Laborers' Pension v. RES Envir Services ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3360
LABORERS ’ PENSION FUND, et al.,
Plaintiffs-Appellees,
v.
RES ENVIRONMENTAL SERVICES, INC.,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 72—William J. Hibbler, Judge.
____________
ARGUED JUNE 9, 2004—DECIDED JULY 29, 2004
____________
Before FLAUM, Chief Judge, and BAUER and EVANS, Circuit
Judges.
FLAUM, Chief Judge. This appeal calls upon us to apply
the familiar principle that conclusory and immaterial state-
ments contained in an affidavit are insufficient to
bar summary judgment. Defendant RES Environmental
Services, Inc. (“RES”), relying exclusively on an affidavit
submitted by its company owner, seeks reversal of the dis-
trict court’s decision granting summary judgment to
Plaintiffs, Laborers’ Pension Fund and Laborers’ Welfare
Fund of the Health and Welfare Department of the Con-
struction and General Laborers’ District Council of Chicago
2 No. 03-3360
and Vicinity (the “Funds”). The Funds brought this action
against RES pursuant to the Employment Retirement
Income Security Act of 1974, 29 U.S.C. §§ 1132 et seq.
(“ERISA”) and Labor Management Relations Act of 1947, 29
U.S.C. §§ 185 et seq. (“LMRA”) seeking to collect delinquent
employee benefit contributions required under a collective
bargaining agreement negotiated between RES and its
employees’ union. For the reasons stated in this opinion, we
affirm the judgment of the district court.
I. Background
The Funds are multi-employer trust funds that provide
fringe benefits to RES’s employees. RES has been operating
since 1992 and is primarily in the business of performing
asbestos abatement work. RES is party to a collective
bargaining agreement (the “CBA”) that was negotiated
between RES and its employees’ union. The CBA requires
RES to make regular contributions to the Funds on behalf
of its employees covered therein for pension, health, and
welfare benefits and to submit monthly remittance reports
identifying each covered employee and its corresponding
contribution. Additionally, the CBA incorporates the Funds’
respective Trust Agreements, which require RES to pay
liquidated damages and interest if RES’s contributions
become delinquent.
In order to determine if RES was satisfying its contri-
bution requirements under the CBA, the Funds designated
two firms to audit RES’s books and records. The first audit,
referred to as the Wolf Report, focused on the period of July
1, 1994 to December 31, 1997 and found that RES owed
$74,452.66 in delinquent contributions, accrued interest,
liquidated damages, and audit costs. The second audit,
referred to as the Graff Report, covered the period of
January 1, 1998 to July 31, 2001 and found that RES owed
$222,441.68 in delinquent contributions, accrued interest,
No. 03-3360 3
liquidated damages, and audit costs. Negotiations between
the Funds and RES took place once the audits were com-
pleted. The parties reached an agreement regarding the
Wolf Report, with RES agreeing to pay $4,011.69. However,
the Funds were not willing to reduce the second audit’s
total.
This lawsuit presents RES’s challenges to the Graff
Report and its findings. RES claims that the Graff Report
improperly includes employees who are not covered by the
CBA. RES also contends that the Graff Report includes
hours relating to work not within the scope of the CBA. To
support these claims, RES offers the affidavit of its owner,
Wiley Stewart. The district court rejected RES’s arguments,
finding that RES failed to present a genuine issue of
material fact as to all issues in dispute.
II. Discussion
We review the district court’s grant of summary judgment
de novo to determine whether there is a genuine issue of
material fact and the law was applied correctly. See Fed. R.
Civ. P. 56(c); Lett v. Magnant, 965 F.2d 251, 255 (7th Cir.
1992). Summary judgment is appropriate where, reviewing
the evidence in the light most favorable to the nonmoving
party, there is no genuine issue of material fact that must
be decided by a jury. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252-55 (1986); Bell v. Duperault, 367 F.3d
703, 707 (7th Cir. 2004); Brademas v. Ind. Hous. Fin. Auth.,
354 F.3d 681, 687 (7th Cir. 2004).
On appeal, RES challenges both the type of employees
and the type of work included in the Graff Report. RES
contends that the improper inclusion in the Graff Report of
hours worked by certain managerial employees and the
hours spent by RES employees performing work outside the
scope of the CBA led to a significant overstatement of RES’s
liability.
4 No. 03-3360
A. Supervisory Employees
RES asserts that the Funds improperly included supervi-
sory employees in the Graff Report. The Funds respond that
the CBA unambiguously requires that contributions be
made for supervisory employees who also have held
nonsupervisory positions during the relevant time period.
Indeed, the CBA provides that the bargaining unit includes:
[P]ersons in the employ of an Employer who are super-
visors as defined by the Labor Management Relations
Act as amended; and who at one time were Employee
members of the bargaining unit herein on whose behalf
contributions were required to be made to the trust
fund described [in other sections of the CBA].
RES does not dispute this provision of the CBA. To rebut
this requirement, RES offers only Wiley Stewart’s affidavit.
Specifically, Stewart’s testimony that:
[T]wo of these RES employees who were included in the
Second Audit, Donald Stewart and Adam Sulik, worked
in supervisory positions for RES. Contrary to [Plaintiffs’
Statement of Facts] plaintiffs are now seeking payment
from RES for hours worked by those employees. [The
Funds’ Field Representative] had previously advised me
that plaintiffs would remove those hours from the
Second Audit but plaintiffs have not done so.
Issues of parol evidence aside, this testimony is not rele-
vant to the appropriateness of including the hours worked
by the former-employee supervisors in the auditor’s cal-
culations of unpaid contributions. The plain language of the
CBA provides that former-employee supervisors are to be
included in the bargaining unit. Stewart’s testimony does
not dispute that these two employees fall into that category
nor does it provide any other legally cognizable reason why
including them would be inappropriate under the CBA.
Thus, RES’s reliance on Ill. Conference of Teamsters v. Steve
Gilbert Trucking, 71 F.3d 1361 (7th Cir. 1995) (finding that
No. 03-3360 5
facts contained in affidavit submitted by company’s owner
directly undermined the accuracy of auditor’s calculations)
was misplaced. Summary judgment was appropriately
granted on this issue.
B. Non-Covered Work
RES claims that the Graff Report includes hours spent by
RES employees performing work outside the scope of the
CBA. RES contends that the CBA only requires contribu-
tions for work relating to asbestos removal, but the Graff
Report includes hours spent by RES employees on wholly
unrelated work, such as maintenance of equipment and
hauling activities. Therefore, RES argues, the Graff Report
substantially overstates the number of hours worked by
RES employees. In response, the Funds dispute that the
CBA distinguishes between covered and non-covered work.
Rather, the Funds contend that as long as an employee is
covered by the CBA, then all work the employee performs
is covered by the CBA. It is unnecessary for us to address
this dispute because even if the CBA does differentiate
between covered and non-covered work, RES has not
produced sufficient evidence to establish that the Graff
Report includes hours devoted to non-covered work.
The district court accurately applied Seventh Circuit law
when it held that once the Funds presented the audit report
and established an absence of company records contradict-
ing the Graff Report, the burden was on RES to establish a
genuine issue of material fact barring summary judgment.
See Chicago Dist. Council of Carpenters Pension Fund v.
Reinke Insulation Co., 347 F.3d 262, 265 (7th Cir. 2003);
Laborers’ Pension Fund v. A & C Envtl., 301 F.3d 768, 783
(7th Cir. 2002). An evidentiary burden is imposed on
employers if a fund raises genuine questions about the
accuracy of the employer’s record-keeping practices. Id. As
we explained in Reinke:
6 No. 03-3360
[O]nce a pension or welfare fund shows that an em-
ployer’s records are deficient and produces an appar-
ently sound accounting suggesting that money is
owed, the employer could be obliged to explain why its
payments to the funds are nonetheless proper. If the
explanation appears to be sufficient, then the fund must
demonstrate at trial its entitlement to additional
payment. Otherwise, in the absence of an explanation
by the employer, the fund would prevail on summary
judgment.
347 F.3d at 264-65.
Here, the Funds assert that RES kept no contemporane-
ous time records reflecting the type of work performed, the
date the work was performed, or the work location. The
Funds claim that this deficiency in record-keeping pre-
vented the Funds’ auditors from accurately determining the
amount and type of work performed by RES employees. As
the district court found, RES has not submitted any
documents to contradict the Funds’ assertions nor come
forward with any evidence setting forth the hours worked
on covered projects, or the laborers who were working on
those projects.
Given the deficiency in records, to prevent summary judg-
ment RES is “obliged to explain why its payments to the
[F]unds are nonetheless proper.” Id. at 264. On the issue of
employees performing non-covered work, the Stewart affida-
vit states: “It has been my personal experience that the
accounting firms who perform audits to verify the amount
of contributions that may be owed regularly include employ-
ees and hours that are not covered by the [CBA].” The
affidavit later identifies five employees and states that they
“performed work not covered by the [CBA].” There is no
specific information supporting these generalized and
conclusory allegations. Indeed, the affidavit fails to intro-
duce any factual assertion to dispute the audit’s findings.
No. 03-3360 7
RES argues that the district court inappropriately found
the Stewart affidavit to be insufficient evidence because it
is an affidavit—RES misses the point. The Stewart affidavit
is insufficient to prevent summary judgment because it
provides no information raising an issue of fact. See Lujan
v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990) (“The object
of [summary judgment] is not to replace conclusory allega-
tions of a complaint or answer with conclusory allegations
of an affidavit.”). Accordingly, summary judgment was
properly granted to the Funds on this issue.
C. Liquidated Damages, Interest, and Attorneys’ Fees
RES claims that the district court erred in determining
that RES owed the Funds payment of penalties, fees, and
interest. We disagree. ERISA requires a court to award at-
torneys’ fees and costs to a prevailing fiduciary in an action
to collect delinquent contributions. 29 U.S.C. § 1132(g)(2).
ERISA also permits the prevailing party to collect the
interest on unpaid contributions plus liquidated damages as
provided for under the plan. Id. RES has not presented any
authority refuting the propriety of these awards. Accord-
ingly, the judgment in favor of the Funds for liquidated
damages, interest, audit costs, and attorneys’ fees was
proper.
III. Conclusion
We AFFIRM the judgment of the district court.
8 No. 03-3360
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-29-04