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Trustees of Suburban Teamsters of Northern Illinois Welfare and Pension Funds v. TMR Services, Inc.

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

March 20, 2018

Trustees of the Suburban Teamsters of Northern Illinois Welfare and Pension Funds, Plaintiffs,
TMR Services, Inc., Defendant.


          Manish S. Shah United States District Judge.

         The Trustees of the Suburban Teamsters of Northern Illinois Welfare and Pension Funds bring this action against TMR Services under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1132 et seq., for delinquent fringe-benefit contributions. The parties filed cross-motions for summary judgment. For the following reasons, plaintiffs' motion for summary judgment is granted, and defendant's motion for summary judgment is denied.

         I. Legal Standards

         Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A genuine dispute as to any material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A court must view all facts and reasonable inferences in the light most favorable to the non-moving party. Roh v. Starbucks Corp., 881 F.3d 969, 973 (7th Cir. 2018). On cross-motions for summary judgment, a court must draw inferences “in favor of the party against whom the motion under consideration was made.” Hess v. Reg-Ellen Mach. Tool Corp., 423 F.3d 653, 658 (7th Cir. 2005) (citation omitted). “Cross-motions must be evaluated together, and the court may not grant summary judgment for either side unless the admissible evidence as a whole-from both motions-establishes that no material facts are in dispute.” Bloodworth v. Vill. of Greendale, 475 Fed. App'x 92, 95 (7th Cir. 2012).

         II. Background

         Martin Rodin was the president and sole shareholder of TMR, an Illinois corporation that provided trucking services. [35] ¶ 5; [45] ¶¶ 3, 6.[1] On June 25, 2014, TMR signed a Memorandum of Agreement with the teamsters' union, in which TMR agreed to be bound by a collective bargaining agreement, effective from June 1, 2012 through May 31, 2017. [45] ¶¶ 13-14. The agreement obligated TMR to pay monthly fringe-benefit contributions to the funds on behalf of covered employees. Id. ¶ 15. The union, under the agreement, also had the right to inspect and to audit TMR's payroll records. [35] ¶ 10.

         All of TMR's truck-driving employees, including Rodin, held Illinois commercial drivers' licenses and were represented by the union. [35] ¶ 20; [45] ¶ 5. It was TMR's practice to require its union-member employees to fill out work tickets contemporaneously when they drove for TMR; the work tickets identified: (1) the employee's name, (2) the date the employee performed the work, (3) the name of the contractor or project for which the employee performed the work, (4) the number of hours the employee spent driving, and (5) an approval signature from the contractor or the project superintendent. [45] ¶ 9. In accordance with this practice, even though Rodin was the owner and a salaried employee, he filled out work tickets whenever he drove a truck for TMR. Id. ¶¶ 7, 10.

         Rodin worked six to seven days a week. [25-2] at 6, 17:5-7. Most of the time, though, Rodin was not driving a truck; instead, he served as TMR's office manager, overseeing the company's daily operations. [45] ¶ 7. In his capacity as office manager, Rodin managed TMR's submission of fringe-benefit contributions to the funds. Id. For every form that TMR submitted to the union, Rodin signed the following certification: “I certify the above is true and complete reporting of hours, weeks and/or days by employees represented in the Collective Bargaining (or participation) Agreement.” [51] ¶ 2. TMR contributed 350 hours' worth of welfare contributions on Rodin's behalf for the month of November 2014 so that Rodin could obtain welfare eligibility, even though he had nothing to support his claims of working these 350 hours. [35] ¶ 18. In order to maintain that welfare eligibility, TMR continued to contribute 100 hours' worth of welfare contributions on Rodin's behalf per month until December 2015.[2] Id. ¶ 19. Since it was only possible for TMR to make 160 hours' worth of welfare contributions on Rodin's behalf in the month of November 2014, the 350 hours' worth of contributions for that month raised a red flag. [25-4] at 86, ¶ 9. In December 2015, the funds sent a notification that TMR could no longer contribute on Rodin's behalf on an hourly basis. [35] ¶ 17. Thereafter, TMR stopped making such contributions. Id.

         The union audited TMR. Id. ¶ 21. After reviewing all of TMR's books and records, the union's auditor concluded that TMR owed $16, 485.02 in weekly contributions, liquidated damages, and interest on behalf of Rodin for the period May 2014 through December 2015. Id. ¶¶ 24, 27; [45] ¶ 24; see also [25-4] at 92-94. The audit calculated TMR's liability by assuming that Rodin worked a sufficient amount of time each week to justify the full weekly contribution and multiplying the weekly contribution rate for every week during the audit period[3]; and the audit credited TMR for the welfare contributions it had already paid on Rodin's behalf during the audit period. [25-4] at 92-94. TMR challenged the audit report, asserting that TMR was only obligated to remit weekly fringe-benefit contributions based on the actual amount of covered work Rodin performed during the audit period. [45] ¶ 28; [36-4] ¶¶ 3-6, 10, 19. Rodin says that that his work tickets document the actual hours of truck-driving work he performed during the audit period. [45] ¶ 31; see also [25-2] at 6, 15:10-16:22; id. at 7-8, 18:1-25:19; id. at 9, 27:1-28:23; [36-5] ¶ 7. Beyond those tickets, however, TMR concedes that it does not have any records of Rodin's hours when he was not performing covered work. [35] ¶ 25; [51] ¶ 17.

         The Trustees, as fiduciaries of the funds, [35] ¶ 3, bring this collection action for payment of TMR's delinquent contributions. They seek $16, 485.02 in health and welfare and pension contributions, 10% liquidated damages on late and unpaid amounts, and interest. [26] at 10.

         III. Analysis

         The Trustees move for summary judgment, arguing that TMR was required to make contributions to the funds for all the work Rodin performed, regardless of whether it was covered or non-covered work. [26] at 5 (citing McCleskey v. DLF Const., Inc., 689 F.3d 677 (7th Cir. 2012)). The Trustees assert, as a general rule, that employers must make fringe-benefit contributions on its employees' behalves for both covered and non-covered work. [43] at 6-7 (citing Laborers' Pension Fund v. C.A. Sementa Contractors, Inc., 82 C 4028 (N.D. Ill. Oct. 26, 1983)). TMR disagrees and it argues that McCleskey is distinguishable because that case turned on the interpretation of an agreement with hourly reporting obligations unlike the agreement involved in this case. [33] at 9 (citing McCleskey, 689 F.3d at 679).

         McCleskey and Sementa do not state a general proposition; rather, each court analyzed the relevant agreement and applied the force of that language to the facts in each case. While it is clear from McCleskey that the Seventh Circuit permits a finding that an employer must make fringe-benefit contributions for covered and non-covered work, that does not compel the same conclusion here. District court decisions like Sementa are merely persuasive authority; their holdings are not binding on this court. Thus, the task at hand is to determine the meaning of the agreement and then to decide whether TMR complied with its obligations.

         Here, parties have differing interpretations of the agreement. The Trustees argue that the agreement requires TMR to make weekly contributions for Rodin's benefit because Rodin is an owner and not a regular employee. [26] at 6; [43] at 5. By contrast, TMR argues that the agreement bases an employer's contribution obligation on the manner in which the employee is compensated. [33] at 7. TMR does not believe it had to remit weekly contributions on Rodin's behalf if Rodin did not perform covered work during that week. Id. at 6, 8. Furthermore, it argues that for weeks when Rodin performed covered work, the agreement prorates TMR's contribution according to the number of days that Rodin drove a truck for TMR (25% per day with a cap of four days). Id. at 9. To support this reading of the agreement, TMR points to the “limiting language” in Articles ...

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