Verne v. Queen City Roofing & Contracting Co.
| Decision Date | 12 December 2018 |
| Docket Number | Case No. 6:17-CV-03051-MDH |
| Court | U.S. District Court — Western District of Missouri |
| Parties | CORY VERNE, Plaintiff, v. QUEEN CITY ROOFING & CONTRACTING CO., Defendant. |
CORY VERNE, Plaintiff,
v.
QUEEN CITY ROOFING & CONTRACTING CO., Defendant.
Case No. 6:17-CV-03051-MDH
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI SOUTHERN DIVISION
December 12, 2018
ORDER
Before the Court is Defendant's Motion for Summary Judgment. (Doc. 68). In it, Defendant asks the Court to enter an Order and Judgment dismissing Counts I, II, and III of Plaintiff's Claim with prejudice. For the reasons explained below, the Court will grant Defendant's Motion as to Count III but deny Defendant's Motion as to Counts I and II. As a consequence of the dismissal of Count III, the Court will also deny as moot Plaintiff's Motion for Partial Summary Judgment on Liability under the Missouri Prevailing Wage Act (Doc. 71) and deny Plaintiff's Motion for Class Certification. (Doc. 70).
A. Voluntary Employee Benefit Association
Queen City Roofing & Contracting Company Voluntary Employee Benefit Association, Inc. (QCR VEBA" or "VEBA") is a non-profit corporation organized and registered under the laws of Missouri. QCR VEBA is a health and welfare payment plan under 26 U.S.C. § 501(c)(9) within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA") that provides fringe benefits to employees of Queen City Roofing ("QCR") and their eligible dependents. Queen City Roofing is a roofing company located in Springfield, Missouri. Currently,
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the VEBA's plan provides health, dental, vision, life, and accident benefits to participants. It also provides holiday and vacation pay as well as an annual "Employee Appreciation Party." Since 2011, that party has cost an average of about $18,000 a year.
QCR VEBA has three trustees - Michael Katrosh, William Noga, and Chris Maples. Katrosh is the general manager of QCR, while Noga is a roofer and Maples is a sheet metal worker. Katrosh is appointed to the Board of Trustees by QCR and also serves as President and Plan Administrator. Noga and Maples are elected by QCR's employees, with Maples serving as Secretary. Each trustee has one vote, and only by a majority vote when a two-thirds quorum exists can the trustees authorize a distribution from the VEBA trust fund. Only by a unanimous vote can trustees terminate the VEBA or merge it with another fund, and upon termination they may only distribute the assets to beneficiaries or pay off liabilities. As a matter of practice, all checks issued by the VEBA are signed by at least two of the trustees. Under the VEBA's Articles of Incorporation and Bylaws, all contributions it receives are irrevocably committed to a trust fund and can only be used for the beneficiaries, who are either QCR employees or their dependents. Under the VEBA's bylaws, contributions made to the VEBA can only be revoked when the contribution was due to a "mistake of fact" made by the contributing party. The Trustees may amend the Bylaws by a majority vote, but may not amend them in a way that would authorize a distribution for anyone's benefit except the plan participants. The VEBA conducts an annual audit and publishes an annual financial statement. On six different occasions between July 7, 2010, and January 30, 2016, the Missouri Department of Labor and Industrial Relations ("MODIL") has investigated QCR in regard to the Missouri Prevailing Wage Law ("MPWL") and in each case was unable to substantiate any violation of the MPWL. The scope, specific focus, and reason for these investigations are not in the record.
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Although QCR and QCR VEBA are distinct legal entities, they are closely related. One member of the VEBA's three-member board is appointed by QCR, and QCR has always appointed its general manager to fill the role. Larry Stock, the President of QCR, incorporated the VEBA and serves as its Registered Agent. The VEBA relies on QCR to administer the fund, and between 2011 and 2016 reimbursed QCR between $20,939 and $37,686 annually for that service. QCR employees are automatically enrolled in the VEBA, although they only become eligible to receive benefits on the first day of the month following four months of continuous employment. Upon termination from QCR, they are automatically terminated from the VEBA and lose their rights as beneficiaries, except for a continuation in health coverage as may be available under the Consolidated Omnibus and Budget Reconciliation Act of 1980 ("COBRA").
QCR is the sole contributor to the QCR VEBA. It contributes a baseline $3.75 per employee per hour worked. It also contributes 5.8% of the gross wages paid to employees into a 401k retirement plan. Finally, for roofers and sheet metal workers, it contributes an additional amount to the VEBA on prevailing wage projects and credits those contributions toward its prevailing wage obligations. Under the Missouri Prevailing Wage Law, employees on public work projects must be paid at or above a minimum hourly rate set by MODIL, known as the prevailing wage rate. An employee's prevailing wage rate includes both the basic hourly rate of pay and the amount of the rate of contributions irrevocably made by an employer to a fund, plan, or program for the benefit of its employees. RSMo. § 290.210(7). QCR asserts, and Plaintiff disputes, that the QCR VEBA qualifies as such a fund. QCR claims it has met its prevailing wage obligations for non-office workers on state projects because although it does not increase their base wage rate on those projects, it contributes an additional amount to the VEBA that, when combined with the base
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wage rate, meets or exceeds the prevailing wage requirement. About 20% of the QCR's work is on public work projects that are subject to the MPWL.
Based on the financial statements and depositions available to the Court, the VEBA appears to be financially healthy. Between 2014 and 2017, the VEBA received $1,434,933.39 from QCR, with $835,200.94 coming from the standard VEBA contribution and $599,732.45 coming from contributions counted toward QCR's prevailing wage obligations. After subtracting payments made to beneficiaries, the VEBA generated a surplus of $654,308.80 over that period. According to its FY2016 audit, the VEBA received contributions of $514,963 and paid out $469,236, including sums paid to reimburse QCR for administrative expenses and paid to host the annual employee appreciation party, resulting in a $45,727 net increase in assets and a total account surplus of $641,426. According to the audit, this amount is approximately $431,580 in excess of the minimum limit under federal law.
B. Overtime Hours
QCR employs hundreds of construction workers and roofers to complete its projects across the Southwest Missouri area. Its workers gather every morning at QCR's headquarters to be sorted into teams and assigned a work location for the day. After learning of their assignment, the workers load the necessary tools and equipment into trucks before heading to the worksite in trucks driven by their foreman. At the conclusion of a workday, workers return to QCR's headquarters, unload the equipment, and head home in their own vehicles. On rare occasions, certain workers were permitted to drive themselves to and from the worksite. Plaintiff was employed from June 3, 2013, to July 6, 2015, and worked as an hourly employee during that time. QCR employees are sorted into three categories: (1) roofers; (2) sheet metal workers; and (3) office workers. Only roofers and
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sheet metal workers were paid prevailing wages, and were subject to the same timekeeping and payroll policies.
QCR maintains time sheets for all roofers and sheet metal workers. The foremen for each work site keeps these timesheets for the members of their crew and gives the time sheets to office personnel to calculate payroll. Rather than keeping a traditional time clock for logging hours, QCR keeps a daily summary of the number of hours worked by its employees that begins when the trucks depart the QCR headquarters for their worksite.
Summary judgment is proper where, viewing the evidence in the light most favorable to the non-moving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Reich v. ConAgra, Inc., 987 F.2d 1357, 1359 (8th Cir. 1993). "Where there is no dispute of material fact and reasonable fact finders could not find in favor of the nonmoving party, summary judgment is appropriate." Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011). Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets the initial step, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To satisfy this burden, the nonmoving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
A question of material fact is not required to be resolved conclusively in favor of the party asserting its existence. Rather, all that is required is sufficient evidence supporting the factual dispute that would require a jury to resolve the differing versions of truth at trial. Anderson v.
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Liberty Lobby, Inc., 477 U.S. at 248-249. Further, determinations of credibility and the weight to give evidence are the functions of the jury, not the judge. Wierman v. Casey's General Stores, et al., 638 F.3d 984, 993 (8th Cir. 2011).
Defendant moves for summary judgment on Count III, which is premised on the Missouri Prevailing Wage Law, and on Count I and Count II, which are based on the Fair Labor Standards Act and the Missouri Minimum Wage Law, respectively.
Plaintiff states in Count III of his complaint that QCR violated the Missouri Prevailing Wage...
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