Trustees of Chi. Painters v. Royal Intern. Drywall

• Decision Date: 03 July 2007
• Docket Number: No. 06-2367.,06-2367.
• Citation: 493 F.3d 782
• Parties: TRUSTEES OF the CHICAGO PAINTERS AND DECORATORS PENSION, HEALTH AND WELFARE, AND DEFERRED SAVINGS PLAN TRUST FUNDS, Plaintiffs-Appellees, v. ROYAL INTERNATIONAL DRYWALL AND DECORATING, INC., an Illinois corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

493 F.3d 782

TRUSTEES OF the CHICAGO PAINTERS AND DECORATORS PENSION, HEALTH AND WELFARE, AND DEFERRED SAVINGS PLAN TRUST FUNDS, Plaintiffs-Appellees, v. ROYAL INTERNATIONAL DRYWALL AND DECORATING, INC., an Illinois corporation, Defendant-Appellant.

No. 06-2367.

United States Court of Appeals, Seventh Circuit.

Argued January 18, 2007.

Decided July 3, 2007.

Steven F. McDowell (argued), Donald D. Schwartz, Arnold & Kadjan, Chicago, IL, for Plaintiffs-Appellees.

Joseph P. Berglund (argued), Berglund & Niew, Oak Brook, IL, for Defendant-Appellant.

Before BAUER, MANION, and ROVNER, Circuit Judges.

MANION, Circuit Judge.

The Trustees of the Chicago Painters and Decorators Pension, Health and Welfare and Deferred Savings Plan Trust Funds ("Trustees") sued an employer of its union members, Royal International Drywall & Decorating, Incorporated ("Royal"). The Trustees claimed that Royal violated collective bargaining agreements by failing to compensate the Funds for each hour the covered employees worked. Following a bench trial, the district court found that Royal owed contributions to the Funds and, after further proceedings, entered an award for damages. Royal appeals, contesting the admission of expert testimony at trial, the district court's factual findings, and the amount of liquidated damages awarded. We affirm.

I.

The district court fully recounted the background of this case in its findings issued after the bench trial, so we recite the facts only as necessary. See Trustees of the Chicago Painters v. Darwan, No. 01-C-2458, 2004 WL 1459553 (N.D.Ill. June 29, 2004). Royal employed individuals, known as "tapers," to install drywall in residential tract housing. Tract housing is a manner of constructing subdivisions with a limited number of model designs and options. Historically, tapers received compensation by the number of pieces of drywall they installed, not by the hours they worked. However, a collective bargaining agreement between Royal and its employees required Royal to compensate the employees and contribute to the Funds based on each hour worked, not by the piece. The Trustees filed suit against Royal, alleging that Royal violated the collective bargaining agreement by compensating its employees by the piece, and not by the hour, and claiming that the contributions made to the Funds were insufficient for the actual number of hours worked.

At trial, the Trustees claimed that Royal's time sheets inaccurately recorded the hours worked, and were instead rigged to reflect the hours budgeted for the project. To prove the actual number of hours worked, the Trustees offered evidence of a "materials audit" that the Trustees conducted on Royal. The audit used the amount of raw materials Royal purchased for installation to calculate the amount of drywall installed. Then, the number of hours worked was calculated based on the average rate of drywall installation for a taper. The parties vigorously contested the average rate at which a taper works. Royal also contended that its time sheets were accurate and sufficient to calculate the contributions.

After hearing the evidence, the district court determined that Royal's time sheets for its employees did "not accurately reflect hours actually worked." Accordingly, the court had to establish an alternative means of ascertaining the hours worked in order to determine the proper amount of contributions due to the Funds. The district court, after considering testimony from experts, employees, and various published sources, followed the materials audit and settled on a rate of 2.86 boards of drywall per hour. The determination of this rate is the crux of this appeal. Based on this rate, and following further briefing from the parties, the district court awarded the Trustees $30,508.13 in unpaid contributions and $68,266.16 in liquidated damages for the period of October 1, 1999, through March 31, 2000. The district court also awarded the Trustees $17,955.82 in liquidated damages for late contributions and $712.08 in owed disbursements for the period of December 1, 1998, through March 31, 2000. Royal appeals.

II.

In an appeal from a bench trial, "[w]e review a district court's conclusions of law de novo, and we review its findings of fact, as well as applications of law to those findings of fact, for clear error." Keach v. U.S. Trust Co., 419 F.3d 626, 634 (7th Cir.2005) (citation omitted).

On appeal, Royal first objects to the district court's finding that the time sheets Royal maintained for its employees were inaccurate. An employer must "maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees." 29 U.S.C. § 1059(a)(1). The collective bargaining agreement in this case required Royal to contribute benefits based on the hours worked. Therefore Royal had an obligation to maintain records of the hours worked that would be "sufficient to determine the benefits due." Id. Royal did maintain time sheets; simply maintaining time sheets, however, is not enough to comply with the statute unless the time sheets are sufficient to determine the actual hours worked, and thus the benefits due. Previous cases in this circuit have characterized sufficient records as "reliable, contemporaneous records," Chicago Dist. Council of Carpenters Pension Fund v. Reinke Insulation Co., 347 F.3d 262, 264 (7th Cir.2003), that demonstrate "accuracy" in recording the work performed, Laborers' Pension Fund v. RES Envtl. Servs., 377 F.3d 735, 739 (7th Cir. 2004) (citation omitted).

Royal claims that it properly maintained reliable, contemporaneous time sheets reflecting the hours worked. The district court, however, made extensive findings about the insufficient quality of Royal's time sheets and records. Specifically, the district court noted that "only five of the 263 time sheets for the period [at issue] record daily hours worked; the remainder list only weekly totals." While weekly, instead of daily, totals of hours are not necessarily insufficient under the agreement, other evidence raised suspicion that the weekly totals were inaccurate. For example, the district court noted that the hours budgeted and the hours worked on the time sheets matched on a substantial majority of the time sheets. The district court also remarked on various notations made on the time sheets, such as "a hand written calculation dividing the number of hours budgeted (156.25) by the number of crew members (4); the sheet assigns 39.25 hours to [the crew chief], while each remaining crew member is reported to have worked only 39 hours." Furthermore, employees testified that they regularly worked more hours than were reflected on the time sheets, and the district court found their testimony credible. Although Royal presents alternative explanations for the quality of the time sheets, the district court's conclusion reflects a reasonable examination of the evidence and testimony. We are not "left with the definite and firm conviction that a mistake has been committed." Gaffney v. Riverboat Servs. of Indiana, 451 F.3d 424, 447-48 (7th Cir.2006) (citation and internal quotation omitted). Accordingly, based on the exhibits and testimony, the district court did not clearly err in concluding that Royal's records were not credible and did not satisfy the requirement to maintain sufficient records to determine the hours actually worked by the employees.¹ United States v. Biggs, 491 F.3d 616 (7th Cir. 2007) ("Although we review for clear error, determinations of witness credibility can virtually never be clear error." (internal quotation, citations, and footnote omitted)).

Because Royal's records were insufficient, the district court proceeded to seek another method for determining the number of hours the employees worked in order to calculate the proper benefits. It did so by finding an hourly rate at which drywall tapers installed drywall boards, a rate that the parties vigorously contested before the district court. On appeal, Royal objects to the district court's admission of the testimony of two experts,² John Hull and Ian Parr, who offered their opinions on the rate of drywall taping. We review de novo the district court's application of the principles articulated in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), which guides the admission of expert testimony under Federal Rule of Evidence 702. That is, we review de novo "whether (1) the proposed witness would testify to valid scientific, technical, or other specialized knowledge and (2) his testimony will assist the trier of fact." Ammons v. Aramark Unif. Servs., 368 F.3d 809, 816 (7th Cir.2004) (citations and internal quotation omitted). If we determine that the district court applied the proper framework, the district court's decision to admit an expert's testimony is then reviewed for abuse of discretion. NutraSweet Co. v. X-L Eng'g Co., 227 F.3d 776, 788 (7th Cir. 2000) (citations omitted).

Following this standard, we first examine whether the district court applied the proper framework. This step "evaluates the reliability of the testimony" and should "reject any subjective belief or speculation." Ammons, 368 F.3d at 816 (citations and internal quotation omitted). The court "must ensure that the expert testimony at issue `both rests on a reliable foundation and is relevant to the task at hand.'" United States v. Cruz-Velasco, 224 F.3d 654, 660 (7th Cir.2000) (quoting Daubert, 509 U.S. at 597, 113 S.Ct. 2786). During the bench trial, both proposed experts testified about their experience, indicating "specialized knowledge" related to the rate of installation of drywall. Fed. R.Evid. 702. Hull testified to his extensive experience in taping drywall and in training the apprentice tapers. Parr testified to his extensive experience in cost estimating in the construction industry. Royal argues that the witnesses' methodology...