Painters District Council No. 58 et al v. Architectural Painting Services, Inc. et al
MEMORANDUM OPINION AND ORDER: IT IS HEREBY ORDERED that Plaintiffs shall have judgment against Defendants Architectural Painting Services, Inc., Architectural Painting Services LLC, and Joseph Sherrillo, jointly and severally, in the amount of $ ;39,147.19. IT IS FURTHER ORDERED that Defendants are entitled to a credit of $9,162.48 against such judgment. IT IS FURTHER ORDERED that as of the date of this order, Defendants owe Plaintiffs $29,984.71 for the claims brought in this lawsuit. A separate judgment will issue. Signed by District Judge Rodney W. Sippel on 4/5/17. (CAR)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
PAINTERS DISTRICT COUNCIL
NO. 58, et al.,
SERVICES, INC., et al.,
Case No. 4:16 CV 41 RWS
MEMORANDUM OPINION AND ORDER
Plaintiffs—Painters District Council No. 58 and its business manager,
several employee benefit plans, and several individuals in their capacities as
trustees of those plans—seek to collect unpaid fringe benefit contributions, union
dues, liquidated damages, attorneys’ fees, and costs from Defendants Architectural
Painting Services, Inc., Architectural Painting Services, LLC, and Joseph Sherrillo.
Plaintiffs bring this suit under Section 301 of the Labor Management Relations Act
(LMRA), 29 U.S.C. § 185, and Section 502 of the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. § 1132. I held a non-jury trial on November 3,
2016. After consideration of the evidence and arguments presented, I make the
following findings of fact and conclusions of law. See Fed. R. Civ. P. 52(a).
FINDINGS OF FACT
I entered a case management order in this case per Federal Rule of Civil
Procedure 16 that set a non-jury trial for October 11, 2016 and ordered the parties
to submit their pretrial materials no later than 20 days prior to that date. Plaintiffs
submitted timely pre-trial materials, including a proposed joint stipulation of
uncontested facts, which stated Plaintiffs contacted Defendants’ counsel regarding
the required joint stipulation of uncontested facts but received no response.
Defendants failed to comply with the pretrial order and did not submit any pretrial
materials or object to any of Plaintiffs’ materials. As a result, I accept Plaintiffs’
joint stipulation of uncontested facts as established and need not recite them
exhaustively here. See ECF No. 25. I will address the facts relevant to Plaintiffs’
damages calculation and Defendants’ limited challenges to liability and damages.
Plaintiffs are Painters District Council No. 58 (the Union), the Union’s
business manager, a number of employee benefit plans (St. Louis Painters Pension
Trust, St. Louis Painters Welfare Trust, St. Louis Painters Vacation Trust, and
Painters District Council No. 2 Apprenticeship and Journeyman Training Trust, or
“the Trusts”), and the trustees of those plans. Plaintiffs seek unpaid employee
benefit contributions under ERISA and unpaid union dues and contributions under
the LMRA. Plaintiffs also seek liquidated damages, audit costs, and attorney’s
fees and costs under ERISA, the LMRA, and the terms of the parties’ collective
bargaining agreement (CBA). Defendants are Architectural Painting Services,
Inc., a Missouri corporation (APS Inc.); Architectural Painting Services LLC, a
Missouri limited liability corporation (APS LLC); and Joseph Sherrillo, an
individual who was an officer of APS Inc. and the organizer of APS LLC.
APS Inc. and APS LLC were bound by CBAs with the Union at all times
relevant to this case. The CBAs provide the Union and the Trusts the right to
perform a payroll examination of the financial books and records of APS Inc. and
APS LLC when they deem it necessary or desirable.1 Joseph Sherrillo, in his
individual capacity, also signed an unconditional guaranty document personally
guarantying “all existing and future indebtedness of the Company to Union, its
members and the Trust Funds” as well as “all damages, cost, fees and expenses
which the union . . . or the Trustees of the Trust Funds may be entitled to recover
from the Company pursuant to collective bargaining agreement or under any local,
state, or federal law.” Pls. Ex. 2. Under the terms of the CBAs, APS Inc. and APS
LLC were required to make contributions to the Trusts and to the Labor
Management Cooperation Fund and the St. Louis Painters and Decorating Industry
Advancement Fund on the basis of all hours worked by employees covered by the
CBAs. The CBAs required APS Inc. and APS LLC to self-report the number of
The parties entered into initial and successor CBAs. The CBAs further bind APS Inc. and APS
LLC to the Painters District Council No. 2 Pension Agreement, Painters District Council No. 2
Welfare Agreement, Painters District Council No. 2 Vacation Agreement, and Painters District
Council No. 2 Apprenticeship and Journeyman Training Agreement, which contain provisions
relevant to the Union and Trusts’ right to perform a payroll examination.
hours covered employees worked and the amount of contributions due by
submitting weekly contribution report forms. The CBAs also required APS Inc.
and APS LLC to remit union dues on behalf of covered employees to the Union.
The CBAs require APS Inc. and APS LLC to pay liquidated damages of 10% on
delinquent contributions up to the first 30 days of the delinquency, after which
liquidated damages are calculated at a rate of 1‒1/2% that is compounded monthly
until the contributions are fully paid. The CBAs require APS Inc. and APS LLC to
pay attorneys’ fees and accounting costs, in addition to other relief prescribed by
law, in a suit to recover unpaid contributions, union dues, or liquidated damages.
Plaintiffs asked the accounting firm Grabel, Schnieders, Hollman & Co.,
P.C. to perform a payroll examination of APS Inc. and APS LLC’s books and
records to aid Plaintiffs in evaluating the contributions Defendants owed for the
period of June 30, 2013 through May 31, 2016. Accountant Charles Kinder of
Grabel, Schnieders, Hollman & Co., P.C. reviewed documents provided by APS
Inc. and APS LLC at Defendants’ counsel’s offices on June 20, 2016. Kinder
determined that the documents Defendants provided were not sufficient for him to
complete the payroll examination. On July 19, 2016, Kinder emailed Joseph
Sherrillo a list of documents he needed Defendants to provide in order to complete
the payroll examination, including Form 941s for eight quarters, all form W-2s for
2014 and 2015, and employee earnings records for certain designated periods of
time. Defendants did not provide any of these requested documents before Kinder
released his written findings on August 10, 2016.
In October 2016, Defendants provided Kinder with two of the documents he
had requested, the Form 941 for the third quarter of 2014 and the first quarter of
2015. Kinder determined that these two additional documents did not provide him
sufficient documentation to complete the payroll examination or to change the
findings of the payroll examination that he completed in August 2016. When
Defendants provided these two additional documents to Kinder, they made no
representation that they had other documentation available or had previously
provided any other documents to the Union for the payroll examination.
As a result of Defendants’ failure to provide Kinder with sufficient
documentation to complete the payroll examination, Kinder invoked Section 15 of
the parties’ CBA and presumed that all of Defendants’ employees who had any
hours reported by Defendants during a weekly pay period worked 40 hours during
that pay period. Section 15 of the CBA states, in relevant part:
The employer shall maintain a time keeping system, which accurately
reflects all hours worked by employees covered by this Agreement.
This system must be presented to the Union at the signing of the
Agreement. The system shall be maintained for the length of the
Agreement, and any change in the system must be approved by the
Union. In the event that the Employer shall fail to maintain or, on
request from the Union or the Trustees of any of the fringe benefit
funds, fails to produce such records, then for purposes of computing
fringe benefit contributions, dues check-off and Industry Fund
contributions, there shall be a rebuttable presumption that any
employee who worked for an Employer within particular weekly pay
period worked a total of 40 hours in such pay period for such
Pls.’ Exs. 9-10, at 16. As a result of invoking Section 15, Kinder calculated that
from June 30, 2013 to May 31, 2016, Defendants incurred a delinquency of
This calculation included unpaid delinquent contributions
($31,073.55); liquidated damages on those delinquent contributions, computed
through August 31, 2016 ($10,540.55); and costs of the payroll examination that
Kinder performed ($1,362.81).2
Defendants did not provide Kinder with any
documents or explanations to contradict the findings of the payroll examination.
Defendants argued at trial that some of the amounts included in Kinder’s
payroll examination were included in prior settlement agreements and a consent
judgment entered in a prior case between these parties, Case No. 4:12 CV 2379
JCH (E.D. Mo.). On review of the prior agreements, the consent judgment, and the
explanations the parties provide about what occurred in the prior case, I do not find
any support for concluding that the amounts paid in Case No. 4:12 CV 2379 JCH
overlap with the amounts Kinder found as being owed in the payroll examination.
Plaintiffs explain that in the prior case, Defendants paid outstanding principal
The amount calculated by Kinder as having been owed as a result of the payroll examination
does not include attorneys’ fees and costs or any contributions for hours not indicated outside
those specifically stated in the payroll examination. Further, the amount calculated by Kinder as
having been owed as a result of the payroll examination also does not include any liquidated
damages that would be owed as a result of the employer submitting late contributions and reports
amounts due per a payroll examination covering the period of February 1, 2010 to
June 30, 2013.
The parties’ settlement then covered the remaining amounts
Defendants owed from that period, namely, liquidated damages, interest, and
attorney’s fees and costs, all calculated through February 14, 2014. Kinder’s
payroll examination picked up where that audit left off, starting at June 30, 2013.
The first week that Kinder found any amounts owed in his current payroll
examination report was March 28, 2014.
Later the parties entered into a second agreement that included a settlement
of the amounts owed on the prior agreement as well as amounts for additional
delinquent contributions and attorneys’ fees Defendants had incurred. See Pls. Ex.
1. Unpaid principal contributions for periods overlapping with the time period at
question in this case were included in this second agreement, but these amounts
were based only on Defendants’ weekly contribution reports. The agreement
stated that the Contractor agreed it may owe additional amounts that could be
uncovered by an audit and explicitly allowed the Funds to conduct an audit of the
Contractor’s records to determine what additional damages may be owed.
Plaintiffs then conducted that audit—resulting in the payroll examination report in
this case—which led them to uncover the damages they now request. Based on the
agreements/consent judgment in Case No. 4:12 CV 2379 JCH and the payroll
examination Kinder conducted in this case.
CONCLUSIONS OF LAW
Plaintiffs seek to recover unpaid employee benefit contributions, liquidated
damages, attorneys’ fees, and costs under ERISA, 29 U.S.C. §§ 1132 and 1145.
They also seek to recover unpaid union dues and contributions, liquidated
damages, and attorneys’ fees and costs under the LMRA, 29 U.S.C. § 185.
Section 1145 of ERISA provides that “[e]very 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. Section 1132(g)(2) provides for
awards in actions by a fiduciary for or on behalf of a plan to enforce § 1145. The
plaintiff bears the burden of proving damages in an ERISA action. Greater St.
Louis Const. Laborers Welfare Fund v. AGR Const. Co., 2010 WL 4319349, at *2
(E.D. Mo. Oct. 22, 2010).
“A union may bring [a] breach of contract claim against an employer for
unpaid contributions in federal court pursuant to section 301 of the LMRA, see 29
U.S.C. § 185, and courts must apply general principles of contract law in
interpreting the parties’ agreement.” Painters Dist. Council No. 2 v. Anthony’s
Painting, LLC, 2011 WL 4369283, at *5 (E.D. Mo. Sept. 19, 2011); see also
Trustees of I.B.E.W. Local 405 Health & Welfare Fund v. Affordable Elec., Inc.,
2009 WL 54559, at *3 (N.D. Iowa Jan. 7, 2009) (“Liability and damages for a
§ 185 claim are governed by the terms of the contract, e.g., a collective bargaining
agreement.” (quotation marks omitted)).
The parties agree Defendants were bound by the CBAs. Defendants do not
dispute that APS LLC assumed APS Inc.’s obligations and is liable for any
amounts owed, nor do they dispute that Joseph Sherrillo is personally liable to
Plaintiffs for all amounts Defendants owe in this case, based on the personal
guaranty he signed. See e.g., Painters Dist. Council No 58 v. RDB Universal
Services, LLC, 2016 WL 1366600, at *6‒7 (E.D. Mo. Apr. 6, 2016). As a result, I
conclude that any amount owed is owed by all Defendants, jointly and severally.
The findings of a payroll examination are presumptively valid. See Painters
Dist. Council 2 v. Grau Contracting, Inc., 2012 WL 2848708, at *1 (E.D. Mo. July
11, 2012) (“With respect to damages in an action for delinquent fringe benefit
contributions, the findings of a plaintiff's accountant are deemed presumptively
valid.”); Greater St. Louis Const. Laborers Welfare Fund v. H2K Const., LLC,
2010 WL 2640192, at *1 (E.D. Mo. June 28, 2010) (noting that findings of
plaintiffs’ accountants are presumptively valid and employer has burden of
producing evidence countering the audit). At trial, Plaintiffs presented testimony
from the accountant who conducted the payroll examination, Charles Kinder.
Kinder explained how he conducted the examination based on the records
Defendants provided him and relevant provisions in the CBA.
Section 15 of the CBA provides that the 40-hour-per-week presumption
applied when an employer fails to maintain or produce adequate records is a
Defendants can rebut the presumption by producing
records that accurately reflect all hours worked, which they are required by law
and by Section 15 of the CBA to keep. See 29 U.S.C. § 1059(a)(1) (stating that
employers have an obligation to maintain records with respect to each of their
employees “sufficient to determine the benefits due or which may become due to
such employees”). When Kinder requested documents accurately reflecting all
hours worked by covered employees, Defendants did not produce them. Kinder
then applied the 40-hour-per-week presumption and completed the payroll
examination, which was presented to Defendants. At that point, Defendants only
produced two of the documents Kinder requested. Kinder testified this incomplete
documentation was not sufficient to allow him to complete the payroll
Defendants did not otherwise respond or attempt to rebut the
findings of the payroll examination report.
Defendants did not produce any
evidence at trial rebutting Kinder’s findings in the payroll examination.
While Defendants pointed out that Kinder himself did not request any
documents from any banks, the contract puts the burden on Defendants to produce
documentation accurately reflecting all hours worked by their employees, not the
Defendants also argue they should not be liable at all because
Plaintiffs’ evidence at trial was insufficient to prove they breached the contract by
failing to maintain the required timekeeping system. They argue Plaintiffs failed to
show they had to maintain any particular system or had to produce additional
records beyond their weekly contribution reports.
The real issue before me is not whether Plaintiffs showed Defendants were
required to keep some particular type of timekeeping system, but rather whether it
was appropriate for Kinder to apply Section 15’s rebuttable presumption when
documentation. Kinder testified that the point of a payroll examination is to check
the accuracy of the weekly contribution reports, which are the Defendants’ reports
of which employees worked and how much they worked during a given pay
period. In order to complete the examination, he needs other documentation—
generally W-2s, Form 941s, and payroll summaries—to compare to the weekly
contribution reports Defendants submit to the Union.
It is undisputed that
Defendants failed to provide this documentation (except for two late pieces) or any
other documentation that could be used to check the accuracy of the weekly
If I accept Defendants’ interpretation of the agreement, Defendants could
misrepresent hours worked in their weekly contribution reports and Plaintiffs
would have no way to check the accuracy of the reports. This is not a reasonable
interpretation in the context of the parties’ agreements, particularly in light of
Section 15, as Plaintiffs would never have occasion to apply the rebuttable
presumption if they were forced to accept Defendants’ weekly contribution reports
as true. I will not interpret the parties’ agreement in a way that does not make
sense. See Portell v. AmeriCold Logistics, LLC, 571 F.3d 822, 824 (8th Cir. 2009)
(“[W]e prefer a construction that attributes a reasonable meaning to all the
provisions of the agreement . . . to one that leaves some of the provisions without
function or sense.” (quotation marks omitted)). Plaintiffs have shown Kinder
properly applied the rebuttable presumption, and Defendants have failed to rebut
the presumption or provide any evidence rebutting the accuracy of the payroll
examination. As a result, I conclude the payroll examination is accurate and
Plaintiffs are entitled to collect all amounts reflected in the examination and
permitted by law and the CBA.
First, Plaintiffs seek to recover $41,900.48 under ERISA, 29 U.S.C. §§ 1132
and 1145. If judgment in favor of the plan is awarded in a § 1145 action, ERISA
mandates an award of:
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of—
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount
not in excess of 20 percent (or such higher percentage as may be
permitted under Federal or State law) of the amount determined by
the court under subparagraph (A),
(D) reasonable attorney’s fees and costs of the action, to be paid by
the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.
For purposes of this paragraph, interest on unpaid contributions shall be
determined by using the rate provided under the plan, or, if none, the rate
prescribed under section 6621 of Title 26.
29 U.S.C. § 1132(g)(2).
Kinder’s payroll examination report shows that Defendants owe $29,286.20
in unpaid employee benefit contributions for the period of June 30, 2013 to May
31, 2016. Because I have concluded that the payroll examination is accurate,
Plaintiffs are entitled to recover these unpaid contributions.
See 29 U.S.C.
§ 1132(g)(2)(A). Plaintiffs do not request interest. See Resp. to Ct. Order at 8,
ECF No. 48 (“Plaintiffs’ request for liquidated damages do not include a separate
request for interest.”). Plaintiffs request liquidated damages in the amount of
$9,934.33, based on the unpaid contributions found in the payroll examination.
Liquidated damages under § 1132(g)(2) are limited to 20 percent of the unpaid
contributions. See 29 U.S.C. § 1132(g)(2)(C)(ii); Trustees of the I.B.E.W. Local
405 Health & Welfare Fund v. Tichy Elec. Co., Inc., 2008 WL 154641, at *11
(N.D. Iowa Jan. 15, 2008). As a result, Plaintiffs are entitled to recover $5,857.24
in liquidated damages for unpaid employee benefits contributions.
request $1,362.81 in audit costs for the payroll examination, which I find is
properly supported, appropriate relief.3 See 29 U.S.C. § 1132(g)(2)(E). Plaintiffs
have not yet submitted a request for attorneys’ fees and costs but indicate they
intend to do so after judgment is entered in this matter.
Plaintiffs also request $2,679.95 in liquidated damages under ERISA for
late-received employee benefit contributions they claim Defendants made between
January 1, 2013–June 30, 2013 and September 1, 2013–March 6, 2016. They only
submitted documentary evidence in support of this request. In their briefing, and
despite my order directing Plaintiffs to supplement the record and identify the
specific legal basis for each amount requested, Plaintiffs did not specifically
indicate which provision of ERISA they believe allows them to recover these
damages. They state generally that they seek to enforce § 1145 of ERISA, for
which damages are provided in § 1132(g)(2), so I am left to assume they request
these damages under §§ 1132(g)(2) and 1145.4
Plaintiffs seek these costs under both ERISA and LMRA, and I conclude they are entitled to
receive them under either.
In their complaint, Plaintiffs alleged “APS Inc. is liable for liquidated damages on amounts it
has paid and may pay in an untimely manner” under 29 U.S.C. § 1132(a)(3). See Compl. ¶ 53.
They did not invoke this section again in later filings and provide no argument at all that
liquidated damages may be “other appropriate equitable relief” allowed under § 1132(a)(3). I am
not going to take this analysis up on my own without any indication from Plaintiffs that they
intended to pursue it or any argument or authority from Plaintiffs in support of it.
The amount of an award of liquidated damages under § 1132(g)(2) is
predicated upon the amount of unpaid contributions at issue. See United Auto.
Workers Local 259 Soc. Sec. Dept. v. Metro Auto Ctr., 501 F.3d 283, 289 (3d Cir.
2007); Carpenters & Joiners Welfare Fund v. Gittleman Corp., 857 F.2d 476, 478
(8th Cir. 1988) (“[T]he term ‘unpaid contributions’ has been interpreted to mean
contributions unpaid at the time suit was filed, rather than contributions which
were delinquent for some time but which were paid up before suit was filed.”).
Plaintiffs are not entitled to liquidated damages under § 1132(g)(2) without a
request for unpaid contributions. See Gittleman, 857 F.2d at 478 (“Therefore,
since there are no ‘unpaid contributions,’ the funds are not entitled to liquidated
damages under section 1132(g)(2) because the availability of those damages is
keyed to the existence of ‘unpaid contributions.’”). Plaintiffs have not indicated
whether any of the contributions from which these liquidated damages resulted
remained unpaid when they filed this lawsuit.5 Plaintiffs have not identified any
other basis under which they request or believe they are entitled to receive these
damages. As a result, I conclude Plaintiffs have not shown they are entitled to
liquidated damages under ERISA for late-received employee benefit contributions.
Only one entry on Plaintiffs’ chart of liquidated damages owed indicates damages owed for a
week ending after this lawsuit was filed, and that entry only appears to list the amount of
liquidated damages, not the amount of unpaid contributions. See ECF No. 48‒3.
Second, Plaintiffs seek to recover $2,640.94 under the terms of the CBA
and the LMRA, 29 U.S.C. § 185. Kinder’s payroll examination report shows
Defendants owe $1,787.35 in unpaid union dues and contributions. Because I
found that report accurate, Plaintiffs have shown they are entitled to receive this
Kinder’s report also shows Defendants owe $606.22 in liquidated
damages, calculated according to the liquidated damages provision in the parties’
agreement. Because damages for a § 185 claim are governed by the terms of the
contract, Plaintiffs have shown they are entitled to this amount. Plaintiffs also
request $247.37 in liquidated damages for late-received union dues and
Again, because Plaintiffs properly supported this request, and
because this is what the parties contracted for, Plaintiffs have shown they are
entitled to this amount.
Defendants argued for the first time in their post-trial brief that Plaintiffs are
limited to only collecting amounts owed in the timeframe referenced in Plaintiffs’
Defendants were on notice of the recovery Plaintiffs seek, and
Plaintiffs presented evidence at trial of the recovery they seek, which Defendants
did not object to. See Fed. R. Civ. P. 15(b)(2) (“When an issue not raised by the
pleadings is tried by the parties’ express or implied consent, it must be treated in
all respects as if raised in the pleadings.”). Defendants’ argument is also defeated
by Rule 54(c) of the Federal Rules of Civil Procedure, which states that “[a]
default judgment must not differ in kind from, or exceed in amount, what is
demanded in the pleadings. Every other final judgment should grant the relief to
which each party is entitled, even if the party has not demanded that relief in its
pleadings.” Fed. R. Civ. P. 54(c) (emphasis added). Because this is not a default
proceeding, and because Defendants were on notice of the recovery Plaintiffs seek
and did not object to it, Plaintiffs can recover all amounts to which they are
entitled, regardless of whether these amounts were demanded in their complaint.
Plaintiffs have met their burden of proof to show that Defendants are liable
to them in the amount of $39,147.19, calculated as follows:
Unpaid employee benefit contributions for June 30, 2013–May 31,
Liquidated damages for unpaid employee benefit contributions for
June 30, 2013–May 31, 2016: $5,857.24
Unpaid union dues and contributions for June 30, 2013–May 31,
Liquidated damages for unpaid union dues and contributions for June
30, 2013–May 31, 2016: $606.22
Liquidated damages for late-received union dues and contributions for
Jan. 1, 2013–June 30, 2013 and Sept. 1, 2013–Mar. 6, 2016: $247.37
Audit costs: $1,362.81
Plaintiffs also indicate Defendants are entitled to a credit of $9,162.48. As a result,
the total amount Defendants owe Plaintiffs for the claims in this suit as of the date
of this order is $29,984.71.
IT IS HEREBY ORDERED that Plaintiffs shall have judgment against
Defendants Architectural Painting Services, Inc., Architectural Painting Services
LLC, and Joseph Sherrillo, jointly and severally, in the amount of $39,147.19.
IT IS FURTHER ORDERED that Defendants are entitled to a credit of
$9,162.48 against such judgment.
IT IS FURTHER ORDERED that as of the date of this order, Defendants
owe Plaintiffs $29,984.71 for the claims brought in this lawsuit.
A separate judgment will issue.
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 5th day of April, 2017.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?