United States District Court, N.D. Illinois, Eastern Division
Trustees of the Suburban Teamsters of Northern Illinois Welfare and Pension Funds, Plaintiffs,
v.
TMR Services, Inc., Defendant.
MEMORANDUM OPINION AND ORDER
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”
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