Sheet Metal Workers Health & Welfare Fund of N.C. v. Stromberg Metal Works, Inc.
| Decision Date | 22 September 2021 |
| Docket Number | 5:21-CV-101-BO |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | SHEET METAL WORKERS HEALTH & WELFARE FUND OF NORTH CAROLINA, SHEET METAL WORKERS' UNION TRAINING FUND OF NORTH CAROLINA; SHEET METAL WORKERS' NATIONAL PENSION FUND; INTERNATIONAL TRAINING INSTITUTE FOR THE SHEET METAL AND AIR CONDITIONING INDUSTRY; NATIONAL ENERGY MANAGEMENT INSTITUTE COMMITTEE FOR THE SHEET METAL AND AIR CONDITIONING INDUSTRY; SHEET METAL OCCUPATIONAL HEALTH INSTITUTE TRUST; NATIONAL STABALIZATION AGREEMENT OF THE METAL INDUSTRY; and SHEET METAL WORKERS' INTERNATIONAL SCHOLARSHIP FUND, Plaintiffs, v. STROMBERG METAL WORKS, INC., Defendant. |
This cause comes before the Court on the parties' cross-motions for summary judgment as well as several motions to strike. The appropriate responses and replies have been filed, or the time for doing so has expired, and a hearing on the matters was held before the undersigned on June 2, 2021 at Elizabeth City, North Carolina. Supplemental briefing was completed on July 20, 2021, and, in this posture, the motions are ripe for ruling.
Plaintiffs commenced this action by filing a complaint on November 1 2019, in the United States District Court for the Middle District of Tennessee to recover unpaid fringe benefit contributions pursuant to Section 515 of the Employee Retirement Security' Income Act (ERISA), 29 U.S.C. § 1145, and Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185. [DE 1]. Plaintiffs filed suit against defendant Stromberg Metal Works as well as a temporary staffing agency, Triangle Servitek, and its agents Joel Garcia Castillo and Jasmine Castregon. The case was transferred to this district on March 1, 2021. The Triangle Servitek defendants were dismissed with the consent of plaintiffs by order filed June 1, 2021. Unless otherwise indicated, the following facts are derived from the undisputed facts submitted by the remaining parties. [DE 75, 78].
Plaintiffs (the Funds or plaintiff Funds) are employee welfare and pension benefit plans and joint labor-management organizations.[1] Defendant Stromberg Metal Works (Stromberg) is a commercial sheet metal fabrication and installation company with a regional office in Raleigh, North Carolina. Stromberg employs workers represented by Local 5 and Local 100 of the Sheet Metal, Air, Rail and Transport International Union and has been a signatory to their collective bargaining agreements (CBA). The CBAs govern, among other things, working conditions, rates of pay, and benefits for workers performing sheet metal work as defined by the CBAs. [DE 1] Compl. ¶ 18. The CBAs provide for four classifications of workers performing sheet metal work under the CBA: journeyman, apprentice, pre-apprentice, and classified. The CBAs further provide for a ratio of journeyman to non-journeyman metal workers that Stromberg and other employer-signatories must follow. The Local 5 CBA requires employer-signatories to maintain a l-to-2 ratio of journeyman to non-journeyman sheet metal workers, or one journeyman to one apprentice and one pre-apprentice or classified worker.[2]
In addition to setting staffing ratios, the CBAs also set contribution rates at which employer-signatories such as Stromberg contribute to the Funds for the benefit of employee participants. An employer is required to make contributions for employees as classified by the CBA and other labor negotiation agreements. “The hourly contribution rates are significantly higher for journeymen (e.g. $6.60 pension, $5.25 health) and apprentices ($4.49 averaged pension, $5.25 health) than classified workers ($0.33 pension, $1.29 health, ” [DE 1] Compl. ¶ 28.
Local 5 and Local 100 operate a hiring hall which, under the CBA, employer-signatories such as Stromberg are obligated to use as a first source of hiring. However, the CBAs permit employers to hire workers not referred by the local unions under certain circumstances. When workers are hired outside the local unions, the CBAs require that the employer refer the worker to the local union for assessment of proper classification, including wage rate. Stromberg used the services of five temporary staffing agencies: Triangle Servitek, LLC; G.A.B. Labor Solution, LLC; Mechanical Labor Staffing, LLC; AEROTEK, Inc.; and Multi-Tech Mechanical Support. Former co-defendant Triangle Servitek provided temporary sheet metal workers to Stromberg for various jobs in North Carolina. Workers hired by Stromberg from a temporary staffing agency performed the same type of sheet metal work for Stromberg as Stromberg employees. Because the parties dispute whether workers hired through a staffing agency are "temporary' employees” or “temporary workers, ” for the purposes of this order the Court refers to these workers as “temporary sheet metal workers.” Although required by the CBA, Stromberg did not refer every worker it hired outside Local 5 to the union hall for assessment and classification as a journeyman, apprentice, preapprentice, or classified worker.
A Resolution 78 Agreement is a local agreement between employers and local unions to amend terms applicable to a particular job site. Resolution 78 Agreement terms are typically more favorable to the employer, allowing the employer to bid for work more competitively over nonunion employers. Stromberg and Local 5 entered into two Resolution 78 Agreements regarding projects in North Carolina - the Mary Ellen Jones Project and the New Bem Project. Both the Mary Ellen Jones and New Bem Project Resolution 78 Agreements set out terms more favorable to Stromberg, including the ratio of worker classification on the project. The Mary Ellen Jones and New Bem Project Resolution 78 Agreements are each one of the documents that govern the amount of contributions Stromberg was required to make to plaintiffs during the time period for which plaintiffs have sought delinquent contributions in this case. See [DE 61-3].
In April 2017, Local 5 filed a grievance alleging that Stromberg had violated the CBA by using temporary sheet metal workers. Specifically, Local 5 alleged that Stromberg had violated union hall hiring procedures and requested that all hours performed by non-referred bargaining unit employees be paid to the Union and that the benefit funds be made whole. Stromberg then filed its own grievance against Local 5, alleging that Local 5 was unable to provide manpower needs for apprentices, pre-apprentices, and classified workers in the ratios agreed to under the CBA. On July 14, 2017, Stromberg and Local 5 settled their dispute and entered into a Grievance Settlement Agreement (2017 Settlement).
In October 2018, Local 5 filed another grievance under the CBA relating to Stromberg's use of temporary sheet metal workers. Local 5 argued that Stromberg had circumvented hiring hall procedures and subcontracted work to companies/employees who were not signatories with Local 5. Local 5 requested that Stromberg make it whole for all lost wages, benefits, assessments, and damages caused by Stromberg's violation of the CBA. In December 2018, a meeting was held on the October grievance at which Joseph Powell, a trustee of plaintiff Pension Fund and a representative of SMART International Union, and Karla Campbell on behalf of plaintiff Health Fund, among others, were present. Mr. Powell reviewed a draft of a settlement agreement and in an email sent on January' 3, 2019, indicated that the provisions of the eventual settlement agreement would be retroactive. Local 5's grievance was settled by a final settlement agreement signed January 14, 2019 (2019 Settlement).[3] Paragraph 14 of the 2019 Settlement provides that [DE 62-2], The 2019 Settlement was signed by representatives of Local 5 and Stromberg Metal Works. The 2019 Settlement settled Local 5's and Stromberg's dispute regarding the applicability of the terms in the CBA to an audit conducted by the Funds.
The Funds are governed by their plan trust documents and the CBA, though they do not participate in the bargaining between the union and employers. Thus, the Funds must rely on reports that signatory-employers like Stromberg submit to them and they are permitted to audit employers to ensure compliance with the CBA. In November 2017, during a meeting of the Board of Trustees of the Sheet Metal Workers' Health and Welfare Fund of North Carolina, the trustees concluded that a payroll audit of Stromberg Metal Works was needed. [DE 67-5 at 107]. This decision was made following an issue that had arisen regarding Stromberg's reporting practices for temporary sheet metal workers. In June 2017, Stromberg had begun submitting reports and payments reflecting the lowest worker classification rate to the Funds on behalf of some temporary sheet metal workers. The trustees determined that an audit was “mandatory to clarify what contributions should be received by the Fund and on whose behalf.” Id. Stromberg contends that it did not believe at the time that it owed any contribution to any of the plaintiff Funds for the temporary' sheet metal workers, but that it made contributions to “buy its peace” because Local 5 believed otherwise
This suit followed plaintiffs' receipt of an audit of Stromberg conducted by a third-party auditor. Plaintiffs seek to recover what they allege to be unpaid fringe benefit contributions by Stromberg under the applicable CBAs.
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