Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc.

826 F.3d 397, 62 Employee Benefits Cas. (BNA) 1084, 2016 U.S. App. LEXIS 10568, 2016 WL 3262532
CourtCourt of Appeals for the Seventh Circuit
DecidedJune 10, 2016
Docket14-3413 & 14-3336
StatusPublished
Cited by13 cases

This text of 826 F.3d 397 (Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc., 826 F.3d 397, 62 Employee Benefits Cas. (BNA) 1084, 2016 U.S. App. LEXIS 10568, 2016 WL 3262532 (7th Cir. 2016).

Opinion

MANION, Circuit Judge.

This action was brought by four carpenter union fringe benefit funds (“the Funds”) under § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, and §' 502(a) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a). The Funds allege that Schal Bovis, Inc., a general contractor that builds large and small buildings in the Chicago metropolitan area, failed to make fringe benefit payments for work performed by nonunion labor, as was required under collective bargaining agreements. The Funds started with 36 *400 claims of unpaid fringe benefits, but proceeded to trial on only four claims. The district court granted summary judgment to the Funds on all four claims on the issue of liability. From summary judgment, the parties proceeded to a bench trial on damages, and from there both parties appeal. Schal Bovis appeals the granting of summary judgment for two of the four claims, the calculation' of damages for those two claims, and the amount of attorneys’ fees awarded. The Funds cross-appeal the calculation of damages for one of the claims and the admission of certain evidence for that calculation.

We reverse the district court’s grant of summary judgment on the two claims Schal Bovis appeals and remand for further proceedings. In the first claim, we hold that the non-union subcontractor should be considered a single employer with the union signatory who ultimately performed the work. Consequently, the Funds are prevented from claiming fringe benefits for the work performed in that claim because Schal Bovis subcontracted the work to a union signatory as required by the collective bargaining agreement. In the second claim, we hold that the collective bargaining agreement prevented the carpenters’ union from claiming work which was the existing practice of other trade unions. Since Schal Bovis presented undisputed evidence that the work performed in the second claim was the existing practice of another trade union — the union to which Schal Bovis subcontracted the work — the Funds cannot claim fringe benefit contributions for the work. The remaining issues are rendered moot by these holdings, so we limit our discussion accordingly.

I. Background

Schal Bovis has been a party to collective bargaining agreements with the Chicago Regional Council of Carpenters (“the Union”) since it first signed an agreement in 1983 (“the Memorandum”). The Memorandum and a Commercial Area Agreement effective 2005 to 2008 (“the Agreement”), bound Schal Bovis to several trust agreements which provided for the creation of the Funds. The Agreement also limited Schal Boris’s ability to subcontract work “coming within the jurisdictional claims of the Union,” that is, carpenter’s work. According to Article III, Section 3.2 of the Agreement, Schal Boris could not subcontract carpenter’s work, which the parties refer to as “jurisdictional work,” to any subcontractor who had not signed the Agreement (usually a non-union shop). If Schal Bovis did, then Section 3.5 obliged Schal Boris either to require the non-union subcontractor to sign the Agreement itself, or to keep track of the hours worked by the subcontractor and pay fringe benefit contributions to the Funds for those hours. Article I, Section 1.1 of the Agreement described in broad, expansive terms what the Union considered to be jurisdictional work, but concluded by stating: “However, the Union agrees that it will not interfere with existing practices of other unions affiliated with the Building Trades.” Doc. 13-12 at 33.

A. The Litigation

In February 2009, the Funds conducted an audit of Schal Boris’s books covering the years 2006 and 2007. Based on the audit, the Funds claimed and demanded $8 million in unpaid fringe benefit contributions, liquidated damages, and interest for 36 claims of work that Schal Boris allegedly subcontracted to non-union shops. Over the next two years, through correspondence between the parties, the Funds reduced their claims from 36 to eight for a total of $1.25 million in unpaid contributions, exclusive of interest and liquidated damages.

*401 In February 2011, the Funds filed suit seeking payment for the eight remaining claims. Early on, however, they withdrew four of the eight claims, leaving a total of $203,000 in allegedly unpaid contributions. In a brief two-page order, the district court granted summary judgment to the Funds on the four remaining claims on the issue of liability only. It left the determination of damages for later, allowing Schal Bovis to present appropriate evidence on that issue. Since only two of the four claims are at issue in this appeal, we limit our discussion to those two. They concern work by Canac Kitchens and Edward Don & Company.

B. The Canac Claim

The Canac claim involved the installation of cabinetry, undisputedly within the Union’s jurisdiction. Schal Bovis admitted that Canac did not have an agreement with the Union, but presented evidence that it had required Canac to use union labor and that Canac had used its sister company, Qualifit Kitchens, which had used union labor. Schal Bovis argued that, under the single-employer doctrine, the district court should consider Schal Bovis to have contracted with a union shop because Canac and Qualifit were essentially the same company. Schal Bovis presented evidence that the companies were owned by the same parent company, did business out of the same office, considered themselves and held themselves out to be the same company, and had a merged management chain. It also pointed out that Canac completed Qualifit’s fringe benefit report forms and Canac paid the contributions to the Funds from its own account. Alternatively, Schal Bovis argued that, by refusing to withdraw the Canac claim, the Funds were administering their ERISA plans arbitrarily because the Funds had withdrawn other claims under identical circumstances, with no explanation for why they were treating the Canac claim differently.

The district court acknowledged Schal Bovis’s single-employer argument, but dismissed it simply by stating that Schal Bo-vis contracted with Canac, not Qualifit. It then held that Schal Bovis presented insufficient evidence to demonstrate that it had fulfilled its obligations under the agreement when hiring non-union labor, specifically, its obligations to keep track of the hours worked by the subcontractor and pay fringe benefit contributions to the Funds for the hours worked. The district court did not address Schal Bovis’s alternative argument that the Funds were arbitrarily enforcing their plans.

C. The Edward Don Claim

The work for the Edward Don claim involved the installation of fire protection systems and stainless steel kitchen equipment. The stainless steel kitchen equipment was comprised of cooking equipment, hoods and ventilation systems, counters and tops, and freezers. Edward Don subcontracted the work to Reid’s Fire and Safety Equipment. Reid’s installed the fire protection systems, which the Funds conceded was not jurisdictional work. The stainless steel kitchen equipment was installed by Reid’s sister company, RB Hoods, which was a union signatory with the Sheet Metal Workers.

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826 F.3d 397, 62 Employee Benefits Cas. (BNA) 1084, 2016 U.S. App. LEXIS 10568, 2016 WL 3262532, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chicago-regional-council-of-carpenters-pension-fund-v-schal-bovis-inc-ca7-2016.