Opinion
Case No. 3:06CV1395.
August 31, 2007
MEMORANDUM DECISION AND ORDER
The parties have consented to have the undersigned Magistrate conduct all proceedings and enter judgment in this breach of contract case filed pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., 1132 and 1145 and the Labor Management Relations Act (LMRA), 29 U.S.C. § 185 et seq. Pending are the parties' Cross-Motions for Summary Judgment (Docket Nos. 21 22) and Plaintiff's Memorandum In Opposition to Defendant's Cross-Motion for Summary Judgment (Docket No. 23). For the reasons that follow, Plaintiff's Motion for Summary Judgment is granted in part and Defendant's Motion for Summary Judgment is granted in part.
FACTUAL BACKGROUND
The basic facts of this case are uncontroverted. Plaintiff is a duly acting depository for the plans and trusts created and maintained pursuant to collective bargaining agreements (CBA), addenda to such agreements and trust agreements between United Association of Union Plumbers and Pipefitters Local 50 (Local No. 50) and Defendant (Docket No 1, ¶ 1).
Defendant is an Ohio corporation engaged as a mechanical contractor in the construction industry. Keith Helminski is Defendant's president (Docket No. 22). Defendant is bound by CBAs with the Laborers International Union of North America, Local No. 500 (Laborers) and Local No. 50 (Docket No. 1, ¶ 3 and Docket No. 22, Exhibit 6). Defendant is also bound by the National Services and Maintenance Agreement for the United Association of Journeymen and Apprentices and Mechanical Service Contractors of America (Docket No. 1, Exhibit A).
For all employees covered by these agreements, Defendant is required to make contributions to all fringe benefit plans, funds or programs. Plaintiff relies, in part, on employer's own reporting techniques to determine the amount of contributions made. Plaintiff monitors the employer's compliance with these requirements through a random audit. Plaintiff selected Defendant for an audit in January 2005 for the period beginning January 1, 2003. Mr. Helminski submitted only those records of contributions paid on behalf of the participants in Local 50. Defendant claims that in June 2005, he was apprised that the examination of his payroll records revealed that contributions were properly made for the period of January 2003 through March 2005.
In August 2005, Defendant was advised of a payroll audit by the Monroe, Michigan Plumbers Pipefitters Local 671 Benefit Fund. Defendant complied with the request by submitting only records pertaining to anyone hired through the Local 671 hiring hall in 2004 (Docket No 22).
In 2005, Defendant began working on a City of Toledo construction project. Defendant employed laborers to complete the project (Docket No. 22, p. 2). On December 5, 2005, Local 50 claimed jurisdiction over the project and filed a grievance against Defendant for hiring laborers to install piping on a filtration system (Docket No. 22, pp. 2-3). On January 27, 2006, the Labor Management Committee (LMC) found that Defendant violated Local 50's jurisdiction and was liable to Local 50 for work performed on the city project by Helm employees (Docket No. 22, p. 3). In July 2006, the National Labor Relations Board issued a Decision and Determination of Dispute finding that Defendant properly assigned the disputed work to laborers rather than Local 50 members. LMC withdrew its decision and award in August 2006 (Docket No. 22, p. 5).
In the meantime in January 2006, Defendant was selected for another audit by Local 50 Benefit Plan for the period of April 1, 2005 (Docket No. 1, ¶ 7). Defendant submitted what it considered the applicable records for years 2003, 2004 and 2005 to the auditor (Docket No. 1, ¶ 9; Docket No. 22, p. 3). On May 22, 2006, the auditor requested the "remaining documentation" needed to complete a full audit (Docket No. 1, ¶ 10). As of October 26, 2006, Defendant had failed to provide the "remaining documentation" requested for completion of an audit (Docket No. 1, ¶ 10).
Plaintiff filed this case seeking an order to compel Defendant to comply with its discovery requests made in May 2006. Both parties filed Motions for Summary Judgment.
SUMMARY JUDGMENT STANDARD
The summary judgment procedure is designed to dispose of cases wherein there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. See FED. R. CIV. P. 56. Summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, with the affidavits if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Copeland v. Machulis, 57 F.3d 476, 478 (6th Cir. 1995) ( citing LaPointe v UAW, Local 600, 8 F.3d 376, 378 (6th Cir. 1993)).
The moving party bears the initial burden of establishing an absence of evidence to support the non-moving party's case. Celotex Corporation v. Catrett, 106 S. Ct. 2548, 2552-2553 (1986). In the face of Defendant's properly supported Motion for Summary Judgment, the Plaintiff cannot rest on his or her allegations to get to the jury without significant probative evidence tending to support the complaint. Anderson v. Liberty Lobby, Incorporated, 106 S. Ct. 2505, 2510 (1986) ( citing First National Bank of Arizona v. Cities Services Co., 88 S. Ct. 1575, 1593 (1968)). The mere existence of a scintilla of evidence to support plaintiff's position will be insufficient; there must be evidence on which a jury could reasonably find for the plaintiff. Id. at 2512.
To oppose a motion for summary judgment successfully, the "opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S. Ct. 1348, 1355 (1986). In determining if the facts are material, the court must look to the substantive law. The evidence of the non-movant is then taken as true and all justiciable inferences are drawn in his or her favor. Anderson, 106 S. Ct. at 2513 ( citing Addickes v. S.H. Kress Co., 90 S. Ct. 1598, 1609-1610 (1970)). The Court must refrain from resolving conflicts in the evidence or making credibility determinations. Id. If, after deciding, the dispute about a material fact is genuine, summary judgment should be denied.
Once the moving party has met its burden, the non-moving party must go beyond the pleadings and come forward with specific facts to show that there is a genuine issue for trial. FED. R. CIV. P. 56(e); Celotex, 106 S. Ct. at 2552-53. The non-moving party must do more than show that there is some metaphysical doubt as to the material facts. Pierce v. Commonwealth Life Insurance, 40 F.3d 796, 800 (6th Cir. 1994). The non-moving party must present significant probative evidence in support of its opposition to the motion for summary judgment. Moore v. Philip Morris Company, 8 F.3d 335, 339-340 (6th Cir. 1993). If, after adequate time for discovery, the party bearing the burden of proof fails to make a showing sufficient to establish an essential element of his claim or her claim, summary judgment is appropriate. Celotex, 106 S. Ct. at 2552-53.
DISCUSSION
Defendant concedes that Plaintiff has the authority to audit employer payroll records and that it is contractually bound to submit employee records so that Plaintiff can conduct an audit (Docket No. 1, ¶ 5 and Docket No. 22, Argument I). However, the contractual obligation has boundaries. Defendant contends that despite Plaintiff's request to complete a second audit within the same year, the request for records on all employees, even non-bargaining unit employees, who worked on the City of Toledo project exceeds the scope of the CBA plan. Plaintiff is foreclosed from seeking an award of attorney fees and costs since Plaintiff refused to reach a compromise on the scope of the information that is discoverable.
Plaintiff claims that the Defendant has no legal authority to limit the scope of the audit. Since non-bargaining employees performing bargaining unit work may create unfunded liabilities chargeable against the plan, Plaintiff is authorized under the common law of trusts to audit all employee records including non-bargaining unit employee records. To ascertain the extent of contributions, if any, that should be made by non-bargaining unit employees, Plaintiff claims that the auditor needs to review the following: (1) the W-3 form filed in 2005, (2) each W-2 form filed for each worker employed in 2005, (3) all Form 1099s issued in 2004, (4) Form 1096 filed in 2005, (5) Ohio Bureau of Employment Services' forms for the first quarter of 2005 and (6) employee earnings records by calendar year showing name, address, social security number, occupation, straight time, overtime, rate of pay, gross earnings, deductions and net pay.
Under the common law of trusts, trustees are understood to have all "such powers as are necessary or appropriate for the carrying out of the purposes of the trust." Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, 105 S. Ct. 2833, 2840 (1985) ( citing 3 A. SCOTT, LAW OF TRUSTS § 186, p. 1496 (3rd ed. 1967)). The manner in which trustee powers may be exercised is further defined in the statute through the provision of strict standards of trustee conduct, also derived from the common law of trusts a standard of loyalty and a standard of care. Id. The fiduciary shall discharge his or her duties with respect to a plan solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to participants and their beneficiaries while defraying reasonable expenses of administering the plan. Id. ( citing 29 U.S.C. § 1104(a)(1)(A); see also 3 A. SCOTT, LAW OF TRUSTS § 186, p. 1496 (3rd ed. 1967); 29 U.S.C. § 1103(c)(1); cf. RESTATEMENT (SECOND) OF TRUSTS § 186(c)(5) (1959)). The fiduciary shall discharge his or her duties with respect to a plan using care, skill, prudence, and diligence under the circumstances then prevailing to the same extent that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Id. ( citing 29 U.S.C. § 1104(a)(1)(B)).
In examining the structure of ERISA in light of the particular duties and powers of the trustees under common law, ERISA clearly assumes that trustees will act to ensure that a plan receives all funds to which it is entitled, so that those funds can be used on behalf of participants and beneficiaries, and that trustees will take steps to identify all participants and beneficiaries, so that the trustees can make them aware of their status and rights under the trust's terms. Id. at 2840-2841. The trustee's duty in conducting audits, in part, is to prevent the employer from creating unfunded liabilities that would jeopardize the interests of participants, beneficiaries and employers. Id. at 2845. Such review may be extended to audits which include examination of records of "not-concededly-covered" employees. Id. at 2833.
In Central States the trust agreement granted broad powers related to the collection of contributions to the fund and a specific right to demand and examine employer records provided the plan document was not in conflict with ERISA. Id. at 2838. The trust company had a legitimate interest in identifying those employees who could have created unfunded liabilities chargeable against the plan. Under the terms of the plan, these employees were notified by the trust company of their rights and obligations under the plan.
The terms of the trust in this case, however, are at odds with the terms of the plan document in Central States. Plaintiff seeks to extend the terms of the trust agreement by seeking an order granting it carte blanche with respect to discovery. The trust agreement in this case makes it clear that the trustee's duty is exclusively and solely to eligible employees and participating employers. Under the plans, an eligible employee is a person who has a common law relationship with the employer and who is a member of the CBA and represented by the union (Docket No. 21, Exhibit 4, Section 9). Beneficiaries are defined for purposes of the plans as persons or entities that may become entitled to a benefit from the pension plan (Docket No. 21, Exhibit 4, Section 4). Unlike the trustee in Central States, even if the trustee identified those non-eligible employees, he or she was not compelled under the trust agreement to identify perspective claims to the trust or notify ineligible employees of their rights under trust terms. Consequently, the only relevant audit in this case is for eligible employees as defined under the plan. Plaintiff may conduct an audit of Defendant's reports and records related to eligible employees under the trust for the period beginning April 1, 2005. Such audit must be conducted within thirty days after judgment is rendered in this case.
For these reasons, Plaintiff's Motion for Summary Judgment is granted to the extent that Defendant is contractually bound to allow the audit to take place and Defendant's Motion for Summary Judgment is granted to the extent that it must provide requested information required to conduct an audit for eligible employees under the trust agreement.
So ordered.