Electrical Workers Pension v. Gary's Elec.

Decision Date18 August 2003
Docket NumberNo. 01-1864.,01-1864.
Citation340 F.3d 373
PartiesELECTRICAL WORKERS PENSION TRUST FUND OF LOCAL UNION # 58, IBEW, et al., Plaintiffs-Appellants, v. GARY'S ELECTRIC SERVICE COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

ARGUED: Mark Granzotto, Royal Oak, Michigan, for Plaintiffs-Appellants.

William L. Hooth, Cox, Hodgman & Giarmarco, Troy, Michigan, for Defendant-Appellee.

ON BRIEF: Sheldon M. Meizlish, Detroit, Michigan, Rolland R. O'Hare, Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston & Waldman, Detroit, Michigan, for Appellant.

William L. Hooth, Ryan Lee Perry, Cox, Hodgman & Giarmarco, Troy, Michigan, for Defendant-Appellee.

Before: BATCHELDER, MOORE, and CLAY, Circuit Judges.

OPINION

KAREN NELSON MOORE, Circuit Judge.

This dispute originated when Defendant-Appellee Gary's Electric Service Company ("Gary's Electric") violated a collective bargaining agreement's ("CBA") fringe benefit provisions and then failed to honor a request for information from Plaintiffs-Appellants Electrical Worker's Pension Trust Fund of Local Union # 58, International Brotherhood of Electrical Workers, et al. ("the Funds") regarding the performance of Gary's Electric's representational duties. The Funds first filed a grievance with the Labor-Management Committee ("LMC") based on Gary's Electric's failure to pay fringe benefits, requesting that the LMC enter an arbitration award ordering Gary's Electric to file past-due reports, pay past-due contributions, and thereafter file and pay contributions as they became due. After the LMC entered the award, the Funds filed an action in district court to secure Gary's Electric's compliance with the terms of the award. Upon the Funds' motion, the district court granted summary judgment in favor of the Funds. When Gary's Electric appealed, the appeal was consolidated with a National Labor Relations Board ("NLRB") petition seeking enforcement of an NLRB order finding that Gary's Electric engaged in unfair labor practices. A panel of this court affirmed the district court's decision and enforced the NLRB order. See Elec. Workers Local 58 Pension Trust Fund v. Gary's Elec. Serv. Co., 227 F.3d 646 (6th Cir.2000).

Thereafter, the Funds brought contempt proceedings in the district court against Gary's Electric and its owner, Russell Gary Pipia ("Pipia"), alleging that they continually violated the terms of the arbitration award. The district court held a hearing and granted the contempt petition as to Gary's Electric but denied it as to Pipia. The district court explained that, among other reasons, Pipia could not be held in contempt because he was not an actual defendant in the action. The Funds then brought this appeal from the portion of the court's order denying the contempt petition as to Pipia. We VACATE the decision of the district court and REMAND for additional proceedings consistent with this opinion.

I. BACKGROUND

Gary's Electric, a Michigan corporation wholly owned by Pipia, was a small electrical service company with primarily residential and small-business customers. In 1976, and again in 1988, Gary's Electric signed a letter of assent authorizing the Southeastern Michigan Chapter of the National Electrical Contractors Association ("NECA") to be its representative for all business matters between NECA and the International Brotherhood of Electrical Workers' Local Union # 58 ("the Union").1 Through its representative, NECA, Gary's Electric entered into a binding CBA with the Union. This CBA required participating employers to pay their employees' fringe benefits — pension, vacation, unemployment, annuity, and medical — into the Funds.

On August 4, 1998, in accordance with the terms of the CBA, the Funds made a demand to the LMC for arbitration of their grievance, charging that Gary's Electric failed to make its contractual payments into the Funds and failed to submit the required fringe benefit reports. A hearing before the LMC was set for August 20, 1998, and Gary's Electric was given notice. On August 25, 1998, the LMC found Gary's Electric guilty of the charges in the grievance and ordered Gary's Electric to pay the past-due fringe benefit payments, produce the reports, and make future payments when due.2 An additional award from the LMC, also dated August 25, 1998, found Gary's Electric guilty of failing to secure a surety bond as required by the CBA.

Almost two months later, after Gary's Electric failed to comply with the LMC awards, the Funds filed a complaint in district court requesting that the court enter a judgment enforcing the LMC's awards. On May 18, 1999, the district court granted the Funds' motion for summary judgment, and Gary's Electric immediately filed an appeal.3 A three-judge panel of this court heard the consolidated appeal4 on August 4, 2000, and issued an opinion on September 25, 2000, enforcing the NLRB order and affirming the district court's grant of summary judgment for the Funds. See Elec. Workers Local 58 Pension Trust Fund, 227 F.3d at 649.

While Gary's Electric's appeal was pending,5 the Funds initiated contempt proceedings in district court against Gary's Electric and Pipia for failing to adhere to the district court's orders to pay past-due contributions, disclose fringe benefit reports, adhere to the rules in the CBA for future contributions and reports, secure a surety bond, and pay the Funds their costs and attorney fees.6 A November 23, 1999 order of the district court temporarily disposed of the Funds' petition for contempt by ordering: (1) Gary's Electric to produce, within one month, the fringe benefit reports from June 1998 through the present date; and (2) Pipia to submit to a deposition within two months. The district court postponed its rulings on the other issues contained in the Funds' petition for contempt.

The instant appeal began when the Funds reinitiated the deferred portions of their contempt petition against both Gary's Electric and Pipia.7 In their motion for rehearing filed on December 7, 2000, the Funds alleged that Gary's Electric, with total disregard for this court's decision, chose not to comply with the district court's judgment — it did not make delinquent payments, produce all the necessary fringe benefit reports,8 make prospective payments as they became due, or comply with the bond award. According to the affidavit of a Funds employee responsible for monitoring participating employers' payments to the Funds, from the district court's judgment enforcing the LMC awards in May 1999 until October 30, 1999, fringe benefit contributions owed by Gary's Electric amounted to $75, 345.04.9 In the motion, the Funds also allege that Pipia began to waste the corporate asserts in an effort to avoid making the court-required payments. According to the Funds, Pipia starting "stripping the corporation of its assets" after the NLRB and the Funds initiated proceedings against it in late 1998 and early 1999. Appellants' Br. at 8. The evidence supporting the Funds' position that Pipia flagrantly and deliberately disregarded the court's judgment includes: Pipia more than tripling his Gary's Electric salary within two years, Pipia's receipt of large bonuses and loans from Gary's Electric, Pipia's use of funds from a corporate account to purchase a fur coat for his wife which he later claimed as a bonus, and Pipia's directives to pay in full every creditor except for the debt owed the Funds.

At the motion hearing, the Funds requested that Pipia "be ordered to purge himself of contempt by requiring him to pay [to the Funds] the sum of ... a hundred thousand twelve dollars [and] thirty-eight cents, that being the amount of indebtedness that accrued after [Pipia] was ordered to comply with the fringe benefit provisions of the Collective Bargaining Agreement." J.A. at 141 (Tr. of Mot. Hr'g). Ultimately, the district court granted the contempt petition with respect to Gary's Electric, but denied it without prejudice with respect to Pipia. The district court stated:

I will at this time enter an order finding the corporation in contempt of the order, the injunctive order of this court because it failed to do what it was ordered to do. I am unable to do that with Mr. Pipia because although you have told me many very reprehensible things that he has done, there are no proofs of that on this record and he was not a defendant in this case and he was not ordered specifically to do anything other than give a deposition which he did do.

J.A. at 153 (Tr. of Mot. Hr'g). The Funds now appeal from the portion of the district court's order denying the petition to hold Pipia in contempt.

II. ANALYSIS
A. Jurisdiction

The district court had jurisdiction pursuant to § 301 of the Labor Management Relations Act, as amended, 29 U.S.C. § 185, and §§ 502(g)(2) and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"). We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291.

B. Standard of Review

A decision on a contempt petition is within the sound discretion of the trial court and thus is reviewed only for an abuse of discretion. Peppers v. Barry, 873 F.2d 967, 968 (6th Cir.1989). "Abuse of discretion is defined as a definite and firm conviction that the trial court committed a clear error of judgment." Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir.1996) (quotation omitted), cert. denied, 522 U.S. 906, 118 S.Ct. 263, 139 L.Ed.2d 190 (1997). Under this standard, a district court's decision is to be afforded "great deference;" it "will be disturbed only if the district court relied upon clearly erroneous findings of fact, improperly applied the governing law, or used an erroneous legal standard." Blue Cross & Blue Shield Mut. of Ohio v. Blue Cross & Blue Shield Ass'n, 110 F.3d 318, 322 (6th Cir.1997).

C. Contempt
1. Corporate Officers Can Be Held in Contempt

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