Iron Workers' Mid-America Pension Plan et al v. Security Industries, Inc. et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 2/12/2014. Mailed notice(mjc, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IRON WORKERS’ MID-AMERICA PENSION PLAN;
JOSEPH J. BURKE; IRON WORKERS’ MIDAMERICA SUPPLEMENTAL ANNUITY FUND;
IRON WORKERS’ LOCAL 395 FRINGE BENEFIT
FUNDS; and LOCAL UNION 395 OF THE
INTERNATIONAL ASSOCIATION OF BRIDGE,
STRUCTURAL, ORNAMENTAL & REINFORCING
IRON WORKERS,
Plaintiffs,
v.
SECURITY INDUSTRIES, INC.,
an Indiana corporation; and
DANNY S. JONES, an individual,
Defendants.
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Case No. 13-cv-1622
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
Plaintiffs have brought this action against Defendant, Security Industries, Inc.
(“Securities Industries”), to recover, inter alia, unpaid fringe benefit contributions, wage
deductions and union dues, under the Employee Retirement Income Security Act (“ERISA”),
29 U.S.C. §§ 1132, 1145, and the Labor-Management Relations Act of 1947, as amended,
29 U.S.C. § 185 (“LMRA”). Plaintiffs also assert a pendent state law claim to enforce a
promissory note against both Security Industries and Defendant Danny S. Jones. Plaintiffs have
moved for summary judgment, arguing that the amounts due are undisputed. The matter has
been fully briefed. For the reasons discussed below, Plaintiffs’ Motion [11] is granted.
BACKGROUND
Local Rule 56.1(a)(3) requires a party moving for summary judgment to provide “a
statement of material facts as to which the moving party contends there is no genuine issue . . . .”
Local Rule 56.1(b)(3) requires the nonmoving party to admit or deny each factual statement
proffered by the moving party and to concisely designate any material facts that establish a
genuine dispute for trial. See Schrott v. Bristol-Myers Squibb Co., 403 F.3d 940, 944 (7th Cir.
2005); see also EEOC v. Caterpillar Inc., 503 F. Supp. 2d 995, 1011n.14 (N.D. Ill. 2007). The
failure to dispute any facts in an opponent’s statement in the manner dictated by Local Rule 56.1
deems those facts admitted for purposes of summary judgment. Smith v. Lamz, 321 F.3d 680,
683 (7th Cir. 2003). Local Rule 56.1(b)(3)(C) further permits the non-movant to submit a
statement “of any additional facts that require the denial of summary judgment . . . .” To the
extent that a response to a statement of material fact provides only extraneous or argumentative
information, this response will not constitute a proper denial of the fact, and the fact is admitted.
See Graziano v. Vill. of Oak Park, 401 F. Supp. 2d 918, 936 (N.D. Ill. 2005). Similarly, to the
extent that a statement of fact contains a legal conclusion or otherwise unsupported statement,
including a fact that relies upon inadmissible hearsay, such a fact is disregarded. Eisenstadt v.
Centel Corp., 113 F.3d 738, 742 (7th Cir. 1997).
The majority of the operative facts in this case are undisputed. Plaintiffs, Iron Workers’
Mid-America Pension Plan, Iron Workers’ Mid-America Supplemental Annuity Fund
(collectively, “Mid-America Funds”), and the Iron Workers’ Local 395 Fringe Benefit Funds
(“395 Funds”) are jointly trusteed employee benefits trust funds that provide pension and welfare
to their participants and related joint-labor management committees. (Pls.’ Rule 56.1 Statement
of Facts (“SOF”) ¶ 1.) Plaintiff, Local Union 395 of the International Association of Bridge,
Structural, Ornamental & Reinforcing Iron Workers (“Local 395”), is a labor union with its
principal office located in Portage, Indiana. (SOF ¶ 2.) Defendant Security Industries, Inc.
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(“Security Industries”) was a corporation located in Hobart, Indiana, until it ceased operating in
the first half of 2013; Defendant Jones was its president and a 50 percent shareholder. (SOF ¶ 3.)
Security Industries had various collective bargaining agreements with Local 395 and
another union, Iron Workers Local 63 (“Local 63.) Pursuant to those agreements, Security
Industries was required to report and pay fringe benefit contributions and wage deductions at
contractual rates on behalf of the covered workers; late contributions and wage deductions were
assessed liquidated damages and permitted the recovery of attorney’s fees and costs against the
employer. (SOF ¶¶ 7, 10, 13.) Specifically, with respect to the agreement with Local 395,
Security Industries was required to report and pay fringe contributions to the Mid-America
Funds, as well as other funds. Security Industries was also required to withhold specified
amounts from its covered employees’ wages and to pay such amounts to Local 395 and other
related entities. Late contributions and wage deductions were to be assessed liquidated damages
at the flat rate of 15 percent of the late contributions and wage deductions. (SOF ¶¶ 8-10.) With
respect to Local 63, Security Industries was required to make contributions to various pension
and welfare funds, including the Mid-America Funds; late contributions were to be assessed
liquidated damages at the rate of 15 percent and made the employer liable for reasonable
attorney’s fees, as provided in the Mid-America Funds’ Trust Agreements. (SOF ¶¶ 11-13.)
Delinquent Contributions and Liquidated Damages Based on Employer Reports
Security Industries submitted reports on the contributions and wage deductions with
respect to work done by Local 395 and Local 63, which identified the total hours worked for
which contributions and wage deductions were due, as well as the applicable contribution rates.
(SOF ¶ 15.) Specifically, Security Industries submitted reports for Local 395 work for
September 2012 and January 2013 through March 2013 without full payment of all contributions
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due thereon. (SOF ¶ 16.) Based on those reports, Plaintiffs claim that Security Industries owes
Local 395 and the 395 Funds contributions and wage deductions totaling $99,641.77, and
liquidated damages in the amount of $14, 946.27, calculated at a rate of 15 percent. (SOF ¶ 17.)
Security Industries also submitted reports to Mid-America Funds for work in Local 63’s
jurisdiction for the months of September 2012 through November 2012 and January 2013
through March 2013, and for September 2012 and January 2013 through March 2013. Based on
those reports, Plaintiffs claim that Security Industries owes the Mid-America Funds contributions
totaling $104, 268.45, with liquidated damages in the amount of $4,476.81. (SOF ¶¶ 19-20.)
Furthermore, Security Industries paid late contributions to Mid-America Funds for May 2012
through September 2012, and owes $5,154.69 in liquidated damages as a result. (SOF ¶ 22.)
The 395 Funds’ Payroll Review
The 395 Funds, through Stewart C. Miller & Co., also conducted a payroll compliance
report for the period April 1, 2012 to March 17, 2013. The resulting “Miller Report” identified
additional contributions due from Security Industries to the 395 Funds totaling $51,998.36, plus
liquidated damages of $7,799.75. Plaintiffs claim that, once outstanding debit memos of $341.56
due Security Industries are applied, the total due to the 395 Funds is $60,139.67. (SOF ¶¶ 23-25.)
The Promissory Note
Security Industries was also delinquent with respect to contributions and wage deductions
due Plaintiffs for work in Local 395’s jurisdiction for May and June 2012. (SOF ¶ 26.) To cure
that delinquency, Security Industries and Plaintiffs negotiated a Promissory Note, through which
Security Industries agreed to pay $101,477.66 by July 30, 2013. (SOF ¶ 26.) The Note further
provided that Defendant Jones would be personally liable for any unpaid amounts due under the
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Note. (SOF ¶ 27.) Plaintiffs only received the first five payments due under the Note, leaving a
balance due of $61,267.83 (principal of $59.644.69 and $1,623.14.). (SOF ¶ 29.)
Plaintiffs have moved for summary judgment against both Security Industries and Jones.
Defendants do not dispute that they owe money to Plaintiffs, but rather contend that there is an
issue of material facts as to the amount owed.
LEGAL STANDARD
Summary judgment is proper if the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56. The moving party bears
the initial responsibility of informing the court of the basis for its motion and identifying the
evidence it believes demonstrates the absence of a genuine issue of material fact. Celotex Corp.
v. Catrett, 477 U.S. 317, 323-24 (1986). If the moving party meets this burden, the nonmoving
party cannot rest on conclusory pleadings but, rather, “must present sufficient evidence to show
the existence of each element of its case on which it will bear the burden at trial.” Serfecz v.
Jewel Food Stores, 67 F.3d 591, 596 (7th Cir. 1995) (citing Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 585-86 (1986)). A mere scintilla of evidence is not enough to
oppose a motion for summary judgment, nor is a metaphysical doubt as to the material facts.
Robin v. Espo Eng’g Corp., 200 F.3d 1081, 1088 (7th Cir. 2000). Rather, the evidence must be
such “that a reasonable jury could return a verdict for the nonmoving party.” Pugh v.
City of Attica, Ind., 259 F.3d 619, 625 (7th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). In considering a motion for summary judgment, the court views the
evidence in a light most favorable to the nonmoving party, drawing all reasonable inferences in
the nonmoving party’s favor. Abdullahi v. City of Madison, 423 F.3d 763, 773 (7th Cir. 2005)
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(citing Anderson, 477 U.S. at 255). The court does not make credibility determinations or weigh
conflicting evidence. Id.
ANALYSIS
Counts I and II
As there is factual overlap between Counts I and II, these counts will be addressed
together. In Count I, Plaintiffs, Mid-America Funds and 395 Funds, seek to recover, under
ERISA, the unpaid fringe benefits contributions and wage deductions from Security Industries,
as required by the collective bargaining agreements. Section 515 of ERISA provides:
Every employer who is obligated to make contributions to a multiemployer plan
under the terms of the plan or under the terms of a collectively bargained
agreement shall, to the extent not inconsistent with law, make such contributions
in accordance with the terms and conditions of such plan or such agreement.
29 U.S.C. § 1145. As third-party beneficiaries of the collective bargaining agreements at issue,
Plaintiffs Mid-America Funds and 395 Funds have “an independent statutory right under § 515
of ERISA to enforce contribution obligations” imposed on the employer, Security Industries.
Central States, S.E. & S.W. Areas Pension Fund v. Sara Lee Bakery Group, Inc., 660 F. Supp.
2d 900, 909 (N.D. Ill. 2009) (citing Central States, S.E. & S.W. Areas Pension Fund v.
Gerber Truck Service, Inc., 870 F.2d 1148, 1152-56 (7th Cir. 1989) (en banc)). Section 1132(g)
of ERISA permits the recovery of the unpaid contributions, interest, liquidated damages,
reasonable attorney’s fees and costs, and other legal or equitable relief deemed appropriate by
the court.
In Count II, Plaintiff Local 395 seeks to enforce, under the LMRA, the collective
bargaining agreement against Security Industries. Section 301(a) of the LMRA, 29 U.S.C.
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§ 185, permits actions in federal district court for “violations of contracts between an employer
and a labor organization . . . .” 29 U.S.C. § 185(a).
It is undisputed that Security Industries has breached the collective bargaining
agreements and failed to pay all its obligated contributions and withheld deductions to Plaintiffs.
Plaintiffs have submitted documentation demonstrating the amounts owed to Plaintiffs. (See
generally Appendix to Pls.’ Rule 56.1 Statement.) Indeed, Defendants do not specifically
dispute the vast majority of the amounts owed to Plaintiffs. Rather, in their Response brief,
Defendants take issue with two specific amounts – a liquidated damages amount, as found in an
exhibit submitted by Plaintiffs, and an amount paid for the month of September 2012.
As a preliminary matter, Defendants have failed to properly comply with Local Rule
56.1(b)(3) for disputing Plaintiffs’ Statement of Material Facts. As discussed above, Rule
56.1(b)(3) requires that the opposing party support any disagreements with “specific references
to the affidavits, part of the record, and other supporting materials relied upon.” In their Rule
56.1(b)(3) Response, Defendants have failed to include any record cites and have left their
denials unsupported. (See, e.g., Defs’ 56.1(b)(3) Resp. ¶¶ 22, 23.) Defendants’ failure to
properly dispute Plaintiffs’ Statement of Material Facts means that those facts are deemed
admitted for purposes of summary judgment. See Smith, 321 F.3d at 683; see also Bordelon v.
Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524, 527 (7th Cir. 2000) (the district court has
discretion to require strict compliance with its local rules governing summary judgment).
Summary judgment is proper in favor of Plaintiffs on this reason alone.
However, in the interest of completeness, Defendants’ asserted “disputed” issues will be
addressed. In their Statement of Additional Facts, Defendants claim that Plaintiffs’ liquidated
damages are inaccurate because the amount identified in Plaintiffs’ Exhibit 7 is different than the
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amount identified in Plaintiffs’ Exhibit 8. (See Defs’ Statement of Additional Contested Material
Facts ¶¶ 2-3.) As Plaintiffs explain, the liquidated damages contained in Exhibit 7 pertain to
unpaid contributions; the liquidated damages contained in Exhibit 8 pertain to contributions that
were paid late by Security Industries. Therefore, these numbers are properly different and do not
create a genuine issue of material fact.
Defendants also assert that Plaintiffs were paid contributions for Local 395’s work for the
month of September 2012 and point to two contribution reports with a total payment of
$39, 807.09. (See id. ¶ 4.) Plaintiffs acknowledge that they were paid contributions for the two
reports referenced by Defendants. However, Plaintiffs point to two additional contribution
reports for September 2012 that were produced by Defendants during discovery and for which
Plaintiffs did not receive contribution payments. Defendants have not demonstrated that an issue
of material fact exists with respect to that additionally owed amount.
There is no genuine issue of material fact as to the amounts owed by Security Industries
to Plaintiffs, and therefore, summary judgment is properly granted in Plaintiffs’ favor. Judgment
in the amount of $288,627.66 is awarded against Security Industries and in favor of Plaintiffs.
The Promissory Note
In Count III, Plaintiffs assert a breach of contract claim based on the Promissory Note
signed by both Defendants. Plaintiffs argue that they are entitled to summary judgment against
Security Industries and Jones for the outstanding balance of $59,644.69 plus remaining interest
of $1,623.14, for a total amount of $61,267.83. Defendants do not dispute that they are liable for
this amount and, indeed, do not even address this count in their response brief. As there is no
genuine issue of material fact on this issue, summary judgment is awarded in favor of Plaintiffs
against Security Industries and Jones, jointly and severally, in the amount of $61,267.83.
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CONCLUSION
Plaintiffs’ Motion for Summary Judgment [11] is granted. Judgment is awarded in the
amount of $288,627.66, plus post-judgment interest, against Defendant Security Industries.
Judgment is awarded in the amount of $61,267.83, plus post-judgment interest, against
Defendants, Security Industries and Jones, jointly and severally. Plaintiffs are further granted
leave to file a bill of costs and a motion supporting their request for attorney’s fees.
Date: February 12, 2014
______________________________
JOHN W. DARRAH
United States District Court Judge
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