Board of Trustees of the Pipe Fitters Retirement Fund, Local 597 et al v. Global Mechanical Inc.

Filing 201

MEMORANDUM Opinion and Order signed by the Honorable Ronald A. Guzman on 3/19/2013. Mailed notice(cjg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BOARD OF TRUSTEES of the PIPE FITTERS
RETIREMENT FUND, LOCAL 597;
BOARD OF TRUSTEES of the PIPE FITTERS
WELFARE FUND, LOCAL 597;
BOARD OF TRUSTEES of the PIPE FITTERS
TRAINING FUND, LOCAL 597; the
BOARD OF TRUSTEES of the CHICAGO AREA
MECHANICAL CONTRACTING INDUSTRY
IMPROVEMENT TRUST;
THE PIPE FITTERS’ ASSOCIATION,
LOCAL 597 U.A.; BOARD OF TRUSTEES
of the PIPE FITTERS’ INDIVIDUAL
ACCOUNT and 401(K) PLAN; and
BOARD OF TRUSTEES of the PIPE FITTING
COUNCIL OF GREATER CHICAGO,
Plaintiffs,
v.
GLOBAL MECHANICAL INC.,
an Indiana Corporation;
Defendant.

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MEMORANDUM OPINION AND ORDER
After Plaintiffs sued Global Mechanical, Inc. (“GMI”) for delinquent contribution
payments under the Employee Retirement Income Security Act (“ERISA”), GMI filed a
counterclaim against Pipefitters Association, Local 597 (“Union”) for breach of the no-strike
provision in the applicable collective bargaining agreement (“CBA”). The parties have filed
cross motions for summary judgment. For the reasons stated herein, the motions are granted in
part and denied in part.
Facts
In December 2010, GMI entered into a Subscription Agreement with the Union, whereby
it agreed to be bound by the provisions of the CBA negotiated between the Union and the
Mechanical Contractors Association for all times relevant to this action. (Def.’s LR
56.1(b)(3)(B) Stmt., Dkt. # 181, ¶ 11.) Specifically, the CBA provides that “[e]ach Employer
hereby agrees to be bound to the Agreement and Declarations of Trust [‘Trust Agreements’] for

each Benefit Fund.” (Id. ¶ 12.) Pursuant to the provisions of the CBA and the Trust Agreements,
GMI was required to make monthly reports of hours worked by covered employees, i.e.,
contribution reports, and pay contributions to the Trust Funds for each hour worked pursuant to
the CBA at the negotiated rate. (Id. ¶ 13.) Pursuant to Section 502(g)(2) of ERISA, and the
applicable provisions of the CBA and Trust Agreements, employers who fail to submit their
monthly contribution reports and contributions to the Trust Funds in a timely manner are
responsible for the payment of liquidated damages and interest for each month that contributions
remain unpaid, plus any reasonable attorney’s fees and costs of maintaining suit. (Id. ¶ 14.)
GMI failed to submit contributions for the months of December 2010 and January 2011
in the aggregate amount of $103,591.66. (Id. ¶ 16.) On or about January 25, 2011, the Union
notified the employees of GMI that their benefits for the month of December 2010, including
401(k) wage deductions and Union dues, had not been submitted by GMI. (Id. ¶ 17.) The Union
therefore notified employees of GMI that they were not required to report to work until GMI
remedied its breach of the CBA by paying the delinquent benefit contributions. (Id. ¶ 18.) The
Union also notified GMI that the employees would return to work as soon as GMI submitted the
outstanding contribution reports and payment for December 2010. (Id. ¶ 19.) GMI failed to do
so and the employees did not return to work. (Id. ¶ 20.) GMI never initiated the grievance
procedure set forth in the CBA to complain of any alleged violation of the CBA by the Union.
(Id. ¶ 21.)
The Trust Funds and the Union submitted a claim on GMI’s Letter of Credit, which
satisfied a portion of the delinquency, but the parties agree that GMI still owes the Trust Funds
and the Union $3,591.66 in unpaid contributions, $10,347.46 in liquidated damages and $417.04
in interest for December 2010 and January 2011. (Id. ¶¶ 22-25.)
Article III, Section 5(a) of the CBA provides in relevant part:
It shall be considered a violation of this Agreement, and shall be cause for
cancellation of this Agreement as to an Employer, if an Employer shall fail, after
reasonable notice from the Trustees, or the Union or the Education Fund Trustees,
as the case may be, to furnish reports, pay Benefit Funds or Education Fund
contributions or Wage-Work Assessments or to comply with the rules and
regulations formulated and promulgated by the Trustees, or by the Union, or
by the Education Fund Trustees, as the case may be.
(Id. ¶ 26.)
Article III, Section 5(b) of the CBA further provides in relevant part:
The Union may cancel this Agreement as to any Employer under Section 5(a) in
the following circumstances:
1. The Employer is more than 50% delinquent in its total contributions required to
be made pursuant to Section 3 and 4 of Article III for any month and fails and/or
refuses – after written notice of any delinquency – to remit the delinquent
contributions within thirty (30) days of such notice;
2. The Board of Trustees of any one Benefit Fund approves cancellation; or
3. The Employer fails to procure and maintain a Surety Bond as described in
Article XI, Section(c).
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(Id. ¶ 28.)
Article XII –Joint Arbitration Board, Section 4(a) of the CBA provides in relevant part:
All disagreements concerning the application or interpretation of this Agreement
must be arbitrated. The Board shall be the arbitration forum and shall have the
full
power to enforce this Agreement and enforce working rules for the parties subject
to this Agreement. It shall have the power to impose such penalties from time to
time as it may deem advisable, including fines. The arbitral decision of the Board
shall be final and binding on all parties subject to the Agreement.
(Id. ¶ 29.)
Article XII –Joint Arbitration Board, Section 5(a) of the CBA provides in relevant part:
Should a dispute or disagreement arise between: the Union and the Association;
an Employer and an Employee; or an Employer and the Union; such dispute or
disagreement shall be submitted in writing to the respective President and
Business Manager of the parties hereto with a copy to the Joint Arbitration Board
within three (3) business days after the dispute or disagreement arises. Should the
President and Business Manager fail to agree and dispose of the matter within
twenty-four (24) hours, the dispute or disagreement shall then be taken up by the
Joint Arbitration Board, or a sub-committee thereof consisting of an equal number
of persons from the Union and the Association, for adjudication. The Board or
sub-committee shall hear the evidence and render its decision as expeditiously as
possible. All decisions shall be determined by a majority vote, and shall be final
and binding on all parties.
(Id. ¶ 30.)
Prior to March 9, 2012, the CBA contained the following provision:
Article 1, Section 1(c): It is agreed that during the time of this Agreement, and
any
extension thereof, there shall be no lock-out by any employer nor any strike,
stoppage, slowdown, picketing or boycott by the Union, any of its members or
any Employees.
(Pls.’ LR 56.1(b)(3)(C) Stmt., Dkt. # 196, ¶ 5.)
Summary Judgment Standard
Summary judgment is proper “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed R. Civ. P. 56(a);
see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Thus, in order to withstand a motion for
summary judgment, the nonmoving party must show that a dispute about a genuine issue of
material fact exists. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
nonmoving party may not merely rest upon the allegations or details in his pleading, but instead,
must set forth specific facts showing there is a genuine issue for trial. See Celotex, 477 U.S. at
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322; Anderson, 477 U.S. at 248. To succeed on a summary judgment motion, the evidence must
be such “that [no] reasonable jury could return a verdict for the nonmoving party.” Anderson,
477 U.S. at 248.
Analysis
GMI’s Counterclaim
In its counterclaim, GMI alleges that the Union breached a no-strike clause in the
relevant CBA by “pulling and/or removing its members from [GMI’s] employ and/or directing
its members to refrain from working for [GMI]” after a dispute arose between the Union and
GMI. (GMI’s Counterclaim, Dkt. # 16, ¶¶ 5-7.) GMI seeks damages from the Union in excess
of $300,000.00. (Id. ¶ 8.)
According to the Union, the Court cannot consider GMI’s counterclaim because GMI did
not exhaust its administrative remedies by seeking to arbitrate its claim for breach of the nostrike provision. Specifically, the Union notes that the CBA requires that “all disagreements
concerning the application or interpretation of this Agreement must be arbitrated.” (Def.’s LR
56.1(b)(3)(B) Stmt., Dkt. # 181, ¶ 29.)
GMI contends that the provision is inapplicable for several reasons. First, it argues that it
is not required to arbitrate the purported breach of the no-strike clause because the Union clearly
waived its right to strike. In support, it points to Dep’t Store, Package, Grocery, Paper House,
Liquor and Meat Drivers, Helpers and Warehousemen, Local Union 955 v. BerminghamProsser Paper Co., 364 F. Supp. 426 (D. Mo. 1973), in which the court held that because the
union’s waiver of its right to strike was not the quid pro quo for an undertaking by the employer
to submit grievance disputes for arbitration, a dispute over the union's right to strike did not
involve an arbitrable issue.
As an initial matter, the Berminghan-Prosser case is not binding on this Court.
Moreover, “[t]he Seventh Circuit explicitly holds that there is a presumption of arbitrability
unless there is no possible interpretation that the arbitration clause covers the asserted dispute.”
United Food and Commercial Workers Local 655 v. Holten, No. 12–CV–00732–DRH–DGW,
2013 WL 784379, at *2 (S.D. Ill. Mar. 1, 2013). Here, the language of the arbitration provision
is clear: “all disagreements concerning the application or interpretation of this Agreement must
be arbitrated.” (Def.’s LR 56.1(b)(3)(B) Stmt., Dkt. # 181, ¶ 29.) Absent express language so
stating, this Court cannot discern from the plain language of the CBA whether the Union’s
purported waiver of its right to strike was a quid pro quo for GMI to submit its grievances to
arbitration. However, under the clear language of the CBA, GMI’s claim that the Union
breached the no-strike clause is subject to arbitration. GMI’s argument that only those
disagreements “concerning the application or interpretation of this Agreement” are subject to
arbitration is a non-starter. GMI’s claim that the Union breached the no-strike provision of the
CBA concerns the “application” of the CBA. Pietro Scalzitti Co. v. Int’l Union of Operating
Eng’rs, 351 F.2d 576, 579 (7th Cir. 1965) (“[T]he question raised by the pleadings and Union's
supporting affidavit is whether Union violated the bargaining agreement. This is a dispute
concerning the meaning, interpretation or application of the agreement.”). To the extent that
there is any doubt that GMI’s counterclaim “concerns the application or interpretation” of the
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CBA, it must be resolved in favor arbitration. Id. The Court finds that the arbitration clause
applies to GMI’s counterclaim.
GMI’s citation to Illinois Bell Tel. Co v. Int’l Bhd. Of Elec. Workers, 330 F. Supp. 302
(S.D. Ill. 1971), does not persuade the Court differently. In Illinois Bell, the court denied the
defendant’s motion to stay the case pending arbitration because the arbitration provision in
Illinois Bell made “no provision of any kind for employer initiation of grievances or for the
processing of a grievance on the part of the employer.” Id. at 303. Accordingly, the Illinois Bell
court concluded that “[t]he employer here clearly has not . . . agreed to submit to arbitration the
question of damages for a strike in violation of contract.” Id. In this case, however, the
arbitration clause expressly calls for arbitration “[s]hould a dispute or disagreement arise
between: the Union and the Association; an employer and an Employee; or an Employer and the
Union.” (Def.’s LR 56.1(b)(3)(B) Stmt., Dkt. # 181, ¶ 30) (emphasis added).
The other case cited by GMI, Cal. Trucking Ass’n v. Bhd. of Teamsters & Auto Truck
Drivers, Local 70, 679 F.2d 1275, 1282 (9th Cir. 1981), is also inapposite. In that case,
employers sought damages for alleged violations by the union of the applicable collective
bargaining agreement and the union argued that the dispute required arbitration. Id. at 1278. In
allowing the suit to proceed, the district court concluded that “even if the agreement required
submission of damages actions to the grievance procedures, [the union’s] express repudiation of
the collective bargaining agreement released the employers from any obligation to arbitrate.” Id.
at 1282. “Specifically, the [district] court found that [the union] consistently repudiated the
entire collective bargaining agreement by denying throughout proceedings before the court that it
was bound by the agreement.” Id. The Ninth Circuit affirmed the district court on that issue. Id.
at 1284-85. Here, there is no argument or evidence that the Union repudiated the CBA.
GMI also argues that it was not required to seek arbitration because the Joint Arbitration
Board (“JAB”) has no power under the CBA to award compensatory damages. The relevant
provision in the CBA states that “[t]he Board . . . shall have the full power to enforce this
Agreement and enforce working rules for the parties subject to this Agreement” as well as “to
impose such penalties from time to time as it may deem advisable, including fines.” (Def.'s LR
56.1(b)(3)(B) Stmt., Dkt. # 181, ¶ 29.) “It is elementary that the question of interpretation of the
collective bargaining agreement is a question for the arbitrator.” Dexter Axle Co. v. Int'l Assoc.
of Machinists & Aerospace Workers, Dist. 90, Lodge 1315, 418 F.3d 762, 768 (7th Cir. 2005)
(internal quotation marks and citation omitted). Thus, the issue of whether the JAB may award
compensatory damages is up to the arbitrator. GMI’s related argument that it would have been
futile to seek arbitration because the issue is not arbitrable and the arbitrator does not have the
power to award damages is unavailing. The Court has already determined that GMI’s claim for
breach of the no-strike provision is arbitrable and, as just noted, the interpretation of the CBA
regarding the arbitrator’s ability to award damages is left to the arbitrator.
Finally, GMI contends that the Union waived any right to arbitration by failing to move
to compel arbitration and litigating the counterclaim. The Union sought to dismiss GMI’s
counterclaim for its failure to exhaust its administrative remedies, which the Court denied on the
ground that the issue required consideration of evidence outside of the complaint and directed
the Union to renew its motion at the summary judgment stage. (Dkt. # 43.) In addressing an
argument similar to GMI’s in a case where the union plead failure to exhaust as an affirmative
defense but did not move to compel arbitration, the Seventh Circuit concluded that “although the
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Union’s litigation strategy is questionable, the pleading of its affirmative defense should have
alerted the court and the plaintiff to the Union’s contention that arbitral remedies should be
exhausted before resorting to suit.” Mautz & Oren, Inc. v. Teamsters, Chauffeurs, and Helpers
Union, 882 F.2d 1117, 1126 (7th Cir. 1989). The Seventh Circuit noted that “[t]his is an
especially apt outcome here, since it was [the employer], and not the Union, which was seeking
relief for an alleged violation of the collective agreement; the primary responsibility to initiate
arbitration proceedings was therefore on [the employer], not the Union.” Id. As in Mautz &
Oren, it was GMI’s, not the Union’s, responsibility to initiate arbitration proceedings regarding
the purported breach of the no-strike provision. Thus, the Court finds that the Union’s filing of
its motion to dismiss was sufficient to put GMI on notice that the Union believed GMI needed to
exhaust its administrative remedies. Accordingly, the Court finds that the Union did not waive
its right to arbitrate.
The Court stays consideration of GMI’s claim that the Union breached the no-strike
provision pending exhaustion of available grievance procedures. Id. (concluding that “employer
should have resorted to arbitration before filing suit under Section 301" and noting that “[o]n
remand, [the employer’s] contract claim should be stayed pending exhaustion of available
grievance procedures”). To the extent that the Union states that the time to seek arbitration has
passed given the CBA’s requirement that all disputes be submitted for arbitration within three
business days after the dispute or disagreement arises (Def.'s LR 56.1(b)(3)(B) Stmt., Dkt. # 181,
¶ 30), any question regarding the timeliness of GMI’s grievance is left to the arbitrator. Mautz &
Oren, 882 F.2d at 1127 (“Any question regarding the timeliness of [the employer’s] grievance
should be left for decision by the grievance committee or arbitrator.”)
Plaintiffs’ Claim for Unpaid Contributions and Attorney’s Fees
GMI does not dispute that it owes $14,356.16 in unpaid contributions, liquidated
damages and interest. (GMI’s Opp. and Cross-Mot. Summ. J., Dkt. # 187, at 21.) Therefore,
judgment is granted in favor of Plaintiffs in that amount.
Plaintiffs also seek $49,138.77 in attorney’s fees and costs. GMI does not contest that
Plaintiffs are permitted to recover attorney’s fees but disputes the amount sought. Because
Plaintiffs have already filed their motion for fees and supporting documentation, GMI shall have
14 days from the date of entry of this order to submit to Plaintiffs their specific objections.
Within 10 days thereafter, the parties shall meet and make every effort to resolve any disputes as
to the amount sought. In so doing, the parties shall provide the opposing party with any
authority in support of their respective positions. In the event any disputes remain after the meet
and confer, the parties shall file a joint memorandum identifying the remaining fees and costs
under dispute and their respective authorities in support. The Court will rule by mail on the
outstanding fees and costs in dispute. The Court reiterates that the parties shall approach their
discussions with the full intent to resolve any disputes between themselves without further Court
involvement.

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Conclusion
For the reasons stated above, Plaintiffs’ motion for summary judgment [168-1] is granted
as to its claim of delinquent contributions and the Union’s motion for summary judgment is
granted in part as to the counterclaim. GMI’s motion for summary judgment [186-1] is granted
in part. Plaintiffs are awarded $14,356.16 in unpaid contributions, liquidated damages and
interest. Plaintiffs are also awarded attorney’s fees, the amount of which will be determined
according to the procedure detailed above. Plaintiffs’ motion to strike [189-1] is denied as moot.
GMI’s counterclaim for breach of the no-strike provision is stayed pending exhaustion of
grievance procedures.

Date: March 19, 2013

__________________________________
United States District Judge
Ronald A. Guzman

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