FINANCIAL FEDERAL CREDIT UNION, Defendants.

          MEMORANDUM OPINION AND ORDER

          Virginia M. Kendall District Court Judge Northern District of Illinois

         Multiemployer pension fund Central States, Southeast and Southwest Areas Health and Welfare Fund and its Trustee Arthur H. Bunte, Jr., filed this suit against Team Financial Federal Credit Union to collect unpaid contributions, attorneys' fees and costs, and audit fees and costs that Central States claims employer Team owes to it pursuant to Section 502(g)(2) of ERISA, 29 U.S.C. § 1132, and the Agreements between the parties. The parties filed cross-motions for summary judgment. For the following reasons, the Court grants Central States's Motion for Summary Judgment [39] and denies Team's Motion for Summary Judgment [42].

         BACKGROUND

         The parties do not dispute the following facts unless otherwise noted.

         Plaintiff Central States, Southeast and Southwest Areas Health and Welfare Fund (“Central States” or “Fund”) is a large multiemployer benefit plan that serves as a trust fund for health, welfare, and pension benefits to employees at affiliated employers. The Fund relies on contributions from employers pursuant to collective bargaining agreements and/or participation agreements that have been negotiated with employers.[1] (Dkt. 51, ¶ 3.) Defendant Team Financial Federal Credit Union (“Team”), a credit union, engaged Central States as a benefits fund for at least some of its employees. (Dkt. 51, ¶¶ 5-6.)

         I. The 1991 Agreement & Team's Contributions

         On February 13, 1991, Team first entered into a Participation Agreement with the Fund (“1991 Participation Agreement”). (Dkt. 51-1, at 15, Ex. B.) At that time, Central States used the same Participant Agreement template for all employers regardless of whether they were a party to a collective bargaining agreement (“CBA”) with a union or, like Team, they were not party to a union CBA.[2] (Dkt. 51, ¶¶ 9, 11.) Because of this, the provisions of Team's 1991 Participation Agreement with Central States referred to a union and CBA even though Team's employees had neither. (Dkt. 51, ¶ 11.) For example, the 1991 Participation Agreement states: “[T]he Union and the Employer have entered into a collective bargaining agreement which provides for participation in the…FUND in order to obtain retirement and/or health benefits for employees (classification: Manager & Clerk) represented by the Union and employed by the Employer.” (Dkt. 51-1, at 15.) Similarly, at the end of the document, the lines for the Union signature remain blank, while a Team representative signed the document as Employer. (Dkt. 51-1, at 16.)

         In that Agreement, Team agreed to contribute $78.00 per week to the fund “for its bargaining unit Employees pursuant to the terms of the collective bargaining agreement” and “only for such Employees” would the sum increase to $85.00 per week effective March 1, 1992 and $93.00 per week effective March 1, 1993.[3] (Dkt. 51-1, at 15, ¶ 5.) The Employer and Union agreed to “represent to the Trustees that payments will be made only on behalf of Employees in the collective bargaining unit, excluding, by way of example…supervisors, among others” and to report to the Fund “any changes in the status of members that are applicable.” (Id., ¶¶ 6, 9.) The Agreement states that it “shall continue in full force and effect until such time as the Employer notifies the Fund[] by certified mail.” (Id., ¶ 7.)[4]

         The Participation Agreement goes on to define “Employee” as:

A person (other than a person employed in a supervisory capacity) who has been on the payroll of an Employer for at least thirty (30) days who is employed under the terms and conditions of a collective bargaining agreement as entered into between an Employer and a Union, and on whose behalf contributions are required to be made;… or [a]ll persons employed by the Union, as herein defined, upon being proposed by the Union and after acceptance by the Trustees…

         (Dkt. 51-1, at 16, ¶ 13) (emphasis added.) This Participation Agreement also refers to the Trust Agreement (“Trust Agreement”), stating:

The Union and the Employer agree to be bound by, and hereby assent to, all of the terms of the Trust Agreement(s) creating said…FUND, as amended, all of the rules and regulations heretofore and hereafter adopted by the Trustees of said Trust Fund(s) pursuant to said Trust Agreement(s), and all of the actions of the Trustees in administering such Trust Fund(s) in accordance with the Trust Agreement(s) and rules adopted.

         (Dkt. 51-1, at 15, ¶ 1.) The Trust Agreement as amended provides that Illinois law should govern it “except as such laws may be preempted by the laws and regulations of the United States.” (Dkt. 41-2, at 27, Art. XI, § 7.) The Trust Agreement specifies:

The ten-year Statute of Limitations applicable to actions on written contracts in the State of Illinois shall apply, provided that the limitations period for any such action shall not begin to accrue until the date upon which the Trustees and the Fund receive actual notice of the cause of action, claim and liability....

(Id.) In addition to the definition of “Employee” in the Participation Agreement, the Trust Agreement provides:

All persons employed by an Employer…as herein defined, under the terms and conditions of a Collective Bargaining Agreement entered into between the Employer and a Union…and such other employees of the Employer as are proposed by the Employer and accepted by the Trustees, on whose behalf payments are required by agreement of the Employer or applicable law to be made to the Fund by the Employer…

         (Dkt. 41-2, at 5, Art. I, § 3) (emphasis added.)[5] The Trust Agreement reinforced that “[e]ach Employer shall remit continuing and prompt contributions to the Trust Fund as required by…applicable law and all rules and requirements for participation…as established and interpreted by the Trustees…” (Dkt. 41-2, at 12, Art. III, § 1.)[6]

         Indeed, Team began to remit payments in 1991 on behalf of two employees: Carla Punch(“Punch”) and Lynda Milton (“Milton”). (Dkt. 51, ¶¶ 43-44.) Punch, a clerk at Team, had contributions paid on her behalf until July 1992. Milton served in a supervisory capacity as Manager at Team until 2001 when she transitioned to her role as CEO. Team continued to contribute on Milton's behalf, and only Milton's behalf, from August 1992 until August 2015.

         (Dkt. 51, ¶¶ 28, 43.) Neither belonged to a union. (Dkt. 51, ¶¶ 43-44, 60.)

         II. Participation Agreements & Team's Contributions from 2001 - 2012

         Come 2001, Central States had developed a Participation Agreement template specifically for employers who were not party to a CBA (“2002 Participation Agreement”). (Dkt. 51, ¶ 18; Dkt. 41-4, Ex. 2, at 10-11; Dkt. 41-3, ¶ 14.) Central States mailed the new form to Team on November 7, 2001, outlining that Team would need to contribute $174.90 to the Health and Welfare Fund “on behalf of each Employee for each week during which the Employee either works or receives compensation” starting March 3, 2002. (Dkt. 41-4, ¶ 3.) The 2002 Participation Agreement required Team to “report changes in its workforce” and explicitly stated that Illinois's 10-year statute of limitations would apply to any claim, which would start to run after the Fund received written notice of the liability. (Dkt. 41-4, ¶ 6.) To this end, the Trust Agreement maintained a 10-year limitations period that did not accrue “until the date upon which the Trustees and the Fund receive actual notice of the cause of action, claim and liability to which the limitations period is applicable.” (Dkt. 51, ¶ 34.)

         Perhaps most notably, the 2002 Participation Agreement defined “Employee” in as “each and every individual employed by [Team] on either a full-time or part-time basis.” (Dkt. 41-4, ¶ 7.) Team did not sign the 2002 Participation Agreement but remitted contributions on Milton's behalf in accord with the new rate of $174.90 as of March 3, 2002. (Dkt. 51, ¶ 19.)

         This pattern continued over the following years: Central States would mail a new Participation Agreement to Team and, though the Agreements went unsigned, Team would pay contributions on Milton's behalf consistent with the rate change. Indeed, Central States mailed a new Participation Agreement to Team in 2002, 2003, 2006, 2009, and 2012.[7] In each of those years, Team did not sign the Agreement. Yet for each rate increase, Team paid Central States weekly contributions on Milton's behalf that reflected those changes. (Dkt. 51, ¶¶ 20-24.) Team's payments responded to monthly bills that included a clause requiring Team to “…represen[t] that all employees eligible to participate in the Funds…are being reported and only eligible employees are being reported.” (Dkt. 51, ¶ 46.) Further, each of these agreements required Team to pay on behalf of “each and every individual employed by [Team] on either a full-time or part-time basis.” (Dkt. 51, ¶ 25.) The Fund relies on employers to self-report the work records of its eligible employees. (Dkt. 51, ¶¶ 45, 59.) Each Agreement also provided that “[Team] agrees to be bound by the terms of the…Fund trust agreement and all amendments adopted in the future….” (Dkt. 51, ¶ 26.)

         Since the 1991 Participation Agreement, Team hired and employed Delores Gentry, Shelia Taylor, and Maria Hinojos. Team employed Delores Gentry (“Gentry”) starting in 1997 and since 2006 she served as the Operations Manager. (Dkt. 51, ¶¶ 61-62.) Team employed Shelia Taylor (“Taylor”) as a loan officer from January 2009 through December 2015. (Dkt. 51, ¶ 63.) After March 2, 2014, each worked more than 20 hours per at Team. (Dkt. 51, ¶¶ 61-64.) And from February 2006 to October 2010, Team employed Maria Hinojos as a bilingual loan officer who also performed office administrative tasks. (Dkt. 51, ¶ 65.) Team offered the opportunity to participate in the Fund to Gentry, Taylor, and Hinojos at or around the time of their hire with the understanding that these employees would ...


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