Trustees of the Suburban Teamsters of Northern Illinois Welfare and Pension Funds v. TMR Services, Inc.

Filing 53

MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 3/20/2018: Plaintiffs' motion for summary judgment is granted. Defendant's motion for summary judgment is denied. [For further detail see attached order.] Notices mailed. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TRUSTEES OF THE SUBURBAN
TEAMSTERS OF NORTHERN ILLINOIS
WELFARE AND PENSION FUNDS,
Plaintiffs,

No. 16 CV 9433

v.

Judge Manish S. Shah

TMR SERVICES, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
The Trustees of the Suburban Teamsters of Northern Illinois Welfare and
Pension Funds bring this action against TMR Services under the Employee
Retirement Income Security Act of 1974, 29 U.S.C. §§ 1132 et seq., for delinquent
fringe-benefit contributions. The parties filed cross-motions for summary judgment.
For the following reasons, plaintiffs’ motion for summary judgment is granted, and
defendant’s motion for summary judgment is denied.
I.

Legal Standards
Summary judgment is appropriate 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). A genuine dispute as to any material fact exists
if “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
party seeking summary judgment has the burden of establishing that there is no
genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986). A court must view all facts and reasonable inferences in the light most
favorable to the non-moving party. Roh v. Starbucks Corp., 881 F.3d 969, 973 (7th
Cir. 2018). On cross-motions for summary judgment, a court must draw inferences
“in favor of the party against whom the motion under consideration was made.”
Hess v. Reg-Ellen Mach. Tool Corp., 423 F.3d 653, 658 (7th Cir. 2005) (citation
omitted). “Cross-motions must be evaluated together, and the court may not grant
summary judgment for either side unless the admissible evidence as a whole—from
both motions—establishes that no material facts are in dispute.” Bloodworth v. Vill.
of Greendale, 475 Fed. App’x 92, 95 (7th Cir. 2012).
II.

Background
Martin Rodin was the president and sole shareholder of TMR, an Illinois

corporation that provided trucking services. [35] ¶ 5; [45] ¶¶ 3, 6.1 On June 25,
2014, TMR signed a Memorandum of Agreement with the teamsters’ union, in
which TMR agreed to be bound by a collective bargaining agreement, effective from
June 1, 2012 through May 31, 2017. [45] ¶¶ 13–14. The agreement obligated TMR
to pay monthly fringe-benefit contributions to the funds on behalf of covered
employees. Id. ¶ 15. The union, under the agreement, also had the right to inspect
and to audit TMR’s payroll records. [35] ¶ 10.
Bracketed numbers refer to entries on the district court docket. Referenced page numbers
are taken from the CM/ECF header placed at the top of filings. The facts are largely taken
from TMR’s responses to the Trustees’ Local Rule 56.1(a) statements, [35], and the
Trustees’ responses to TMR’s Local Rule 56.1(a) statements, [45], where both the asserted
fact and the opposing party’s response are set forth in one document. When the parties
raised arguments in their statements, included additional facts in their responses or
replies, failed to support their statements by admissible evidence, or failed to cite to
supporting material in the record, I disregarded those portions of those statements,
responses, or replies.
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2

All of TMR’s truck-driving employees, including Rodin, held Illinois
commercial drivers’ licenses and were represented by the union. [35] ¶ 20; [45] ¶ 5.
It was TMR’s practice to require its union-member employees to fill out work tickets
contemporaneously when they drove for TMR; the work tickets identified: (1) the
employee’s name, (2) the date the employee performed the work, (3) the name of the
contractor or project for which the employee performed the work, (4) the number of
hours the employee spent driving, and (5) an approval signature from the contractor
or the project superintendent. [45] ¶ 9. In accordance with this practice, even
though Rodin was the owner and a salaried employee, he filled out work tickets
whenever he drove a truck for TMR. Id. ¶¶ 7, 10.
Rodin worked six to seven days a week. [25-2] at 6, 17:5–7. Most of the time,
though, Rodin was not driving a truck; instead, he served as TMR’s office manager,
overseeing the company’s daily operations. [45] ¶ 7. In his capacity as office
manager, Rodin managed TMR’s submission of fringe-benefit contributions to the
funds. Id. For every form that TMR submitted to the union, Rodin signed the
following certification: “I certify the above is true and complete reporting of hours,
weeks and/or days by employees represented in the Collective Bargaining (or
participation) Agreement.” [51] ¶ 2. TMR contributed 350 hours’ worth of welfare
contributions on Rodin’s behalf for the month of November 2014 so that Rodin could
obtain welfare eligibility, even though he had nothing to support his claims of
working these 350 hours. [35] ¶ 18. In order to maintain that welfare eligibility,
TMR continued to contribute 100 hours’ worth of welfare contributions on Rodin’s

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behalf per month until December 2015.2 Id. ¶ 19. Since it was only possible for TMR
to make 160 hours’ worth of welfare contributions on Rodin’s behalf in the month of
November 2014, the 350 hours’ worth of contributions for that month raised a red
flag. [25-4] at 86, ¶ 9. In December 2015, the funds sent a notification that TMR
could no longer contribute on Rodin’s behalf on an hourly basis. [35] ¶ 17.
Thereafter, TMR stopped making such contributions. Id.
The union audited TMR. Id. ¶ 21. After reviewing all of TMR’s books and
records, the union’s auditor concluded that TMR owed $16,485.02 in weekly
contributions, liquidated damages, and interest on behalf of Rodin for the period
May 2014 through December 2015. Id. ¶¶ 24, 27; [45] ¶ 24; see also [25-4] at 92–94.
The audit calculated TMR’s liability by assuming that Rodin worked a sufficient
amount of time each week to justify the full weekly contribution and multiplying
the weekly contribution rate for every week during the audit period3; and the audit
credited TMR for the welfare contributions it had already paid on Rodin’s behalf
during the audit period. [25-4] at 92–94. TMR challenged the audit report, asserting
that TMR was only obligated to remit weekly fringe-benefit contributions based on
the actual amount of covered work Rodin performed during the audit period. [45]
¶ 28; [36-4] ¶¶ 3–6, 10, 19. Rodin says that that his work tickets document the
actual hours of truck-driving work he performed during the audit period. [45] ¶ 31;

TMR also paid two weeks’ worth of pension contributions on Rodin’s behalf for each month
of the audit period even though that contribution was not based on the work Rodin actually
performed. [25-2] at 12, 40:16–41:2.
2

Rodin asserted that he worked six to seven days a week, every week. See [25-2] at 6, 17:5–
7; id. at 9, 27:16–20.
3

4

see also [25-2] at 6, 15:10–16:22; id. at 7–8, 18:1–25:19; id. at 9, 27:1–28:23; [36-5]
¶ 7. Beyond those tickets, however, TMR concedes that it does not have any records
of Rodin’s hours when he was not performing covered work. [35] ¶ 25; [51] ¶ 17.
The Trustees, as fiduciaries of the funds, [35] ¶ 3, bring this collection action
for payment of TMR’s delinquent contributions. They seek $16,485.02 in health and
welfare and pension contributions, 10% liquidated damages on late and unpaid
amounts, and interest. [26] at 10.
III.

Analysis
The Trustees move for summary judgment, arguing that TMR was required

to make contributions to the funds for all the work Rodin performed, regardless of
whether it was covered or non-covered work. [26] at 5 (citing McCleskey v. DLF
Const., Inc., 689 F.3d 677 (7th Cir. 2012)). The Trustees assert, as a general rule,
that employers must make fringe-benefit contributions on its employees’ behalves
for both covered and non-covered work. [43] at 6–7 (citing Laborers’ Pension Fund v.
C.A. Sementa Contractors, Inc., 82 C 4028 (N.D. Ill. Oct. 26, 1983)). TMR disagrees
and it argues that McCleskey is distinguishable because that case turned on the
interpretation of an agreement with hourly reporting obligations unlike the
agreement involved in this case. [33] at 9 (citing McCleskey, 689 F.3d at 679).
McCleskey and Sementa do not state a general proposition; rather, each court
analyzed the relevant agreement and applied the force of that language to the facts
in each case. While it is clear from McCleskey that the Seventh Circuit permits a
finding that an employer must make fringe-benefit contributions for covered and
non-covered work, that does not compel the same conclusion here. District court
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decisions like Sementa are merely persuasive authority; their holdings are not
binding on this court. Thus, the task at hand is to determine the meaning of the
agreement and then to decide whether TMR complied with its obligations.
Here, parties have differing interpretations of the agreement. The Trustees
argue that the agreement requires TMR to make weekly contributions for Rodin’s
benefit because Rodin is an owner and not a regular employee. [26] at 6; [43] at 5.
By contrast, TMR argues that the agreement bases an employer’s contribution
obligation on the manner in which the employee is compensated. [33] at 7. TMR
does not believe it had to remit weekly contributions on Rodin’s behalf if Rodin did
not perform covered work during that week. Id. at 6, 8. Furthermore, it argues that
for weeks when Rodin performed covered work, the agreement prorates TMR’s
contribution according to the number of days that Rodin drove a truck for TMR
(25% per day with a cap of four days). Id. at 9. To support this reading of the
agreement, TMR points to the “limiting language” in Articles 9.1(a)(ii) and 10.1(a),
which TMR views as evidence that the agreement contemplated that an owner of a
contributing employer may perform covered and non-covered work in a given week.
Id. at 8. The agreement states, in relevant part:
9.1 (a)(i) Effective June 1, 2012, the Employer shall pay the sum
of $7.25 per hour, on all hours worked, for each regular employee
covered by this Agreement into a trust fund set up by the Trust
Agreement now in effect in the aforementioned Union Local for
the payment of Health and Welfare benefits as determined by a
Board of Trustees. . . .
9.1 (a)(ii) Effective June 1, 2012, the Employer shall pay the
sum of $300.00 per week, if the participant . . . own[s] a majority
interest in the participant’s employer . . . . The Employer shall
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pay the required contribution for any regular employee covered
by this section who performs work on any two (2) calendar days
in such week into a trust fund set up by the Trust Agreement
now in effect in the aforementioned Union Local for the payment
of Health and Welfare benefits as determined by a Board of
Trustees. . . .
10.1 (a) Effective June 1, 2012 thru May 31, 2014, the Employer
shall pay the base rate sum of one hundred eighty-nine dollars
($189.00), plus applicable RPS and MS, per week per employee
into a Trust Fund for the purpose of providing pension benefits
to employees covered by this Agreement.
Effective June 1, 2014, the Employer shall pay the base rate
sum of one hundred eighty-nine dollars ($189.00), plus
applicable RPS and MS+, for a pension contribution total of two
hundred fifty-two dollars and eighty-five cents ($252.85) per
week per employee into a Trust Fund for the purpose of
providing pension benefits to employees covered by this
Agreement. . . .
A calendar week is Sunday through Saturday. Starting with the
first worked day of the week, the Employer will pay 25% of the
weekly contribution for each day the employee worked, with a
cap of four (4) days.4
Comparing Article 9.1(a)’s subparagraphs (i) and (ii), which have a parallel
structure, makes clear that this section of the agreement distinguishes between
regular employees and participant-owners. Employers make contributions for
regular employees on an hourly basis; but, employers make contributions for
participant-owners on a weekly basis. As the Trustees point out, this distinction
also appears in the “Summary Plan Description For Benefits in Effect November 1,
2009” which explains: “If you are an owner-operator and you are working in covered
employment, your collective bargaining agreement should provide for weekly

4

See [25-2] at 41–44.

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contributions, rather than hourly contributions, so that you remain in your current
weekly-rate class.” [43] at 4 (citing [44] at 14). It further explains that an individual
qualifies as an “owner-operator” is he owns a majority interest in his employer.5 [44]
at 14. Based on the undisputed facts, Rodin falls into the category of participantowner when referring to the agreement and the category of owner-operator when
referring to the summary plan.
Adding further detail to this distinction, subparagraph (i) requires employers
to make contributions for regular employees “on all hours worked.” By contrast,
subparagraph (ii) requires the employer to “pay the required contribution for any
regular employee covered by this section who performs work on any two (2) calendar
days in such week.” The reference in subparagraph (ii) in this sentence to “any
regular employee” is confusing—the first sentence of the subparagraph concerns
only participant-owners. Taking into account the context of Article 9 as a whole,
subparagraph (ii) requires employers to make contributions on an employee’s behalf
only when that employee worked two days in a given week. When an employee—
regular or participant-owner—works one or less days in a given week, the employer
is not obligated to make contributions on the employee’s behalf. When the employee
works for two or more days in a given week, the employer’s contribution for health
and welfare benefits is on all hours worked if the employee is a regular employee,
and it is set at a weekly rate if the employee is a participant-owner.

TMR acknowledges that this document also bears on the parties’ obligations. See, e.g., [51]
¶¶ 6–8.
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Article 10 of the agreement consistently refers to employees in a general
sense and it only contemplates contributions for pension benefits on a weekly basis.
Even though Article 10 measures contributions on a weekly basis, it prorates an
employer’s contribution obligation based on the number of days an employee works
in a given week—“the Employer will pay 25% of the weekly contribution for each
day the employee worked, with a cap of four (4) days.”
There is nothing in the language of Article 9 or Article 10 to support a finding
that employers are only obligated to make contributions when the employees
performed covered work. TMR’s citation to Article 1.4, which details “Work
Covered” for jurisdictional purposes, does not change my conclusion. See [36-6] at 6–
7. Indeed, as Article 1.5 explains, “The work listed in Section 1.4 above is listed for
the purpose of describing work customarily and / or traditionally performed by the
employees covered by this Agreement, and for no other purpose.” Id. at 7. The
performance of covered work triggers coverage under the agreement; it does not
limit the amount of contributions owed for that coverage. As a result, TMR should
not have made contributions for Rodin on an hourly basis only for his truck driving.
For Article 9, TMR owed a contribution, at a weekly rate, anytime Rodin worked at
least two days in a given week. For Article 10, TMR owed a contribution, measured
as a percentage of a set weekly rate, for each day, up to four days, that Rodin
worked in a given week.
ERISA requires employers to keep records of its employees’ hours in order to
permit the calculation of benefits. 29 U.S.C. § 1059(a)(1); Ill. Conference of

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Teamsters and Employers Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361,
1367 (7th Cir. 1995). When an employer has not kept adequate records, courts
presume that the auditor’s calculations are correct and they shift the burden to the
employer to rebut the presumption. Chi. Dist. Council of Carpenters Pension Fund
v. Reinke Insulation Co., 347 F.3d 262, 264 (7th Cir. 2003). Under this burdenshifting approach, the Trustees must show that TMR is liable for delinquent
contributions and that TMR failed to keep adequate records, thereby making it
impossible to calculate the precise amount of contributions owed. Laborers’ Pension
Fund v. A & C Envtl., Inc., 301 F.3d 768, 782 (7th Cir. 2002). The burden then
shifts to TMR to present evidence of the precise amount of work or to challenge the
accuracy of the Trustees’ calculations. Id. at 782–83. If TMR cannot carry its
burden, then the Trustees’ audit report sets the amount of the delinquency. Id. at
783.
The Trustees argue that the court should presume that the audit report is
accurate because TMR kept insufficient records. [26] at 6. They point to TMR’s
admission that beyond the twenty-four work tickets, there are no other records to
show what work Rodin performed during the audit period. Id. at 8; see also [35]
¶ 25; [51] ¶ 17. TMR disputes that its records are deficient because it maintained
daily payroll records of its hourly employees per the agreement, and because TMR
was not required to keep hourly records for Rodin, who was a salaried owneremployee. [33] at 11–12 (citing 29 U.S.C. § 1059(a)(1); Reinke, 347 F.3d at 264). To
support its point, TMR cites Article 26, Section 26.2 of the agreement, which states:

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“Employers shall keep a permanent daily payroll record of all employees and of
hours worked by employees on a time basis showing starting and quitting time.”
[33] at 12; see also [45] ¶ 22. TMR argues that the agreement does not specify what
form the daily payroll record must take and that its work tickets comply with this
requirement.
As rebuttal evidence, TMR presents Rodin’s twenty-four work tickets and
Rodin’s sworn testimony that those work tickets accurately represent all of the
times he drove a truck for TMR during the audit period. TMR argues that this
evidence is enough to rebut the presumption that the audit report is accurate, and it
notes that other courts in this district have found documents like the work tickets to
be reliable challenges to an employer’s audit. [33] at 10 (citing Reinke, 347 F.3d at
265). I agree that these work tickets are reliable in the sense that they are
contemporaneous records of the time Rodin spent driving a truck, see Reinke, 347
F.3d at 264, but because TMR has no records for Rodin’s other work, it cannot
challenge the accuracy of the vast majority of the time that factored into the audit’s
calculation—the days Rodin spent performing non-covered work.
In any event, the evidence of when Rodin drove a truck for TMR would only
reduce the damages calculation if I had agreed with TMR that the agreement only
obligates an employer to make contributions for covered work. Given that I reached
the opposite conclusion, and given Rodin’s testimony that he worked six to seven
days a week throughout the audit period, evidence of when Rodin performed
covered work does not reduce the damages calculation here. The pattern of Rodin’s

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work meant: (1) under Article 9, TMR owed a contribution on his behalf for every
week of the audit period; and (2) under Article 10, TMR owed the full contribution
for every week during the audit period.
The Trustees are entitled to $16,485.02 in delinquent contributions,
liquidated damages, and interest from TMR. The Trustees are directed to submit a
proposed judgment order with updated calculations and to file, pursuant to Local
Rule 54.3, a petition for attorney’s fees and costs.
IV.

Conclusion
Plaintiffs’ motion for summary judgment is granted. Defendant’s motion for

summary judgment is denied.
ENTER:
___________________________
Manish S. Shah
United States District Judge

Date: March 20, 2018

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