Teamsters and Employers Welfare Trust of Illinois v. Gwillim Trucking, Inc.

Filing 24

OPINION: Plaintiff Teamsters and Employers Welfare Trust of Illinois' Combined Motion and Memorandum of Law for Summary Judgment Against Gwillim Trucking, Inc. (d/e 14 ) is GRANTED IN PART and DENIED IN PART. Judgment is entered in favor of Pla intiff and against Defendant on Count II of Plaintiff's Complaint in the amount of $24,138.60. Partial judgment is entered in favor of Plaintiff and against Defendant on Count III of Plaintiff's Complaint in the amount of $219,989.00. Plaintiff's claim against Defendant in Count III for unpaid contributions from July 1, 2014 to September 30, 2015, remains pending. (SEE WRITTEN OPINION) Entered by Judge Sue E. Myerscough on 2/14/2017. (GL, ilcd)

E-FILED

Wednesday, 15 February, 2017 12:10:20 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
TEAMSTERS AND EMPLOYERS
WELFARE TRUST OF ILLINOIS,
Plaintiff,
v.
GWILLIM TRUCKING, INC.,
Defendant.

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Civil No. 14-03386

OPINION
SUE E. MYERSCOUGH, U.S. District Judge:
Now before the Court is Plaintiff Teamsters and Employers
Welfare Trust of Illinois’ Combined Motion and Memorandum of
Law for Summary Judgment Against Gwillim Trucking, Inc. (Mot.
for Summ. Judg.) (d/e 14). Plaintiff’s motion is GRANTED IN PART
and DENIED IN PART. There is no genuine dispute of material fact
regarding the amount owed to Plaintiff by Defendant Gwillim
Trucking, Inc. for the time period beginning on January 1, 2007,
and ending on June 30, 2014. However, Defendant has raised a
genuine dispute of material fact regarding the amount it owes

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Plaintiff for the time period beginning on July 1, 2014, and ending
on September 30, 2015.
I. INTRODUCTION
Plaintiff is a trust fund administered to provide participating
employees with health and welfare benefits. Plaintiff receives
contributions from employers and employer associations pursuant
to agreements, including participation agreements and collective
bargaining agreements, between local unions and employers and
employer associations. Defendant employs individuals who are
members of, and represented by, Chauffeurs, Teamsters,
Warehousemen, and Helpers, Local Union No. 525 (Local 525).
On December 11, 2014, Plaintiff filed a three-count Complaint
(d/e 1) alleging that Defendant had failed to pay Plaintiff
contributions as required by collective bargaining agreements and
the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. § 1001 et seq. Count I of Plaintiff’s Complaint alleges that
Defendant is liable to Plaintiff for unpaid contributions that came
due between February 2014 and October 2014. Count II alleges
that Defendant is liable to Plaintiff for unpaid contributions that
came due between January 2007 and December 2009. Count III
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alleges that Defendant is liable to Plaintiff for unpaid contributions
that came due after December 2009. Plaintiff also seeks liquidated
damages, audit costs, and attorney’s fees.
Plaintiff seeks summary judgment on Counts II and III of its
Complaint. Plaintiff argues that Defendant owes it money as a
result of failing to make payments required by collective bargaining
agreements and a participation agreement, a point that Defendant
does not dispute. Plaintiff also argues that Defendant has not
raised any genuine dispute of material fact regarding the amount
owed by Defendant to Plaintiff, an amount derived from audit
reports prepared at Plaintiff’s request and based on Defendant’s tax
and payroll records. In response, Defendant argues that criminal
charges recently filed against its business manager raise a genuine
dispute of material fact regarding the amounts owed to Plaintiff.
Plaintiff disagrees that the pending criminal charges create a
genuine dispute of material fact as to the amount it is owed.
II. BACKGROUND
The parties do not dispute the majority of the facts relevant to
this action. Defendant was a signatory to three collective
bargaining agreements with Local 525. See Mot. for Summ. Judg.,
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Exs. 2A, 2B, 2C. The three agreements covered, respectively, the
time periods from October 2, 2006 to September 30, 2009; from
October 2, 2009 to September 30, 2012; and from October 1, 2012
to September 30, 2015. All three collective bargaining agreements
required Defendant to make weekly contributions to Plaintiff for
each covered employee who had been on Defendant’s payroll at
least 31 days and had worked any portion of a payroll week. Mot.
for Summ. Judg., Ex. 2A, Article 20; Ex. 2B, Article 20; Ex. 2C,
Article 20. The agreements also required employers who were
delinquent in their contributions to pay attorney’s fees and
collection costs.
The rates at which the Defendant was obligated to contribute
to Plaintiff varied not only from agreement to agreement, but also
from year to year. For example, in the collective bargaining
agreement covering October 2, 2006 through September 30, 2009,
Defendant was obligated to pay $160.00 per week per qualifying
employee in the first year, $183.00 per week the second year, and
$210.00 per week the second year. Mot. for Summ. Judg., Ex. 2A,
Article 20. The agreement covering October 2, 2009 through
September 30, 2012, imposed rates for each year at $176.00 per
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week, $202.00 per week, and $231.00 per week, respectively. Mot.
for Summ. Judg., Ex. 2B, Article 20. The agreement covering
October 1, 2012 through September 30, 2015, imposed rates for
each year at $200.00 per week, $229.00 per week, and $262.00 per
week, respectively. Mot. for Summ. Judg., Ex. 2C, Article 20. If
Defendant paid a qualifying employee wages for any portion of a
payroll week for work performed under a collective bargaining
agreement, the full weekly contribution amount was due from
Defendant to Plaintiff for that employee; no pro rata payments were
contemplated by the parties.
In addition, Defendant was a signatory to a participation
agreement with Plaintiff during the time frame covered by the
collective bargaining agreements. Under this agreement, Defendant
was required to remit contributions to Plaintiff for employees that
did not fall under the purview of the collective bargaining
agreements. Mot. for Summ. Judg., Ex. 3A. The rates at which
these contributions for non-bargaining employees were to be paid
and the formula applied to determine whether payments were due
were identical to those imposed on Defendant by the collective
bargaining agreement in effect at the time. Id. ¶ 6.
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The collective bargaining agreements entered into by Local 525
and Defendant and the participation agreement entered into by
Plaintiff and Defendant imposed the terms of Plaintiff’s trust
agreement on Defendant. Mot. for Summ. Judg., Ex. 2A, Article 20;
Ex. 2B, Article 20; Ex. 2C, Article 20; Ex. 3A, ¶ 1. The trust
agreement authorizes Plaintiff to audit an employer’s employment
and payroll records, recover liquidated damages from delinquent
employers in the amount of 10% of the total owed, and recover
costs and expenses, including attorney’s fees and audit costs. Mot.
for Summ. Judg., Ex. 1A, Section 4.4.
As authorized by the trust agreement, Plaintiff hired Zenith
American Solutions (Zenith) to conduct an audit of Defendant’s
payroll records from January 1, 2007 to December 31, 2009. The
audit report prepared by Zenith concluded that Defendant owed
Plaintiff $33,201.00 in unpaid contributions. Mot. for Summ.
Judg., Ex. 3B. Adding $3,320.10 in liquidated damages (10 percent
of the total owed) and $617.50 in audit charges, Defendant owed
Plaintiff a total of $37,138.60 for the time period of January 1, 2007
to December 31, 2009. Id. Payments subsequently made by
Defendant lowered its obligation to Plaintiff for this time period to
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$24.138.60. A copy of Zenith’s audit report was sent to Defendant
with a letter explaining that Defendant could challenge the report’s
findings.
Plaintiff subsequently hired Zenith to examine Defendant’s
payroll records from January 1, 2010 to December 30, 2015.
Defendant did not provide all the documents requested by Zenith
with respect to the audit. Nevertheless, based on the documents
Defendant did produce—various tax forms and a payroll transaction
report—Zenith prepared another audit report, which concluded that
Defendant owed Plaintiff $640,743.00 in delinquent contributions,
$64,074.30 in liquidated damages, and $6,370.00 for audit costs,
for a total of $711,187.30. See Mot. for Summ. Judg., Ex. 5B.
However, the most recent collective bargaining agreement between
Local 525 and Defendant expired on September 30, 2015; therefore,
Defendant was not obligated to make contributions to Plaintiff in
October, November, or December of 2015. According to the second
audit report, Defendant owes Plaintiff $639,186.80 for the time
period starting on January 1, 2010, and ending on September 30,
2015. This revised total amount breaks down as follows:
$575,288.00 in delinquent contributions, $57,528.80 in liquidated
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damages, and $6,370.00 for audit costs. A copy of this second
Zenith audit report was sent to Defendant with a letter explaining
that Defendant could challenge the report’s findings.
On October 17, 2016, the Macoupin County State’s Attorney
charged Kari A. McKinney, Defendant’s office manager, with one
count of theft, alleging that Ms. McKinney stole between $100,000
and $500,000 from Defendant. Def. Response Mot. for Summ.
Judg. (d/e 20), Ex. 1, p. 6. Approximately one month later, on
November 16, 2016, the Macoupin County State’s Attorney filed 98
additional counts against Ms. McKinney. See Def. Response Mot.
for Summ. Judg., Ex. 1, pp. 7-113. These counts allege that from
July 2014 to February 2016, Ms. McKinney committed forgery by
endorsing checks drawn on Defendant’s bank account made out to
persons other than Ms. McKinney. See id.
III. LEGAL STANDARD
Summary judgment is proper if the movant shows that no
genuine dispute exists as to any material fact and that the movant
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
The movant bears the initial responsibility of informing the Court of
the basis for the motion and identifying the evidence the movant
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believes demonstrates the absence of a genuine dispute of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). No
genuine dispute of material fact exists if a reasonable trier of fact
could not find in favor of the nonmoving party. Brewer v. Bd. of
Trustees of Univ. of Ill., 479 F.3d 908, 915 (7th Cir. 2007). When
ruling on a motion for summary judgment, the Court must construe
facts in the light most favorable to the nonmoving party and draw
all reasonable inferences in the nonmoving party’s favor. Woodruff
v. Mason, 542 F.3d 545, 550 (7th Cir. 2008). The Court may grant
partial summary judgment in order to narrow the factual issues for
trial “by identifying the material disputes of fact that continue to
exist.” BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir.
2015).
IV. ANALYSIS
The Court notes briefly that it has jurisdiction over Plaintiff’s
ERISA claims pursuant to 29 U.S.C. § 1132(e)(1). ERISA defines an
“employer” as “any person acting directly as an employer, or
indirectly in the interest of an employer, in relation to an employee
benefit plan.” 29 U.S.C. § 1002(5). A “multiemployer plan” is one
to which more than one employer must contribute and one
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maintained pursuant to “one or more collective bargaining
agreements between one or more employee organizations and more
than one employer.” 29 U.S.C. § 1002(37)(A). Every employer
obligated to make contributions to a multiemployer plan under the
terms of the plan or the terms of a collectively bargained agreement
shall make the contributions in accordance with the terms and
conditions of the plan or agreement. 29 U.S.C. § 1145.
Given that Defendant, which employs members of Local 525,
was a signatory to collective bargaining agreements with Local 525
and a participation agreement with Plaintiff, agreements which
required Defendant to make contributions to Plaintiff, Defendant is
an “employer” as defined by ERISA. Similarly, Plaintiff meets the
ERISA definition of a “multiemployer plan” because it receives
contributions from multiple employers. Therefore, 29 U.S.C. § 1145
required Defendant to make contributions to Plaintiff as required by
Plaintiff’s trust agreement and the aforementioned collective
bargaining agreements and participation agreement. Defendant, to
its credit, admits that it owes Plaintiff for unpaid contributions.
The remaining question is how much Defendant owes.

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The collective bargaining agreements and participation
agreement required Defendant to make weekly payments to Plaintiff
for every employee who has been on Defendant’s payroll for at least
31 days and worked any portion of the applicable payroll week. The
rate at which Defendant was to pay for each qualifying employee
varied from year to year and ranged from $160.00 per week to
$262.00 per week. In order to determine Defendant’s total liability
under this payment structure, Plaintiff hired Zenith to conduct two
audits. The first audit determined that Defendant owed $37,138.60
in unpaid contributions, liquidated damages, and audit fees for the
period from January 1, 2007 to December 31, 2009, the time period
with which Count II of the Complaint is concerned. Plaintiff
acknowledges that a partial payment by Defendant lowered the
current balance for this time period to $24,138.60. With this
figure, Defendant does not argue. Accordingly, there is no genuine
dispute of material fact with respect to Count II of Plaintiff’s
Complaint, and Plaintiff is entitled to judgment for the remaining
balance as a matter of law. The Court grants summary judgment in
favor of Plaintiff on Count II of the Complaint. Plaintiff is awarded

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$24,138.60 for unpaid contributions, liquidated damages, and
audit fees.
Determining whether Plaintiff is entitled to summary judgment
on Count III of the Complaint is a more difficult question. The
Court has determined that partial summary judgment in favor of
Plaintiff on Count III is proper based on the current record, which
includes information regarding pending criminal charges against
Defendant’s business manager.
ERISA requires an employer to “maintain records with respect
to each of his employees sufficient to determine the benefits due or
which may become due to such employees.” 29 U.S.C. § 1059(a)(1).
Accordingly, where an employer is required to make contributions
to a trust fund that provides fringe benefits to employees, the
records an employer must keep to satisfy this statutory provision
will necessarily depend on the factors that go into determining
when the employer’s contributions become due. If, as here, the
payments are dictated by the dates on which the employee worked,
the records the employer must keep include those which indicate
the dates on which each employee worked. See Laborers’ Pension
Fund v. RES Envtl. Servs., Inc., 377 F.3d 735, 739 (7th Cir. 2004).
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“[O]nce a pension or welfare fund shows that an employer’s
records are deficient and produces an apparently sound accounting
suggesting that money is owed, the employer could be obliged to
explain why its payments to the fund are nonetheless proper. Chi.
Dist. Council of Carpenters Pension Fund v. Reinke Insulation Co.,
347 F.3d 262, 264 (7th Cir. 2003). “If the explanation appears to be
sufficient, then the fund must demonstrate at trial its entitlement to
additional payment.” Id. This burden, when placed on defendant
employers, is a burden of explanation, not a burden of persuasion.
Id. If the employer is unable to meet its burden, the fund is entitled
to prevail on summary judgment. Id.
Here, Defendant does not argue with Plaintiff’s contention that
Defendant’s payroll records were deficient. Nor does Defendant
dispute that Section 4.6 of Plaintiff’s trust agreement gave Plaintiff
the right to have an auditor inspect Defendant’s payroll records.
See Mot. for Summ. Judg., Ex. 1A, Section 4.6. Therefore, it was
Defendant’s burden to produce evidence on which a reasonable trier
of fact could conclude that the amount Plaintiff claims Defendant
owes for the time period from January 1, 2010 to December 31,
2015, is too high.
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With its amended response to Plaintiff’s motion for summary
judgment, Defendant provided the Court with public records
indicating that Defendant’s business manager (now its former
business manager, presumably) has been charged with one count of
theft and 98 counts of forgery. These charges relate to checks
payable on Defendant’s bank account and made out to certain of
Defendant’s current and former employees, checks the business
manager allegedly signed as payee. According to Defendant, the
checks were written by Ms. McKinney without authorization and do
not relate to any actual wages due to the purported payees, certain
of Defendant’s employees. Defendant has asked its accountants to
file amended tax returns and issue amended tax forms as a result
of Ms. McKinney’s alleged crimes.
Before addressing these records in its amended reply in
support of its motion for summary judgment, Plaintiff asks the
Court to strike Defendant’s response to the motion for failure to
satisfy Local Rule 7.1(D). Local Rule 7.1(D) requires responses to
motions for summary judgment to contain certain sections and,
where appropriate, citations to evidentiary documentation
referenced by specific page. See CDIL-LR 7.1(D). Plaintiff correctly
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notes that the Court admonished Defendant about the need to
comply with Local Rule 7.1(D) when it allowed Defendant additional
time in which to file an amended response to Plaintiff’s motion for
summary judgment. Plaintiff is also correct in stating that Local
Rule 7.1(D) puts litigants on notice that the Court may strike any
filing not in compliance with the rule’s requirements. See id.
However, the Court is unwilling to strike Defendant’s amended
response for technical violations of a local rule when, as explained
below, the amended response raises a genuine dispute of material
fact as to how much Defendant owes Plaintiff for the time period
beginning on July 1, 2014, and ending on September 30, 2015.
The decision on whether to apply a local rule strictly or overlook a
transgression is left to the discretion of this Court. See Waldridge v.
Am. Hoechst Corp., 24 F.3d 918, 923 (7th Cir. 1994). Given that a
ruling striking Defendant’s amended response carries with it the
potential to award a party thousands of dollars to which it may not
be legally entitled, the Court refuses to strike the amended response
for its failure to strictly comply with Local Rule 7.1(D).
Turning now to the substance of Defendant’s amended
response, Plaintiff argues that Defendant has provided no
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explanation as to how the purportedly fraudulent checks contradict
the second Zenith audit support. But Defendant does argue that
the checks allegedly written by Ms. McKinney do not correspond to
wages that were due current or former employees. And if the
checks were not related to wages that were due any employee, an
audit that took into account those checks to determine when
Defendant’s employees worked would not be completely accurate.
Given that Zenith’s second audit report was based, in part, on a
payroll transaction report produced by Defendant, a trier of fact
could reasonably conclude that the presence of fraudulent checks
made out to Defendant’s current or former employees caused
Zenith’s auditor to conclude that those employees worked during
the weeks to which the checks corresponded even though they did
not. Indeed, a cursory comparison of the charges against Ms.
McKinney and the second Zenith audit report show that many of
the allegedly fraudulent checks correspond with employees and
dates where the Zenith auditor found Defendant delinquent with
respect to contributions owed to Plaintiff. See, e.g., Mot. for Summ.
Judg., Ex. 5B, pp. 60-62, 64, 66 (spreadsheets calculating
Defendant’s unpaid contributions from December 2014 and
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January, February, April, and June of 2015) ; Def. Response, Ex. 1,
pp. 13-20 (criminal charges accusing Ms. McKinney of forging the
signatures of employees on checks written in December 2014 and
January, February, April, and June of 2015). And there is no
indication in the record before the Court that Zenith was aware of
the allegedly fraudulent checks and excluded them from the
analysis conducted during the second audit.
In addition, Defendant has indicated that its accountants are
preparing amended tax forms and tax returns in light of the
revelation of Ms. McKinney’s alleged wrongdoing. Zenith relied on
the tax documents Defendant provided it in creating the second
audit report, and any amendments to those documents based on
fraudulent checks could only lower Defendant’s contribution
liability. Given that the amount of the unpaid contributions is
directly dependent on the days on which Defendant’s employees
worked, the allegedly fraudulent checks, when viewed in
conjunction with the second Zenith audit report, raise a material
dispute as to the issue of how much Defendant owes Plaintiff for
unpaid contributions from July 1, 2014 to September 30, 2015. It
may be that the Zenith audit report is accurate with respect to the
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contributions Defendant failed to pay Plaintiff from July 1, 2014 to
September 30, 2015. For instance, it could be that the employees
named on the checks allegedly signed by Ms. McKinney did work
during the weeks to which those checks corresponded. But Plaintiff
has not met its burden in supplying the facts needed for the Court
to reach such a conclusion. Plaintiff notes that the criminal
charges against Ms. McKinney are “unproven.” Plaintiff is correct,
but that does not mean that its motion for summary judgment
must be granted in its entirety. While the charges against Ms.
McKinney may ultimately prove unfounded, at this time, they are
sufficient to cast doubt upon the accuracy of the second Zenith
audit report, thereby making a grant of summary judgment in favor
of Plaintiff for the time period from July 1, 2014 to September 30,
2015, inappropriate. See Ill. Conference of Teamsters & Employers
Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361, 1367 (7th
Cir. 1995) (holding that the defendant employer “asserted several
facts that would cast doubt upon the accuracy” of the plaintiff’s
calculations, thereby creating a genuine dispute of material fact).
Plaintiff’s request for summary judgment on Count III of its
Complaint is not defeated in its entirety, however. Given that none
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of the charges brought against Ms. McKinney involve actions earlier
than July 2014, Defendant has failed to raise a genuine dispute of
material fact regarding the amount owed to Plaintiff for the time
period from January 1, 2010 to June 30, 2014. The Court therefore
grants summary judgment in favor of Plaintiff on Count III of the
Complaint, but only as to the time period from January 1, 2010 to
June 30, 2014. According to the second Zenith audit report, this
amount stands at $199,990.00 in unpaid contributions and
$19,999.00 in liquidated damages, for a total of $219,989.00.
Defendant also argues that written notice provided by Plaintiff
indicated that it would not be providing Defendant’s employees with
medical coverage after October 31, 2014, due to existing
delinquencies. Because Defendant failed to attach the written
notice on which it bases this argument to its response to Plaintiff’s
motion for summary judgment, the Court refuses to consider the
argument at this time. See Killian v. Concert Health Plan, 651 F.
Supp. 2d 770, 774 (N.D. Ill. 2009) (refusing to consider summary
judgment argument based on documents not submitted as
exhibits).

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Given that the criminal charges against Ms. McKinney were
not filed until after the deadline for Plaintiff’s motion for summary
judgment, the parties may benefit from additional discovery
relevant to the issue of whether the allegedly fraudulent checks
have any bearing on the amount owed by Defendant to Plaintiff for
unpaid contributions. Therefore, the Court VACATES the discovery
deadline of December 9, 2015, and the dispositive motion deadline
of June 10, 2016. The parties shall have until April 7, 2017, to
complete additional discovery. The parties shall have until June 2,
2017, to file dispositive motions. The Final Pretrial Conference set
for March 9, 2017, is CONTINUED to Monday, August 28, 2017.
The Bench Trial set for March 21, 2017, is CONTINUED to
September 19, 2017.
In any action in which the Court enters judgment in favor of a
plan seeking to enforce 29 U.S.C. § 1145, the Court is required to
award the plan the following: (1) unpaid contributions; (2) interest
on the unpaid contributions; (3) an amount equal to the greater of
the interest on the unpaid contributions or liquidated damages
provided for under the plan in an amount not in excess of 20
percent of the amount of the unpaid contributions; (4) reasonable
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attorney’s fees; and (5) the costs of the action. 29 U.S.C. §
1132(g)(2). Because the Court has granted summary judgment in
favor of Plaintiff on Count II of the Complaint and partial summary
judgment on Count III of the Complaint, Plaintiff is entitled to prejudgment interest on the unpaid contributions, attorney’s fees, and
costs in addition to the amounts it has been awarded with respect
to unpaid contributions, liquidated damages, and audit costs.
V. CONCLUSION
For the reasons stated, Plaintiff Teamsters and Employers
Welfare Trust of Illinois’ Combined Motion and Memorandum of
Law for Summary Judgment Against Gwillim Trucking, Inc. (d/e 14)
is GRANTED IN PART and DENIED IN PART. Judgment is entered
in favor of Plaintiff and against Defendant on Count II of Plaintiff’s
Complaint in the amount of $24,138.60. Partial judgment is
entered in favor of Plaintiff and against Defendant on Count III of
Plaintiff’s Complaint in the amount of $219,989.00. Plaintiff’s claim
against Defendant in Count III for unpaid contributions from July
1, 2014 to September 30, 2015, remains pending. Plaintiff is
granted leave to file a petition for its attorney’s fees, pre-judgment
interest, and costs and should file its petition within 21 days of the
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date of this Order. Pursuant to Federal Rule of Civil Procedure
54(b), the Court finds no just reason for delay.

ENTER: February 14, 2017.
/s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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