United States District Court, M.D. Louisiana
NATIONAL ROOFERS UNION AND EMPLOYERS JOINT HEALTH AND WELFARE FUND, ET AL
ASCENSION SHEET M LLC F/K/A ASCENSION ROOFING & SHEET M INC., ET AL
RULING AND ORDER
JOHN W. deGRAVELLES, District Judge.
Before the Court is Plaintiffs' Motion for Summary Judgment (Doc. 33). Defendants oppose the motion. (Doc. 38). The Court has jurisdiction pursuant to 28 U.S.C. § 1331. Oral argument is not necessary.
After carefully considering the law, facts, and arguments of the parties, Plaintiffs' Motion for Summary Judgment is granted in part and denied in part. As a matter of law: (1) Defendants owe contributions for both union and nonunion employees who performed work covered under the collective bargaining agreement; (2) Defendants owe contributions for union and nonunion employees that accrue from January 2014 until the CBA is terminated; (3) As a matter of law, Defendants owe accruing interest at 12 percent per annum and liquidated damages of 10 percent on all delinquent contributions until paid. In all other respects Plaintiffs' motion is denied.
However, as set forth below, this ruling is contingent on the fact that the Plaintiffs' are governed by ERISA. Plaintiffs' are given 14 days to supplement their Statement of Uncontested Facts to assert that they are in fact governed by ERISA. Defendants are given 7 days to respond in order to dispute this fact, if they can do so in good faith.
I. Relevant Factual and Procedural Background
This case arises out of Defendants' alleged failure to pay nonunion employees fringe benefit contributions pursuant to a collective bargaining agreement ("CBA"). The Plaintiffs brought suit pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132 and 1145, and § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a). The Plaintiffs, National Roofers Union and Employers Joint Health and Welfare Fund, ("Welfare Fund") and National Roofing Industry Pension Fund, ("Pension Fund") (collectively "The Funds") are seeking to recover allegedly delinquent contribution payments from Defendants. Pursuant to Local Rule 56(a) and (b), The Funds have submitted a Statement of Uncontested Facts, (Doc. 33-2), and Defendants have submitted a response. (Doc. 38-1). Many of the facts of this case are uncontested by the parties.
1. The Funds
The Funds assert that they are employee benefit plans governed by ERISA. The Funds contend that they were "established by the National Roofers Union and employers in an industry affecting commerce, whose employees are represented by those unions for the purpose of providing health, welfare, and pension benefits to employees performing work that is covered by collective bargaining agreements." (Doc. 33-1, p. 2). Defendants have raised no argument against The Funds assertions.
2. Ascension Sheet Metal LLC and JRE, LLC, d/b/a Ascension Roofing & Sheet Metal
Since 2008, Rebecca Evans-Mouk ("Mouk") and her father, John Evans, ("Evans") coown Ascension Roofing & Sheet M Inc. ("Ascension"). (Statement of Uncontested Facts, Doc. 33-2, p. 1); (Defendants' Response to Plaintiffs' Statement of Uncontested Facts, Doc. 38-1, p. 1). In 2012, Ascension's services expanded because Mouk and Evans became general contractors. Id. Mouk and Evens Incorporated "JRE, LLC, " which operates "doing business as" Ascension Roofing and Sheet Metal. (Doc. 33-2, p. 1); (Doc. 38-1, p. 1). Payroll records from Ascension show that the company operates under the name JRE, LLC ("JRE"). (Doc. 33-2, p. 4); (Doc. 38-1, p. 6). Defendants admit that JRE and Ascension (collectively "Defendants") "are one and the same entity sharing common ownership and enterprise[.]" (Doc. 37, p. 7 ¶ 26). Furthermore, Defendants have admitted that JRE is the owner of Ascension and that JRE is its alter ego for purposes of this lawsuit. (Doc. 38-2, p. 5).
The parties agree that Defendants offer services in roofing and waterproofing; however, Defendants further assert that these are only two of the areas of service the company offers. (Doc. 33-2, p. 1); (Doc. 38-1, p. 1). Defendants claim that "the company is a union shop for sheet metal fabrication and general contracting, as for the construction of buildings and other structures and engages subcontractors to complete projects in all trades necessary to complete its contractual agreements." (Doc. 38-1, p. 1). Defendants further assert that "[r]oofing is becoming less of the work of the company with the passage of time." (Doc. 38-1, p. 1-2). Nevertheless, Defendants admit that they have no plans of phasing out their roofing work. (Doc. 33-2, p. 2); (Doc. 38-1, p. 2).
As President, Mouk serves mainly in a management role. Id. She is responsible for hiring and firing employees, soliciting new customers, signing contracts, and estimating time and costs for a project. Id. Mouk is authorized to bind the company. Id. Defendants concur with this explanation of Mouk's role, but further assert that "she is responsible for maintaining of the company's financial records and is the owner/member most responsible for the roofing part of the business operation." (Doc. 38-1, p. 2).
3. The Collective Bargaining Agreement
Since 2008, Defendants have operated under a CBA between the Baton Rouge Roofing and Sheet Metal Contractors Association and the United Union of Roofers, Waterproofers and Allied Workers Local 317 ("Union"). (Doc. 33-2, p. 2); (Doc. 38-1, p. 2). On December 2, 2010, Evans entered Defendants into a CBA between the Union and the Contractors Association. The CBA was effective until November 30, 2012. (First Amending Complaint, Doc. 31, p. 4 ¶ 9); (Defendants Answer to First Amending Complaint, Doc. 37, p. 3 ¶ 9). On January 23, 2013, Mouk renewed the CBA. (Doc. 33-2, p. 2); (Doc. 38-1, p. 2). Mouk and Evans understand that their company is operating under the CBA. Id. Defendants admit in their Motion in Opposition that the Agreement was automatically renewed through 2015. (Doc. 38-2, p. 8).
Initially, Defendants relied on the Union referral system for its roofer employees and relied on the Union's classification for its roofer employees. (Doc. 33-2, p. 2); (Doc. 38-1, p. 2). When Defendants used the Union referral system, all roofers employed were Union members. Id. Sometime in 2011 or 2012, Defendants stopped using the Union referral system and hired general laborers and/or subcontractors for roofing work. (Doc. 33-2, p. 3); (Doc. 38-1, p. 3). Defendants concur, but further state "that the union could no longer provide roofers after repeated requests." Id.
The Funds contend that Defendants continue to operate as a contractor engaged in roofing and waterproofing work; and continue to assign general laborers to perform its roofing work. Id. Defendants concur, but assert that the "Union cannot provide qualified workers for the roofing jobs the company does[.]" (Doc. 38-1, p. 3).
The parties agree that "[n]o contributions are paid for the general laborers performing roofing work because Mouk and Evans only paid contributions for union members." (Doc. 33-2, p. 3); (Doc. 38-1, p. 3). Blank remittance reports issued to the Funds indicated that Defendants had no employees engaged in roofing. (Doc. 33-2, p. 3); (Doc. 38-1, p. 3). Defendants concur, but further claim that "the reports were only as to union workers not general laborers that may have in engaged[sic] in some roofing work. The reports only applied to union workers." (Doc. 38-1, p. 3).
The Funds contend that "[Defendants] rely on general laborers to lay up a roof by cutting insulation, installing crickets and saddles, mopping, setting felt and heat weld [sic]." (Doc. 33-2, p. 3); (Doc. 38-1, p. 3). Defendants concur by stating "[Evans] made that statement." (Doc. 38-1, p. 3). Defendants then assert that "[Mouk] explains that very little of this type of work is done by the company. The company does mostly coatings - not tear offs, crickets or mopping. Subcontractors do the cutting of insulation, installing crickets and saddles, mopping, setting felt and heat welding." (Doc. 38-1, pp. 3-4) (citing Doc. 38-3).
As a default practice, Mouk classifies a nonunion employee engaged in roofing and labor as a "general laborer." (Doc. 33-2, p. 3); (Doc. 38-1, p. 4). Defendants concur with this statement, but contend that "not all persons classified as general laborers are roofers as assumed incorrectly by the auditors of Plaintiffs. Most of the roofing work' is done by subcontractors since no roofers have been provided by the union." (Doc. 38-1, p. 3). Mouk believes roofer subcontractors are not covered under the CBA because they are not direct hires or "employees" under the CBA. (Doc. 33-2, p. 3); (Doc. 38-1, p. 4).
The parties agree that a majority of roofing work done by Defendants is described under Article III, Work Jurisdiction Section 3 of the CBA. (Doc. 33-2, p. 3); (Doc. 38-1, p. 4). Defendants also do roofing work described in Sections 2 and 4 of the CBA. (Doc. 33-2, p. 3); (Doc. 38-1, p. 4).
4. The Payroll Audit
The Funds assert that Defendants were "selected for a payroll audit to evaluate whether contributions are owed." (Doc. 33-2, p. 4). Defendants disagree and claim that "[the payroll audit] was done to harass the owners of JRE, LLC, particularly, [Mouk], and was instigated by James Scott, the local union representative for reasons to be shown at trial." (Doc. 38-1, p. 4). The Funds claim that Defendants "provided payroll records only after the Court granted the motion to compel." (Doc. 33-2, p. 4) (citing Ruling on Motion to Compel Discovery, Doc. 19). Defendants disagree and contend that "[p]ayroll records were provided but not to the extent demanded by Plaintiffs prior to the motion to compel filed by Plaintiffs." (Doc. 38-1, pp. 4-5).
For the payroll audit, Defendants provided complete payroll records as they pertain to all employees. (Doc 33-2, p. 4); (Doc. 38-1, p. 5). The Funds claim that Defendants do "not itemize work hours according to the job performed." (Doc 33-2, p. 4). The Funds auditor included all "general laborers" in its calculation to determine the amount of delinquent contributions owed. The Funds assert in their reply memorandum that the auditor included all "general laborers" in the audit report because of "Mouk's explanation that when a formerly classified roofer from the union returned to [work for Defendant], [h]e came back to the company as a general laborer.'" (Doc. 39, p. 8).
Defendants contend that "[n]onunion employees are classified as general labor, however not all general laborers are engaged in roofing for the company." (Doc. 38-1, p. 5). However, both parties agree that a general laborer may earn over $20.00 per hour, and wages do not distinguish a roofer from a general laborer. (Doc 33-2, p. 4); (Doc. 38-1, p. 5).
The Funds assert that the "auditor, Legacy Professional LLP, ("Legacy") conducted a payroll audit based on payroll records obtained in discovery from January 1, 2011 to December 31, 2013." (Doc 33-2, p. 4). Defendants "do not completely concur" with this statement, and contend that "other information previously supplied to the auditors may have been used, which is unknown to Defendants." (Doc. 38-1, p. 5). The Funds claim that "[d]elinquent contributions were found to be owing on reported and unreported employees." (Doc 33-2, p. 4). Defendants disagree and claim "no amounts are due [The Funds] by [D]efendants as all amounts due have been paid before the audit was undertaken." (Doc. 38-1, p. 5). Defendants further contend that:
The auditors of the [The Funds] made incorrect assumptions that all employees listed as general laborers were roofers on the employee rolls of JRE, LLC. The auditors incorrectly calculated amounts for workers that have no connexity to roofing in the company as far as work assignments go and also incorrectly listed general laborers or employees, who worked on roofing projects that did not have roofing union members on the job and therefore no payments are due as the company was not operating as a union shop with the employees used on those jobs because there were no union workers present or qualified to do the jobs in the locations on which they were done, namely chemical plants and United States Government facilities.
(Doc. 38-1, pp. 5-6).
5. Individual Workers
The parties agree that Mouk classifies employees. (Doc 33-2, p. 5); (Doc. 38-1, p. 6). Payroll records entitled, "JRE Payroll Allocation" and "JRE, LLC Employee Classification" show classifications provided by Mouk. Id.
The parties agree that Eugene Jackson and Roosevelt Givens should be classified as roofers. (Doc 33-2, p. 4); (Doc. 38-1, p. 6). The Union once classified Neil Andrews as a roofer apprentice. (Doc 33-2, p. 4); (Doc. 38-1, p. 6). Additionally, both parties agree that the JRE, LLC Payroll Allocation records designate the following employees as "roofers" in the Roofing Division: Neil Andrews, Eric Aguillar, Andy Grijalva, Sonny Grijalva, Erasma Guitierrez, Ernesto Guitierrez, Guadalupe Izaguirre, Jesus Izaguirre, Jose Orozco, Byron Ottes, Thompson Gregory and Candace Washington. (Doc 33-2, p. 5); (Doc. 38-1, p. 6). However, Defendants contend that "they do not always act as roofers[.] [S]ome of them are independent contractors." (Doc. 38-1, p. 6).
Both parties agree that the JRE, LLC Employee Classification, designate the following employees as "roofers:" Neil Andrews, Byron Ottes, and Levy Patton. (Doc 33-2, p. 5); (Doc. 38-1, p. 7). Guadalupe Izaguirre and Jesus Izaguirre are also listed as roofing subcontractors; however, they were on Ascension's payroll in 2012. (Doc 33-2, p. 5); (Doc. 38-1, p. 7). Additionally, the following employees are classified as "pre-apprentice/general laborers:" Hunter Beavers, Steven Hale, Philip Hicks, John Hirtler, Stephen Jacks, and Shane Rousel. (Doc 33-2, p. 5); (Doc. 38-1, p. 7).
Defendants admit that they do "not remit contributions for employees classified as general laborer or roofing subcontractor and pre-apprentice/general laborers." (Doc 33-2, p. 5); (Doc. 38-1, p. 7).
6. Remedy Sought by The Funds
The Funds seek the following remedies:
1. $175, 157.13 as a partial payment pending a final payroll audit and compliance under the CBA. This amount includes:
a. $134, 098.88, representing the amount owed as delinquent contributions for the period from January 2011 through December 2013,  including 12 percent per annum interest and 10 percent liquidated damages. This amount includes:
i. $73, 597.17 in unpaid contributions, $14, 779.57 in interest, and $7, 359.72 in liquidated damages to the National Roofers Union And Employers Joint Health and Welfare Fund; and
ii. $29, 565.85 in unpaid contributions, $5, 839.99 in interest, and $2, 956.58 in liquidated damages to the National Roofing Industry Pension Fund.
b. $4, 950.75, representing the payroll audits fees.
c. $36, 107.50, representing to date attorneys' fees.
2. Accruing and continuing contributions from January 2014 to present.
3. Accruing interest at a rate of 12% per annum and liquidated damages of 10% on all contributions.
(Doc. 33, p. 2); (Doc. 33-1, p. 20).
II. Present Motion
The Funds now move for summary judgment pursuant to Federal Rule of Civil Procedure 56.
A. The Funds' Argument
The Funds argue that ERISA, 29 U.S.C. §§ 1132 and 1145, and the LMRA, 29 U.S.C. § 185(a), govern this action to collect unpaid fringe benefits under the terms of the CBA. (Doc. 33-1, p. 8). Additionally, The Funds argue that, as a signatory employer to the CBA, Defendants agreed to make contributions to the Funds regardless of union affiliation. (Doc. 33-1, p. 10). The Funds claim that the CBA covers any person performing work as described in the CBA. (Doc. 33-1, p. 13). The Funds assert that the CBA details the roofing and waterproofing work processes, and requires benefit contributions for all employees engaged in covered employment. (Doc. 33-1, p. 13).
Furthermore, the Funds argue that contributions are owed for "overlooked roofers" and for employees engaged in roofing work that are classified as "general laborers" because they are engaging in work falling within the craft definition under the CBA. (Doc. 33-1, p. 15-19). The Funds argue that Defendants "also operate under a second CBA with the Sheet Metal Workers" and that contributions are owed for sheet metal employees classified as "general laborers/pre apprentice." (Doc. 33-1, p. 15-19). The Funds argue that their payroll audit is entitled to a presumption of correctness. (Doc 33-1, p. 21). Finally, The Funds argue that Mouk's testimony establishes that "general laborers" perform work described under the CBA. (Doc. 33-1, pp. 21-23).
B. Defendants' Argument
Defendants argue in their opposition that they are not subject to remitting contributions for non-union roofers or subcontractors who do roofing work. Defendants assert that Louisiana is a right to work state and that this law applies to them and their non-union employees. (Doc 38-2, p. 1) (citing La. R.S. 23:981). Defendants argue that the Union failed to provide the necessary qualified workers for their work, such as drug free employees. (Doc. 38-2, p. 2). Defendants assert that "[t]here is nothing in the [CBA] that prohibits [Defendants] from conducting [their] business as a non-union shop especially when the union cannot provide qualified employees[.]" Id.
Defendants contend that The Funds auditor incorrectly assumes that all workers listed as "general laborer" are non-union roofers. Id. Defendants claim that general laborers do not perform roofing work exclusively, and that some of them do no roofing at all. Id. Defendants also argue that The Funds do not have written authorization from employees to withhold any sums. (Doc. 38-2, p. 7). Defendants assert that the union does not represent the non-union employees, and that The Funds cannot prove what work the non-union employees engage in. (Doc. 38-2, p. 9).
C. The Funds' Reply
The Funds counter that employees are not required to join a union or submit authorization to withhold funds because contributions are owed based on covered employment rather than union status. (Doc. 39, p. 3). The Funds also assert that Defendants confuse the written authorization requirement for union dues deductions with contributions. (Doc. 39, p. 3 n. 5). The Funds contend that contributions are deductible by the employer in calculating federal and state income taxes or payroll taxes and are not considered wages. Id. Additionally, The Funds argue that Defendants lack competent evidence to rebut their audit report. (Doc. 39, p. 7). Finally, The Funds argue that Defendants have no valid defense to their delinquent contributions. Id. at 8.
III. Summary Judgment Standard
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "[I]f the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986). A party must support its summary judgment position by "citing to particular parts of materials in the record" or "showing that the materials cited do not establish the absence or presence of a genuine dispute." Fed. Rule Civ. P. 56(c)(1).
If the mover bears his burden of showing that there is no genuine issue of fact, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... [T]he nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.'" See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587, 106 S.Ct. 1348 (1986) (internal citations omitted). The non-mover's burden is not satisfied by "conclusory allegations, by unsubstantiated assertions, or by only a scintilla' of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (citations and internal quotations omitted). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.'" Matsushita Elec. Indus. Co., 475 U.S. at 587. Further:
In resolving the motion, the court may not undertake to evaluate the credibility of the witnesses, weigh the evidence, or resolve factual disputes; so long as the evidence in the record is such that a reasonable [fact-finder] drawing all inferences in favor of the nonmoving party could arrive at a verdict in that party's favor, the court must deny the motion.
International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir.1991).
A. Applicable Law
The Funds assert that federal law governs this case because they are seeking to collect delinquent contributions in accordance with ERISA and the LMRA. (Doc. 33-1, pp. 8-10). Conversely, Defendants essentially assert that Louisiana law should govern and that because Louisiana is a right to work state, they do not owe contributions for nonunion employees under the CBA. (Doc 38-2, p. 1) (citing La. R.S. 23:981). Here, the Court agrees with The Funds that federal law applies.
Section 301(a) of the LMRA provides:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect ...