Laborers' Pension Fund v. Joe Cachey Const. Co., 96 C 1168.

• Decision Date: 05 December 1996
• Docket Number: No. 96 C 1168.,96 C 1168.
• Parties: LABORERS' PENSION FUND and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity, Plaintiffs, v. JOE CACHEY CONSTRUCTION CO., INC., an Illinois corporation, and Future Masonry, Inc., an Illinois corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

Page 365

947 F.Supp. 365

LABORERS' PENSION FUND and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity, Plaintiffs, v. JOE CACHEY CONSTRUCTION CO., INC., an Illinois corporation, and Future Masonry, Inc., an Illinois corporation, Defendants.

No. 96 C 1168.

United States District Court, N.D. Illinois, Eastern Division.

December 5, 1996.

COPYRIGHT MATERIAL OMITTED

Hugh B. Arnold, Donald D. Schwartz, Arnold & Kadjan, Chicago, IL, for Plaintiffs.

James Patrick Daley, Joanne Litwack Hyman, Hector Brian Centeno, Bell, Boyd & Lloyd, Chicago, IL, Jean M. Roche, Jean M. Roche & Associates, Oak Lawn, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

HOLDERMAN, District Judge:

Plaintiffs, Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (collectively Funds), filed a three count second amended complaint against defendants, Joe Cachey Construction Co., Inc. (Joe Cachey) and Future Masonry, Inc. (Future Masonry), pursuant to the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and the Employment Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1132 and 1145. Funds allege violations of collective bargaining and trust agreements. Both Joe Cachey and Future Masonry have filed a motion to dismiss count one of Funds' second amended complaint contending lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. For the following reasons, defendant Joe Cachey's motion is DENIED as to contributions for Joe Cachey's employees and GRANTED as to Future Masonry's employees and defendant Future Masonry's motion is GRANTED in its entirety.

BACKGROUND

Plaintiffs are pension and welfare funds established pursuant to collective bargaining agreements previously entered into between the Laborers' District Council and its affiliated locals (Union). Defendants Joe Cachey and Future Masonry are Illinois construction companies. Since April 16, 1988, Joe Cachey has entered into successive collective bargaining agreements with Union. In certain provisions of the agreements, Joe Cachey agreed to be bound by the trust agreements that established Funds. Pursuant to the collective bargaining agreements, Joe Cachey is required to make periodic contributions to Funds on behalf of certain of its employees and, when given reasonable notice by Funds or their representatives, to submit all necessary books and records to Funds' accountant for the purpose of determining whether or not it is in compliance with its obligation to contribute to Funds. Funds claim that since April 1, 1995, Joe Cachey has failed to make some of the contributions required to be paid by it to Funds in violation of its contractual obligations under the agreements into which it entered.

Funds also argue that Joe Cachey and Future Masonry are liable for unpaid benefits for laborer employees on the payroll of Future Masonry since they claim that Joe Cachey and Future Masonry are a "single employer" and an "alter ego" of one another. Funds believe that Mr. Cachey controls the labor relations policy-making of both companies and that the companies are interrelated, sharing common employees, equipment, materials, jobs, management including Mr. Cachey, and ownership. Funds maintain that Mr. Cachey operates Future Masonry with the intent to evade the Union contractual obligations of Joe Cachey. Therefore, Funds argue that since Joe Cachey and Future Masonry share the same employees and because the employees regularly receive pay checks from both companies for work on the same projects, the employees of both companies are entitled to have their benefits paid pursuant to the agreement entered into between the Union and Joe Cachey regardless whether the employee's paycheck is from Joe Cachey or Future Masonry.

Count one of Funds' second amended complaint alleges Funds' theory that Joe Cachey and Future Masonry are in fact a single employer. Funds seek an audit of Joe Cachey's books and records from April 1, 1995 through the present and of Future Masonry's books and records from January 1, 1990 through the present to determine any appropriate unpaid employee benefit contributions. Funds ask that Joe Cachey and Future Masonry be enjoined from any further violations of the collective bargaining and trust agreements and that they be awarded costs and liquidated damages.

Funds predicate federal subject matter jurisdiction over this action on § 301 of the LMRA, 29 U.S.C. § 185(a), and §§ 502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145. Joe Cachey and Future Masonry have each filed a motion to dismiss count one of Funds' second amended complaint on the ground that this court lacks subject matter jurisdiction to decide this claim since Future Masonry is not a signatory to the collective bargaining agreement with Union.

ANALYSIS

I. Claims Against Joe Cachey for Contributions for Joe Cachey Employees

A. Section 301 of the LMRA

A claim brought pursuant to § 301 of the LMRA must satisfy three requirements before it can be properly asserted in federal court: it must be (1) a claim of a violation of (2) a contract (3) between an employer and a labor organization. 29 U.S.C. § 185(a); Railroad Maintenance Laborers' Local 1274 Pension, Welfare and Educ. Funds v. Kelly R.R. Contractors, Inc., 591 F.Supp. 889, 892 (N.D.Ill.1984). All three of these requirements are met with respect to Joe Cachey. There is no dispute that Joe Cachey entered into collective bargaining agreements with Union. Funds are third party beneficiaries of the agreement. Funds allege within count one of their second amended complaint that Joe Cachey is in violation of the agreement because it ceased making contributions for its employees to Funds. Section 301 is the statutory mechanism for bringing such a claim of breach of a collective bargaining agreement. Kelly, 591 F.Supp. at 892. Therefore, this court has subject matter jurisdiction over this claim as it pertains to defendant Joe Cachey's contributions to Funds on behalf of Joe Cachey employees. Accordingly, Joe Cachey's motion to dismiss must be denied under § 301 of the LMRA.

B. Section 502 and 515 of ERISA

Pursuant to § 502 of ERISA, a civil action may be brought by a participant, beneficiary, or fiduciary to enjoin violations of ERISA or to enforce provisions of ERISA or terms of benefit plans. 29 U.S.C. § 1132(a)(3). Federal courts have exclusive jurisdiction over actions brought pursuant to this provision. 29 U.S.C. § 1132(e)(1). Funds, as third-party beneficiaries, are seeking enforcement of § 515 of ERISA, 29 U.S.C. § 1145¹, and terms of Joe Cachey's collective bargaining agreement with Union. See generally Central States, S.E. & S.W. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148 (7th Cir.1989). Section 502 provides this court with subject matter jurisdiction to hear this claim as it pertains to Joe Cachey and its employees. Therefore, Joe Cachey's motion to dismiss count one of Funds' second amended complaint as it pertains to Joe Cachey's employees must be denied under §§ 502 and 515 of ERISA.

II. Claims Against Joe Cachey and Future Masonry for Contributions for Future Masonry Employees

A. Section 301 of the LMRA

Funds' argument that this court has subject matter jurisdiction over this claim as alleged against Joe Cachey and Future Masonry for contributions for Future Masonry employees requires a different analysis from the one above. Unlike Joe Cachey, Future Masonry is a nonsignatory to the collective bargaining agreement since it did not enter into an agreement with Union. Funds claim that this court has subject matter jurisdiction over both Joe Cachey and Future Masonry based upon the single employer doctrine. See, e.g., Radio & Television Broad. Technicians Local Union 1264 v. Broadcast Serv. of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965) (per curiam). Funds argue that under this theory, a nonsignatory party may be found liable for the contractual obligations assumed by a related signatory corporation. To prevail under the single employer theory and enforce the agreement, Funds must establish that: (1) the entities in question are a single employer; and (2) the employees of both employers constitute an appropriate bargaining unit. Local 881, United Food & Commercial Workers Union v. Butera Finer Foods, Inc., No. 91 C 7512, 1992 WL 220679, at *3 (N.D.Ill. Sept.2, 1992).

A finding that two employers are a single employer requires that a court determine if there is an absence of an "arm's length relationship" found among unintegrated companies. South Prairie Constr. Co. v. Local No. 627, Int'l Union of Operating Eng'rs, 425 U.S. 800, 803, 96 S.Ct. 1842, 1843, 48 L.Ed.2d 382 (1976) (per curiam). Under federal labor law, two or more nominally separate business entities are regarded as a single employer when they are so structurally interrelated that they constitute one integrated enterprise. Butera, 1992 WL 220679, at *3. A district court has jurisdiction to decide this issue in a § 301 suit. Local 705, Int'l Bhd. of Teamsters v. Willett, Inc., 614 F.Supp. 932, 934 (N.D.Ill.1985).

A second determination must be made once two employers are found to constitute a single employer since the mere finding that two employers constitute a single employer is insufficient to bind the nonsignatory employer to a collective bargaining agreement. In order to enforce a collective bargaining agreement, the plaintiff must establish the propriety of a single bargaining unit comprising the employees of the two employers. Id. at 935. "A union contract signed by one employer will not bind both employers under this doctrine unless the employees of both employers constitute a single bargaining unit." Kelly, 591 F.Supp. at 893. The purpose for this second inquiry is ...