Unite Here Health et al v. The Pittsburgh Athletic Association

Filing 46

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 3/25/2014: Civil case terminated.Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITE HERE HEALTH, et al.,
Plaintiff,
Case No. 12 C 6015
v.

Hon. Harry D. Leinenweber

THE PITTSBURGH ATHLETIC
ASSOCIATION,
Defendant.

MEMORANDUM OPINION AND ORDER
Plaintiff Unite Here Health (hereinafter the “Fund”) brings
this action under the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., seeking to recover
unpaid

plan

contributions

Association (“PAA”).

from

Defendant

Pittsburgh

Athletic

The Fund has moved for summary judgment

pursuant to Rule 56 of the Federal Rules of Civil Procedure.
(ECF No. 28).

For reasons stated herein, the Motion is granted.
I.

BACKGROUND

The Fund is an ERISA “welfare plan” and an “employee benefit
trust fund” under the Labor Management Relations Act, 29 U.S.C.
§ 186(c)(5).

The Fund is administered from its central offices in

Aurora, Illinois.
PAA

is

a

Pennsylvania

nonprofit

association

“employer” as the term is defined in ERISA.

and

is

an

On November 1, 2008,

PAA entered into a Collective Bargaining Agreement (the “CBA”) with

the Pennsylvania Joint Board of Unite Here, Local 57, under which
PAA agreed to pay contributions to the Fund at the following fixed
monthly rates:
For employees hired before October 23, 2003:
Effective November 1, 2008
Effective March 1, 2009
Effective March 1, 2010

$601.21/mo
$663.97/mo
$770.20/mo

For employees hired after October 23, 2003:
Effective November 1, 2008
Effective March 1, 2009
Effective March 1, 2010

$440.20/mo
$485.88/mo
$563.62/mo

Through the CBA, PAA further agreed to be bound by the
Agreement

and

Declaration

Agreement”)

and

to

established

and

actions

of

“abide

Trust

and

taken”

be
by

of

the

bound
the

Fund
by

all

Trustees

(“Trustees”) pursuant to the Trust Agreement.
of Facts (“Pl.’s’ Stmt.”) ¶ 6, ECF No. 29).

(the

of

“Trust

procedures
the

Fund

(Pl.’s’ 56.1 Stmt.
Any inconsistencies

between the CBA and the Trust Agreement were to be resolved in
favor of the Trust Agreement.

(Id.).

Section 6.08 of the Trust Agreement confers upon the Trustees
broad discretionary authority to interpret the terms of the Trust
Agreement.

Specifically, the Trustees were granted:
full
and
exclusive
jurisdiction
and
discretionary
authority
to
decide
all
questions
or
controversies
of
whatever
character arising in any manner between any
parties or persons in connection with the
Welfare Fund or the interpretation thereof,
including the construction of the language of
this Trust Agreement, the benefit programs,
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the rules and regulations adopted by the
Trustees, and any writing, decision, benefit
eligibility determination, instrument, or
accounts in connection with same and with the
operation of the Welfare Fund or otherwise.
All
decisions,
determinations,
and
any
construction of the Trust Agreement adopted by
the Trustees in good faith shall be binding
upon all persons dealing with the Welfare
Fund. . . .
(Id. ¶ 7).
In addition, the Trustees were permitted to audit PAA’s
payroll books and collect interest and late fees on any delinquent
contribution payments.

(Id.).

On February 28, 2011, the CBA expired and was not renewed.
Section 9.04 of the Trust Agreement mandates certain continuing
obligations to the Fund upon the expiration of the CBA.
section states in relevant part that:
[t]he Employer’s obligation to make timely
contributions to the Welfare Fund under its
collective
bargaining
agreement
or
participation agreement and in accordance with
the Minimum Standards shall continue after
expiration
of
the
collective
bargaining
agreement or participation agreement and
during
periods
when
a
new or
renewal
collective
bargaining
agreement
or
participation agreement is being negotiated.
The obligation to contribute includes the
obligation to pay the contribution rate
established by the Trustees during the postexpiration period.
This obligation shall
continue until the earliest of the following
events:
(a) impasse followed by a strike
(unless the Employer and the Union agree in a
writing acceptable to the Trustees that
contributions will be made during and after
the strike); (b) the Employer has submitted to
the
Welfare
Fund
a
written
notice
of
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That

termination which states the legal basis for
the termination and which has been approved by
the Fund Executives in accordance with the
Welfare Fund’s rules and procedures for
termination; or (c) the end of the 12 month
period following the expiration of the
collective
bargaining
agreement
or
participation agreement.
The Employer’s
continuing obligation to make contributions
after expiration of the collective bargaining
agreement or participation agreement, as
described above, is enforceable by the
Trustees in accordance with Sections 9.06,
9.07, and 17.03 of this Trust Agreement.
(Id.).
On March 1, 2011, the Fund increased its monthly contribution
rates to $774.45 for employees hired prior to October 23, 2003, and
to $566.73 for employees hired after October 23, 2003.

Between

March and November 2011, PAA continued to pay contributions at the
new rates set by the Trustees.

From December 2011 to February

2012, however, PAA did not make any contributions to the Fund.
Pursuant to its audit powers under the Trust Agreement, the
Fund conducted two contribution compliance reviews of PAA’s records
– the first, for work performed between January 2009 and December
2010 (the “2010 Audit”), and the second, for work performed between
January 2011 and February 2012 (the “2012 Audit”).

According to

the Fund, the 2010 Audit showed that PAA owed $33,389.35 in overdue
contributions,

$1,973.37

in

accrued

interest,

$6,677.87

in

liquidated damages, and audit costs in the amount of $9,705.15.
The 2012 Audit revealed further overdue contributions in the amount
of

$66,468.05,

$2,943.57

in

accrued
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interest,

$13,293.61

in

liquidated damages, and audit costs in the amount of $7,387.99. On
July 31, 2012, Matthew Walker (“Walker”), the Fund’s Administrator,
commenced this action on behalf of the Fund, seeking a judgment
against PAA for these outstanding amounts.
II.
Summary

judgment

LEGAL STANDARD

is

appropriate

“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 judgment as a matter of law.”
U.S. 317, 322 (1986).

Celotex Corp. v. Catrett, 477

The inquiry is “whether the evidence

presents a sufficient disagreement to require submission to a jury
or whether it is so one-sided that one party must prevail as a
matter of law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252

(1986). The Court construes all facts and reasonable inferences in
the light most favorable to the non-moving party.

Wilson v. Cook

County, 742 F.3d 775, 779 (7th Cir. 2014).
III.
Under

ERISA,

any

ANALYSIS

employer

that

is

obligated

to

make

contributions to a multi-employer plan pursuant to the terms of a
collective bargaining agreement must “make such contributions in
accordance with the terms and conditions of such plan or such
agreement.”

29 U.S.C. § 1145.

ERISA permits the recovery of any

unpaid contributions, interest, liquidated damages, reasonable
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attorney’s fees and costs, and other legal or equitable relief
deemed appropriate by the Court.

29 U.S.C. § 1132(g)(2).

The Fund’s audit records indicate that PAA owes a total of
$141,838.96 in overdue contributions, accrued interest, liquidated
damages, and audit costs.

The Fund also seeks to recover the

attorneys’ fees and costs that it incurred through efforts it has
made to collect the unpaid amounts from PAA.
PAA

takes

the

position

contributions to the Fund.

that

it

owes

no

outstanding

Specifically, it asserts that it was

not required to make any payments after the expiration of the CBA
because the parties did not negotiate a new or renewal CBA.

PAA

further argues that the affidavits and audit reports upon which the
Fund relies are inadmissible and cannot support entry of summary
judgment in favor of the Fund.

Finally, PAA contends that, even if

the Fund’s evidence were sufficient, there are genuinely disputed
factual issues concerning the total contributions PAA made to the
Fund.
A.

The Court considers each of these arguments in turn.
PAA’s Disputed Interpretation of the Trust Agreement

PAA first argues that it had no obligation to make payments to
the Fund after the CBA expired because Section 9.04 of the Trust
Agreement only required continued contributions for the period of
time during which a new or renewal CBA was being negotiated.
(Def.’s Mem. in Opp. to Summ. J. (“Def.’s Opp. Mem.”) at 2, ECF
No. 41).

Since the parties did not negotiate or adopt any

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successor agreement, PAA denies that it owes any amount to the Fund
following the expiration of the original CBA.
The Fund interprets the Trust Agreement differently and argues
that Section 9.04 contemplates contributions after the expiration
of the CBA regardless of whether or not a new CBA was being
negotiated.

Because Section 6.08 of the Trust Agreement gives the

Trustees the sole discretion to interpret the Agreement, the Fund
contends that its interpretation is binding on PAA.
Where, as here, an ERISA plan gives the fund administrator
discretionary authority to construe the terms of a benefits plan,
the administrator’s interpretation will be set aside “only if it is
arbitrary and capricious.” Black v. Long Term Disability Ins., 582
F.3d 738, 744-45 (7th Cir. 2009).

Under this standard of review,

the administrator’s plan interpretation is entitled to “the highest
level of deference.”

Exbom v. Central States, Se. & Sw. Areas

Health & Welfare Fund, 900 F.2d 1138, 1142 (7th Cir. 1990).
The dispute over PAA’s obligations to the Fund appears to
arise

out

of

conjunction

Section

“and,”

9.04’s

which

somewhat

could

misleading

indicate

that

use

of

continued

the
fund

contributions were required only in the event that a new or renewal
CBA was being negotiated.

But the language of Section 9.04 is far

from clear and the Fund’s contention that contributions were to
continue

whether

or

not

the

parties

were

engaged

in

such

negotiations is a reasonable enough reading of the Trust Agreement.

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Indeed, there is some evidence that PAA itself agreed with that
interpretation, since it continued to make payments to the Fund for
nine months after the expiration of the CBA despite there having
been no negotiations for any successor agreement during that time.
In any event, even if the contrary position that PAA now adopts is
correct, PAA agreed to be bound by the Trustees’ interpretation of
the Trust Agreement and there is no basis for rejecting the Fund’s
reading

of

Section

9.04

as

being

arbitrary

and

capricious.

Accordingly, PAA’s arguments regarding the limited scope of its
obligations following the expiration of the CBA are unavailing.
B.

PAA’s Evidentiary Objections

As proof of PAA’s overdue fund obligations, the Fund relies in
part upon the affidavits of Dean Dailey (“Dailey”), the Fund’s
Collections Manager, and Suzette Cordero (“Cordero”), the Fund’s
Audit Manager.

PAA contends that these affidavits should not be

considered because they lack proper foundational support.
Rule 56(c)(4) of the Federal Rules of Civil Procedure states
that “[a]n affidavit or declaration used to support or oppose a
motion must be made on personal knowledge, set out facts that would
be admissible in evidence, and show that the affiant or declarant
is competent to testify on the matters stated.”

Federal Rule of

Evidence 602 further provides that “[a] witness may testify to a
matter only if evidence is introduced sufficient to support a
finding that the witness has personal knowledge of the matter.

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Evidence to prove personal knowledge may consist of the witness’s
own testimony.”
Both the Dailey and Cordero Affidavits plainly meet the
foundational requirements under the Federal Rules.

Dailey offers

testimony concerning the amount of unpaid fund contributions owed
by PAA and attests that, in his capacity as the Fund’s Collections
Manager, he reviews records of contributions received by the Fund,
monitors records on each entity required to make contributions,
reviews contribution reports, and manages “all books, records,
documents and papers relating to such entities who are delinquent
in their obligations to the Welfare Fund.”

(Aff. of Dean Dailey,

sworn to on Mar. 1, 2013 (“Dailey Aff.”) ¶ 2, ECF No. 29-1).
Dailey’s summary of PAA’s past-due fund contributions therefore is
a matter within his personal knowledge.

Cordero’s testimony as to

the

2012

audit

reports

for

the

2010

and

Audits

likewise

is

supported by her personal knowledge of the Fund’s payroll audit
procedures:

she has served as the Fund’s Audit Manager for more

than ten years and, during that time, has overseen audits and
supervised auditors throughout various regional offices.

(Undated

Aff. of Suzette Cordero (“Cordero Aff.”) ¶ 2, ECF No. 29-1).

PAA’s

foundational objections as to both affidavits therefore are without
merit.
PAA also contends that the audit reports for the 2010 and 2012
Audits, which are attached to and described in Cordero’s affidavit,

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are inadmissible hearsay. Although PAA is correct that the reports
are hearsay, they are admissible nonetheless as records of a
regularly conducted business activity pursuant to Rule 803(6) of
the Federal Rules of Evidence.
Business records are exempted from the hearsay rule because
“businesses depend on them to conduct their own affairs, so there
is little if any incentive to be deceitful, and because the
regularity of creating such records leads to habits of accuracy.”
Jordan v. Binns, 712 F.3d 1123, 1135 (7th Cir. 2013).

To qualify

as a business record, “(1) the document must be prepared in the
normal course of business; (2) it must be made at or near the time
of the events it records; and (3) it must be based on the personal
knowledge of the entrant or on the personal knowledge of an
informant having a business duty to transmit the information to the
entrant.”

Bank of N.Y. Mellon v. Murillo, No. 12-cv-6726, 2014 WL

773041, at *2 (N.D. Ill. Feb. 25, 2014) (quotation omitted).
Although Cordero is not the custodian of the Fund’s audit reports,
she is competent to supply this foundational information because of
her extensive knowledge of the Fund’s audit procedures.

See,

United States v. LeShore, 543 F.3d 935, 941-42 (7th Cir. 2008)
(business records foundation may be established by anyone with
“knowledge of the procedure under which the records were created”).
Cordero’s affidavit makes clear that the audit reports for the
2010 and 2012 Audits were prepared in the regular course of the

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Fund’s business activities, that the audit reports were generated
at or near the time the Audits were completed, and that the audit
reports were compiled by the auditors who performed and thus had
personal knowledge of the Audits.

This is sufficient to qualify

the reports as business records under Rule 803(6).

Accordingly,

the audit reports are admissible to prove amounts that are due and
owing to the Fund.

PAA’s objection to the use of this evidence in

connection with the present motion therefore is overruled.
C.

PAA’s Failure to Show Disputed Issues of Material Fact

PAA’s final argument is that summary judgment is improper
because a genuine factual dispute exists as to the amounts PAA owes
the Fund.

In an effort to contradict the Fund’s audit reports, PAA

points to various internal payment records and an affidavit from
its General Manager, Joseph Dengler (“Dengler”), which show that it
made consistent monthly contribution payments from January 2007
through November 2011.

The Fund does not dispute, however, that

PAA paid contributions for the work it reported.

Rather, it

contends

additional

that,

based

upon

its

audit

records,

contributions are owed because PAA failed to report all time worked
by its bargaining unit employees.

Although PAA’s payment records

perhaps are probative of the fact that it made some contributions
to the Fund, they do not contravene the Fund’s audit findings or
demonstrate
performed.

that

PAA

did

report

all

work

that

its employees

In addition, the Court notes that PAA concedes that it

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paid the Fund nothing for work performed by its employees between
December 2011 and February 2012, as it would have been required to
do under the Fund’s binding interpretation of the Trust Agreement.
In the absence of any company records that contradict the
Fund’s audit reports, the burden shifts to PAA to show that there
are factual disputes sufficient to bar summary judgment. Laborers’
Pension Fund v. RES Envtl. Servs., 377 F.3d 735, 738-39 (7th Cir.
2004).

Because PAA’s evidence fails to create a genuine issue of

material

fact

regarding

the

Fund’s

calculation

of

delinquent

contributions, summary judgment must be granted in favor of the
Fund.
IV.

CONCLUSION

For the reasons stated herein, the Fund’s Motion for Summary
Judgment [ECF No. 28] is granted.

Judgment in the amount of

$141,838.96, plus reasonable attorneys’ fees, costs, and postjudgment interest is awarded to the Fund.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Date:3/25/2014

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