Plumbers & Pipefitters Local 625 v. Nitro Constr. Servs., Civil Action No. 2:18-cv-01097

CourtUnited States District Courts. 4th Circuit. Southern District of West Virginia
Writing for the CourtJohn T. Copenhaver, Jr. Senior United States District Judge
Decision Date24 September 2020
PartiesPLUMBERS & PIPEFITTERS LOCAL 625; PLUMBERS & STEAMFITTERS LOCAL 565; PLUMBERS & STEAMFITTERS LOCAL 83; and WEST VIRGINIA PIPE TRADES HEALTH AND WELFARE FUND, Plaintiff, v. NITRO CONSTRUCTION SERVICES, INC., formerly known as Nitro Electric Company, Inc., Defendant.
Docket NumberCivil Action No. 2:18-cv-01097

PLUMBERS & PIPEFITTERS LOCAL 625;
PLUMBERS & STEAMFITTERS LOCAL 565;
PLUMBERS & STEAMFITTERS LOCAL 83;
and WEST VIRGINIA PIPE TRADES HEALTH AND WELFARE FUND, Plaintiff,
v.
NITRO CONSTRUCTION SERVICES, INC.,
formerly known as Nitro Electric Company, Inc., Defendant.

Civil Action No. 2:18-cv-01097

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF WEST VIRGINIA AT CHARLESTON

September 24, 2020


MEMORANDUM OPINION AND ORDER

Pending are the plaintiffs' motion for partial summary judgment, filed May 13, 2020 (ECF No. 98), the defendant's motion for summary judgment, filed May 27, 2020 (ECF No. 101), and the plaintiffs' motion for leave to file a sur-reply regarding the defendant's motion for summary judgment, filed June 24, 2020 (ECF No. 108).

I. Background

The plaintiffs in this case are an employee health and welfare benefit fund managed by fund trustees (the "Fund") and three local unions—Plumbers & Pipefitters Local 625 ("Local 625"), Plumbers & Steamfitters Local 565 ("Local 565"), and

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Plumbers & Steamfitters Local 83 ("Local 83")—whose members are participants in and beneficiaries of the Fund. See No. 1 at 2; ECF No. 7 at 2-3; ECF No. 98-1 at 2-3. The defendant is a construction company that has made contributions to the Fund as a participating employer. See ECF No. 1 at 2; ECF No. 7 at 3; ECF No. 98-2 at 87-104; ECF No. 98-3 at 2-3.

The defendant's contributions to the Fund were made pursuant to collective bargaining agreements with the unions and the Fund's trust agreement.1 With respect to the defendant's agreement with Local 625, a portion titled "PAYMENTS TO FUNDS AND PENALTY" states, in pertinent part:

. . . . [The defendant] shall pay the contributions to the . . . Fund[] monthly on or before the 10th day

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of each month[,] and failure of [the defendant] to make this payment to the . . . Fund[] by the 20th day of the month on which payment is due, or for repeated failures to meet these payments by the 10th of each month shall subject [the defendant] to the following:

Penalty Number One: A fine for liquidated damages set by the Trustees of the . . . [F]und[], for the [defendant]'s delinquency.

ECF No. 28-1 at 24-25.

The defendant's agreements with Local 565 and Local 83 likewise point to the trust agreement with the Fund. The agreement with Local 565 states:

. . . . The [defendant] shall pay all health and welfare . . . benefit contributions to the employee's home Local Union, or to a Local Union designated by the International Union so as to provide continuous coverage for each employee. The [defendant] hereby adopts and agrees to be bound by the written terms of such legally established local trust agreements specifying the detailed basis on which payments are to be made into, and benefits paid out of, such trust funds.

ECF No. 28-3 at 10. Similarly, a section of the agreement with Local 83 addressing welfare benefit funds states that the defendant "agrees to be bound by and will sign all legally constituted trusts which have been established between Local [83] . . . and recognized bargaining agencies of contractors in the area." ECF No. 28-2 at 10.2

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The Fund's trust agreement, to which all three of the collective bargaining agreements point, states that the Fund's trustees "have the power to demand and collect contributions of the [defendant] to the Fund" and to "take such steps, including the institution and prosecution of and intervention in any legal proceeding that may be necessary or desirable to effectuate the collection or preservation of contributions or other amounts which may be owed." ECF No. 28-4 at 48. Pursuant to this authority, the trust agreement states that the defendant "shall be obligated on demand of the Trustees to pay interest at the rate established by the Trustees from time to time . . . on the money due . . . together with all necessary expenses of collection incurred by the Trustees, including, . . . reasonable attorney fees, court costs and fees." Id. at 48-49. The trust agreement also states that the trustees are to adopt "a

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'Delinquent Employer Procedure' that will set up a standard system to follow in dealing with Employers who are late in making their payments, so as to effectuate the collection of delinquent contributions." Id. at 47.

The Fund's trustees adopted a delinquent employer procedure that was in effect from November 1, 1995, to January 25, 2017. See ECF No. 28-5 at 2; ECF No. 28-6 at 7. According to the procedure, the defendant was to "submit . . . a check for the entire sum of money due the Trust Fund reflected by the Monthly Contribution Report submitted therewith," which was to "reflect[] all hours of work performed by each employee" "for the preceding month." ECF No. 28-5 at 3 (emphasis omitted). The procedure specifies that the "payment is to be submitted . . . on or before the 20th day of the month immediately following the month designated in the Monthly Contribution Report." Id. at 4. If the payment was not received on the due date, the procedures required the Fund's administrator to write the defendant and inform it that its contribution was delinquent and that amounts for interest and liquidated damages would be assessed, which must be received, along with the delinquent contribution, within fifteen days of the defendant's receipt of the notification. See id. The interest was to be "calculated at the rate of 1% per month, of the total amount due," and the

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liquidated damages were to be "calculated at a rate of 10% for the first month said payment is delinquent." Id. at 5. If the amounts were not received within the fifteen-day period, the Fund's administrator was to notify the Fund's attorney, who, in turn, was to provide the defendant another letter informing it that, "if the contributions, interest and liquidated damages and attorney['s] fees are not [timely] paid" within another fifteen days, he was authorized to seek "damages permissible under the TRUST AGREEMENT" in a lawsuit. Id. at 5-6.

The Fund's trustees adopted a delinquent contribution policy that replaced the delinquent employer procedure and applies to contributions made on or after January 26, 2017. See ECF No. 28-6 at 7. Like the replaced procedure, the policy specifies that "[c]ontributions and the supporting remittance report . . . are due no later than the 20th day of the month following the month in which the work was performed." Id. at 3. If a contribution is not received by the due date, the Fund's administrator is to "send a notice of delinquency to the [defendant] requesting immediate payment of the [c]ontribution[] due plus liquidated damages," which are "calculated at 10% for the first month said payment is delinquent," and "assess interest on the delinquent [c]ontribution[] at the rate of 1% per month." Id. "If the delinquent [c]ontribution[], interest

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and liquidated damages are not received . . . by the last day of the month following the month in which contributions are due," the Fund's administrator is to "send a second notice assessing additional interest charges on the unpaid contributions at the rate of 1% per month." Id. If outstanding amounts are not received by the twentieth day of the next month, the Fund's administrator is to notify the Fund's attorney, who is to send a letter to the defendant demanding payment. See id. at 3-4. If payment is not received within fifteen days after the letter is sent, the Fund's attorney can initiate legal action in the form of a lawsuit. See id. at 4. The policy also specifies that attorney's fees are to be assessed against the defendant for any legal action the Fund's attorney institutes for collection efforts. See id. at 6.

This matter concerns contribution payments the defendant submitted to the Fund with respect to the three unions between June 2016 and August 2017. See ECF No. 1 at 3. There appears to be no dispute that the defendant submitted payments for the full amounts of those contributions before this suit was filed, see ECF No. 28-7 at 8-25; see also ECF No. 106 at 4-5, but there also appears to be no dispute that at least some of those contribution payments were late, see ECF No. 28-7 at 6-7; ECF No. 101-3. However, other factual disputes remain

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regarding, for instance, if and when the defendant was notified that the payments were late. See ECF No. 28-7 at 8-25; ECF No. 101-2 at 1-2, 6.

By October 2017, the defendant had been made aware that the Fund had assessed liquidated damages and interest against it based on late contribution payments. See ECF No. 101-2 at 1-2, 6. The defendant appealed the assessments to the Fund's trustees on October 25, 2017, but the trustees denied the appeal. See id.

In June 2018, the plaintiffs filed suit against the defendant pursuant to § 301 of the Labor Management Relations Act ("LMRA")3, 29 U.S.C. § 185. See ECF No. 1 at 1. Under § 301, "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." 29 U.S.C. § 185(a). The plaintiffs allege that the defendant is obligated by the collective bargaining agreements with the unions to make timely contributions to the Fund and that the defendant made late

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contributions. See ECF No. 1 at 3. They allege that the defendant "is liable for [the] failure to make timely . . . contributions pursuant to 29 U.S.C. § 185(a) and under the Collective Bargaining Agreements." Id. at 2. They further allege that the defendant's failure pay the liquidated damages and interest assessed for the late contributions violated the terms of the collective bargaining agreements and the trust agreement. See id. at 3. Accordingly, the plaintiffs seek judgment in the amount of the assessed liquidated damages and interest as well as attorney's fees. See id...

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