Locals 302 and 612 of the International Union of Operating Engineers Construction Industry Health and Security Fund et al v. Gill, No. 2:2009cv01779 - Document 22 (W.D. Wash. 2010)
Court Description: ORDER granting 11 Plaintiffs' Motion for Partial Summary Judgment. Plaintiffs' request for attorney's fees and costs in the amount of $3,520.04 is Granted, by Hon. James P. Donohue.(MD)
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Locals 302 and 612 of the International Union of Operating Engineer...nd Security Fund et al v. Gill Doc. 22 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 12 LOCALS 302 AND 612 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS CONSTRUCTION INDUSTRY HEALTH AND SECURITY FUND, et al., Case No. 09-cv-1779-JPD ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT 13 Plaintiffs, 14 15 16 v. NELSON E. GILL, a sole proprietor, d/b/a Nelson Construction, 17 Defendant. 18 19 20 I. 21 Plaintiffs, Local 302 of the International Union of Operating Engineers and three 22 23 24 INTRODUCTION AND SUMMARY CONCLUSION Operating Engineers trust funds, bring this action to compel defendant, Nelson E. Gill, to submit to an audit by furnishing certain employee payroll records and information. This matter comes before the Court upon plaintiffs’ motion for partial summary judgment. Dkt. 11. 25 26 Defendant opposes the motion. Dkt. 18; Dkt. 19. After careful consideration of plaintiffs’ ORDER PAGE - 1 Dockets.Justia.com 1 motion, defendant’s opposition, plaintiffs’ reply, and the balance of the record, the Court 2 GRANTS plaintiffs’ motion for partial summary judgment. The Court also GRANTS 3 plaintiffs’ request for attorney’s fees and costs in the amount of $3,520.04. 4 II. 5 The relevant facts of this case, as set forth by plaintiffs’ briefs and supporting 6 BACKGROUND documents, are uncontroverted by defendant. Plaintiff Operating Engineers trust funds (the 7 “Trust Funds”) are employee benefit plans governed by § 302(c)(5) of the Labor Management 8 9 Relations Act of 1947 and the Employee Retirement Income Security Act of 1974 (“ERISA”). 10 See 29 U.S.C. § 186(c)(5); 29 U.S.C. § 1001 et seq., as amended (1988). The Trust Funds 11 provide medical, retirement, and training benefits to eligible employees. See Dkt. 15 at 3 12 (Parmelee Decl.). Specifically, plaintiff Trust Funds include the Locals 302 and 612 of the 13 International Union of Operating Engineers - Construction Industry Health and Security Fund, 14 the Locals 302 and 612 of the International Union of Operating Engineers - Employers 15 Construction Industry Retirement Fund, and the Western Washington Operating Engineers 16 17 Employers Training Trust Fund. See id. at 1-2. Each Trust Fund was established by a written 18 trust agreement (the “Trust Agreements”), and is governed by a board of trustees (the 19 “Trustees”). See id. at 2. 20 21 22 Individual employers bound by a collective bargaining agreement with plaintiff Local 302 of the International Union of Operating Engineers (“Local 302”), the 2007-2010 Operating Engineers Local 302 Master Labor Agreement (the “Master Labor Agreement”), are required 23 24 25 26 to report and contribute to the Trust Funds. See Dkt. 15 at 3 (Parmelee Decl.). Defendant became bound to the Master Labor Agreement when he executed an Operating Engineers Local 302 Compliance Agreement (the “Compliance Agreement”) in April 2007. Id., Ex. A at ORDER PAGE - 2 1 2. Thus, by entering into the Compliance Agreement with Local 302, defendant agreed to 2 promptly report and remit monthly contributions to the Trust Funds for each hour of 3 compensation defendant pays to his eligible employees. See id., Ex. B at 20-21. 4 5 6 The Compliance Agreement also incorporates the terms and conditions of the three Trust Agreements, and provides that defendant “consents to be bound by the actions and determinations of the Trustees.” Id., Ex. A at 1-2. In addition to defining employers’ 7 obligations to report and contribute to the Trust Funds, the Trust Agreements establish broad 8 9 audit rights for the Trustees in connection with their administration of the Trust Funds. 10 Specifically, the Trust Agreements contain nearly identical language providing that “[t]he 11 Trustees, or their authorized representatives,” may conduct an audit of the pertinent financial 12 or payroll records of an employer “whenever such examination is deemed necessary or 13 advisable by the Trustees in connection with the proper administration of the Fund[s].” Id., 14 Ex. C at 26; id., Ex. D at 22; id., Ex. E at 11. Moreover, the Trustees “may require . . . any 15 Individual Employer, the Union, any Employee or other beneficiary to promptly furnish to the 16 17 Trustees, on demand, such payroll records, information, data, reports or documents reasonably 18 required for the purposes of administration of the Fund.” Id. Finally, the Trust Agreements 19 provide that “[t]he parties agree that they will use their best efforts to secure compliance with 20 any reasonable requests of the Board for any such information, data, reports, or documents.”1 21 22 Id. Defendant reported hours of work and remitted contributions to the Trust Funds for 23 24 25 26 employees during the period August 2007 through March 2008, but did not report hours or remit contributions after that date. See Dkt. 15 at 7 (Parmelee Decl.). As a result, in 2009 the 1 “Best efforts” is not expressly defined in the Compliance Agreement, Master Labor Agreement, or Trust Agreements. ORDER PAGE - 3 1 Trustees deemed it both necessary and advisable that their authorized representatives, 2 accounting firm Lindquist LLP (“Lindquist”), examine defendant’s records to determine if he 3 previously reported and paid all contributions owed to the Trust Funds. See id.; Dkt. 12 at 2 4 (Hislop Decl.). 5 6 Pursuant to the Trustees’ request, Lindquist sent defendant a letter dated August 7, 2009, asking defendant to schedule an appointment for the purpose of testing his contributions 7 to the Trust Funds for the period of January 1, 2005, through the present. See Dkt. 12 at 3 8 9 (Hislop Decl.); id., Ex. A. The letter also asked defendant to furnish certain itemized payroll 10 and tax records at the time of the audit. See id., Ex A. When defendant failed to schedule an 11 appointment for the audit despite several messages from Lindquist and plaintiffs’ counsel, 12 plaintiffs initiated this lawsuit in December 2009 to compel defendant to submit to the audit. 13 See Dkt. 1; Dkt. 13 at 2 (Reid Decl.); Dkt. 13, Ex. A. 14 In February 2010, defendant contacted Lindquist and scheduled an appointment for the 15 audit. See Dkt. 12 at 3 (Hislop Decl.). When defendant consistently failed to respond to 16 17 Lindquist’s messages, however, the appointment was canceled. See id. In March and April 18 2010, defendant provided some payroll documents to Lindquist. See id. Upon review of these 19 materials, Lindquist determined that the documents provided by defendant were inadequate to 20 determine whether defendant had properly reported and contributed to the Trust Funds. See id. 21 22 at 2-4. Specifically, Lindquist required several records that it had originally requested from defendant in August 2009. Accordingly, Lindquist emailed defendant on April 23, 2010, and 23 24 25 asked him to furnish the following outstanding documents: (1) 26 ORDER PAGE - 4 Washington State Employment Securities Reports for the following quarters: 2007-3; 2007-4; 2008-1; 2008-2; 2008-3; 2008-4; 2010-1; 1 (2) Accounts payable legers (check registers) for 2009 and 2010; and 2 (3) Payroll Registers. 3 4 Id., Ex. B. Lindquist also asked to speak with the person who manages defendant’s Quickbooks payroll registers to help retrieve acceptable payroll registers for the audit. Id. 5 On May 5, 2010, defendant advised plaintiffs that he had already provided all the 6 7 documents and records he could access. See Dkt. 13 at 2 (Reid Decl.); id., Ex. B. To date, 8 defendant has not furnished the outstanding documents or assisted Lindquist in retrieving 9 acceptable payroll registers for the audit. Id. at 2 (Reid Decl.). 10 11 12 Plaintiffs have moved for partial summary judgment to compel defendant to submit to the audit by promptly furnishing the outstanding documents and information requested by Lindquist’s April 23, 2010, email. See Dkt. 11 at 16-17. Plaintiffs argue that defendant is 13 obligated to use his “best efforts” to furnish the outstanding documents, and that “best efforts” 14 15 include subpoenaing the documents from third parties, if necessary. Dkt. 20 at 2-3. Plaintiffs 16 also assert that defendant’s “best efforts” should include requesting the Employment Security 17 Reports from the state, if he does not have the reports in his possession. Id. at 4. Finally, 18 plaintiffs move the Court to award attorney’s fees and costs in the amount of $3,520.04. See 19 20 id. at 17-19; Dkt. 21 at 1-2 (Leahy Decl.). Defendant opposes the motion for partial summary judgment on the grounds that Local 21 22 23 302 should bear the burden of furnishing the outstanding documents because it can obtain them more easily. See Dkt. 18 at 2-3 (Gill Aff.); Dkt. 19 at 2 (Cushman Aff.). Specifically, 24 defendant explains that he had a falling out with his former bookkeeper, who performed all 25 accounting and payroll functions during the relevant time period, including reporting and 26 remitting contributions to the Trust Funds. See Dkt. 18 at 2 (Gill Aff.). According to ORDER PAGE - 5 1 defendant, the bookkeeper “has clearly indicated that no request by me, either informally or 2 through a court, will result in my receiving the records directly.” Id. Nevertheless, defendant 3 believes “the bookkeeper would provide the records to the Union at the Union’s independent 4 request, and I have told the Union this and asked them to obtain the records that way.” Id. 5 Thus, defendant asserts that “[t]he Union is far more able to obtain the records than I am, and 6 . . . I would give them any assistance it needs to obtain the records.” Id. Similarly, defendant’s 7 counsel states that the outstanding documents “are most readily attainable if the Union, as 8 9 10 opposed to Nelson Gill, subpoenas the documents from the bookkeeper.” Dkt. 19 at 2 (Cushman Aff.). 11 Thus, defendant’s sole contention is that the burden of furnishing the outstanding 12 documents should fall on Local 302. See Dkt. 18 at 2-3 (Gill Aff.). In his affidavits, defendant 13 does not appear to deny his duty to submit to the audit, or contend that Lindquist’s request for 14 the outstanding documents and information is an unreasonable request. See Dkt. 18 (Gill Aff.); 15 Dkt. 19 (Cushman Aff.). Defendant does not address the issue of attorney’s fees and costs. Id. 16 17 18 III. JURISDICTION The parties have consented to this matter proceeding before the undersigned United 19 States Magistrate Judge pursuant to 28 U.S.C. § 636(c). See Dkt. 6. The Court has exclusive 20 jurisdiction over this action pursuant to 29 U.S.C. §§ 1132(e)(1) and (f) (1974). Venue is 21 22 proper because the Trust Funds are administered in this district. 29 U.S.C. § 1132(e)(2). IV. DISCUSSION A. Summary Judgment Standard 23 24 25 26 Summary judgment is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, there exists “no genuine issue as to any material fact” such ORDER PAGE - 6 1 that “the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A 2 material fact is a fact relevant to the outcome of the pending action. See Anderson v. Liberty 3 Lobby, Inc., 477 U.S. 242, 248 (1986). Genuine issues of material fact exist when the evidence 4 would enable “a reasonable jury . . . [to] return a verdict for the nonmoving party.” Id. In 5 response to a summary judgment motion that is properly supported, the nonmoving party may 6 not rest upon mere allegations or denials in the pleadings, but must set forth specific facts 7 demonstrating a genuine issue of fact for trial, and produce evidence sufficient to establish the 8 9 existence of the elements essential to his case. See Fed. R. Civ. P. 56(e); Celotex Corp. v. 10 Cattrett, 477 U.S. 317, 323 (1986). A mere scintilla of evidence, however, is insufficient to 11 create a factual dispute. See Anderson, 477 U.S. at 252. To defeat a motion for summary 12 judgment, the non-moving party must make more than conclusory allegations, speculations, or 13 argumentative assertions that material facts are in dispute. T.W. Elec. Service, Inc. v. Pacific 14 Elec. Contractors Ass'n, 809 F.2d 626, 630-32 (9th Cir. 1987). 15 B. Defendant Must Use His “Best Efforts” to Comply with the Trustees’ Requests 16 17 As discussed above, a trust for employee health or pension benefits is a contract 18 governed by ERISA. See 29 U.S.C. § 1001 et seq., as amended. ERISA requires that the 19 assets of employee benefit plans be held in trust pursuant to a written trust agreement. Id. at 20 §§ 1102(a), 1103(a). The language of a trust agreement defines the rights and obligations of 21 22 the parties to the trust to the extent they are consistent with ERISA. Id. at § 1145; Santa Monica Culinary Welfare Fund v. Miramar Hotel Corp., 920 F.2d 1491, 1493-94 (9th Cir. 23 24 25 26 1990) (internal citations omitted). The U.S. Supreme Court has held that a trust agreement may provide trustees of an employee benefit plan with broad rights to audit employers’ books and records, and that such ORDER PAGE - 7 1 rights are consistent with ERISA. Central States Southeast and Southwest Areas Pension Fund 2 v. Central Transport Inc., 472 U.S. 559, 571-74, 582-83 (1985) (Central States II); Miramar 3 Hotel Corp., 920 F.2d at 1494-95. As a result, such audit rights are enforced in accordance 4 with the terms of the trust agreement. See Central States II, 472 U.S. at 568; Miramar Hotel 5 Corp., 920 F.2d at 1494-95. Furthermore, in interpreting the terms of trust agreements, the 6 U.S. Supreme Court and circuit authority have emphasized the independent relationship 7 between a trust fund, an employer, and a union. Miramar Hotel Corp., 920 F.2d at 1494-95. 8 9 See also Central States II, 472 U.S. at 575-77 (holding that a trust fund need not rely on a 10 union to monitor employer contributions); Schneider Moving & Storage Co. v. Robbins, 466 11 U.S. 364, 370-76 (1984) (outlining the differing interests between a union, employer, and trust 12 fund within the context of arbitration); Hawkins v. Bennett, 704 F.2d 1157, 1159 (9th Cir. 13 1983) (“The trust fund is independent of the collective bargaining agreement between the 14 parties.”). 15 The plain language of the Trust Agreements grants the Trustees broad audit rights to 16 17 ensure that employers like defendant have fulfilled their reporting and contribution obligations 18 to the Trust Funds. See Dkt. 15, Ex. C at 26; id., Ex. D at 22; id., Ex. E at 11. These broad 19 audit rights include the right to compel “any Individual Employer . . . to promptly furnish to 20 the Trustees, on demand, such payroll records, information, data, reports or documents 21 22 reasonably required for the purposes of administration of the Fund.” Id. As discussed above, the Trustees’ audit rights will be enforced. The Trust Agreements also require defendant to 23 24 25 “use [his] best efforts to secure compliance with any reasonable request . . . for any such information, data, reports, or documents.” Id. 26 ORDER PAGE - 8 1 Defendant argues that Local 302 should furnish the outstanding documents, because 2 Local 302 could likely obtain them “more easily” by requesting or subpoenaing them from his 3 former bookkeeper. Defendant’s contention fails, however, because the Trust Agreements 4 impose the burden of compliance solely on the party the Trustees direct to furnish the pertinent 5 documents or information. See id. The Trust Agreements do not, as defendant argues, impose 6 this burden on the party who can comply with the greatest ease under the circumstances. On 7 April 23, 2010, the Trustees directed defendant, and not Local 302, to promptly furnish the 8 9 outstanding documents, as well as provide information regarding defendant’s payroll registers. 10 See Dkt. 12 at 4 (Hislop Decl.); id., Ex. B. As a result, defendant has a duty to use his “best 11 efforts” to furnish the outstanding documents and information to Lindquist. 12 In these proceedings, defendant has made no showing that he has undertaken his “best 13 efforts” to comply with Lindquist’s April 23, 2010, request. Specifically, defendant has failed 14 to subpoena the outstanding documents from his former bookkeeper, or request the 15 Employment Security reports from the state or any other source. See Dkt. 20 at 4. He has also 16 17 failed to respond to Lindquist’s request for assistance in retrieving acceptable payroll registers 18 for the audit. See Dkt. 12 at 4 (Hislop Decl.). The Court finds that, at a minimum, the Trust 19 Agreements require this much effort by defendant. Accordingly, plaintiffs’ motion for partial 20 summary judgment is GRANTED. 21 22 C. Plaintiffs are Entitled to Attorney’s Fees and Costs Plaintiffs argue that the Court should direct an award of reasonable attorney’s fees and 23 24 25 26 costs. Dkt. 11 at 17-19. Plaintiffs have offered the declaration of Thomas A. Leahy in support of this request, which indicates that plaintiffs’ counsel has incurred attorney’s fees and costs in the total amount of $3,520.04. Dkt. 14 at 1-2 (Leahy Decl.). ORDER PAGE - 9 1 ERISA empowers the Court, “in its discretion,” to grant “reasonable attorney’s fees and 2 costs of action to either party.” 29 U.S.C. § 1132(g)(1). To determine whether an award is 3 appropriate, the Court must consider: 4 (1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees against the opposing party would deter others from acting under similar circumstances; (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties’ positions. 5 6 7 8 9 10 Miramar Hotel Corp., 920 F.2d at 1495 (citing Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980)). The Court need not find that all five factors weigh in favor of the movant 11 in order to direct an award of attorney’s fees. McElwaine v. U.S. West, Inc., 176 F.3d 1167, 12 13 14 1173 (9th Cir. 1999). In this case, the balance of Hummell factors tips sharply in favor of granting plaintiffs’ 15 motion for attorney’s fees and costs. Although both parties suggest that the other is acting in 16 bad faith, there is no specific evidence of such behavior by either party. See Dkt. 18 (Gill 17 18 Aff.); Dkt. 19 (Cushman Aff.); Dkt. 20 at 4. Similarly, although defendant asserts that he is “planning to file for Chapter 13 Bankruptcy” at some time in the future, there is no specific 19 20 21 22 23 24 25 evidence in the record indicating that he has already done so. Dkt. 18 at 3 (Gill Aff.). The third Hummell factor is not particularly helpful, as the Court can only speculate as to whether an award in this case would discourage future litigants from asserting the same arguments. The fourth and fifth Hummell factors, however, weigh heavily in plaintiffs’ favor. Plaintiff Trust Funds requested the audit at issue to ensure that defendant had properly complied with his obligations under the Master Labor Agreement and respective Trust 26 Agreements. Thus, the outstanding documents and payroll register information were requested ORDER PAGE - 10 1 by the Trustees solely for the benefit of the Trust Funds’ participants and beneficiaries. 2 Finally, the strength of the plaintiffs’ position on the merits suggests an award of attorney’s 3 fees and costs is appropriate in this case. Accordingly, plaintiffs’ motion for attorney’s fees 4 and costs in the total amount of $3,520.04 is GRANTED. 5 6 V. CONCLUSION For the reasons discussed above, the Court hereby ORDERS as follows: 7 (1) Plaintiffs’ motion for partial summary judgment, Dkt. 11, is GRANTED; (2) Defendant is directed to submit to the audit within three (3) weeks of the date of this Order; (3) 12 Prior to the date of the audit, defendant is directed to use his “best efforts” to furnish the following outstanding documents to the Trustees’ authorized representatives by subpoenaing or requesting the documents from multiple sources, if necessary: 13 (a) Washington State Employment Securities Reports for the following quarters: 2007-3; 2007-4; 2008-1; 2008-2; 2008-3; 2008-4; 2010-1; 15 (b) Accounts payable legers (check registers) for 2009 and 2010; and 16 (c) Payroll Registers. 8 9 10 11 14 17 (4) Defendant is also directed to comply with any reasonable request for information by the Trustees’ authorized representatives, including Lindquist’s April 23, 2010, request for assistance in retrieving acceptable payroll registers for the audit; (5) Plaintiffs’ request for attorney’s fees and costs in the amount of $3,520.04 is GRANTED; and 22 (6) The Clerk is directed to send copies of this Order to counsel for all parties. 23 DATED this 9th day of August, 2010. 18 19 20 21 24 A 25 JAMES P. DONOHUE United States Magistrate Judge 26 ORDER PAGE - 11
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