Board of Trustees of the Northwest Insulation Workers Welfare Trust et al v. Thermal Mechanical Insulation, LLC
Filing
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FINDINGS AND RECOMMENDATIONS. IT IS RECOMMENDED that the Trusts' motion for summary judgment (ECF No. 29 ) be GRANTED, and that the Court award the Trusts $58,489.11 as set forth above. Signed by Magistrate Judge Carolyn S Ostby on 7/19/2016. (JDR, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
BOARDS OF TRUSTEES OF
THE NORTHWEST
INSULATION WORKERS
WELFARE TRUST, WESTERN
STATES INSULATORS AND
ALLIED WORKERS PENSION
PLAN, WESTERN STATES
INSULATORS AND ALLIED
WORKERS INDIVIDUAL
ACCOUNT PLAN, WESTERN
STATES INSULATORS AND
ALLIED WORKERS HEALTH
AND WELFARE PLAN, LABORMANAGEMENT COOPERATION
TRUST, and INSULATION
INDUSTRY FUND,
Plaintiffs,
vs.
THERMAL MECHANICAL
INSULATION, LLC, a Montana
limited liability company,
Montana I.D. No C208363,
Defendant.
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CV 15-09-BLG-SPW-CSO
FINDINGS AND
RECOMMENDATION OF
UNITED STATES
MAGISTRATE JUDGE
I.
Introduction
Plaintiffs are the boards of trustees of six employee trust funds
(collectively “Trusts”). They brought this action against Defendant
Thermal Mechanical Insulation, LLC (“Thermal”) under the Employer
Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001, et seq.,
to enforce the terms of certain trust agreements to which Thermal was
a party. Cmplt. (ECF No. 1) at 4.1 The Trusts sought through their
Complaint: (1) to audit Thermal’s books and records for the period of
January 2011 through July 2013, id. at 4-5; and (2) to collect any
unpaid fringe benefit contributions, and associated late fees, that
Thermal was required to make to the Trusts on behalf of employees
performing bargaining unit work, id. at 3-4.
On July 2, 2015, Thermal filed a stipulation agreeing that the
Trusts have the right to audit its books and records, but reserving its
defenses. Thermal’s Stipulation (ECF No. 20) at 1. Thus, the only
remaining claim involves whether the Trusts are entitled to collect any
unpaid fringe benefit contributions that Thermal was required to make
1
“ECF No.” refers to the document as numbered in the Court’s
Electronic Case Files. See The Bluebook, A Uniform System of Citation,
§ 10.8.3. References to page numbers are to those assigned by the
electronic filing system.
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to the Trusts. The Trusts also seek liquidated damages and interest on
any unpaid contributions, attorney fees, and costs. ECF No. 1 at 4-5.
This Court has jurisdiction under 29 U.S.C. § 1132(a)(3). Now
pending is the Trusts’ motion for summary judgment. Mtn. for
Summary Judgment (ECF No. 29). As discussed below, the
undersigned recommends that the Court grant the Trusts’ motion.
II.
Background2
Thermal is a Montana limited liability company that performs
mechanical insulation work, among other jobs. Effective July 10, 2010,
Thermal signed a Compliance Agreement to the Master Labor
Agreement dated August 1, 2010 through July 31, 2013, between the
International Association of Heat and Frost Insulators and Allied
Workers, Local Union 82 (“Local 82"), and the Western Washington
Chapter of the Western Insulation Contractors Association. The
agreement is a collective bargaining agreement (“CBA”). Thermal was
bound by the CBA’s terms. During its effective dates, the CBA
obligated Thermal to submit contributions to the Trusts for the hours
worked by its covered employees.
2
The background facts are undisputed except where noted.
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Relevant to this action, an audit of Thermal’s payroll records from
October 2011 through July 31, 2013, revealed that Thermal employed
Guadalupe Bujanda (“Bujanda”), Rumaldo Herrera (“Herrera”), and
Jessie A. Thomas (“Thomas”). Trusts’ Opening Br. (ECF No. 30) at 5.
The Trusts maintain that all three individuals were journeyman
insulators during the relevant time. Thermal disputes that the three
individuals were qualified as journeyman insulators. Thermal
maintains that it was having ongoing disputes with Local 82 regarding
Local 82's ability to supply qualified employees covered by the CBA.
Thermal maintains that, when it employed Bujanda, it classified him
as a “CI” or “commercial improver” worker for which it was not
required to contribute to the Trusts, and hired Herrera and Thomas for
non-CBA jobs, for which it was not required to contribute to the Trusts.
Respecting Bujanda, Thermal employed him during the months of
May 2012 and June 2012. Bujanda worked 150 hours for Thermal in
May 2012, and 32 hours in June 2012. Thermal did not report to the
Trusts the 182 hours that Bujanda worked for Thermal during the two
months, but Thermal maintains that it was not required to report the
hours.
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Respecting Herrera, Thermal employed him from July 2011
through March 2013. Thermal reported Herrera’s hours to the Trusts
and submitted contributions on his behalf. But starting in December
2012, Thermal did not report all of Herrera’s hours to the Trusts or
submit all of the contributions to the Trusts for the hours Herrera
worked. Specifically: (1) in December 2012, Thermal reported and
submitted contributions for 37 hours worked when Herrera actually
worked 206.5 hours; (2) in January 2013, Thermal reported and
submitted contributions for 105 hours worked when Herrera actually
worked 140 hours; and (3) in February and March 2013, Herrera
worked 159 and 116 hours, respectively, and Thermal did not report or
submit contributions to the Trusts for any of those hours. In total,
Thermal did not report 479.5 hours for Herrera.
Respecting Thomas, during the months of August 2011 and
October 2011 through December 2011, Thermal reported to the Trusts
the hours that Thomas worked for Thermal and submitted
contributions on his behalf. Thermal also employed Thomas during the
months of October 2012 through February 2013. Thermal did not
report to the Trusts any of the hours that Thomas worked during that
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time and did not submit contributions on his behalf. In total, Thermal
did not report 380 hours for Thomas.
III. Summary of Parties’ Arguments
The Trusts argue that there are no genuine issues of material fact
and that they are entitled to judgment as a matter of law. They argue
that: (1) they have shown that Bujanda, Herrera, and Thomas were
journeyman insulators covered under the CBA who performed covered
work for which Thermal owes contributions, Trusts’ Opening Br. (ECF
No. 30) at 10-12; (2) Thermal is obligated to submit contributions to the
Trusts for all hours that Bujanda, Herrera, and Thomas worked, even if
they split working time between positions covered by the CBA and not
covered by the CBA, id. at 13-14; and (3) under ERISA, Thermal must
pay the Trusts liquidated damages on the unpaid contributions,
interest on the unpaid contributions, and attorney fees and costs, id. at
14-17.
In response, Thermal argues that genuine issues of material fact
preclude summary judgment. Thermal’s Resp. Br. (ECF No. 39) at 11.
Thermal argues that the Trusts have failed to demonstrate that: (1)
Bujanda, Herrera, and Thomas were ever registered or listed with
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Local 82, id. at 11-12; (2) that they were qualified journeyman
mechanics/insulators during the relevant time periods for which the
Trusts argue that Thermal owed contributions, id. at 12-14; and (3)
that the three employees were performing work covered by the CBA, id.
Thermal also argues that the union, Local 82, had not fulfilled its
obligation under the CBA to provide qualified journeymen
mechanics/insulators. This failure, Thermal argues, forced it to find
and hire employees and relieved it of its obligation to make
contributions on behalf of those workers. Id. at 2-10.
Finally, Thermal argues, even assuming that the three employees
were covered by the CBA, Thermal is not required to submit
contributions for all hours worked by the employees. Id. at 15-16.
Rather, Thermal argues, the Trusts misplace reliance on cases holding
that employers must contribute for all hours worked even if an
employee splits time between CBA-covered and non-CBA jobs because
those cases interpreted completely different agreements than those at
issue in this case. Id.
In reply, the Trusts argue that: (1) Thermal cannot use as a
defense to the Trusts’ claim for contributions any dispute that Thermal
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may have had with Local 82 because contract defenses do not apply in
actions brought by trust funds for collection of unpaid contributions,
Trusts’ Reply Br. (ECF No. 46) at 2-4; (2) Thermal’s evidence actually
supports the Trusts’ position that Bujanda, Herrera, and Thomas are
journeyman mechanics because Thermal’s contribution history
demonstrates that it contributed on behalf of these individuals as
journeyman mechanics during the relevant period, id. at 5-6; (3)
whether the three employees were union members or properly qualified
as journeymen is legally irrelevant because the CBA covers work
performed, not union membership or journeyman status, as long as
they performed bargaining unit work, which they did in this case, id. at
7-8; (4) Thermal is responsible for submitting contributions for all
hours worked by employees, even if the employees performed work not
covered by the CBA, id. at 8-11; (5) contributions received from
Thermal will be credited to the employees’ accounts, contrary to
Thermal’s belief that the money will not be used for the benefit of
Thermal’s former employees, id. at 11-12; and (6) the Court should
strike certain portions of David Harmala’s declaration filed in support
of Thermal’s opposition to the motion at hand because they lack
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support, are self-serving, or contain inadmissible hearsay, id. at 12-13.
IV.
Summary Judgment Standard
“The court shall 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). A
party seeking summary judgment always bears the initial
responsibility of informing the court of the basis for its motion, and
identifying those portions of the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, which it believes demonstrate the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Material facts are those which may affect the outcome of the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as
to a material fact is genuine if there is sufficient evidence for a
reasonable fact-finder to return a verdict for the nonmoving party. Id.
If the moving party meets its initial responsibility, the burden then
shifts to the opposing party to establish that a genuine issue of fact
exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986). “[T]he mere existence of some alleged factual dispute
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between the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be no
genuine issue of material fact.” Anderson, 477 U.S. at 247-48.
V.
Discussion
The Trusts’ claim to collect any unpaid fringe benefit
contributions that Thermal was required to make falls under 29 U.S.C.
§ 1145 of ERISA, which states:
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 the law, make such contributions in
accordance with the terms and conditions of such plan or such
agreement.
Thus, to establish a violation of 29 U.S.C. § 1145, the Trusts must
demonstrate that: (1) they are multiemployer plans; (2) the CBA
obligated Thermal to make the required contributions; and (3)
defendant failed to make the contributions. Trustees of Eighth Dist.
Elec. Pension Fund v. Gietzen Elec., Inc., 898 F.Supp.2d 1193, 1198 (D.
Idaho 2012) (citation omitted).
Here, it is undisputed that the Trusts are multiemployer plans as
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contemplated under ERISA.3 The parties also agree that Thermal did
not pay the subject contributions at issue. Thus, the only dispute is
whether Thermal was obligated to pay such contributions. For the
reasons discussed below, the Court concludes that Thermal was so
obligated, and that the Trusts are entitled to summary judgment.
As noted above, Thermal’s principal arguments opposing the
Trusts’ motion are that: (1) the union, Local 82, was not fulfilling its
obligations under the CBA to provide qualified journeymen insulators;
and (2) the Trusts have failed to show that Bujanda, Herrera, and
3
Respecting each plaintiff’s status, the parties stipulate as follows:
The Northwest Insulation Workers Welfare Trust, Western
States Insulators and Allied Workers Pension Plan, Western
States Insulators and Allied Workers Individual Account Plan,
Western States Insulators and Allied Workers Health and
Welfare Plan are “multiemployer plans” as defined in Section
4001(a)(3) of ERISA, 29 U.S.C. § 1301(a)(3). These multiemployer
trusts provide health, pension and training benefits to employees
of signatory employers, generally, insulators and allied workers,
and their dependents and survivors.
The Labor-Management Cooperation Trust and Insulation
Industry Fund are trust funds created under [section] 302(c)(9) of
the Labor Management Relations Act of 1947 (LMRA), as
amended, 29 U.S.C. § 186 (c)(9), established for one or more of the
purposes set forth in section 5(b) of the Labor Management
Cooperation Act of 1978
Statement of Stipulated Facts (ECF No. 7) at 2-3.
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Thomas were qualified journeymen registered with Local 82. These
deficiencies, Thermal argues, relieve it of its obligation to pay the
contributions required under the CBA. The Court is not persuaded.
As an initial matter, Thermal acknowledges that it was bound by
the terms of the CBA and that, during its effective dates, the CBA
obligated Thermal to submit contributions to the Trusts for the hours
worked by its covered employees. Thermal’s Stmt. of Disputed Facts
(ECF No. 40 at 2-3). Thermal further acknowledges that it employed
Bujanda, Herrera, and Thomas at times during the relevant period. Id.
at ¶¶ 7, 8, and 13. And, Thermal acknowledges, it did not submit
contributions to the Trusts for all of the hours worked by each man. Id.
at ¶¶ 7, 10, and 15. Thermal’s stance that it was not required to
submit contributions is based on its positions that: (1) Local 82 was not
providing qualified journeymen insulators; (2) the three employees
were not qualified as journeyman mechanics/insulators; and (3) the
three employees were not union members of Local 82. None of these
arguments is persuasive.
First, Thermal’s ongoing disputes with Local 82 regarding Local
82's ability to supply qualified employees is not a proper basis to excuse
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Thermal’s obligation to contribute funds to the Trusts. And, Thermal
cannot use Local 82's alleged breach of the CBA as a defense in this
action. In Southwest Administrators, Inc. v. Rozay’s Transfer, the
Ninth Circuit explained:
For reasons of public policy, traditional contract law does not
apply with full force in actions brought under [ERISA] to collect
delinquent trust fund contributions. In recognition of the fact
that millions of workers depend upon employee benefit trust
funds for their retirement security, Congress and the courts have
acted to simplify trust fund collection actions by restricting the
availability of contract defenses, which make collection actions
unnecessarily cumbersome and costly.
791 F.2d 769, 773 (9th Cir. 1986) (citations omitted). “In the Ninth
Circuit, only those defenses demonstrating illegality of the
contributions or striking at the heart of the underlying collective
bargaining agreement as void ab initio (as opposed to, merely,
voidable), are available when contesting delinquency actions such as
this.” Gietzen, 898 F.Supp.2d at 1200 (citing Southwest Administrators,
791 F.2d at 773-73).
In the case at hand, Thermal does not argue that the
contributions the Trusts seek are illegal. It also does not argue that
the CBA is void by Local 82's alleged failure to provide qualified
journeymen insulators. Based on the foregoing authority, Thermal
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cannot rely on Local 82's alleged failure to perform under the CBA as a
basis for withholding contributions. Id. (rejecting argument that
employer not required to contribute funds under collective bargaining
agreement because union allegedly failed to provide qualified
electricians because “while potentially available in a typical contract
dispute, [the argument] is not recognized under ERISA’s more
constrained framework, driven by public-policy intended to favor
benefit protection.”). Thus, Thermal’s first argument fails.
Second, the Court concludes that Thermal also cannot avoid
submitting contributions based on its position that the three employees
were not qualified as journeyman mechanics/insulators. The CBA
provides that Thermal must contribute for all employees who perform
insulation work as follows:
This agreement covers the rates of pay, rules and working
conditions of all employees engaged in the preparation and
physical distribution on the job site, and application of pipe
and boiler coverings, insulation of hot surfaces, ducts, flues,
etc. Also the covering of cold piping and circular tanks and
equipment connected with it, fire and pressure seals, fire
stops of mechanical, electrical penetrations and all other
work included in the trade jurisdictional awards to the
union and standing agreements with other trades.
This includes alterations and repairing of work similar
to the above and the use of all materials for the purpose
mentioned.
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All fabricated work done in the employer’s shop
covered under the scope of this agreement shall be
performed by employees under the terms and conditions of
this agreement. It shall have the authorized Asbestos
Workers International Union label, or Asbestos Workers
covered by this agreement shall not be required to handle
such material.
Master Labor Agreement, Article II Work Covered (ECF No. 34-3) at 5.
The CBA does not require as a precondition to employer contributions
to the Trusts that employees hold a particular experience status or
classification. Rather, the CBA unambiguously applies to “all
employees” performing bargaining unit work. See Pierce County Hotel
Employees and Restaurant Employees Health Trust v. Elks Lodge,
B.P.O.E. No. 1450, 827 F.2d 1324, 1327 (9th Cir. 1987) (rejecting
argument that CBA requiring contributions for “any person performing
work covered by this agreement” was ambiguous).
And, Thermal has neither persuasively argued nor presented
evidence indicating that Bujanda, Herrera, and Thomas were not
performing bargaining unit work. On the contrary, the Trusts have
presented evidence that the three employees were performing
bargaining unit work during the relevant time periods. See Declaration
of Jessie Thomas (ECF No. 35) at 2-3 (stating that during time Thermal
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employed him, Thomas “only performed work covered by the Insulator’s
[sic] collective bargaining agreement[ ]” and that he “saw Rumaldo
Herrera performing insulation work” during the months of October
2012 through February 2013); Declaration of Rumaldo Herrera (ECF
No. 49) at 2-3 (stating that at all times when he was employed by
Thermal, he was a journeyman-foreman insulator and from December
2012 through March 2013 he worked as a journeyman-foreman
insulator for Thermal performing insulation work and supervising
man-hours); Declaration of Michaeal Loberg (ECF No. 34) at 2-3
(stating that Bujanda was dispatched to Thermal to perform bargaining
unit work during the relevant time and that Bujanda, Herrera, and
Thomas all were journeyman insulators when they worked for
Thermal). Because the undisputed evidence of record shows that the
three employees were performing bargaining unit work during the
relevant times, Thermal’s second argument fails.
Third, the Court is unpersuaded by Thermal’s argument that it is
relieved from making contributions to the Trusts because the three
employees were not union members of Local 82. As noted above, the
CBA covers employees performing insulation work and does not require
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union membership as a prerequisite for employer contributions to the
Trusts. See Master Labor Agreement, Article II Work Covered (ECF No.
34-3) at 5. Also, the CBA’s so-called “recognition clause” provides that
Thermal “recognizes the union as the sole and exclusive bargaining
representative of all employees performing work over which the union
has jurisdiction,” which is “defined by the Building and Construction
Trades Department of the American Federal of Labor.” Master Labor
Agreement, Article VIII Union Security & Resident Employee & Hiring
Arrangement (ECF No. 34-3) at 7. “The presence in the agreement of a
recognition clause designating the union as the exclusive bargaining
agent for all employees indicates that fringe benefit contributions are
required for both union and non-union members.” Trustees of the
Southern California IBEW-NECA Pension Trust Fund v. Flores, 519
F.3d 1045, 1047 (9th Cir. 2008) (citations omitted). For these reasons,
Thermal’s third argument fails.
Thermal finally argues that, if the Court determines that the
employees are covered by the CBA, Thermal is not required to submit
contributions for non-CBA hours that the employees worked.
Thermal’s Resp. Br. (ECF No. 39) at 15-16. Thermal is mistaken.
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First, as noted, Thermal has neither persuasively argued nor
presented evidence from which a reasonable inference could be drawn
that the three employees were not performing bargaining unit work at
all relevant times. And, as discussed above, the Trusts have presented
evidence that the three employees were performing bargaining unit
work during the relevant time periods. For this reason alone,
Thermal’s argument fails.
Second, even if the employees did perform both bargaining unit
work and non-CBA work, Thermal nevertheless must contribute to the
Trusts. Under Ninth Circuit authority, when an employee splits
working time between work covered by a collective bargaining
agreement and work not covered by the agreement, the employer is
required to contribute for all hours that the employee works or for
which the employer pays the employee. See Board of Trustees of
Cement Masons and Plasterers Health and Welfare Trust v. Whitewater
Engineering Corp., 64 Fed.Appx. 39, 40 (9th Cir. 2003); Operating
Engineers Pension Trusts v. B & E Backhoe, Inc., 911 F.2d 1347, 1351
(9th Cir. 1990) (enforcing split-time rule requiring contributions for
employees performing both covered and non-covered work); Operating
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Engineers Pension Trusts v. A-C Company, 859 F.2d 1336, 1341 (9th Cir.
1988) (same). Thus, Thermal must make contributions for all hours
worked even if the work performed is split between covered and noncovered work.
For all of the foregoing reasons, the Trusts are entitled to
summary judgment. Consequently, under 29 U.S.C. § 1132(g)(2), the
Trusts are entitled to: (1) unpaid contributions from Thermal on behalf
its employees for the audit period of October 2011 through July 31,
2013, as discussed above; (2) interest on the unpaid contributions; (3)
an amount equal to the greater of interest on the unpaid contributions
or liquidated damages under the CBA not in excess of 20 percent of the
unpaid contributions; and (4) reasonable attorney’s fees and costs.
With their opening brief in support of their summary judgment
motion, the Trusts have provided the declarations of Jonathon Loflin,
the Trusts’ auditor, and Bill Boyle, the Trusts’ Account Manager, to
support their claims for:
(1) $16,314.01 in unpaid employee benefit contributions;
(2) $3,730.51 in liquidated damages;
(3) $6,618.09 in interest (updated through May 6, 2016); and
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(4) $3,485.00 in accounting fees for the relevant period.
See Declaration of Jonathon Loflin (ECF No. 32) and Declaration of Bill
Boyle (ECF No. 33). The Trusts also have provided the declaration of
Noelle Dwarzski, the Trusts’ counsel, to support their claim for
$27,662.50 in attorneys’ fees and $679.00 in costs. See Declaration of
Noelle Dwarzski (ECF No. 36). Thus, the Trusts’ total award claimed is
$58,489.11.
Thermal has not contested these amounts despite having had the
opportunity to do so in responding to the Trusts’ summary judgment
motion.
VI.
Conclusion
Based on the foregoing, IT IS RECOMMENDED that the Trusts’
motion for summary judgment (ECF No. 29) be GRANTED, and that
the Court award the Trusts $58,489.11 as set forth above.
NOW, THEREFORE, IT IS ORDERED that the Clerk shall serve
a copy of the Findings and Recommendation of United States
Magistrate Judge upon the parties. The parties are advised that
pursuant to 28 U.S.C. § 636, any objections to the findings and
recommendation must be filed with the Clerk of Court and copies
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served on opposing counsel within fourteen (14) days after entry hereof,
or objection is waived.
DATED this 19th day of July, 2016.
/s/ Carolyn S. Ostby
United States Magistrate Judge
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