Trustees of the N.E.C.A. - IBEW Local 176 Health, Welfare, Pension, Vacation and Training Trust Funds, v. New Frontier Electrical Construction, Inc.

Filing 154

MEMORANDUM Opinion and Order: The Court denies Plaintiffs' motion for summary judgment 127 . This case will proceed to trial to determine (1) whether New Frontier employed individuals for which contribution payments were required, and (2) the a mount of contribution payments required by New Frontier. This case is set for a hearing on September 27, 2021 at 9:30 AM to set dates for trial and, if the parties wish, a referral to the Magistrate Court for settlement. Signed by the Honorable Jorge L. Alonso on 9/13/2021. Notice mailed by Judge's staff (lf, )

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THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TRUSTEES OF THE N.E.C.A.—IBEW
LOCAL 176 HEALTH, WELFARE,
PENSION, VACATION AND TRAINING
TRUST FUNDS,
Plaintiffs,
v.
NEW FRONTIER ELECTRICAL
CONSTRUCTION INC., an Illinois
Corporation,
Defendant.

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Case No. 18-cv-1737
Judge Jorge L. Alonso

Memorandum Opinion and Order
Plaintiffs filed this lawsuit to collect delinquent contributions owed under a collective
bargaining agreement. Plaintiffs are the trustees of the National Electrical Contractors
Association–IBEW Local 176 Health, Welfare, Pension, Vacation and Trust Funds, which were
established under trust agreements and collective bargaining agreements between various
employer associations and the Eastern IL Chapter of the National Electrical Contractors
Association (“NECA”) and Local Union No. 176, IBEW. Defendant New Frontier Electrical
Construction, Inc. (“New Frontier”), an Illinois corporation engaged in electrical contracting
work, signed a letter of assent in which it agreed to be bound by all the provisions in the
approved labor agreements between NECA and Local Union No. 176, IBEW. Plaintiffs contend
that New Frontier failed to pay fringe benefit dues in accordance with those labor agreements.
Pending before the Court is Plaintiffs’ motion for summary judgment [127]. For the reasons
discussed below, the Court denies Plaintiff’s motion for summary judgment.

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Background
The Court takes the following undisputed facts from Plaintiffs’ Local Rule 56.1
Statement of Material Facts. Before that, however, the Court takes a moment to comment on the
Defendant’s response to Plaintiffs’ statement of facts and Plaintiff’s requests to admit.

I.

Local Rule 56.1
Local Rule 56.1(e) requires a party responding to a Local Rule 56.1 statement of facts to

respond to each numbered paragraph in the moving party’s statement and to attach any
evidentiary material to that response. The Court enforces Local Rule 56.1 strictly. McCurry v.
Kenco Logistics Services, LLC, 942 F.3d 783, 790 (7th Cir. 2019) (“We take this opportunity to
reiterate that district judges may require strict compliance with local summary-judgment rules”).
Defendant’s response fails to respond to Plaintiff’s statements of fact in accordance with Local
Rule 56.1. Giving Defendant the benefit of the doubt, it appears Defendant confused Local Rule
56.1’s requirements—responding instead to the numbered paragraphs in Plaintiffs’ motion for
summary judgment. See [135]. Instead, Defendant needed to respond to the numbered
paragraphs in docket entry #130. Even after Plaintiffs pointed this out to Defendant, it still failed
to correct this mistake when filing its sur-reply. Therefore, to the extent that Plaintiffs’ factual
statements are consistent with the evidence provided, the Court deems those facts undisputed.

II.

Plaintiffs’ Requests to Admit
The Court also addresses Plaintiff’s requests to admit submitted with their summary

judgment motion. Appended as Exhibit A to their statement of undisputed facts, Plaintiffs
attached 103 requests to admit submitted to Defendant’s then-attorney on July 26, 2019.
Defendant failed to respond, but claims in a single sentence in its response brief that it was
unaware of the requests to admit. This claim is not supported by any affidavit or other evidence.
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Furthermore, additional exhibits attached to Plaintiffs’ motion shows that Defendant’s thenattorney, through an assistant, acknowledged receipt of the requests. Accordingly, Rule 36 of the
Federal Rules of Civil Procedure requires those requests be deemed admitted. Fed. R. Civ. P.
36(a)(3). Moreover, Defendant has not filed any motion requesting those admissions be
withdrawn or amended in accordance with Fed. R. Civ. P. 36(b). The Court, therefore, accepts
Plaintiffs’ requests as admitted. Having addressed those preliminary matters, the Court turns to
the undisputed facts of this case.

III.

Factual Background
Plaintiffs are the Trustees of the NECA-IBEW Local 176 health, welfare, pension,

vacation, and training trust funds. Written trust agreements and collective bargaining agreements
between various employer associations, individual employers, and the NECA and IBEW Local
176 established these funds. New Frontier is an Illinois corporation that engages in electrical
contracting work. James Foster is the sole shareholder and owner of New Frontier.
A.

The Inside Agreements

On February 26, 2010, New Frontier agreed to comply with all provisions in the thencurrent and subsequently approved labor agreements between IBEW Local 176 and NECA’s
Eastern Illinois Chapter, including the Inside Agreement between IBEW Local 176 and NECA.
The Inside Agreement, among other things, requires employers to contribute to various funds
established by the agreement. The present dispute covers the time period from June 1, 2016 to
December 31, 2017 and involves two Inside Agreements: one effective on June 1, 2015 (the
“2015 Agreement”) and the other effective on June 1, 2017 (the “2017 Agreement”) (collectively
the “Agreements”). These Agreements set forth the conditions that employers signing a letter of
assent agree to be bound by, including the fringe benefit contributions employers agree to make.

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The Agreements further define an “owner in fact” of a company as an “[e]mployee of a closely
held corporation who is a spouse or other close relative of an employer’s majority shareholder,
and who enjoys special privileges or status and/or exercise control over the company[.]” The
parties agree that James Foster is the owner-in-fact of New Frontier.
B.

Contribution Rates

On June 1, 2016, NECA and IBEW Local 176 revised the relevant contribution rates for
the various funds. The revisions based the new rates on the number of hours a covered employee
worked. Sections 2.02 and 6.04 of the 2015 Agreement state that the agreement explicitly covers
work performed by a Journeyman Wireman, Foreman, General Foreman, or Area General
Forman. With respect to the types of work that are covered, Section 2.03 states that the
agreement covers the “installation, operation, maintenance, and repair of all electrical wiring and
electrical equipment used in construction, alteration and repair of buildings, structures, bridges,
street and highway work, tunnels, subways, shafts, dams, river and harbor work, airports, mines,
all electrical raceways for electrical cables and wires, and such other work as by custom has been
performed by members of the I.B.E.W. when determined to be within the Inside branch…[.]”
Sections 3.05 and 3.14 of the 2017 Agreement state the same.
The table below summarizes the various funds and contribution rates from June 1, 2015
to December 31, 2017.
Fund
Health and Welfare Fund
Pension Trust Fund
Pension Trust Fund
(Decatur)

2015 Rate (2016 Revised Rate)
$14.77 per hour
(increased to $14.97 per hour on
6/1/2016)
$10.05 per hour
(increased $10.30 per hour on
6/1/2016)
$5.14 per hour

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2017 Rate
$15.47 per hour
$10.77 per hour
$5.39 per hour

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Supplemental
Unemployment Benefit
Trust
Labor-Management
Cooperation Committee
National LaborManagement
Cooperation Fund
Savings Fund
National Electrical
Benefit Fund
Joint Apprenticeship and
Training Committee
Administrative
Maintenance Fund
Working dues

$2.75 per hour
(increased $3.25 per hour on
6/1/2016)
$0.28 per hour
(decreased $.17 per hour on
6/1/2016)
$0.01 per hour (maximum of
150,000 hours)

$3.50 per hour

$1.50 per hour for each
Journeyman
3% of gross monthly labor
payroll paid to employees in
bargaining unit
$1.20 per hour for all hours
worked
0.5% of gross monthly labor
payroll
(increased 0.8% on 6/1/2016)
Effective 6/1/2016, worker dues
were 3.5% of member’s pay
based on hours

$1.50 per hour for each
Journeyman
3% of gross monthly labor
payroll paid to employees in
bargaining unit
$1.20 per hour worked

$0.17 per hour
$0.01 per hour (maximum of
150,000 hours)

0.8% of gross monthly labor
payroll
3.5%

In addition, the Agreements contemplate liquidated damages fees for late payments. After
the 15th day, the Agreements imposed a penalty of $100 plus 5% interest on the monies owed;
after the 25th day, the Agreements add an additional $200 and 5% interest on the monies owed.
The Agreements further contemplate payment for legal, audit, and court fees incurred to collect
unpaid contributions.
C.

The Audit by Richard J. Wolf and Co., Inc.

Despite signing a letter of assent, New Frontier did not make all the required
contributions to these funds during the period from June 1, 2016 to December 31, 2017. New
Frontier made at least some payments to the Health and Welfare Fund for the work performed by
James Foster, although the parties dispute whether New Frontier made all the required payments.
Plaintiffs engaged the services of Patrick Lynch, an auditor with the Richard J. Wolf and
Company, Inc., to audit New Frontier, as permitted by the 2015 and 2017 Agreements.
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According to Lynch’s audit, New Frontier owes a total of $762,397.86 to the various benefit
funds. Plaintiffs further contend that New Frontier did not make contributions for covered work
by Kwate Dodd, Houston Thomas, and Richard Delaney—all of whom worked for New Frontier
at some point performing non-electrical work. According to Foster, this work mostly consisted of
gathering materials from stores for various electrical jobs that Foster performed.
In determining the total dues owed, the auditor separated the amounts owed into two
groups: “Additional Hours and Earnings” and “Unreported Hours and Earnings.” For
“Additional Hours and Earnings,” the auditor determined the numbers of hours worked by Foster
(it is unclear how the auditor calculated these hours) and multiplied that number by the
applicable rates to arrive at the amount of additional dues that Defendant owes. With respect to
the “Unreported Hours and Earnings,” the auditor reviewed records provided to him from New
Frontier’s banks: Chase Bank and First Midwest Bank. In these records, he observed various
withdrawals without any documentation showing where this money went or how it was used. He
took the total value that had no documentation and divided that number by the benefit package
(contained in the 2015/2017 Agreements) to calculate the number of hours worked. The parties
dispute whether New Frontier employed any other covered employees aside from James Foster
who required contribution payments. In any event, New Frontier doesn’t dispute that Foster
personally performed electrical work on various projects during the relevant time frame. After
calculating the number of hours worked for each month, the auditor multiplied the number of
hours worked by the applicable fringe benefit rate for each fund to determine the amount owed to
each fund.
The parties also dispute whether the auditor accounted for funds New Frontier spent on
materials, paid to subcontractors, or spent on non-electrical work. The audit omitted any

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withdrawals accompanied by documentation showing that New Frontier used the withdrawal for
some other purpose, but treated the other withdrawals as payments for labor since the auditor
received no documentation showing how New Frontier used these withdrawals. Plaintiffs
initiated this lawsuit to recover those alleged unpaid contributions.

Standard of Review
A court should grant summary judgment “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); Jajeh v. County of Cook, 678 F.3d 560, 566 (7th Cir. 2012). To establish an
undisputed material fact, a party “must support the assertion by . . . citing to particular parts of
materials in the record, including depositions, documents, electronically stored information,
affidavits or declarations, . . . admissions, interrogatory answers, or other materials.” Fed. R. Civ.
P. 56(c)(1)(A). Once the party moving for summary judgment demonstrates the absence of a
disputed issue of material fact, “the burden shifts to the non-moving party to provide evidence of
specific facts creating a genuine dispute.” Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012).

Discussion
Section 1145 of Title 29 obligates every employer bound by a multi-employer plan to
make contributions consistent with that plan. 29 U.S.C. §1145. If an employer fails to make these
payments, the Employee Retirement Income Security Act of 1974 (“ERISA”) permits a plan’s
fiduciary to file a federal civil action to collect the total unpaid contributions, interest on the
unpaid contributions, liquidated damages, reasonable attorney’s fees and costs of the action, and
such other legal or equitable relief as the court deems appropriate. 29 U.S.C. §1132(g)(2)(A–E).
Plaintiffs argue that the Defendant did not make all its required fringe benefit
contribution payments. Defendant, in response, argues that (1) res judicata bars Plaintiffs’
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motion for summary judgment, (2) Defendant made the required contributions to the Health and
Welfare Fund, and (3) genuine issues of material fact remain precluding summary judgment with
respect to Plaintiffs’ audit. The Court addresses each argument in turn.

I.

Res Judicata
“Under res judicata, a final judgment on the merits of an action precludes the parties or

their privies from relitigating issues that were or could have been raised in that action.” Allen v.
McCurry, 449 U.S. 90, 94 (1980). Res judicata blocks a second lawsuit if there is: (1) an identity
of the parties in the two suits; (2) a final judgment on the merits in the first; and (3) an identity of
the causes of action. Barr v. Board of Trustees of Western Illinois University, 796 F.3d 837, 840
(7th Cir. 2015).
Defendant’s reliance on this doctrine is misplaced. First, the Court’s prior order denying
Plaintiffs’ motion for summary judgment was not a final judgment on the merits. See Stinson v.
Gauger, 868 F.3d 516, 522 (7th Cir. 2015) (“An order denying a motion for summary judgment
is usually not a final decision within the meaning of § 1291 and so is not generally immediately
appealable”). Second, the Court permitted Plaintiffs to file an amended motion for summary
judgment because of an error with uploading Plaintiffs’ supporting evidence and exhibits onto
the electronic filing system. See [117]. Simply put, the doctrine of res judicata does not apply in
this circumstance.

II.

Contribution Payments
Next, the Court must determine whether the Agreements required New Frontier to make

contribution payments for each fund, or if the Agreements only required a minimum payment to
the Health and Welfare Fund. Courts interpret collective bargaining agreements according to
ordinary principles of contract law. M&G Polymers USA, LLC v. Tackett, _U.S._, 135 S. Ct. 926,

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933 (2015); U.S. Soccer Federation v. U.S. Women’s Nat. Soccer Team Assoc., 190 F. Supp. 3d
777, 784 (N.D. Ill. 2016). As such, courts must first look to the agreement’s plain language when
interpreting its terms. Wilson v. Career Educ. Corp., 729 F.3d 665, 671 (7th Cir. 2013) (Darrow,
J., concurring).
Plaintiffs contend that while it made some Health and Welfare Payments for Foster, New
Frontier did not make contribution payments to the other funds as contemplated by the
Agreements and did not make additional payments for unreported hours. To support this,
Plaintiffs rely mainly on the audit conducted by Patrick Lynch. New Frontier acknowledges that
it only made contributions to the Health and Welfare Fund for work performed by Foster but
argues that the Agreements do not require payment to the other funds.
The Court agrees with Plaintiffs that the Agreements’ plain language requires payments
to all funds. For example, in the 2015 Agreement it states in Section 3.12 with respect to the
Health and Welfare Fund, that “[e]ach employer shall contribute the sum of fourteen dollars and
seventy seven cents (14.77) per hour to such welfare fund, for each hour worked…[.]” Likewise,
in Section 3.16, with respect to the Pension Trust Fund, the agreement states that “[e]ach
employer shall contribute the sum of ten dollars and five cents ($10.05) per hour to such pension
fund, for each hour worked starting June 1, 2015.” Both the 2015 and 2017 Agreements contain
similar language that establish that payments to each fund are mandatory and not discretionary.
Thus, to the extent that New Frontier did not make payments to these funds for hourly work
covered by the agreement, it owes those payments.
Furthermore, the Court disagrees that language in the Agreements permit employers to
make a minimum payment amount to only the Health and Welfare Fund, as argued by
Defendant. Defendant refers to the following language in support of its position:

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On behalf of any such owner in fact, the employer shall pay contributions to the
Fringe Benefit Funds, pursuant to the Section 3.17 (a) & (b) of this agreement, on
the basis of the gross wages of a Journeyman Wireman for the hours actually
worked by such individual; but at a minimum, contributions to the Health &
Welfare Fund, pursuant to Section 3.12, shall be made as though such individuals
worked not less than thirty-seven (37) hours per week for fifty (50) weeks not less
than 1850 hours per year. [130-1] at pg. 30; see also [130-1] at pg. 66 (2017
Agreement with same language)
Defendant argues that this language gives employers a choice whether to pay just the minimum
Health and Welfare contributions or make all contributions to all funds. Plaintiffs respond, and
the Court agrees, that this minimum-payment language allows an owner-in-fact to be eligible for
health care coverage, even if the owner doesn’t actively work in the field, as some owners don’t
perform the physical work themselves. But this provision does not alleviate an employer’s
obligation to pay fund dues for each hour worked by a covered employee. Indeed, the
Agreement’s language doesn’t couch contribution payments in discretionary terms, permitting an
“either/or” scenario, where an employer can either make the payments for all funds or choose to
only make contributions to the Health and Welfare fund. Rather, the Agreements set a baseline
for what contribution an owner-in-fact must make, even if they don’t perform any covered
hourly work themselves.

III.

Contributions for New Frontier Employees
The parties further dispute whether the Agreements require contribution payments for

non-electrician employees that New Frontier may have employed. Again, the Court looks to the
plain language to resolve this issue. In the 2015 Agreement, Section 2.03 spells out the type of
work that is covered by the agreement. Similarly, in the 2017 Agreement, Section 3.14 does the
same. These provisions are virtually identical and state that the work covered by the Agreements
includes electrical work relating to the installation, operation, maintenance and repair of all
electrical wiring and electrical equipment used to construct or repair buildings, bridges, street
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and highway work, tunnels, subways, shafts, dams, river and harbor work, airports, mines, and
all electrical raceways for electrical cables and wires. In broader terms, the Agreements cover
any electrical work performed by an electrician working for an employer who agrees to be bound
by the collective bargaining agreement. But these Agreements do not cover non-electrical work
performed by other employees.
As such, the record demonstrates that a question of fact remains whether Defendant was
required to make contributions for any work performed by Kwate Dodd, Houston Thomas, and
Richard Delaney—who, assuming facts most favorable to the non-movant, were not electricians
during the relevant time period and only performed non-electrical work. Because James Foster
was the sole owner of New Frontier, he possesses the personal knowledge to attest to this fact,
and his deposition testimony creates a dispute of fact as to whether contributions for their work
was required.

IV.

The Audit’s Calculations
Lastly, although Plaintiffs establish that Defendant owes at least some contributions,

genuine issues of material fact on the total amount of contributions owed preclude summary
judgment. ERISA requires employers to maintain records regarding their employees “sufficient
to determine the benefits due or which may become due to such employees.” 29 U.S.C. §
1059(a)(1); see also 29 U.S.C. § 1027 (requiring company to retain such records for at least six
years). “The records must be contemporaneous time records that reflect the type of work
performed, the date the work was performed, and the work location.” Sullivan v. Tag Plumbing
Co., Case No. 08-cv-3669, 2012 WL 3835526, at *5 (N.D. Ill. Sept. 4, 2012) (internal quotation
marks omitted); see also Laborers’ Pension Fund v. RES Environmental Servs., Inc., 377 F.3d
735, 739 (7th Cir. 2004). The failure to maintain sufficient records can have serious

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consequences, as the Seventh Circuit explained in Chicago Dist. Council of Carpenters Pension
Fund v. Reinke Insulation Co., where the court found that once a fund shows that the employer’s
records are deficient, and the funds produce a seemingly sound accounting, the employer must
then explain why its payments to the funds are proper. 347 F.3d 262, 264-65 (7th Cir. 2003). If
the employer makes a sufficient explanation, then the funds must prove at trial the additional
amounts it is owed. “[I]n the absence of an explanation by the employer, the fund would prevail
on summary judgment.” Id.
This presumption in the fund’s favor, however, is not meant to establish whether a
defendant owes contributions at all. Rather, it relieves a “plaintiff fund of its burden to prove
precisely how much of the work performed by the defendant’s employees was covered work
when the employer has failed to keep records that would have allowed the fund accurately to
calculate such damages.” Laborers’ Pension Fund v. A&C Environmental, Inc., 301 F.3d 768,
783 (7th Cir. 2002). Indeed, the Seventh Circuit explains “that this rule does not apply to compel
judgment against an employer when the employer raises a genuine issue of material fact as to the
accuracy of the fund’s calculation.” Id.; see Illinois Conference of Teamsters and Employers
Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361, 1367 (7th Cir. 1995) (employer’s failure
to come forward with documentary evidence establishing amount of covered work performed
was not fatal in effort to oppose fund’s motion for summary judgment when factual issues
remained as to the amount owed).
Here, genuine issues of material fact preclude summary judgment as to the amount owed.
For instance, as stated above, the parties dispute whether the Agreements required contributions
for Kwate Dodd, Houston Thomas, and Richard Delaney. Plaintiffs argue that these individuals
performed electrical work during the relevant time period and, therefore, the Agreements cover

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them as well. But New Frontier argues that it had no other employees during the relevant time
period aside from James Foster, and that Dodd, Thomas, and Delaney did not perform electrical
work covered by the Agreements. This presents a classic dispute of fact.
In addition, the parties dispute whether the audit appropriately accounts for payments by
New Frontier for cost of materials and payments to subcontractors. In arguing the deficiency of
New Frontier’s recordkeeping and the audit’s reasonableness, Plaintiffs analogize the present
case to Laborers’ Pension Fund v. Loucon Construction, Inc., Case No. 98-cv-6227, 2004 WL
2538298 (N.D. Ill. 2004). In Loucon, the district court granted summary judgment for pension
funds that claimed that the defendant failed to make contribution payments. Id. at *7. In that
case, the court considered whether the plaintiffs showed the defendant’s records were deficient
and whether the plaintiffs produced a sound accounting suggesting money was owed. Id. at *5.
With respect to the records, the court found that the plaintiffs met their burden based on the
defendant’s substandard record keeping practices. Id. at *5-6. Moreover, the defendant failed to
respond to the plaintiffs’ motion for summary judgment, and therefore the court concluded that
the defendant offered no contradictory evidence that the accounting was unsound. Id. at *6-7.
Accordingly, the court granted summary judgment for the plaintiffs. Id.
Loucon is distinguishable. First, the Loucon defendant completely failed to respond to the
plaintiffs’ summary judgment motion, whereas, in this case, although inartful and not in full
compliance with Local Rule 56.1, Defendant has at least responded to Plaintiff’s motion for
summary judgment. Second, the Loucon defendant did not offer any reason why the audit in that
case was incorrect. 2004 WL 2538298, at *5. Here, however, Defendant argues that the audit
does not account for certain non-labor items such as costs and materials, and the record contains
some support for this argument. See [130-7] (Defendant Answers to Interrogatories detailing

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costs for various projects); [130-8] (Defendant’s Amended Answers to Interrogatories containing
receipts for costs). As such, genuine disputes as to the audit’s calculations—particularly whether
New Frontier employed additional employees that required contribution payments and whether
the audit calculations accounted for non-labor items—preclude the issuance of summary
judgment.

Conclusion
For the reasons above, the Court denies Plaintiffs’ motion for summary judgment. This
case will proceed to trial to determine (1) whether New Frontier employed individuals for which
contribution payments were required, and (2) the amount of contribution payments required by
New Frontier. This case is set for a hearing on September 27, 2021 at 9:30 AM to set dates for
trial and, if the parties wish, a referral to the Magistrate Court for settlement.

SO ORDERED.

ENTERED: September 13, 2021

_________________________________
JORGE L. ALONSO
United States District Judge

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