Shales v. Schroeder Asphalt Servs., Inc.
| Decision Date | 21 May 2013 |
| Docket Number | No. 12 C 6987,12 C 6987 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | MIKE SHALES, JOHN P. BRYAN, AL OROSZ, DAN BREJC, TOBY KOTH and VERN BAUMAN as Trustees of THE FOX VALLEY LABORERS' HEALTH AND WELFARE FUND, and MIKE SHALES, JOHN P. BRYAN, AL OROSZ, DAN BREJC, TOBY KOTH and VERN BAUMAN as Trustees of THE FOX VALLEY & VICINITY LABORERS' PENSION FUND, Plaintiffs, v. SCHROEDER ASPHALT SERVICES, INC., BRENT SCHROEDER, individually and d/b/a SCHROEDER SEALCOATING, and STACY SCHROEDER, individually and d/b/a SCHROEDER SEALCOATING, Defendants. |
Hon. Virginia M. Kendall
Plaintiffs Mike Shales, John P. Bryan, Al Orosz, Dan Brejc, Toby Koth and Vern Bauman as Trustees of the Fox Valley Laborers' Health and Welfare Fund and the Fox Valley & Vicinity Laborers' Pension Fund (collectively the "Funds") filed a First Amended Complaint against Defendants Schroeder Asphalt Services, Inc., Brent Schroeder and Stacy Schroeder and Schroeder Sealcoating to collect unpaid benefit contributions and industry fund contributions allegedly owed the Funds. The Defendants moved to dismiss the Complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and for lack of subject-matter jurisdiction under Fed. R.Civ. P. 12(b)(1). For the reasons set forth below, the Court grants the motion in part and denies it in part.
The following facts are taken from the Funds' Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Voelker v. Porsche Cars North America, Inc., 353 F.3d 516, 520 (7th Cir. 2003); Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). Defendant Schroeder Asphalt is a party to successive collective bargaining agreements with the Construction and General Laborers' District Council of Chicago and Vicinity (the "Union"). (See First Amended Complaint, Doc. 28 at ¶ 6.) Those agreements require Schroeder Asphalt to make monthly contributions to the Funds for health, welfare, and pension benefits for Schroeder's employees who work within the jurisdiction of the Union. (Id.) The monthly contribution amount that Schroeder Asphalt is obligated to pay depends on the amount of hours worked by Schroeder's union employees. (Id.)
Schroeder Asphalt sought to avoid these obligations by having Schroeder Sealcoating, a sole proprietorship owned by Brent and Stacy Schroeder, pay wages owed to Schroeder Asphalt employees from a Schroeder Sealcoating bank account. (Id. at ¶ 15.) Since these wages were paid by Schroeder Sealcoating, Schroeder Asphalt did not record these payments or the corresponding hours worked in its payroll records. (Id.) The alleged purpose of this maneuver was to conceal the true amount of hours worked by Schroeder Asphalt's employees from the Union and the Funds in an effort to reduce Schroeder Asphalt's benefit contribution obligations. (Id.) The Funds learned of the alleged scheme when Schroeder Asphalt employees reported it to the Union in 2012. (Id. at ¶ 29.)
As a result, the Funds filed a complaint, subsequently amended, against Schroeder Asphalt, Brent and Stacy Schroeder, and the Schroeders' unincorporated sole proprietorship Schroeder Sealcoating. The first count alleges that Schroeder Asphalt is liable to the Funds for breaching the collective bargaining agreement by failing to make the requisite benefit contributions. The second count alleges that Schroeder Asphalt and Schroeder Sealcoating operated as a single employer, thereby making the two companies liable for each other's obligations. The second count also alleges that Brent and Stacy Schroeder are personally liable for the unpaid contributions because Schroeder Sealcoating is an unincorporated sole proprietorship.
The Complaint also seeks to hold the Defendants liable for failing to make contributions to other entities that are not named parties to this litigation. Specifically, the Complaint alleges that the collective bargaining agreement required Schroeder Asphalt to also make contributions to the Laborers' District Council Labor-Management Cooperation Committee ("LMCC"), the Chicago Area Laborers-Employers Cooperation and Education Trust ("LECET"), and the Illinois Small Pavers Association ("ISPA"). (Id. at ¶ 9.)
When considering a motion to dismiss under Rule 12(b)(6) the Court accepts as true all of the well-pled facts alleged in the complaint and construes all reasonable inferences in favor of the nonmoving party. See Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 619 (7th Cir. 2007) (citing Savory v. Lyons, 469 F.3d 667, 670 (7th Cir. 2006)); accord Murphy, 51 F.3d at 717. To state a claim upon which relief can be granted a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when"accepted as true . . . state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal quotations omitted). In analyzing whether a complaint meets this standard the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 556 U.S. at 678. When the factual allegations are well-pled the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. See id. at 679. A claim has facial plausibility when the factual content plead in the complaint allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See id. at 678.
Additionally, where a plaintiff fails to assert standing, "relief from [the] court is not possible, and dismissal under 12(b)(1) is the appropriate disposition." Am. Fed'n of Gov't Employees, Local 2119 v. Cohen, 171 F.3d 460, 465 (7th Cir. 1999) (internal citation omitted). Thus, the Plaintiff has the burden to sufficiently assert standing to accommodate the Court's subject matter jurisdiction. See United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003) (internal citation omitted). In assessing a facial standing challenge at the pleadings stage, the Court looks no further than the allegations in the complaint and accepts all such allegations as true. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-44 (7th Cir. 2009).
Count I of the Funds' Complaint alleges that Schroeder Asphalt violated § 515 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1145, and § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, by failing to submit timely andaccurate reports and contributions to the Funds. Section 515 of ERISA provides that "[e]very employer who is obligated to make contributions to a multiemployer plan under...the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of....such agreement." 29 U.S.C. § 1145. Section 301 of ERISA provides in relevant part that a breach of a collectively bargained agreement between a union and an employer is actionable. See 29 U.S.C. § 185; see also Sullivan v. William A. Randolph, Inc., 504 F.3d 665, 667 (7th Cir. 2007) (overruled on other grounds in Pakovich v. Verizon Ltd. Plan, 653 F.3d 488 (7th Cir. 2011)); IBEW, Local 481 v. Sign-Craft, Inc., 864 F.2d 499, 503 (7th Cir. 1988). Third party beneficiaries to these types of agreements, such as the Funds, may sue under these provisions to recover required contributions in federal court. See Line Constr. Benefit Fund v. Allied Elec. Contractors, Inc., 591 F.3d 576, 579-80 (7th Cir. 2010); Central States, Southeast & Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1151 (7th Cir. 1989) ().
The Funds' Amended Complaint clearly alleges sufficient facts to provide Schroeder Asphalt with fair notice of its alleged violations of these provisions. Specifically, the Complaint alleges that Schroeder Asphalt entered into a collective bargaining agreement with the Union. The CBA requires Schroeder Asphalt to make monthly contributions to the Funds for health, welfare and pension benefits. Between November 1, 2010 and June 1, 2012, Schroeder Asphalt avoided making those contributions by using a related company, Schroeder Sealcoating, to pay wages for certain hours worked so that those hours were not recorded in Schroeder Asphalt's payroll records. These allegations are sufficient to meet the requirements of Federal Rule of Civil Procedure 8(a) for purposes of pleading violations of ERISA § 515 and LMRA § 301.
Contrary to Defendant's assertion, the Funds are not required to allege specific details regarding the specific dates of the schemes, the specific employees involved or the specific amount of hours worked to sufficiently state a claim as Defendant suggests. See Thornton v. Evans, 692 F.2d 1064, 1082 (7th Cir. 1982) (); see also, e.g., Smith v. Aon Corp., No. 04 C 6875, 2006 WL 1006052, at *6 (N.D. Apr. 12, 2006) () (internal citations and quotations omitted); but see In re Sears Roebuck & Co. ERISA Litigation, No. 02 C 8324, 2004 WL 407007, at *6 (N.D. Ill. Mar. 3, 2004) (...
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