Laborers' Pension Fund v. Murphy Paving & Sealcoating, Inc.

Decision Date30 March 2020
Docket NumberNo. 16 C 8043,16 C 8043
Citation450 F.Supp.3d 815
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, and Laborers' District Council Retiree Health and Welfare Fund, and Catherine Wenskus, Administrator of the Funds, and the Construction and General Laborers' District Council of Chicago and Vicinity, Plaintiffs, v. MURPHY PAVING AND SEALCOATING, INC., an Illinois corporation, and Michael Murphy, individually, Defendants.
CourtU.S. District Court — Northern District of Illinois

Amy Nicole Carollo, G. Ryan Liska, Patrick T. Wallace, Katherine C.V. Mosenson, Kelly Carson Burtzlaff, Office of Fund Counsel, Laborers' Pension and Welfare F, Chicago, IL, for Plaintiffs Laborers' Pension Fund, Laborers' Welfare Fund of the Health and Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity, Laborers' District Council Retiree Health and Welfare Fund, Catherine Wenskus.

Christina Krivanek Wernick, Construction & General Laborers' District Council of CH, Burr Ridge, IL, for Plaintiff the Construction and General Laborers' District Council of Chicago and Vicinity.

Jeffrey James Scolaro, Lisa Marie Roccanova, Matthew James Hammer, Raymond Hugo Groble, III, Daley Mohan Groble P.C., Chicago, IL, for Defendant Murphy Paving and Sealcoating Inc.

Jeffrey James Scolaro, Daley Mohan Groble P.C., Chicago, IL, for Defendant Michael Murphy.

MEMORANDUM ORDER AND OPINION

REBECCA R. PALLMEYER, United States District Judge

Defendant Murphy Paving and Sealcoating, Inc. and Plaintiff Construction and General Laborers' District Council of Chicago and Vicinity ("District Council") are parties to a collective-bargaining agreement that the District Council contends Murphy Paving has repeatedly violated. In this lawsuit, the District Council and associated benefit funds—the Laborers' Pension Fund, the Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity, and the Laborers' District Council Retiree Health and Welfare Fund (collectively "the Funds")—seek to collect unpaid wages, employee benefit contributions, and union dues from Murphy Paving. (See Am. Compl. [76].) Murphy Paving responded with this counterclaim [81]. Murphy alleges that the District Council and the Funds tortiously interfered with its contracts and business expectancy by notifying some of the general contractors for which Murphy Paving planned to perform paving and maintenance work that Murphy Paving was not complying with the terms of its collective-bargaining agreement. The District Council and the Funds move to dismiss the counterclaim in its entirety as preempted by either Section 301 of the Labor Management Relations Act ("LMRA"), see 29 U.S.C. § 185, or by other federal labor laws. For the reasons stated below, the motion to dismiss [96] is granted.

BACKGROUND

Murphy Paving and the District Council, a labor organization, executed a collective-bargaining agreement ("CBA") that was effective at all times relevant to this dispute. (Countercl. [81] ¶ 6.) Murphy Paving also signed a Side Letter of Agreement ("Side Letter") granting it certain exceptions from the CBA's terms. According to the allegations in the counterclaim, deemed true for purposes of this motion, Murphy Paving has fully complied with the agreement's wage, fringe benefit, and dues requirements. (Id. ¶ 7.) The District Council has nonetheless filed a series of grievances against Murphy Paving alleging violations of the CBA and the Side Letter.

The District Council and affiliated local unions first filed two grievances against Murphy Paving in November 2015, alleging based on audits that Murphy Paving underpaid wages, fringe benefits, and union dues between January 2013 and the end of September 2015. (Id. ¶¶ 8–13.) Despite Murphy Paving's alleged confidence that it had timely paid all required wages, union dues, and fringe benefits, when it learned of the grievances, Murphy Paving attempted to negotiate with the District Council and the Funds to resolve the discrepancies revealed by the audit. (Id. ¶¶ 7, 10.) In August 2016, after several months of negotiations, the Funds1 filed a two-count complaint against Murphy Paving in this court to collect the allegedly delinquent employee benefit contributions and union dues. (Id. ¶¶ 10, 12.) In October 2016, while this lawsuit was pending, there was a hearing on the wage grievance (the counterclaim does not say who conducted it), and the grievance was upheld in its entirety (presumably a gross error, assuming the truth of Murphy Paving's allegations of full compliance). (Id. ¶ 18.) Murphy Paving and the District Council ultimately signed a settlement agreement regarding the grievance award in January 2018. (Id. ) Also in October 2016, the District Council filed a grievance and a charge with the National Labor Relations Board ("NLRB") alleging that Murphy Paving retaliated against an employee, Raul Luna, for union activity. (Id. ¶¶ 15–16.) Murphy Paving alleges that the NLRB found no evidence of retaliation (id. ), but the District Council asserts it withdrew that charge only after Murphy Paving agreed to compensate workers for the alleged retaliation. (Mot. to Dismiss ("MTD") [96] at 9.)

After a subsequent audit, the District Council filed two additional grievances against Murphy Paving in April 2018, again alleging that Murphy Paving had underpaid wages and fringe benefits. (Id. ¶ 19.) The District Council filed a complaint with the Illinois Department of Labor related to these grievances, alleging that Murphy Paving failed to comply with Illinois minimum wage and overtime laws, but ultimately dropped the claim. (Id. ¶ 20.) In one of these April 2018 grievances, the District Council also sought to revoke Murphy Paving's right to rely on the more favorable terms in the Side Letter. (Id. ) Murphy Paving claims that "to appease" the District Council, it agreed to send a "weekly job list" and "reconciliations," and allowed members of the District Council to "observe the various crews and report back." (Id. ¶ 21.) But on May 31, 2018, the District Council filed a sixth grievance against Murphy Paving for allegedly failing to call a union steward to work. (Id. ¶ 22.) Murphy Paving alleges that it has attempted to work with the District Council to resolve all of these grievances. (Id. ¶ 23.)

Murphy Paving's counterclaims arise out of communications between the District Council and general contractors for whom Murphy Paving expected to perform subcontractor work on various construction projects. Count I alleges that the District Council tortiously interfered with two of Murphy Paving's contracts. First, on some unidentified date, Murphy Paving contracted with Trice Construction Company to perform work as a subcontractor on a gas project. (Id. ¶ 26.) Then, despite Murphy Paving's alleged compliance with all wage, dues, and benefits terms of the collective-bargaining agreement and the Side Letter, the District Council informed Trice in a letter that Murphy Paving had not paid its workers the correct wages and fringe benefits while they were working on projects covered by Trice's contract with Murphy Paving. (Id. ¶ 29.) Specifically, the correspondence stated:

It has recently come to our attention that employees of Murphy Paving & Sealcoating, Inc. ("Murphy") were not been [sic ] paid Laborers' wages and fringe benefits while performing work as a subcontractor of Trice Construction. Specifically, employees of Murphy have been miscoded as performing "sealcoating" work and paid as little as $18 per hour, without benefits, while performing asphalt patch work on the Nicor Gas Project during the 2017 construction season through present.

(Id. ) After receiving this communication, Trice removed Murphy Paving from jobs that Murphy Paving had contracted with Trice to perform, allegedly causing a loss to Murphy Paving of millions of dollars. (Id. ¶¶ 30–31.) Murphy Paving had a second contract with Osman Construction Corporation ("Osman"). (Id. ¶ 32.) But after the District Council notified Osman on January 30, 2018 that Murphy Paving was "delinquent," Osman informed Murphy Paving that, because Osman was a signatory with the District Council, Osman would "hold funding until notice was received from the union that Murphy was in good standing." (Id. ¶¶ 34–35.) It appears that Murphy Paving did ultimately receive the payment, but it alleges it suffered economic losses as a result of the payment delay. (Id. ¶ 38.)

In Count II, Murphy Paving alleges that the District Council tortiously interfered with its prospective economic advantage. Specifically, during the period of its dispute with the District Council over wage and fringe benefit payments, Murphy Paving was negotiating with Black Dog Corporation ("Black Dog") to perform paving and maintenance work. (Id. ¶ 40.) The negotiations had been going on for some time when the District Council's in-house attorney contacted Black Dog representatives and warned that Black Dog "would be pursued for damages should its venture with Murphy Paving continue." (Id. ¶ 43.) Black Dog then ended negotiations with Murphy Paving, as a result of which Murphy Paving lost anticipated revenue. (Id. ¶ 46.)

In Count III, Murphy Paving alleges that the District Council tortiously interfered with its economic advantage by giving certain companies that had signed the same collective-bargaining agreement more favorable Side Letter terms. (Id. ¶ 48.) For example, Pavement Systems Inc. was permitted to pay lower hourly wages than Murphy Paving for the same work. (Id. ¶ 52.) Because Murphy Paving was bound by less favorable Side Letter terms, it was not "competitive in the marketplace for its services" and lost the opportunity to "acquir[e] certain [unidentified contracts" with other...

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