Opinion
Case Number: 97-CV-73675-DT.
June 26, 2000.
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
This is a case seeking to recover contributions allegedly due to the Plaintiff ERISA fringe benefit funds. Now before the Court is Plaintiffs' Motion for Summary Judgment. The Court heard oral argument on May 9, 2000. Having considered the entire record, the Court, for the reasons that follow, GRANTS the Plaintiff's motion in part, and DENIES it in part.
FACTS
The following facts are uncontested. Defendant Moscatello Tile Company, by Carol Moscatello, one of its principal officers, signed a collective bargaining agreement with the Tile Layers and Finishers B.A.C. Local 32 ("Union"), on November 27, 1995. That agreement sets forth rates of pay for members of various trades represented by the union. In addition to cash compensation to tradesmen, signatory employers are required to contribute to various union fringe benefit funds. For each hour worked by union members employed by the Defendant, contributions were required to the union's (1) vacation and holiday fund; (2) health welfare fund; (3) local union pension fund; (4) International union pension fund; (4) international union training fund; (5) local training fund. Employers were also required to collect and remit union dues for union members.
According to an audit conducted by the Plaintiff, Defendant did not make contributions to the funds in respect of work performed by two employees, a "T. Walker" and Gary Moscatello. Mr. Moscatello is a "major shareholder of Defendant who works in the trade." Defendant admits to not having made the contributions identified by the Plaintiff, but claims that the CBA does not obligate it to make those contributions.
The contract provisions dealing with fringe benefits are contained in Article IV of the CBA. Def. Exh. A at 11-17. Each fund has different contractual language defining the employer's duty to contribute:
1. Insurance (Health Welfare):
Article IV, Section 4, Paragraph 1 (Exh. A at 13) provides that "Each employer shall contribute to the Insurance Fund the hourly contribution set forth . . . for each hour worked by each employee performing work within the trade jurisdiction." An employee with a financial interest in an employer signatory "shall pay to the fund on the basis of 160 hours per month."
2. Vacation Holiday
Contributions are required for "each hour worked by each employee covered hereunder." Any person performing work within the trade jurisdiction of the Union and who has a financial interest in an employer signatory "may pay to the fund on the basis of 160 hours per month." Article IV, Section 4, Para. 2 (Exh. A at 13).
3. Pension (Local)
Contributions are required for "each hour worked by each employee performing work within the trade jurisdiction of the union." Any person performing work within the trade jurisdiction of the union and with a financial interest in the employer "may pay to the fund on the basis of 160 hours per month. Article IV, Section 4, Para. 3 (Exh. B at 13-14).
4. Promotion
Contributions are required for "each hour worked by each employee covered hereunder." Any person performing work within the trade jurisdiction and who has a financial interest in an employer signatory "shall pay to the fund on the basis of 160 hours per month." Article IV, Section 9. (Exh. B. at 17).
5. Union Dues
The provision for union dues calls for each employer to deduct dues from the wages of "each employee who has individually authorized such deduction in writing" and remit them to the union. Dues are based on hours worked. Any person subject to the dues provision and who has a financial interest in an employer signatory is required to pay dues on the basis of 160 hours per month. Art. IV, Sec. 6. (Exh. B at 15-16).
6. Local Training Fund
Contributions are required to make contributions to the local training fund for all hours worked by all employees covered by the agreement. There is no separate provision for this fund for employee-owners. Art. IV, Sec. 7. (Exh. B at 16).
7. International Union Pension Fund
Employers agree to make payments to the Bricklayers and Trowel Trades International pension fund for each employee covered by the CBA. Contributions are based on hours worked by each employee performing work within the trade jurisdiction of the union. Employee-owners "shall pay to the Fund on the basis of 160 hours per month." Art. IV, Sec. 4. (Exh. B. at 14).
8. International Masonry Institute Training Fund
These contributions are required for all hours worked by employees covered by the agreement. No separate provision is made for employee-owners. Art. IV, Sec. 8 (Exh. B at 16-17).
In all cases, the contribution rates per hour are set forth in separate schedules based on the different job classifications (e.g., Tile Setters, Tile Finishers) covered by the union.
Plaintiff claims that Defendant has failed to make contributions for the years 1994-1995 for an employee identified as "T. Walker" and for the years 1995-1997 for Gary Moscatello, a shareholder of the Defendant who works in the trade. Defendant concedes that the contributions were not made.
ANALYSIS
The plaintiff fringe benefit funds are multi employer plans governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. The collective bargaining agreement signed by the Defendant obligates it to make contributions to the plans on terms delineated in the CBA. The statute puts the force of law behind those terms by providing that employers obligated to contribute to such plans "shall . . . make such contributions in accordance with the terms of such plan or such [collective bargaining] agreement." 29 U.S.C. § 1145. The fiduciary of a plan is authorized to bring a civil action against an employer who violates § 1145 by failing to make required contributions. 29 U.S.C. § 1132 (a)(3). The Court is empowered to grant equitable relief, including an accounting, and is required to award a prevailing fiduciary (a) the unpaid contributions; (b) interest on the unpaid contributions; (c) an amount equal to the interest or, if greater, liquidated damages as provided in the CBA up to 20% of the unpaid contributions; and a reasonable attorney's fee. 29 U.S.C. § 1132(g)(2).
This is an action to enforce Defendant's obligations under the CBA and § 1145. The Defendant does not contest the existence or validity of the contract. Similarly, Defendant does not allege that the audit performed by the Plaintiff inaccurately reflects hours worked by its employees in the trade jurisdiction of the union, and does not contest the assertion that it made no benefit fund contributions with respect those hours.
Defendant resists the instant motion by raising three defenses: (1) that because the Union itself is not a party, no judgment can be rendered for Plaintiffs with respect to union dues; (2) that Plaintiff's counsel has disavowed authority to settle on behalf of the Union International, and that therefore no contributions are due to the International's pension fund because that party is not represented in the litigation; and (3) that no contributions are due to the Insurance, Vacation, Industry Promotion and Local 32 Pension funds with respect to hours worked by Gary Moscatello, because the contract language does not require such contributions for employee-owners. The Court discusses each of those defenses in turn.
A. Union Dues
The attack on the union dues claim is two-fold. First, Defendant asserts a claim that is primarily jurisdictional: that if dues are owed to the Union, it is the Union that must sue to collect them, and it has not done so. Second, even if the parties plaintiff had standing to press the Union's claims, the claim is barred by Plaintiffs' failure to first exhaust the CBA grievance procedure. Because Defendant's first argument is correct, the Court does not reach the question whether the CBA grievance procedure was, or was required to be, exhausted before union dues were sought in court.
The union is not a party to this suit, and the complaint does not include a prayer for union dues. Plaintiffs added the union to the case caption in their pleadings on this motion, and added a prayer for union dues to the motion. The union was not listed as a party plaintiff on the face of the complaint, nor on the civil cover sheet required to be attached to complaints filed in this Court. Plaintiffs have never moved for leave to amend the complaint to add the union. Nothing in the collective bargaining agreement makes the fringe benefit trustees the agents of the union for purposes of collecting union dues. Because the union is not represented in this suit, no award of union dues is proper. Accordingly, Plaintiffs' motion for summary judgment is DENIED with respect to union dues. Because the claim for union dues was never properly before the Court, denial of summary judgment to the Plaintiffs completely disposes of that issue.
B. Bricklayers International Pension Fund
Defendant's second argument is that no contributions are due to the International's pension fund, because it too is unrepresented in this litigation. To accept this defense, the Court would have to disregard the fact that the International is specifically listed as a party plaintiff in the case caption. The Court may disregard the caption, Defendant argues, because the Plaintiffs' counsel has written, during settlement negotiations, that the instant suit was "filed on behalf of the local union and the local funds, not the International." Def. Exh. B.
As the Plaintiff points out in reply, however, Defendant pulls this quotation out of context. Defendant was seeking, in return for settlement, a release from the union local and the International on all future claims. The Plaintiff's attorney responded that she did not represent the International, and so could not offer a release from the International. The fact that the International is not a party to this suit, however, is completely separate from the question whether the International's pension fund is a party to the suit. The International's pension fund is a party to the suit, and the Defendant cannot escape its liability for contributions to the International Pension Fund as provided for in the CBA.
C. Contributions for Hours Worked by Gary Moscatello
Defendant's third argument is that no contributions are due for hours worked by Gary Moscatello, because the CBA makes such contributions optional for employees with a financial interest in the employer. The Court disagrees.
The contract language relating to the fringe benefit funds varies slightly for each fund. For each fund, the CBA first spells out the general rule for contributions, and then (in all but one case) sets out a special rule for "employee-owners" (i.e., employees who work within the trade jurisdiction of the Union, but also have a financial interest in the employer).
The general rule for each of the seven funds concerned (Health Welfare, Vacation, Local Pension, Local Training, Industry Promotion, International training and International Pension), requires an employer to contribute set rates based on each hour worked. The contract language applies this contribution requirement to hours worked either by "each employee performing work within the trade jurisdiction" or "each employee covered by" the CBA.
Sometimes referred to by the parties as "insurance").
Mr. Moscatello would clearly fall within the category of "each employee performing work within the trade jurisdiction." Indeed, in its pleadings, Defendant refers to Mr. Moscatello as "a major shareholder of Defendant who works in the trade." Def. Brief at 2. Thus, for the three funds (Health Welfare, Local Pension, International Pension) that use the "each employee performing work in the trade jurisdiction" language, Defendant is required to contribute based on Mr. Moscatello's hours, unless the rule governing employee-owners leads to a different result.
In the case of the Health and Welfare Fund, the CBA requires that in the case of employee-owners, the employer "shall contribute" on the basis of 160 hours per month. Thus, far from excepting employee-owners, the CBA appears to require contributions on behalf of employee-owners on the basis of 160 hours per month, regardless of whether the employee-owner actually works that many hours in a month. The International Pension Fund clause also states that employers "shall contribute" on the basis of 160 hours per month for employee-owners. Accordingly, as to these two funds, Defendant's argument fails. Plaintiffs are entitled to judgment with respect to these two funds.
In the case of the local pension fund, the CBA provides that an employee-owner performing work within the trade jurisdiction of the Union "may pay" to the local pension fund on the basis of 160 hours per month. Defendant contends that this permissive language means that Defendant need not contribute to the local's pension fund at all with respect to Gary Moscatello. Defendant argues, in effect that the general and specific rules are "either-or".
To so find, however, would be to ignore the clear language of the immediately preceding sentence, which requires the employer to contribute for each hour worked by each person performing work within the trade jurisdiction. That requirement clearly includes Gary Moscatello, since he is a person performing work within the trade jurisdiction of the union. The two rules can be harmonized, and both given effect by construing the 160-hour provision as permission to contribute on the basis of more hours than actually worked by the employee-owner, but not less. Such a construction gives meaning to both sentences. Any other construction, including that urged by the Defendant, would require the Court not to honor both provisions. Thus, the 160-hour provision does not absolve Defendant from the requirement to contribute to the local pension fund for hours worked by Gary Moscatello. However, because Defendant could, consistently with the CBA, limit those contributions to actual hours worked by Gary Moscatello, it is unclear if Plaintiffs are entitled to the full amount they seek for the local pension fund, because it is unclear whether their calculations are based on Mr. Moscatello's actual hours or on 160 hours per month. Accordingly, with respect to this fund, the Court grants summary judgment to Plaintiffs as to liability, with the amount to be fixed by audit.
The remaining funds (Local training, Vacation, Industry promotion, and International training) all require employers to contribute based on each hour worked by employees covered by the CBA. It is not as clear that Mr. Moscatello falls within the class of "employees covered by" the CBA. On the one hand, if the parties' meant for this class to be as broad as "persons performing work within the trade jurisdiction of the union", they could have used the same language, and so it is arguable that the different language necessarily covers a narrower class of individuals. Who is not included in this narrower class? It could be argued that "employee-owners" are excluded, since there is separate language addressing them.
On the other hand, it could be argued that because the CBA requires signatory employers to use only union members in performing work within the trade jurisdiction (see Art. II, pp2-3 of Def. Exh. A), that all employees are covered, and the different language is of no import. This is the stronger argument. The CBA allows only an 8-day grace period during which a new employee need not be a union member. Accordingly, if "employees covered hereunder" defines a narrower class of persons than "employees performing work within the trade jurisdiction", the people excepted from the narrower class appear to be not employee-owners such as Mr. Moscatello, but new employees working during their 8-day grace period. Thus, the Court concludes that Mr. Moscatello is "an employee covered" by the CBA, for whom contributions are required to these four funds.
The question then becomes whether the "employee-owner" provisions for these four funds requires a different level of contributions for hours worked by Mr. Moscatello. Again the answer is no. Indeed, the Industry Promotion Fund clause contains the mandatory "shall pay" language, requiring contributions for Mr. Moscatello on the basis of 160 hours per month, regardless of whether he works that many. The other funds use the "may pay" language, i.e., allowing the employer to contribute on the basis of 160 hours per month for employee-owners. The local training fund contains no separate provision for employee-owners, but as discussed above, Mr. Moscatello is covered by the general provision for that fund, as he is for all the funds. Accordingly, the Court GRANTS summary judgment to the Plaintiffs as to liability for all the fringe benefit funds. However, some of the funds are permissive, rather than mandatory with respect to the 160-hours requirement for employee-owners. Plaintiffs' papers do not reveal whether the amounts sought by Plaintiffs for Mr. Moscatello's hours are based on actual hours worked or 160 hours per month. Therefore, the Court ORDERS a full audit of Defendant's records, as sought by the Plaintiffs in their complaint, and as provided for in the CBA, to determine the amount of Defendant's liability.
Finally, because the award of attorney's fees, interest, and liquidated damages are mandatory under the statute, the Court GRANTS that relief, the amount of it to be determined following the audit.
SUMMARY
For the foregoing reasons, the Court
(1) DENIES Plaintiffs' motion insofar as it seeks union dues;
(2) GRANTS Plaintiffs' motion insofar as it seeks to establish liability of Defendant for contributions to the funds, including the International's pension fund;
(3) ORDERS a thorough audit of the Defendant's records to establish the amount of contributions owing, in accordance with the principles outlined in this opinion; and
(4) GRANTS Plaintiffs' motion insofar as it seeks interest, liquidated damages, expenses of the audit and attorney's fees, in amounts to be determined in future proceedings.
LET JUDGMENT ENTER ACCORDINGLY.