Chi. Reg'l Council of Carpenters Pension Fund v. Schal Bovis, Inc., s. 14–3413 & 14–3336

• Decision Date: 10 June 2016
• Docket Number: Nos. 14–3413 & 14–3336,s. 14–3413 & 14–3336
• Citation: 826 F.3d 397
• Parties: Chicago Regional Council of Carpenters Pension Fund, et al., Plaintiffs–Appellees, Cross–Appellants, v. Schal Bovis, Inc., Defendant–Appellant, Cross–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

826 F.3d 397

Chicago Regional Council of Carpenters Pension Fund, et al., Plaintiffs–Appellees, Cross–Appellants

v.Schal Bovis, Inc., Defendant–Appellant, Cross–Appellee.

Nos. 14–3413 & 14–3336

United States Court of Appeals, Seventh Circuit.

Argued October 29, 2015

Decided June 10, 2016

Rehearing En Banc Denied Aug. 22, 2016

Kevin P. McJessy, McJessy, Ching & Thompson, Chicago, IL, for Plaintiffs–Appellees.

Michael W. Duffee, Thompson Coburn LLP, Chicago, IL, for Defendant–Appellant.

Before Flaum, Manion, and Rovner, Circuit Judges.

Manion

, Circuit Judge.

This action was brought by four carpenter union fringe benefit funds (“the Funds”) under § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185

, and § 502(a) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a). The Funds allege that Schal Bovis, Inc., a general contractor that builds large and small buildings in the Chicago metropolitan area, failed to make fringe benefit payments for work performed by nonunion labor, as was required under collective bargaining agreements. The Funds started with 36 claims of unpaid fringe benefits, but proceeded to trial on only four claims. The district court granted summary judgment to the Funds on all four claims on the issue of liability. From summary judgment, the parties proceeded to a bench trial on damages, and from there both parties appeal. Schal Bovis appeals the granting of summary judgment for two of the four claims, the calculation of damages for those two claims, and the amount of attorneys' fees awarded. The Funds cross-appeal the calculation of damages for one of the claims and the admission of certain evidence for that calculation.

We reverse the district court's grant of summary judgment on the two claims Schal Bovis appeals and remand for further proceedings. In the first claim, we hold that the non-union subcontractor should be considered a single employer with the union signatory who ultimately performed the work. Consequently, the Funds are prevented from claiming fringe benefits for the work performed in that claim because Schal Bovis subcontracted the work to a union signatory as required by the collective bargaining agreement. In the second claim, we hold that the collective bargaining agreement prevented the carpenters' union from claiming work which was the existing practice of other trade unions. Since Schal Bovis presented undisputed evidence that the work performed in the second claim was the existing practice of another trade union—the union to which Schal Bovis subcontracted the work—the Funds cannot claim fringe benefit contributions for the work. The remaining issues are rendered moot by these holdings, so we limit our discussion accordingly.

I. Background

Schal Bovis has been a party to collective bargaining agreements with the Chicago Regional Council of Carpenters (“the Union”) since it first signed an agreement in 1983 (“the Memorandum”). The Memorandum and a Commercial Area Agreement effective 2005 to 2008 (“the Agreement”), bound Schal Bovis to several trust agreements which provided for the creation of the Funds. The Agreement also limited Schal Bovis's ability to subcontract work “coming within the jurisdictional claims of the Union,” that is, carpenter's work. According to Article III, Section 3.2 of the Agreement, Schal Bovis could not subcontract carpenter's work, which the parties refer to as “jurisdictional work,” to any subcontractor who had not signed the Agreement (usually a non-union shop). If Schal Bovis did, then Section 3.5 obliged Schal Bovis either to require the non-union subcontractor to sign the Agreement itself, or to keep track of the hours worked by the subcontractor and pay fringe benefit contributions to the Funds for those hours. Article I, Section 1.1 of the Agreement described in broad, expansive terms what the Union considered to be jurisdictional work, but concluded by stating: “However, the Union agrees that it will not interfere with existing practices of other unions affiliated with the Building Trades.” Doc. 13–12 at 33.

A. The Litigation

In February 2009, the Funds conducted an audit of Schal Bovis's books covering the years 2006 and 2007. Based on the audit, the Funds claimed and demanded $8 million in unpaid fringe benefit contributions, liquidated damages, and interest for 36 claims of work that Schal Bovis allegedly subcontracted to non-union shops. Over the next two years, through correspondence between the parties, the Funds reduced their claims from 36 to eight for a total of $1.25 million in unpaid contributions, exclusive of interest and liquidated damages.

In February 2011, the Funds filed suit seeking payment for the eight remaining claims. Early on, however, they withdrew four of the eight claims, leaving a total of $203,000 in allegedly unpaid contributions. In a brief two-page order, the district court granted summary judgment to the Funds on the four remaining claims on the issue of liability only. It left the determination of damages for later, allowing Schal Bovis to present appropriate evidence on that issue. Since only two of the four claims are at issue in this appeal, we limit our discussion to those two. They concern work by Canac Kitchens and Edward Don & Company.

B. The Canac Claim

The Canac claim involved the installation of cabinetry, undisputedly within the Union's jurisdiction. Schal Bovis admitted that Canac did not have an agreement with the Union, but presented evidence that it had required Canac to use union labor and that Canac had used its sister company, Qualifit Kitchens, which had used union labor. Schal Bovis argued that, under the single-employer doctrine, the district court should consider Schal Bovis to have contracted with a union shop because Canac and Qualifit were essentially the same company. Schal Bovis presented evidence that the companies were owned by the same parent company, did business out of the same office, considered themselves and held themselves out to be the same company, and had a merged management chain. It also pointed out that Canac completed Qualifit's fringe benefit report forms and Canac paid the contributions to the Funds from its own account. Alternatively, Schal Bovis argued that, by refusing to withdraw the Canac claim, the Funds were administering their ERISA plans arbitrarily because the Funds had withdrawn other claims under identical circumstances, with no explanation for why they were treating the Canac claim differently.

The district court acknowledged Schal Bovis's single-employer argument, but dismissed it simply by stating that Schal Bovis contracted with Canac, not Qualifit. It then held that Schal Bovis presented insufficient evidence to demonstrate that it had fulfilled its obligations under the agreement when hiring non-union labor, specifically, its obligations to keep track of the hours worked by the subcontractor and pay fringe benefit contributions to the Funds for the hours worked. The district court did not address Schal Bovis's alternative argument that the Funds were arbitrarily enforcing their plans.

C. The Edward Don Claim

The work for the Edward Don claim involved the installation of fire protection systems and stainless steel kitchen equipment. The stainless steel kitchen equipment was comprised of cooking equipment, hoods and ventilation systems, counters and tops, and freezers. Edward Don subcontracted the work to Reid's Fire and Safety Equipment. Reid's installed the fire protection systems, which the Funds conceded was not jurisdictional work. The stainless steel kitchen equipment was installed by Reid's sister company, RB Hoods, which was a union signatory with the Sheet Metal Workers. RB Hoods used union labor from the Sheet Metal Workers and paid fringe benefit contributions to the Sheet Metal Workers.

Schal Bovis argued that it was not liable for fringe benefit contributions because the work subcontracted to Edward Don was not jurisdictional work. The definition of jurisdictional work in the Union's collective bargaining agreement was broad enough to encompass the installation of stainless steel kitchen equipment. However, Schal Bovis argued that the Union was prevented from claiming the installation of stainless steel kitchen equipment as jurisdictional work because the work was an existing practice of the Sheet Metal Workers. Significantly, Section 1.1 of the Agreement prevented the Union from interfering with the existing practices of other unions. As with the previous claim, Schal Bovis argued in the alternative that by insisting on contributions for the Edward Don work, the Funds were administering their ERISA plans arbitrarily. After all, they had already withdrawn several claims that would have interfered with other unions but gave no reason why they refused to withdraw the Edward Don claim.

The district court found that work in the Edward Don claim fit the Union's broad definition of jurisdictional work. The district court acknowledged that Schal Bovis had raised the possibility that the Funds had exempted other similar claims so as not to interfere with other unions. Nevertheless, the district court found that Schal Bovis's evidence of the circumstances of those exemptions was insufficient to demonstrate that the Funds were required by Section 1.1 to exempt the Edward Don claim. Instead, the district court reasoned that the Union could have been granting individualized accommodations.

After the issue of liability was decided at summary judgment, the parties agreed to determine damages by a bench trial on written submissions alone. The district court entered its judgment for damages in the total amount of $312,621.13. Both parties appeal.

II. Analysis

A. Standard of Review

The parties dispute the applicable standard of review. Schal Bovis argues that the usual standard of review applies, that is, that we review a grant of summary judgment de novo , with factual inferences construed in favor of the non-moving party....