Zorn v. KC Community Const. Co., Inc.

• Decision Date: 29 December 1992
• Docket Number: No. 92-1055-CV-W-3,92-1105-CV-W-2.,92-1055-CV-W-3
• Citation: 812 F. Supp. 948
• Parties: Jack ZORN et al., Plaintiffs, v. K.C. COMMUNITY CONSTRUCTION COMPANY, INC., Defendant. IBEW LOCAL 124, et al., Plaintiffs, v. K.C. COMMUNITY CONSTRUCTION COMPANY, INC., Defendant.
• Court: U.S. District Court — Western District of Missouri

812 F. Supp. 948

Jack ZORN et al., Plaintiffs, v. K.C. COMMUNITY CONSTRUCTION COMPANY, INC., Defendant.

IBEW LOCAL 124, et al., Plaintiffs, v. K.C. COMMUNITY CONSTRUCTION COMPANY, INC., Defendant.

Nos. 92-1055-CV-W-3, 92-1105-CV-W-2.

United States District Court, W.D. Missouri, W.D.

December 29, 1992.

James G. Walsh, Jr., Janae L. Schaeffer, Jolley, Walsh & Hager, P.C., Kansas City, MO, for plaintiff Local 124 Intern. Broth. of Elec. Workers.

Anthony Joseph Romano, Matthew R. Hale, Polsinelli, White, Vardeman & Shalton, Kansas City, MO, for defendant K.C. Community Const. Co., Inc.

ORDER GRANTING PLAINTIFFS' MOTIONS FOR A PRELIMINARY INJUNCTION

GAITAN, District Judge.

This case involves two suits brought against an electrical contractor, K.C. Community Construction Company, Inc., for collection of delinquent fringe benefit contributions and related injunctive relief. The first suit (Zorn, et al. v. K.C. Community, Case No. 92-1055-CV-W-3) was brought by six multiemployer employee benefit Funds¹ and their Trustees pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132 and 29 U.S.C. § 1145. IBEW Local 124 is also a plaintiff in this suit pursuant to Section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a), seeking payment of withheld union dues from the defendant. The second suit (IBEW Local 124 v. K.C. Community, Case No. 92-1105-CV-W-2) was brought by Local 124 pursuant to Section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a), to enforce an arbitration award which ordered the defendant to pay its delinquencies to these Funds and to remain current in the future. Judge Hunter recused himself in Case No. 1055 and transferred that case to this Court. The Court. The cases have been consolidated and are properly before the Court on the plaintiffs' motions for preliminary injunction. A hearing was held on December 17, 1992. At that time the Court received some testimony as well as oral argument of counsel. Based on the exhibits provided at the hearing, the testimony, and briefs filed by counsel, the Court finds that the facts are basically undisputed. Accordingly, the case is ripe for a ruling on the plaintiffs' motions. The operative facts are as follows.

K.C. Community and IBEW Local 124 are parties to a collective bargaining agreement known as the Inside Agreement, effective September 4, 1990 through August 31, 1993. The Inside Agreement requires contributions by K.C. Community to the various employee benefit plans as described therein. It is those plans which are plaintiffs herein. The Inside Agreement also requires K.C. Community to withhold union dues from its employees' pay and transmit that money to Local 124. Beginning in June, 1992, K.C. Community became delinquent in its required payments, and that situation has continued. The total delinquencies which have accrued during the period June through November, 1992, undisputed by the defendant, are as follows.

                     June         —       $ 17,092.67
                     July         —         63,319.06
                     August       —         74,525.48
                     September    —         35,080.74
                     October      —         20,985.69
                     November     —         25,214.00
                                         ____________
                       Total              $236,617.64
                

The payments which have been received by the plaintiffs against this balance total $84,064.92, of which $45,000.00 was paid by Amwest Surety pursuant to a performance bond maintained by the defendant as required by Section 2.06(a) of the Inside Agreement. Hence, as of November 30, 1992, the defendant is delinquent to the plaintiffs in the amount of $161,183.97, which includes 5% liquidated damages provided by Section 2.07(b) of the Inside Agreement.²

On November 17, 1992, the six benefit Funds and their Trustees filed a collection action pursuant to Sections 502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145. ERISA specifically grants the Court authority to grant injunctive relief. 29 U.S.C. § 1132(a)(3).

On October 21, 1992, Local 124 filed a grievance against K.C. Community, pursuant to Section 1.06 of the Inside Agreement, seeking payment of all delinquencies, and related relief. A hearing was held before the Joint Labor-Management Committee at which both Local 124 and K.C. Community appeared and provided evidence and testimony. On November 3, 1992, the Joint Labor-Management Committee issued a unanimous award finding the defendant delinquent as alleged and ordering the defendant to take certain action.

The Committee's Decision was as follows:

The Joint Labor Management Committee determines that Kansas City Community Construction Company, Inc. is in violation of Article II, Sections 2.07(a), (b), and (c) of the Inside Agreement for failure to pay all benefit contributions due for the months of June, July, August and September, 1992.

In accordance with that Decision, the Committee ordered the following Remedy:

1. By Monday, November 16, 1992, Kansas City Community Construction Company, Inc. shall pay or have paid on its behalf, all fringe benefit contributions due for the month of October, 1992 to the appropriate funds as specified in the Inside Agreement, along with an accurate accounting of employees, hours worked, and projects on which employees worked for the month of October, 1992.

2. By Monday, November 16, 1992, Kansas City Community Construction Company, Inc. shall reach a Payment Agreement with the Trustees of the various funds whereby amounts due and owing the various funds for the months of June, July, August and September, 1992 shall be paid. Full compliance with the terms of the Payment Agreement shall be required.

3. Kansas City Community Construction Company, Inc. must remain current on all future fringe benefit contributions due and owing the various funds.

4. If full compliance with Parts No. 1, 2, and 3 is not achieved or maintained by Kansas City Community Construction Company, Inc., then all delinquent contributions for the months of June, July, August, September, and subsequent months shall immediately be payable, including any interest and penalties mandated by the Inside Agreement. In addition, Kansas City Community Construction Company, Inc., shall pay fringe benefit contributions on a weekly basis, in accordance with Article II, Section 2.06(e), beginning Friday, November 20, 1992. Weekly payments shall continue until such a time that Kansas City Community Construction Company, Inc. becomes and remains current for a period of time not less than three consecutive months.

The Committee's Award concluded with the following observation:

This decision is final and binding. Nothing in this Decision shall be construed as prohibiting judicial enforcement should it be necessary. Furthermore, nothing in this Decision shall be construed as prohibiting or limiting the Trustees of the various funds from performing their duties as Trustees.

In their motion for a preliminary injunction, the Funds seek an order directing the defendant to immediately make contributions for the month of November, 1992, to the Health and Welfare Trust, the Local 124 Pension Fund, the Local 124 Vacation and Holiday Fund, and the NEBF Fund, and to make future contributions to those Funds as they become due for each succeeding month thereafter. In its motion, Local 124 seeks a preliminary injunction ordering the defendant to comply with the terms of the November 3, 1992, Award of the Joint Labor-Management Committee.

In Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109 (8th Cir.1981), the Eighth Circuit ruled that the determination of whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on the defendant; (3) the probability that movant will succeed on the merits; and (4) the public interest. The plaintiffs have clearly and convincingly met each of these criteria. For the following reasons, the Court will grant both motions for a preliminary injunction.

IRREPARABLE HARM

In evaluating this element, ERISA Section 515, 29 U.S.C. § 1145, defines the basic obligation:

§ 1145. Delinquent contributions.

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or 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 plan or such agreement.

Section 502 of ERISA, 29 U.S.C. § 1132, provides in relevant part, Section 1132(a)(3), that a civil action may be brought

by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;

(Emphasis added.) In addition, § 1132(g)(2)(E) provides that in cases where a judgment is awarded, the Court shall also award the plan

such other legal or equitable relief as the court deems appropriate.

While the instant case is not yet ripe for judgment, these sections of ERISA evidence Congressional approval for the use by federal district courts of injunctive relief.

In Laborers Fringe Benefit Funds v. Northwest Concrete, 640 F.2d 1350 (6th Cir.1981), the sole question was whether or not a fiduciary of an employee benefit plan could bring an action under ERISA to enjoin a recalcitrant employer from failing to comply with the benefit payment provisions of a labor agreement. There, as here, the controlling issue was actual and not prospective injury to the plan. That Court went on to hold that the Fund did not have an adequate legal remedy because the employer was likely to continue to be delinquent in its contributions. In granting injunctive...