New England Carpenters Cent. Collection Agency v. Labonte Drywall Co., CIVIL ACTION NO. 12-10734-RGS
| Decision Date | 05 June 2014 |
| Docket Number | CIVIL ACTION NO. 12-10734-RGS |
| Parties | NEW ENGLAND CARPENTERS CENTRAL COLLECTION AGENCY et al. v. LABONTE DRYWALL COMPANY, INC. |
| Court | U.S. District Court — District of Massachusetts |
FINDINGS OF FACT, RULINGS OF LAW,
AND ORDER AFTER A NONJURY TRIAL
STEARNS, D.J.
Based on the credible testimony of the witnesses at trial and the supporting exhibits, I make the following findings of fact.1 I also accept and incorporate as true the facts stipulated to by the parties.
1. Plaintiff Trustees are fiduciaries for the pension, annuity, health benefits, vacation and training fund fringe benefit plans named in the Complaint (the Funds). Stipulated Facts ¶ 1. Plaintiff New EnglandCarpenters Central Collection Agency (Agency) was established by the New England Carpenters Pension Fund and has been designated by the Trustees of each of the Funds and by the Union to collect all monies owed to the Funds and others by employers pursuant to collective bargaining agreements with the Union and to conduct audits on behalf of the Trustees of the Funds. Id.
2. The Funds are jointly administered, multi-employer plans within the meaning of § 3(37) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1002(37). Id. The Funds are "employee pension benefit plans" and "employee welfare benefit plans" within the meaning of § 3(1) and (2) of ERISA, 29 U.S.C. § 1002(1) and (2). Id.
3. Defendant Labonte Drywall Company (Labonte) was a New Hampshire corporation engaged in commercial drywall work until May of 2007, when it converted to a limited liability company under New Hampshire law. Id. ¶ 2; Trial Transcript (Tr.) at 67. Clermont Labonte is (and was at all relevant times) the sole member and owner of Labonte. Id. Clermont Labonte's son, Dany Labonte, was authorized to act as Labonte's agent in its responses to plaintiffs' audit requests. Tr. at 72, 76.
4. On January 31, 1996, Clermont Labonte, on behalf of Labonte, signed a State-Wide Agreement with the United Brotherhood of Carpenters andJoiners of America. Stipulated Facts ¶ 4; Tr. at 70. Paragraph 1 of the State-Wide Agreement provided that:
Labonte] accepts and agrees to abide by the collective bargaining agreements between the various contractor associations and the unions of the United Brotherhood of Carpenters and Joiners of America in the Commonwealth of Massachusetts wherever those contracts shall apply. [Labonte] agrees that it shall abide by any amendments or successor agreements negotiated by the contractor associations and the local unions.
5. The State-Wide Agreement further provided that "[t]he duration of this statewide agreement shall be co-extensive with the terms set out in the collective bargaining agreements referred to in paragraph 1 unless either party to this statewide agreement gives notice of termination of this agreement in accordance with the applicable notice provisions in the collective bargaining agreement referred to in paragraph 1." Id. ¶ 2.
6. Article 31 of the Collective Bargaining Agreement (CBA) in effect during the period September 1, 2005, through August 31, 2009, provided as follows.
This agreement will expire on August 31, 2009 except that if neither party to this Agreement gives notice in writing to the other party or before July 1, 2009 that it desires a change after August 31, 2009, then thisAgreement will continue in effect until August 31, 2010 and so on each year thereafter unless on or before July 1 of each year thereafter, a notice is given by either party.
Id. ¶ 6. (Emphasis added).
7. The CBA required signatory employers, such as Labonte, to make contributions to the Funds in accordance with its terms. Stipulated Facts ¶ 7; Tr. at 6. These contributions were to be made on a weekly basis on behalf of all employees covered by the CBA. Stipulated Facts ¶ 7; Tr. at 10.
8. The CBA also obligated signatory employers to comply with the terms of the Trust Agreements for each of the eleven associated benefit Funds. Exs. 2 & 3. Section 3.2 of the Trust Agreements for the Annuity, Pension and Health Funds provided, in relevant part, as follows.
The Trustees, or their authorized representatives, upon reasonable notice, may examine the pertinent payroll records of any Employer, including, but not limited to, all quarterly and yearly payroll tax returns, payroll listings, time reports, individual earnings records and checks, whenever such examination is deemed necessary by the Trustees, or their authorized representatives, in connection with the proper administration of the Trust Fund. . . . In the event that the Trustees shall incur attorney's fees or other expenses inorder to enforce the Trustees' right to audit the records of any Employer, such attorney's fees or other expense shall be charged against such Employer regardless of whether the employer shall have been delinquent in contributions to the Trust Fund for the period of the audit.
9. Albert Peciaro has served as the Director for Contractor Relations for the Union since 2005. Tr. at 41-42. Contractor Relations is responsible for maintaining and overseeing the contractual relationship between the Union, various employer associations, and individual employers. Id. at 42.
10. To terminate a collective bargaining relationship, either a contractor or the Union must submit written notice to the other of the desire to do so. Id. at 43. Neither the Agency nor the Funds are parties to any collective bargaining agreement. Id. at 44. Peciaro has received approximately twenty-four termination notices from signatory employers during the past six or seven years. Id. at 48. During his eight years as the Director of Contractor Relations, Peciaro has never received a notice of termination that wasoriginally sent to the Agency, though "at times [the notice] is sent directly to a Local." Id. at 51.
11. Contractor Relations notifies the Agency of any employer terminations. Id. at 49. The Union has never received a written notice of termination from Labonte. Id. at 49-50. According to Dany Labonte, any correspondence he sent regarding the CBA was addressed to 350 Fordham Road - the address of the Agency and the Funds' offices. Id. at 83, 112.
12. The Agency never received notification from Contractor Relations that Labonte was no longer a signatory employer. Id. at 12. Nor did Contractor Relations ever ask the Agency to compute Labonte's withdrawal liability. Id. at 47-48.
13. The Agency oversees the auditing of between 600-800 employers signatory to collective bargaining agreements with the Union. Id. at 7. Signatory employers are generally audited on a three-year audit cycle. Id. at 10. The Agency conducts approximately 150-200 audits per year. Id. Among the signatory employers regularly audited by the Agency are those that indicate they are not actively performing work. Id. at 10-11.
14. Pursuant to the CBA and the respective Trust Agreements, the Trustees of the employee benefit Funds may demand signatory employers furnish all pertinent payroll records to the Agency for inspection and review to ensure compliance. Trial Ex. 2, Art. 10 § 6; Exs. 4-6, § 3.2. The purpose of the CBA audits is to determine, among other things, whether any covered employees have worked hours for which contributions have not been remitted. Tr. at 11.
15. By letter dated January 8, 2007, the Agency notified Labonte that an audit would be conducted for the period of January 1, 2004, through the end of 2006 (2007 Audit). Ex. 9.
16. Leo Donohue conducted the 2007 Audit of Labonte. Tr. at 29. At the time, Donahue was a payroll auditor for the Agency. Id. at 20, 27. He is not employed directly by the Union or any of its affiliates. Id. at 20, 28- 29, 51. Labonte provided materials requested during the 2007 Audit. Id. at 13, 39, 41. Dany Labonte informed Donohue in a letter dated April 3, 2007, that Ex. 22. The letteraddressed to Donohue contained Dany Labonte's name in type, but without a corresponding signature. Id.; Tr. at 104.
17. Donohue did not recall receiving the April 3, 2007 letter. Id. at 31. The only written correspondence Donohue recalls receiving from Dany Labonte during the 2007 Audit was a letter dated December 28, 2007, explaining bonus payments that Labonte had made to some of the carpenters who had worked on the Manchester Place project. Ex. 11; Tr. at 31, 91. Again, Dany Labonte's letter included his name, but was unsigned. Ex. 11.
18. At the conclusion of the 2007 Audit, Donohue prepared a summary report claiming that Labonte had underreported a total of 24 hours of work by 38 employees in 2004; 4,765 hours of work by 74 employees in 2005; and 40 hours of work by one employee in 2006. Ex. 10; Tr. at 29-30. There is no evidence in the record that any steps were taken by the Agency to enforce the collection of payments on the underreported hours. Id. at 24, 73, 91-92. Nor have plaintiffs offered any evidence countering Labonte's assertion that it gave up all union-related work at the end of 2005, id. at 68, 86, or that it ceased doing carpentry and drywall installation in March of 2006. Id. at 56, 95.2
19. In a letter dated February 11, 2010, the Agency informed Labonte that an audit would be conducted for the period of January 1, 2007, through December 31, 2009 (2010 Audit). Ex. 12.
20. On or about April 6, 2010, the Union through its counsel, Christopher Souris, sent Clermont Labonte notice of an investigation of "the extent to which union companies and their officers or other principals maybe operating, managing or controlling a non-union company in violation of the collective bargaining agreement." Ex. 13. The letter informed Clermont Labonte that the Union had determined that his "Company [Labonte Drywall] is operating...
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