Tharp et al v. Five Star Flooring
Filing
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OPINION AND ORDER: The Court ORDERS the Clerk to enter judgment in favor of the Plaintiffs against Defendant Five Star Flooring, L.L.C., in the amount of $10,783.44 together with statutory judgment interest of 0.79% from and after Novembe r 30, 2016, and together with attorney fees and court costs. The Plaintiffs shall file with the Court by 12/30/2016, an itemization of their attorney fees and court costs incurred in this case. Defendant Five Star Flooring shall have thirty (30) days from the date of Plaintiffs' itemization filing within which to file an objection or other response. No reply shall be filed by Plaintiffs unless the Court notifies otherwise. Signed by Magistrate Judge Paul R Cherry on 11/30/2016. (lhc)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
DAVID THARP, Board of Trustees
Chairman, and DOUG ROBINSON,
Board of Trustees Secretary, on
behalf of INDIANA / KENTUCKY /
OHIO REGIONAL COUNCIL OF
CARPENTERS PENSION FUND;
MARK McGRIFF, Board of Trustees
Chairman, and GREG HAUSWALD,
Board of Trustees Secretary, on
behalf of INDIANA / KENTUCKY /
OHIO REGIONAL COUNCIL OF
CARPENTERS DEFINED
CONTRIBUTION PENSION
TRUST FUND;
MARK McGRIFF, Board of Trustees
Co-Chairman, and WILLIAM NIX,
Board of Trustees Co-Chairman, on
behalf of INDIANA / KENTUCKY /
OHIO REGIONAL COUNCIL OF
CARPENTERS WELFARE FUND;
MARK McGRIFF, Board of Trustees
Chairman, and JOE COAR, Board of
Trustees Secretary, on behalf of
INDIANA / KENTUCKY / OHIO
REGIONAL COUNCIL OF
CARPENTERS JOINT
APPRENTICESHIP AND
TRAINING FUND;
DOUGLAS J. McCARRON, Board of
Trustees Chairman, on behalf of
UNITED BROTHERHOOD OF
CARPENTERS APPRENTICESHIP
TRAINING FUND OF NORTH
AMERICA; and
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CASE NO. 2:14-CV-458-PRC
INDIANA / KENTUCKY / OHIO
REGIONAL COUNCIL OF
CARPENTERS,
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Plaintiffs,
v.
FIVE STAR FLOORING, L.L.C.,
Defendant.
OPINION AND ORDER
On September 27, 2016, Plaintiffs Indiana / Kentucky / Ohio Regional Council of Carpenters
Pension Fund, Defined Contribution Pension Trust Fund, Welfare Fund, Joint Apprenticeship and
Training Fund, United Brotherhood of Carpenters Apprenticeship Training Fund of North America,
and Indiana / Kentucky / Ohio Regional Council of Carpenters of the United Brotherhood of
Carpenters and Joiners of America (the “Trust Funds” or the “Carpenters Union”) appeared by
counsel Thomas E. Moss and Suzanne C. Dyer. Defendant Five Star Flooring, L.L.C., appeared by
its General Manager Frank Mattei and by counsel Paul B. Poracky. A contested Bench Trial was
held. The Court received evidence.
Based upon the record of proceedings the Court FINDS, ORDERS, ADJUDGES, and
DECREES:
PROCEDURAL HISTORY
1.
On December 23, 2014, Plaintiffs filed their Amended Complaint alleging two
Counts. [DE 5].
2.
On September 23, 2015, Defendant Five Star Flooring filed its Answer to Complaint.
[DE 19].
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3.
On September 12, 2016, the Final Pre-Trial Conference was held [DE 35].
4.
On September 27, 2016, the Bench Trial was held [DE 37].
5.
On October 4, 2016, an Amended Pre-Trial Order was filed [DE 40].
6.
On November 9, 2016, Plaintiffs and Defendant Five Star Flooring filed their
respective Proposed Findings of Fact and Conclusions of Law [DE 43, 44].
7.
The parties orally agreed on the record to have this case assigned to a United States
Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this
case. Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c) [DE
23].
FINDINGS OF FACT
8.
The Indiana / Kentucky / Ohio Regional Council of Carpenters of the United
Brotherhood of Carpenters and Joiners of America (“the Carpenters Union”) is a labor union
representing and acting for various carpenters in Indiana and elsewhere.
9.
The Plaintiff Trust Funds are entities created under the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. §§ 1001, et seq.; they are administered by the Carpenters Union.
10.
Defendant Five Star Flooring, L.L.C., is a business based in Valparaiso, Porter
County, Indiana engaged in floor construction, repair, and replacement. From time to time it hires
carpenters to perform carpentry work.
11.
On March 12, 2012, the Carpenters Union and the Northwest Indiana Contractor
Association of Indiana, Inc., entered a written contract known as the Collective Bargaining
Agreement (CBA) effective for the time period March 12, 2012, to May 31, 2015. Plaintiffs’ Exhibit
2. The CBA was drafted by the Carpenters Union.
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12.
On June 5, 2013, the Carpenters Union and Five Star Flooring entered a written
contract titled a Memorandum of Agreement adopting and incorporating the CBA “and all approved
amendments.” Plaintiffs’ Exhibit 1. The Memorandum of Agreement was drafted by the Carpenters
Union.
13.
The Memorandum of Agreement and CBA require Five Star Flooring to submit
monthly written reports of the hours of covered work done by carpenters and the various fringe
benefits owed to the various Trust Funds and the Union on behalf of the carpenters.
14.
The Memorandum of Agreement and CBA require that Five Star Flooring deduct
certain amounts of money from the carpenters’ pay checks and forward the withheld money to a
third party depository.
15.
The Memorandum of Agreement and CBA require that in the event of untimely
payment, or non-payment, by Five Star Flooring, it must pay the delinquent principal, interest,
liquidated damages, audit fees, attorney fees, and costs.
16.
Patrick Cruickshank and Nicholas Landry began as “accepted applicants” with the
Carpenters Union, as probationary apprentice carpenters, both on May 24, 2013. Their probationary
time period was 180 days beginning that date.
17.
The wording in the CBA at Article III, Section 3(b), page 5, does not exclude
accepted applicants or probationary apprentices as “employees.” Plaintiffs’ Exhibit 2. The Court
finds that Cruickshank and Landry were employees for the purposes of this case.
18.
Sometime in 2013, the Carpenters Union adjusted the pay rates, and fringe benefit
rates, for its carpenters performing commercial carpentry work for the time period June 1, 2013, to
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May 31, 2014, and it drafted and issued an undated written schedule of the adjusted rates which was
received by Five Star Flooring. Plaintiffs’ Exhibit 4.
19.
Cruickshank and Landry were hired by Five Star Flooring in 2013. They both
performed commercial carpentry work as floor layers and finishers for Five Star Flooring during
June, July, August, September, and October of 2013.
20.
Five Star Flooring paid wages to, and fringe benefits on behalf of, Cruickshank and
Landry in 2013 and submitted written reports to the Carpenters Union. Plaintiffs’ Exhibit 10.
21.
The Carpenters Union and the Trust Funds had an audit done for hours worked and
payment of wages and fringe benefits for the Carpenters Union members who worked for Five Star
Flooring. The audit was for the time period January 1, 2013, through December 31, 2013.
22.
As a result of the audit, the Carpenters Union and the Trust Funds allege that they
were shortchanged by Five Star Flooring. The Carpenters Union and the Trust Funds allege, based
on the audit, that for the year 2013 Five Star Flooring is delinquent in payment of fringe benefits in
the amount of $7,205.64 in relation to Cruickshank and Landry and that Five Star Flooring also
owes audit fees of $6,350.00, interest of $740.58, and liquidated damages of $720.56 all in relation
to Cruikshank and Landry. The total of these amounts is $15,016.78. Amended Pre-Trial Order [DE
40], pages 4 and 5, paragraph 6.
23.
The payroll audit done in this case at the request of the Carpenters Union and the
Trust Funds resulted in a billing of $6,350.00 by the auditor. The auditor billed for 63.5 hours at
$100.00 per hour. Plaintiffs’ Exhibit 8.
24.
The audit involved an unspecified number of meetings of the auditor(s) with the
Plaintiffs and Plaintiffs’ attorneys but the number and length of the meetings are unknown.
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25.
The auditor’s calculations of deficiencies in this case are mathematical computations
that do not appear to be complex. Plaintiffs’ Exhibit 8. The calculations were done by the auditor
using a Microsoft Excel spreadsheet computer program.
26.
Plaintiffs did not present in evidence a specific itemization of the auditor’s time
spent, nor a specific itemized description of auditor’s work done, on this case.
27.
The audit fee of $6,350.00 is unreasonably excessive. $2,116.66 is a reasonable
amount for the audit fee.
28.
The CBA provides that:
If an audit of an employer’s payroll discloses a delinquency in any of the above
funds in excess of 5% of the total amount due . . . for the time period covered by the
audit, the employer shall be assessed the costs of the audit plus any additional
expenses incurred in the collection . . . including reasonable attorney’s fees and court
costs.
Plaintiffs’ Exhibit 2, Article III, Section 8(a), page 10.
29.
Although the total amount of fringe benefits owed by Five Star Flooring to
Cruikshank and Landry is not in evidence as an amount, the evidence reasonably implies, and the
Court finds, that the total of deficiencies owed them for fringe benefits exceeds 5% of the total
amounts of fringe benefits due by Five Star Flooring for the time period of the audit.
CONCLUSIONS OF LAW
30.
The Employee Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. §§ 1001,
et seq., as amended, applies, in part, to any multiemployer plan “which more than one employer is
required to contribute” to and “which is maintained pursuant to one or more collective bargaining
agreements.” ERISA § 1002(37)(A)(i), (ii).
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31.
ERISA § 1145 provides, in part: “Every employer who is obligated to make
contributions to a multiemployer plan . . . under the terms of a collectively bargained agreement
shall . . . make such contributions.”
32.
ERISA § 1132 authorizes civil actions (lawsuits) to enforce the provisions of ERISA.
33.
The Labor Management Relations Act (LMRA) of 1947, 29 U.S.C. §§ 141, et seq.,
as amended, applies not only to most employees but also to labor organizations. LMRA § 152(3),
(5).
34.
LMRA § 157 provides that employees and labor organizations may enter collective
bargained agreements (contracts) with employers.
35.
LMRA § 185(a) authorizes civil actions (lawsuits) by labor organizations against
employers to enforce collective bargained agreements (contracts).
ANALYSIS
36.
This case boils down to how to legally, factually, and reasonably interpret the
Carpenters Union’s document adjusting the wage and fringe benefit rates (Plaintiffs’ Exhibit 4).
37.
At all times relevant to this case, Cruickshank and Landry were probationary
apprentice carpenters.
38.
The undated document issued by the Carpenters Union adjusting the wage and fringe
benefit rates for the time period June 1, 2013, to May 31, 2014, (Plaintiffs’ Exhibit 4) is poorly
drafted.
39.
On the rate adjustment sheet is a section titled “Carpenters Fringe Package” without
using the word “benefits.” Another section is titled “Apprentice Benefits” without using the word
“fringe”.
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40.
On the wage adjustment sheet at the “Apprentice Wages” section, located next to the
“Apprentice Benefits” section, are five lines for five categories of apprentices:
1.
2.
3.
4.
5.
41.
Probationary 180 Days Apprentices;
1st Year Apprentices;
2nd Year Apprentices;
3rd Year Apprentices;
4th Year Apprentices.
At the “Apprentice Wages” and “Apprentice Benefits” sections, the wage adjustment
sheet establishes fringe benefit amounts for each of the five lines. At the first line for Probationary
180 Days Apprentices it states an Annuity rate and amount and a Pension rate and amount and by
asterisk designation it reasonably implies that the amount of the other kinds of fringe benefits remain
unchanged.
42.
Five Star Flooring was required by the ERISA, the LMRA, the CBA, and the June
5, 2013, Memorandum of Agreement, in combination, to pay not only the Annuity amount and
Pension amount (as shown at the 180 days probationary apprentice line) but also the six other
“fringes” or “benefits” which are set forth in the “Carpenters Fringe Package” section on the rate
adjustment sheet.
43.
Five Star Flooring breached its contractual obligations owed to the Carpenters Union
and the Trust Funds by not paying all of the fringe benefits due for Cruickshank and Landry as
required by the CBA, the June 5, 2013, Memorandum of Agreement, and the rate adjustment sheet,
in combination.
44.
The amount of damages suffered by the Carpenters Union and the Trust Funds is
$7,205.64 in fringe benefits unpaid, $2,116.66 in audit fees (amount reduced by the Court), $740.58
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in interest, $720.56 in liquidated damages, for a sub-total of $10,783.44 together with attorney fees
in an undetermined amount.
45.
Five Star Flooring alleges that Plaintiffs filed their Amended Complaint in bad faith.
The Court concludes that the claims of the Plaintiffs were not brought in bad faith.
46.
Plaintiffs are the prevailing parties in this case.
CONCLUSION
47.
The Court hereby ORDERS the Clerk to enter judgment in favor of the Plaintiffs
against Defendant Five Star Flooring, L.L.C., in the amount of $10,783.44 together with statutory
judgment interest from and after November 30, 2016, and together with attorney fees and court
costs.
48.
The Plaintiffs shall file with the Court by December 30, 2016, an itemization of their
attorney fees and court costs incurred in this case. Defendant Five Star Flooring shall have thirty
days from the date of Plaintiffs’ itemization filing within which to file an objection or other
response. No reply shall be filed by Plaintiffs unless the Court notifies otherwise.
So ORDERED this 30th day of November, 2016.
s/ Paul R. Cherry
MAGISTRATE JUDGE PAUL R. CHERRY
UNITED STATES DISTRICT COURT
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