Opinion
No. 2:19-cv-01381-JAM-DB
03-31-2021
U.A. LOCAL NO. 343 PENSION PLAN, et al., Plaintiffs, v. G.A.R. PLUMBING PARTNERS, INC., Defendant.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
On July 22, 2019, U.A. Local No. 343 Pension Plan, U.A. Local Nos. 343 and 355 Defined Contribution Plan, Plumbers and Steamfitters Managed Health Care Plan, (collectively the "Benefit Funds"), the Board of Trustees of the Benefit Funds, and U.A. Local No. 343 ( "Plaintiffs") filed this action against G.A.R. Plumbing Partners, Inc. ("Defendant" or "G.A.R."), seeking to collect contributions owed by G.A.R. under a collective bargaining agreement. Compl., ECF No. 1. Plaintiffs assert two claims against G.A.R.: (1) failure to make required contributions in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and (2) breach of a collective bargaining agreement and the trust agreement in violation of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185. Compl. ¶¶ 21-28.
On August 28, 2020, G.A.R. filed a counterclaim against Plaintiffs, bringing two claims for: (1) restitution of overpaid amounts pursuant to ERISA, and (2) breach of a collective bargaining agreement and the trust agreement in violation of the LMRA. Countercl. ¶¶ 21-34, ECF No. 25.
Plaintiffs now move for summary judgment on their claims and Defendant's counterclaims. Mot. Summ. J. ("Mot."), ECF No. 40. Defendant filed an opposition, Opp'n, ECF No. 45, to which Plaintiffs replied, Reply, ECF No. 46. For the reasons set forth below, the Court GRANTS in part and DENIES in part Plaintiffs' Motion for Summary Judgment.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for February 23, 2021.
I. BACKGROUND
G.A.R. is a plumbing services company owned and operated by George Robertson and his wife. Def.'s Resp. to Pls.' Statement of Undisputed Facts ("SUF") ¶¶ 6-7, ECF No. 45-4. G.A.R. is only licensed to perform plumbing work, and its only source of revenue is plumbing work. Id. ¶¶ 8-10. From April 1, 2012, to December 31, 2016, G.A.R. was a signatory to the U.A. Local 343 Master Labor Agreement ("MLA"). Id. ¶ 1. The MLA requires contributions into the Benefit Funds for all hours of covered work, which includes plumbing work. Id. ¶¶ 3-4.
This lawsuit commenced after Plaintiffs performed a payroll audit on G.A.R. for the April 1, 2012 to December 31, 2016 period. Id. ¶ 11. The audit revealed that G.A.R. had not reported any hours of covered work for the period between July 1, 2016 to December 31, 2016. SUF ¶ 30, ECF No. 41. Cash disbursement journals and invoices for that period, however, indicated that G.A.R. had made $20,368.93 in plumbing supply purchases, signaling to the auditors that covered work may have been performed. Id. Plaintiffs' auditors shared this information with the Chairmen of the U.A. Local 343 Benefit Funds and explained it was customary under the circumstance here -where adequate time records were not kept yet it appeared covered work had been performed - to either presume full-time, forty hours per week of work, or to divide the material purchases by the journeymen wage rate; and then after adopting one of those two presumptions, shift the burden to the employer to show the actual hours of work performed. Id. ¶ 31. The Chairmen of the U.A. Local 343 Benefit Funds decided to adopt a presumption of forty hours of work per week and then shift the burden to G.A.R. to demonstrate the actual hours of work performed for the July to December 2016 period. Id.
G.A.R. appealed the presumption of forty hours per week of covered work. Def.'s Resp. to Pls.' SUF ¶¶ 33-34. During the appeal process, G.A.R. did not provide time records or other evidence showing the actual hours of covered work performed in that period. Id. In February 2019, the Board of Trustees denied G.A.R.'s appeal. Id. ¶ 35. A few months later, Plaintiffs initiated this lawsuit to collect the delinquent contributions they allege G.A.R. owes for covered plumbing work performed in the latter half of 2016. See generally Compl.
Over a year later, G.A.R. filed its counterclaim for return of ineligible pension contributions. See generally Countercl. G.A.R.'s two counterclaims arise from a separate compliance audit Plaintiffs performed on G.A.R. for the period from June 2012 through April 17, 2020. Id. ¶ 17. G.A.R. claims Plaintiffs miscalculated and overbilled G.A.R. $30,229.77 for that nearly eight-year period and seeks return of those funds. Id.
II. OPINION
A. Legal Standard
A Court must grant a party's motion for summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed. R. Civ. Proc. 56(a). The movant bears the initial burden of "informing the district court of the basis for its motion and identifying [the documents] which it believes demonstrate the absence of a genuine issue of a material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Once the movant makes this initial showing, the burden rests upon the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Id. An issue of fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. /// ///
B. Analysis
Plaintiffs move for summary judgment as to their own claims and Defendant's counterclaims. Mot. at 1-2.
1. Plaintiffs' Claims
Plaintiffs first argue they are entitled to summary judgment on both of their claims under the MLA. Mot. at 7-8; Reply at 3-5. Specifically, Plaintiffs contend that because G.A.R. failed to keep records for the latter half of 2016 as it was required to under ERISA, the Trustees were entitled under Section 165(f) of the MLA to determine a formula for benefits owing between June 1, 2016 to December 31, 2016, which the Trustees did when they adopted the forty hour per week presumption. Mot. at 8; Reply at 3. Section 165(f) of the MLA states: "If a payment obligation is disclosed by the audit for which no fringe benefit payment was received by the Trust Funds, and for which the number of hours worked cannot be plainly ascertained, the Trustees will determine the appropriate formula to be applied to compute the fringe benefit contributions owed. The Individual Employer shall be required to comply with such formula and make payments to the Trust Funds immediately upon being advised of the amount due."
As an initial matter, the Court agrees with Plaintiffs that the language of this provision is unambiguous: Section 165(f) clearly allows the Trustees to create a formula to compute the amount of fringe benefits owed when the amount due cannot be plainly ascertained and requires employers to comply with the Trustees' formula under such circumstances. Id. (emphasis added). Thus, if it were undisputed that the hours worked by Mr. Robertson in the 2016 period at issue could not be ascertained, G.A.R. would be required to pay in accordance with the Trustees' formula under the clear language of the MLA.
In their Motion, Plaintiffs assume "it is undisputed GAR failed to keep records of George Robertson's time" and thus that it is undisputed that the amount due is not plainly ascertainable. Mot. at 7. Not so. Defendant makes clear in its opposition brief and its response to Plaintiffs' Statement of Undisputed Facts that it does dispute whether the amount due for the latter half of 2016 can be ascertained. Opp'n at 1-2; Def.'s Resp. to Pls.' SUF ¶¶ 13, 29-31. Yet, these arguments are left largely unaddressed by Plaintiffs. See Reply. Most significantly, Plaintiffs do not address Defendant's response to Undisputed Material Fact No. 13 ("Mr. Robertson and GAR did not keep records of his time during this testing period of April 1,2012 to December 31, 2016") in which Defendant cites to deposition testimony and declarations to show there is genuine dispute as to whether G.A.R.'s records for this period are sufficient to ascertain the amount due. Def.'s Resp. to Pls.' SUF ¶ 13. Ignoring Defendant's challenge to this critical fact and the evidence Defendant points to in support of its challenge, Plaintiffs instead focus on an undisputed fact: SUF ¶ 34 ("In its appeal, G.A.R. did not provide records or other evidence showing the actual hours of covered work performed by Mr. Robertson during the period of July 1, 2016 to December 31, 2016."). Reply at 2. From this undisputed fact - that G.A.R. did not bring forward records during its appeal to the Board of Trustees - Plaintiffs ask the Court to infer that G.A.R. does not have records at all for this period thereby triggering Section 165(f) of the MLA. But the Court cannot draw this inference as a matter-of-law, particularly given Plaintiffs' failure to address the evidence Defendant has brought forward in support of its position that G.A.R. has sufficient records such that the number of hours worked by Mr. Robertson is ascertainable. Def.'s Resp. to Pls.' SUF ¶¶ 13, 29-31.
Because there is a genuine factual dispute as to the ascertainability of the hours of covered work performed by Robertson in the latter half of 2016, there is also a genuine question as to whether Section 165(f) of the MLA is triggered in the first instance. Accordingly, Plaintiffs' first argument that they are entitled to summary judgment under Section 165(f) of the MLA fails.
Next, Plaintiffs contend that even if the Court does not grant summary judgment under the MLA, the Court may grant summary judgment under the Ninth Circuit's burden-shifting approach set forth in Brick Masons Pension Trust v. Industrial Fence & Supply, Inc., 839 F.2d 1333 (9th Cir. 1988). Mot. at 8-10; Reply at 5. In Brick Masons, which concerned a collection action brought by union benefit trust funds against two brick-mason employers, the Ninth Circuit explained in relevant part that: "once the trustees produce evidence raising genuine questions about the accuracy of the employer's records and the number of hours worked by the employees, the burden shifts to the employer to come forward with evidence of the precise amount of work performed." Id. at 1338.
Plaintiffs argue that G.A.R. has failed to meet its evidentiary burden under the Brick Masons test. Mot. at 9. The problem once again with Plaintiffs' argument is that it proceeds based upon a mistaken assumption that "G.A.R. concedes it kept no records of Mr. Robertson's time." Id. Because Plaintiffs assume this lack of records is undisputed, they further assume Brick Masons is triggered in the first place and that the burden has therefore shifted to G.A.R. Id. Yet, as discussed above, G.A.R. does not concede this point. Rather, G.A.R. insists that its records are sufficient to determine the work performed, bringing forward evidence to support that position. See Opp'n at 1-2, 6; Def.'s Resp. to Pls.' SUF ¶¶ 13, 29-31. Notably, in reply, Plaintiffs do not tackle Defendant's arguments about the sufficiency of the records head on, instead they simply repeat "G.A.R. has not produced any evidence to meet its burden to prove the precise amount of work performed." Reply at 5. However, in light of Defendant's arguments as to the sufficiency of its records, the Court cannot assume, as Plaintiffs do, that the Brick Masons test is triggered in the first place let alone that the burden has shifted to G.A.R. Id.
Accordingly, for the same reason Plaintiffs fail to show they are entitled to summary judgment under the MLA, they fail to establish an entitlement to summary judgment under Brick Masons: there is a genuine dispute as to whether G.A.R.'s records are sufficient to determine the amount of work performed. Because of this genuine dispute of material fact, Plaintiffs are not entitled to judgment as a matter of law on their two claims under either the MLA or under Brick Masons.
2. Defendant's Counterclaims
Plaintiffs also move for summary judgment on Defendant's counterclaims. Mot. at 12-15; Reply at 5-6. G.A.R.'s two counterclaims are for: (1) restitution of overpaid amounts pursuant to ERISA, and (2) breach of a collective bargaining agreement and the trust agreement in violation of the LMRA. Countercl. ¶¶ 21-34.
In opposition, G.A.R. appears to concede its second claim fails as a matter of law because the LMRA does not provide a cause of action for return of pension contributions. See Mot at 15; see also Award Service, Inc. v. N.Cal. Retail Clerks Unions, 763 F.2d 1066, 1071 (9th Cir. 1985) (refusing to recognize any implied right of action for return of ERISA contributions under the ERISA). As Plaintiffs point out in their Motion, the Ninth Circuit made clear in Award Service that an employer seeking a return of pension contributions has no right of action under the LMRA and must instead proceed under Section 403(c)(2) of ERISA. Id. G.A.R. does not dispute this in opposition. See Opp'n. Accordingly, the Court finds G.A.R.'s second counterclaim fails as a matter of law and grants summary judgment for Plaintiffs on this claim.
As to its first counterclaim, G.A.R. properly proceeds under Section 403(c)(2) of ERISA. Countercl. ¶¶ 21-34. Section 403(c)(1) sets forth the general rule that: "the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan their beneficiaries and defraying reasonable expenses of administering the plan." However, Section 403(c)(2)(A) lays out an exception to the rule, providing for the return of contributions to an employer where there has been a mistake of fact: "In case of a contribution . . . (ii) made by an employer to a multiemployer plan by a mistake of fact or law . . . paragraph (1) shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake." See also Award Service, 763 F.2d at 1068 (noting that employers have a cause of action under Section 403(c)(2) to recover mistaken contributions).
Plaintiffs advance two arguments as to why they are entitled to summary judgment on Defendant's Section 403(c)(2) claim. Mot. at 12-14; Reply at 5-6. First, Plaintiffs argue G.A.R. is not entitled to a refund because the Trustees have not made a determination on G.A.R.'s request for return of contributions and no refund can be made under Section 403 of ERISA without such a determination that a refund is owing. Mot. at 13-14; Reply at 5. To support their position, Plaintiffs cite to Bds. of Trs. of the Northwest Ironworkers Health & Sec. Fund v. Western Rebar Consulting, Inc., 2:18-cv-00486-BAT, 2020 WL 4000967 (W.D. WA. July 15, 2020) (granting motion to dismiss defendant's counterclaim seeking return of overpaid funds). Reply at 6. In Western Rebar, plaintiffs, the board of trustees for multiemployer plans regulated by ERISA and LMRA, filed an action seeking unpaid contributions from the defendant-employer; and the defendant-employer later filed a counterclaim seeking return of incorrectly submitted funds, which plaintiffs moved to dismiss. 2020 WL 4000967 at *1.
As an initial matter, this unreported opinion issued by a magistrate judge in the Western District of Washington is not binding on this Court. Further, the Western Rebar court's discussion of whether the defendant there had sufficiently alleged a mistake of fact such that it was entitled to restitution of its contributions and whether the defendant had sufficiently alleged that the equities justified the return of the contributions is of limited utility to this Court deciding a motion for summary judgment. Id. at *1. For its part, Defendant does not address Western Rebar nor does it bring forward any authority of its own. See Opp'n at 6-7.
Despite Defendant's failure to address Western Rebar, this Court does not find Plaintiffs are entitled to judgment as a matter of law under this lone non-binding authority. Western Rebar does not clearly authorize this Court to grant summary judgment for Plaintiffs merely because the Trustees have not made a determination on G.A.R.'s request.
Second, Plaintiffs argue G.A.R. has failed to meet its burden to show the equities favor restitution. Mot. at 14-15; Reply at 5-6. As the Ninth Circuit explained in Award Service, an employer seeking a refund under Section 403(c)(2)(A) must not only show a mistake of fact, but also must establish that the equities favor restitution. 763 F.2d at 1069. A court determining whether the equities favor restitution may consider "the effect on the beneficiaries of the Fund." Laborers' Health & Welfare Fund v. W.A. Rasic Constr. Co., 145 F.3d 1338, 1998 WL 279400 at *2 (9th Cir. 1998).
Plaintiffs contend the equities do not favor restitution because there is a pending payroll testing audit that the Trustees have reason to believe may show the underpayment of contributions. Reply at 6. As such, the Trustees as fiduciaries are concerned about the beneficiaries and have therefore deferred their decision on G.A.R.'s request for return of the funds. Id. In light of this concern about G.A.R.'s underpayment and the effect on the beneficiaries of the Benefit Funds, the equities, according to Plaintiffs, do not favor restitution. Id.
Defendant does not specifically respond to Plaintiffs' argument. See Opp'n. Instead, Defendant generally counters that because "G.A.R. is a husband and wife-run plumbing business to whom [$30,229.77] would make a substantial impact," the equities favor their position. Opp'n at 7. Further, Defendant requests the Court order an immediate return of the $30,229.77. Id.
The Court finds that neither party has shown the equities clearly favor their position, at least not as a matter of law. Plaintiffs are therefore not entitled to summary judgment on G.A.R.'s first counterclaim for return of ineligible contributions and G.A.R. is not entitled to a court order requiring immediate return of the funds.
III. ORDER
For the reasons set forth above, the Court GRANTS Plaintiffs' motion for summary judgment only as to Defendant's second counterclaim. Their motion is DENIED as to all other claims.
IT IS SO ORDERED. Dated: March 31, 2021
/s/ _________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE