Md. Elec. Indus. Health Fund v. Mesco, Inc.
| Decision Date | 28 February 2014 |
| Docket Number | Civil Action No. ELH-12-505 |
| Parties | MARYLAND ELECTRICAL INDUSTRY HEALTH FUND, et al., Plaintiffs, v. MESCO, INC., et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Eight plaintiffs, including seven multiemployer benefit plans and one labor union, filed suit against MESCO, Inc. ("MESCO") and Michael E. Sewell & Associates, Inc. ("Sewell" or "Sewell & Associates"), pursuant to section 502(a)(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1132(a)(2). They contend that defendants failed to make required contributions and remittances pursuant to a collective bargaining agreement and other related agreements.
In particular, plaintiffs allege that MESCO failed to pay contributions due for the months of October 2007 through July 2011, as well as October 2011 through September 2012, and owes plaintiffs contributions, liquidated damages, and interest in the amount of $228,810.87. See ECF 35, Exh. 1, Affidavit of Administrator Claire M. Kratz, May 24, 2013 ("Kratz Aff.") ¶ 7.1 Further, they allege that Sewell failed to pay contributions for the period beginning in January2009 and ending in December 2011,2 and owes plaintiffs contributions, liquidated damages, and interest in the amount of $260,633.92. Id. ¶ 8. Plaintiffs also maintain that defendants operated as a single entity, and thus each defendant is jointly and severally liable for all unpaid contributions and associated damages.
Plaintiffs have moved for summary judgment (ECF 35, "Motion" or "Mot."), which defendants oppose (ECF 44).3 Plaintiffs have also filed a "Motion To Strike The MaterialChange To Deposition Testimony Of James W. Conkel, Jr." (ECF 34, "Motion to Strike"), which defendants also oppose (ECF 36). No hearing is necessary to resolve the motions. See Local Rule 105.6. For the reasons that follow, I will grant plaintiffs' summary judgment motion, in part, and deny it in part, and deny as moot the Motion to Strike.
Seven of the eight plaintiffs are multiemployer employee benefit plans (the "Plan Plaintiffs"), as defined in section 3(1) of ERISA, 29 U.S.C. § 1002(1)-(2). The remaining plaintiff is a labor organization.
As to the Plan Plaintiffs, five are multiemployer employee welfare benefit plans, as defined in 29 U.S.C. § 1002(1): Maryland Electrical Industry Health Fund ("Health Fund"); Maryland Electrical Industry Joint Apprenticeship and Training Committee ("JATC"); National Electrical Benefit Fund ("NEBF"); National Labor Management Cooperation Committee ("NLMCC"); and Maryland Electrical Industry Labor Management Cooperation Committee ("MEILMCC"). The two other Plan Plaintiffs are multiemployer employee pension benefit plans, as defined in 29 U.S.C. § 1002(1): Maryland Electrical Industry Pension Fund ("Pension Fund") and Maryland Electrical Industry Severance and Annuity Fund ("Severance Fund"). The remaining plaintiff is Local Union No. 24, International Brotherhood of Electrical Workers, AFL-CIO ("Local 24"), an unincorporated labor organization as defined in section 2(5) of the Labor Management Relations Act, 29 U.S.C. § 152(5), as well as an "employee organization," as defined in section 3(4) of ERISA, 29 U.S.C. § 1002(4). Complaint (ECF 1) ¶ 10.
MESCO is a Maryland corporation engaged in the electrical contracting and construction business. See Mem. Exh. 14 (MESCO Articles of Incorporation).5 Sewell, also a Maryland corporation engaged in the electrical trade, dissolved on December 28, 2011, shortly before suit was filed in this case. See Mem. Exh. 16 (Sewell Articles of Incorporation) and 17 (Sewell Articles of Dissolution). Michael E. Sewell ("Mr. Sewell") was the sole owner and officer of Sewell. Mem. Exh. 18, Deposition of Michael E. Sewell, as representative of Sewell, at 11. Mr. Sewell testified that Sewell typically performed deliveries and other support services for MESCO. Id. at 31.
Central to this dispute is a Collective Bargaining Agreement (the "CBA") between Local 24 and the Baltimore Division, National Electrical Contractors Association, Maryland Chapter. See Mem. Exh. 3 (CBA) at 1.6 The CBA states that the jurisdiction covered by the agreement includes Baltimore, Harford, Frederick, Carroll, Howard, and Anne Arundel Counties, as well as Baltimore City and Annapolis. Id. at 77. Further, the CBA states that it "shall apply to all firms who sign a Letter of Assent to be bound by the terms of this Agreement." Id. at 1 (emphasis in CBA). Both MESCO and Sewell, d/b/a Mr. Electric, signed such letters of assent. See Mem. Exh. 2 (MESCO Letter of Assent); Opp. Exh. 2 (Sewell Letter of Assent).
In their Opposition, defendants expressly adopted a portion of the statement of facts found in plaintiffs' Memorandum, pertaining to MESCO's Letter of Assent and its obligationsunder the CBA to make contributions to plaintiffs. See Mem. at 4; Opp. at 4. That portion states, id.:
On December 30, 1998, Mesco signed the Letter of Assent obligating it to adhere to the terms of the CBA negotiated between the Baltimore Division, National Electrical Contractors Association, Maryland Chapter, and Local Union 24, [International Brotherhood of Electrical Workers]. [Mem. Exh. 2 (Mesco Letter of Assent).] The CBA provides for the rates of pay, wages, hours of employment, and other conditions of employment for Mesco's employees covered by the CBA. The CBA specifically provides for the payment of contributions by Mesco to the Health Fund, Pension Fund, Severance Fund, NLMCC and MEILMCC of specified amounts per hour worked by each of Mesco's employees covered by the CBA. [CBA] Articles VI, VII, VIII. In addition, the CBA provides for payment of employee benefit contributions by Mesco to the JATC and the NEBF of specified percentages of gross earnings of Mesco's employees covered by the CBA. [CBA] Article V, Section 5.16 and Article VI, Section 6.01. All such payments are to be made by the 15th day of the month following the month in which the hours were worked, and such payments are to be accompanied by a remittance report showing the hours worked by each covered employee, the gross wages for such employees, and the amounts owed. [Kratz Aff. ¶ 6]; [CBA] Article VI, Sections 6.01, 6.07. The Letter of Assent specifically provides that the signatory employer "agrees to comply with, and be bound by, all of the provisions contained in [the] current and subsequent approved labor agreements." [Mem. Exh. 2]. The CBA further provides for certain authorized deductions to be made from the wages of Mesco's employees. Specifically, union dues are to be deducted from the wages of Mesco's employees and are to be remitted to Local 24. [CBA] Article III, Section 3.07. Remittances to Local 24 are to be made by the 15th day of the month following the month in which the hours were worked, and such remittances are to be accompanied by a remittance report showing the hours worked by each covered employee, and the amounts owed for such hours. [Id.] Article VI, Section 6.07.
As defendants readily acknowledge, Sewell and MESCO signed identical Letters of Assent. See Opp. at 3 (); Opp. Exh. 2 (Sewell Letter of Assent). Defendants further recognize that, "if there is an obligation on the part of MESCO to contribute to the Funds and/or Local 24 by virtue of its identical Letter of Assent, that same obligation would have existed as to Sewell & Associates." Opp. at 3.
Plaintiffs explain that an auditor working on their behalf performed an audit of MESCO for the months of October 2007 through July 2011 and determined that MESCO owes delinquent employee fringe benefit contributions in the amount of $26,047.42. Mem. Exh. 4 at 4. The auditor also allegedly conducted an audit of MESCO's payroll records, produced in the course of this litigation, and remittance reports submitted by MESCO to plaintiffs for the months of October 2011 through September 2012, and determined that $167,882.56 in unpaid contributions is due to plaintiffs for those months. Mem. Exh. 5 at 4. Further, the auditor conducted an audit of Sewell's payroll records for the months of January 2009 through December 2011, and determined that Sewell owes plaintiffs $199,158.00 in unpaid contributions for that period. Mem. Exh. 6 at 4. In total, plaintiffs seek to recover $393,087.98 in unpaid contributions, jointly and severally.
Additionally, plaintiffs maintain that defendants are jointly and severally liable for $16,028.21 in prejudgment interest owed by MESCO, and for $41,156.19 in prejudgment interest owed by Sewell. Mem. at 41-42. Plaintiffs also claim joint and several entitlements to $18,852.68 in liquidated damages owed by MESCO, and $20,319.73 in liquidated damages owed by Sewell. Id. at 42-44. In sum, plaintiffs seek $489,444.79 in delinquent contributions, interest, and liquidated damages, jointly and severally. Id. at 44.
In support of their contention that MESCO and Sewell are jointly and severally liable for the damages sought, plaintiffs argue that the two defendants operated as a single employer and/or were alter egos of one another. See Mem. at 2, 8-9. To that end, plaintiffs cite numerous exhibits to establish, among other things, that MESCO and Sewell: (1) had multiple, common business locations; (2) had common employees; (3) had numerous common projects, with Sewell periodically paying wages on behalf of MESCO, despite contractual provisions preventingMESCO from assigning work to others, and with MESCO representing that work performed by employees of Sewell was performed by its own employees; (4) paid employees interchangeably; (5) had common financial ties; and (6) shared the same fax number. Mem. at 9-31.7
Additional facts are included in the Discussion.
Plaintiffs'...
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