Opinion
No. 99 C 0374
September 21, 2000
MEMORANDUM OPINION AND ORDER
Before this court are plaintiffs Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Fund of the Construction and General Laborers' District Council of Chicago and Vicinity ("plaintiffs" or the "Funds") motion for summary judgment as to a claim brought under Section 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, to collect delinquent employee benefit fund contributions against defendant Milco Construction. Inc., ("Milco"). For the following reasons, the motion is GRANTED.
Statement of Facts
Before discussing the material facts, this court must first address the defendant's failure to comply with 56.1(b). In support of its motion for summary judgment, the plaintiffs met their burden under Local Rule 56.1(a) by filing a supporting memorandum of law and statement of material facts. (Plaintiffs' Statement of Material Facts Pursuant to Local Rule 56.1(a)(3) (hereinafter Pls.' 56.1)). The defendant filed "Defendant's Answer to Plaintiffs' Motion For Summary Judgment" wherein Milco admitted or denied the plaintiffs' factual statements. (hereinafter Dft.'s Answer to Pls.'56.1). The defendant, however, completely failed to support his denials with any factual support. Local Rule 56.1(b) requires a party opposing a motion for summary judgment (here, the defendant) to respond to each of the movants' statements, and such a response should include, "in the case of any disagreement, specific references to the affidavits, part of the record, and other supporting materials relied upon. . . ." (Local Rule 56.1(b)(3)(A)). The Seventh Circuit has clearly stated that the district court's rules may be strictly enforced. Waldridige v. American Hoechst Corp., 24 F.3d 918, 920-923 (7th Cir. 1994). More specifically, in Northern District of Illinois, failure by a non-moving party to properly support a denial as required by Local 56.1(b)(3) constitutes an admission. Newkirk v. Williams, ATU, 2000 WL 1307909, *1 (N.D.Ill.); Washington v. MacNeal Hospital, 2000 WL 1273452, *1 (N.D. Ill.); Austin v. Cole Taylor Bank, 2000 WL 1047216, * 1-*2 (N.D.Ill.). In many of its responses, defendant merely has copied the factual assertions in Pls.' 56.1 and added the words "Defendant admits" or "Defendant does deny." (Deft.'s Answer to Pls.'s 56.1). In the last paragraph, the defendant simply repeats the cursory denials made in its initial Answer and asserts that these denials are a basis for "genuine issues of material fact." (Deft.'s Answer to Pls.' 56.1, ¶ 11). This last statement, however, manifests a lack of understanding for the rules and fails to provide any support for or credibility to the denials themselves.
There many instances where the defendant has failed to comply with 56.1(b). For example, paragraph 7 of Deft.'s Answer to Pl.'s 56.1 states the following without even one specific reference to an affidavit, a document in the record, or other supporting material:
Defendant does not admit, and does deny plaintiff's allegations in Plaintiff's Motion For Summary Judgment listed below:
• That each employee listed in the audit report, the report truly and accurately reflects unreported ours performed by that employee.
• that each employee identified in the audit report performed covered work for those hours listed as unreported hours.
• That each employee identified in the audit report, during the hours mentioned, each employee performed covered work within the geographical jurisdiction of the Union.
• That the rates provided in the audit report, truly and accurately reflect the amount of contributions due each Fund for every hour of work performed by covered employees.
The newly numbered local rule has been enforced similarly to former Local Rules 12(m) and 12(n). See, e.g., Newkirk v. Williams, ATU, 2000 WL 1307909, *1 (N.D.Ill.); Washington v. MacNeal Hospital, 2000 WL 1273452, *1 (N.D. Ill.); Austin v. Cole Taylor Bank, 2000 WL 1047216, * 1-*2 (N.D.Ill.). Under Local Rules 12(m) and 12(n), any material facts not properly controverted are deemed admitted. This rule has been strictly enforced. See, e.g., McGuire v. United Parcel Serv., 152 F.3d 673, 675 (7th Cir. 1998); Pasant v. Jackson Nat'l Life Ins., 768 F. Supp. 661, 663 (N.D.Ill. 1991); Davis v. Frapolly, 756 F. Supp. 1065, 1069-1070 (N.D.Ill. 1991).
Local Rule 56.1(b) also requires the defendant to file a "supporting memorandum of law" as well as "additional facts that require the denial of summary judgment." (Local Rule 56.1(b)(2); Local Rule 56.1(b)(3)(B)). The defendant has not submitted a memorandum of law or a statement of additional facts to support his position that summary judgment is not warranted ill this case.
The Funds properly filed a statement of material facts pursuant to Local Rule 56.1(a)(3) along with its motion for summary judgment against Milco. (Pls.' 56.1, ¶ 8). These documents clearly assert that the audit report "truly and accurately" reflects the contributions owed, on behalf of each employee and in total, to the Funds by Milco for the period September 4, 1996 through May 31, 1999. (Pls.' 56.1). The statements are properly supported by an affidavit from the Fund's Field Representative, Michael Christopher, as well as the a letter and an audit report from the Laborers' Funds auditors, Graff, Ballauer, Blanski Friedman, P.C. (Pls.' Ex. Tab "C"). In the absence of any evidence to the contrary from Milco, the facts in the Pls.' 56.1 are deemed admitted.
The Funds are multiemployer benefit plans within the meanings of Sections 3(3) and 3(37) of ERISA, 29 U.S.C. § 1002(3) and 37(A). The Funds have offices and conduct business within the District of Illinois. Milco is an Illinois corporation doing business within this District, and is an Employer within the meaning of Section 3(5) of ERISA, 29 U.S.C. § 1002(5), and Section 301(a) of LMRA, 29 U.S.C. § 185(a). (Complaint, Pl.'s Ex. Tab "A", ¶¶ 3-4; Answer to Complaint, ¶¶ 3-4).
Milco and the Construction and General Laborers District Council of Chicago and Vicinity and its affiliated Local 1 (the "Union") are parties to a collective bargaining agreement (the "Agreement"). (Complaint ¶ 4, Pl.'s Ex. Tab "A", ¶ 5; Affidavit of Michael Christopher, Pl.'s Ex. Tab "C", ¶ 2; Answer to Complaint, ¶ 5). The Agreement adopts and incorporates a Master Agreement Between the Union and Milco, and also binds Milco to the Funds respective Agreements and Declarations of Trust. (Answer to Complaint, ¶ 5).
The Agreement obligates Milco to make contributions to pension, health and welfare, and training funds on behalf of those employees who are covered by the Agreement. In addition, under the Agreement, Milco must submit monthly remittance reports within thirty days after the work was performed, in which Milco, inter alia, identifies the employees who are covered by the Agreement as well as the amount Milco has contributed to the Funds on behalf of each employee. (Affidavit of Michael Christopher, Pl.'s Ex. Tab "C"; Answer to Complaint, ¶ 6). In addition, the Agreement requires that Milco procure, carry and maintain a surety bond to guarantee payment of Wages, pension and welfare contributions for the duration of the Agreement. (Complaint, ¶ 7). Finally, the Funds also have been designated to serve as collection agents ofr the Union for the purpose of collecting contributions to the Training Fund and for the purposes of collecting union dues which are deducted from employees' wages. (Affidavit of Michael Christopher, Pl.'s Ex. Tab "C', ¶ 4).
Beginning in July 1998, Milco stopped making the required contributions and stopped a submitting the required monthly reports to the Funds. (Complaint, ¶ 8 Answer to Complaint, ¶ 9). In addition, Milco has not maintained a surety bond to guarantee the payment of wages, pension and welfare contributions. (Complaint, ¶ 8). By failing to contribute and report to the Funds, Milco has thereby failed to report to the union and forward union dues deducted from employees' wages from July 1998 to the present.
Despite several demands for payment by the Funds, Milco has not paid the required contributions or other sums. (Complaint, ¶ 9). The Funds filed a complaint in Federal District Court January 22, 1999 and served Mildred Smith, Milco's President, with the complaint on January 29, 1999. (Plaintiffs' Motion for Default and To Compel an Audit, ¶ 2). When the defendant failed to respond, this court ordered Milco to submit to a complete payroll audit of its books and records. (04/28/99 Minute Order). Milco admits that the Agreement obligates the company to make contributions, and Milco admits that it has not paid all contributions. (Deft.'s Answer to Pls.' 56.1, ¶¶ 3, 8).
The Laborers' Funds auditors, Graff, Ballauer, Blanski Friedman, P.C., conducted an audit of Milco's records for the period from September 4, 1996 through May 31, 1999. (Affidavit of Michael Christopher, ¶ 3). The Funds submitted a "Request for Admissions, Interrogatories and Request to Produce" to the defendant on September 28, 1999, in order to verify the results from the Milco with that of their auditors. The defendant, however, did not produce and has not produced at any point thereafter any information that might challenge the methodology or conclusions of the audit report. Milco's only response came in the form of a denial that it had to failed to make timely reports and a denial that the estimates contained in the audit report of amounts owed are true and accurate. Consequently, Milco's inaction effectively amounts to an admission that the audit report truly and accurately reflects the names as well the number of covered employees at Milco, the unreported hours performed by those employees, and the amount due to each Fund for every hours of work performed by the covered employees. (Pls.' 56.1, ¶ 8; Pls.' Ex. Tab "D").
Milco is required by the Agreement to pay liquidated damages in the amount of 10 per cent of the principal amount of delinquent contributions, and interest on delinquent contributions at the rate of prime plus 2 percent, as charged by the First National Bank of Chicago from the date of delinquency forward. (Affidavit of Michael Christopher, Pl.'s Ex. Tab "C"; Deft.'s Answer to Pls.' 56.1, ¶ 5)).
Analysis Under Summary Judgment Standard
The Funds bring this claim against Milco under Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(2) and Section 301(a) of the LMRA, 29 U.S.C. § 185(a) to collect unpaid contributions, as well as interest and liquidated damages on the unpaid contributions, reasonable attorneys' fee and costs, and such other legal and equitable relief as this Court deems appropriate.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter if law." Fed.R.Civ.P. 56(c); Cox v. Acme Health Serv., Inc., 55 F.3d 1304, 1308 (7th Cir. 1995). A genuine issue of material fact exists for trial when, after viewing the record and all reasonable inferences drawn from it in a light most favorable to the non-movant, a reasonable jury could return a verdict for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Hedberg v. Indiana Bell Tel. Co, 47 F.3d 928, 931 (7th Cir. 1995). The party moving for summary judgment bears the initial burden of demonstrating that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hedberg, 47 F.3d at 931. If this burden is met by the movant, the non-movant must then set forth specific facts to show that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. In deciding a motion for summary judgment, the court must read the facts in a light most favorable to the nonmovant. Cuddington v. Northern Ind. Public Serv. Co., 33 F.3d 813, 815 (7th Cir. 1994). However, Rule 56(c) mandates the entry of summary judgment against a party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and in which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. A scintilla of evidence in support of the non-movant's position is not sufficient to oppose successfully a summary judgment motion: "there must be evidence on which they jury could reasonably find for the [non-movant]." Anderson, 477 U.S. at 250.
Plaintiffs have presented evidence, in the form of an affidavit and an accountant's report, that the defendant failed to report certain hours worked by employees covered by the Agreement and failed to make the required contributions based on these hours to the Funds. Under ERISA, it is the employer's burden to present documentation to disprove the auditors findings. Michigan Laborers' Health Fund v. Grimaldi Concrete, Inc., 30 F.3d 692, 696 (6th Cir. 1994); Plumbers' Pension Fund, Local 130 v. Wilber, 1989 WL 2126, *2 (N.D.Ill). An employer's failure to provide any material evidence challenging the legitimacy of an audit has been the basis for accepting the Fund's audit report as the correct measure of damages. Grimaldi, Id.; Chicago District Council v. P.M.Q.T., 169 F.R.D. 336 (N.D.Ill 1996).
In Illinois Conference of Teamsters and Employers Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361, 1367 (7th Cir. 1995), the Seventh Circuit found that an affidavit and a deposition testimony by the defendant, Steve Gilbert, that indicated potential inaccuracies in the Teamsters and Employers Welfare Fund's audit report were sufficient to raise a genuine issue of material fact and therefore precluded entry of summary judgment as to damages. In this case, Milco similarly admits that it has not paid all contributions, but denies that the amounts owed are accurate. The facts surrounding Milco are distinguishable, however, because Milco has not even provided an affidavit or a deposition testimony supporting its assertion that the Funds' audit report is inaccurate. In Gilbert, the defendant provided receipts as proof of year-end bonuses that had been recorded as regular income, and in addition, he testified that only 80 to 90 percent of the hours for which Gilbert's Trucking's drivers were paid was "covered" work. Id. at 1366. Milco's cursory denials that the amounts calculated in the audit report are incorrect are not sufficient to meet Milco's burden of coming forward with evidence that the Funds' calculations were inaccurate. Reading the facts in a light most favorable to the defendant, the plaintiffs have adequately stated grounds for relief for unpaid contributions in the amounts requested.
Damages
Pursuant to ERISA Section 502(g)(2), 29 U.S.C. § 1132(g)(2), the Funds are entitled to judgment for $345,689.44, the amounts due owing as reflected in the audit for the period of September 4, 1996 to May 31, 1999. This amount includes:
• principal unpaid contributions of $257,604.31;
• interest in the amount of $50,280.14;
• liquidated damages in the amount of $24.738.53;
• past due late charges in the amount of $2,516.46; and
• audit costs in the amount of $10,550.00
In addition, pursuant to ERISA Section 502(g)(2), Section 301(a) of the LMRA, 29 U.S.C. § 185(a), and the applicable collective bargaining agreement and Agreements and Declarations of Trust, the Laborers Funds are entitled to reasonable attorney's fees and costs. Idaho Plumbers Pipefitters v. United Mechanical Contractors, Inc., 875 F. Supp. 1404 (N.D. Ill. 1993); Thelin v. Mitchell, 576 F. Supp. 1404 (N.D.Ill 1983).
Further, the defendants are hereby ordered to create and maintain a surety bond guarantying its covered employees wages and contributions as required under the Agreement.
Finally, since Milco has not submitted reports, the Funds are unable to calculate amounts due to the Funds after May 31, 1999. Towards this end, plaintiffs may conduct a second audit covering the period June 1, 1999 to the present. Given Milco's negligence with regard to submitting the required reports, this court orders Milco to submit reports by the 10th day of the month following the month in which the work was performed.
Conclusion
For the foregoing reasons, the court GRANTS the motion for summary judgment for the plaintiffs. The court awards $345,689.44 to the plaintiffs plus reasonable attorneys' fee and costs. The plaintiff is directed to file a petition for fees and costs within 21 days of the date of this order.