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Greater St. Louis Construction Laborers Welfare Fund v. X-L Contracting, Inc.

United States District Court, E.D. Missouri, Eastern Division

October 31, 2016

GREATER ST. LOUIS CONSTRUCTION LABORERS WELFARE FUND, et al, Plaintiffs,
v.
X-L CONTRACTING, INC., Defendant.

          MEMORANDUM AND ORDER

          SHIRLEY PADMORE MENSAH MAGISTRATE JUDGE

         This case is before the Court on those portions of Plaintiffs' Motion for Summary Judgment (Doc. 86) as to which the Court deferred ruling in its prior Memorandum and Order, as well as Defendant X-L Contracting's Motion for Leave to File a Second Amended Counterclaim (Doc. 124) and Motion for Leave to Conduct Additional Discovery (Doc. 126). The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c)(1). (Doc. 11).

         I. Factual Background

         The instant lawsuit was filed by two groups of plaintiffs: (1) several employee benefit plans and their trustees (the “Benefit Funds Plaintiffs”), [1] and (2) several labor organizations (the “Union Plaintiffs”)[2] (collectively, “Plaintiffs”). Defendant X-L Contracting, Inc. (“X-L”) is an employer. During the time period relevant to this litigation, X-L and the Union Plaintiffs were signatories to two collective bargaining agreements (“CBAs”): the Site Improvement Agreement (the “Site Agreement”) and the Bituminous Paving Agreement-Highway (the “BPA”). The CBAs require employers to submit monthly fringe benefit contributions to the Benefit Funds Plaintiffs, based on the hours worked by any employee who performs covered work as defined by the CBAs. A complication arises when an employee whose normal place of employment is covered by the Benefit Funds Plaintiffs performs work in another geographic area covered by different benefit funds (for example, the Construction Industry Laborers Pension and Welfare Funds, also known as the “Outstate Funds”). In such a situation, the employer makes fringe benefit contributions on that employee's behalf to the Outstate Funds instead of to the Benefit Funds Plaintiffs. Under a “Reciprocal Agreement” entered into by the Benefit Funds Plaintiffs and the Outstate Funds, an employee who wants the contributions that were made on his behalf to the Outstate Funds to be transferred to the Benefit Funds Plaintiffs may submit a transfer request form with the Outstate Funds, at which point the Outstate Funds are required to transfer any contributions received to the Benefit Funds Plaintiffs.

         Both CBAs provide that the Benefit Funds Plaintiffs have the right to police the employers' self-reporting of the hours worked through a payroll examination process. The Site Agreement and the BPA both provide:

The Employer agrees that Welfare, Pension, Training, Fund, Vacation, Supplemental Dues and LECET shall each have the right to verify the accuracy of reports and contributions made by the Employer, by having their respective employees, agents, representatives or accountants audit and examine during the Employer's regular business hours, the Employer's weekly payroll journal, individual earnings records of employees, copy of Federal payroll tax returns and other payroll records as may be necessary to allow such examiner to determine whether the Employer is making full and complete reports and contributions as required by the Employer's collective bargaining agreement with the Union.

         In addition, the CBAs bind the employers to the terms of trust agreements that create the Benefit Funds Plaintiffs, and those trust agreements also grant the Benefit Funds Plaintiffs the right to verify employer reporting through examination of the employer's payroll records.

         In the summer of 2013, the Benefit Funds Plaintiffs sent several letters to X-L informing X-L that they had not received reports for the months of May and June 2013. Between June and November 2013, there were several telephone conversations between X-L's accountant and someone at the fringe benefit office in an attempt to resolve the issue. On November 22, 2013, the Benefit Funds Plaintiffs sent X-L a letter indicating that they had the reports for work performed under the Site Agreement but not for work performed under the BPA.

         On February 25, 2014, the accountants for the Benefit Funds Plaintiffs sent a letter to X-L, requesting a payroll examination and setting forth the list of records that would be needed for the payroll examination. A dispute arose over the scope of the records that X-L was required to make available for the examination. X-L took the position that it was obligated only to provide payroll records for employees whom X-L contended were members of Laborers Locals 42-53-110 and not for other X-L employees, and that it would not provide unredacted documents. The Benefit Funds Plaintiffs took the position that, pursuant to the relevant law as established by the United States Supreme Court, they were entitled to examine records of X-L's other employees as well. On April 24, 2014, Plaintiffs' accountant went to X-L's office to perform the field work for the payroll examination, and X-L provided access only to payroll records of X-L employees who were members of Laborers Locals 42-53-110.

         On May 19, 2014, Plaintiffs filed their Complaint, asserting two claims. In their first count, Plaintiffs sought (a) an interlocutory order of accounting requiring X-L to submit its books and records to an accountant selected by Plaintiffs to determine the amounts owed to Plaintiffs during the period of January 1, 2011 through March 31, 2014; (b) a judgment against X-L based upon the findings of the financial examination; (c) an order requiring X-L to submit its reports for the period of May and June 2013, along with the required contributions and liquidated damages; (d) an order requiring X-L to make payments in the future to the Benefit Funds Plaintiffs in accordance with the terms and provisions of the collective bargaining agreement, and such collective bargaining agreements as may be negotiated and executed in the future; and (e) interest, liquidated damages, costs, accounting fees, and reasonable attorney's fees pursuant to 29 U.S.C. § 1132(g). In their second count, Plaintiffs sought an injunction prohibiting X-L from performing work of a type covered by X-L's collective bargaining agreement with Laborers Locals 42-53-110 within the geographic area covered by that collective bargaining agreement until such time as X-L obtained a required surety bond or letter of credit.

         On May 20, 2014, X-L was served with the Complaint. On May 21, 2014, Plaintiffs obtained a bond in the amount of $25, 000 in favor of the Benefit Funds Plaintiffs. On May 30, 2014, counsel for X-L sent an email to counsel for the Benefit Funds Plaintiffs, stating that the missing May and June 2013 BPA reports had been submitted using the Site Agreement report forms and that the issue had been resolved. There appears to be no disagreement that this issue was resolved at that time.

         On August 15, 2014, the Benefit Funds Plaintiffs served a request for production of documents. X-L continued to object to most of these requests on the grounds that Plaintiffs did not have a right to an audit of information related to X-L employees other than the union laborers subject to Plaintiffs' jurisdiction. On August 29, 2014, X-L emailed Plaintiffs with self-generated spreadsheets purporting to show that X-L had paid benefits to the Benefit Funds Plaintiffs that it should instead have paid to the Outstate Funds. X-L demanded a refund of the payment. On October 29, 2014, Plaintiffs filed a motion to compel the production of the requested documents. X-L opposed the motion and made multiple requests for additional time to respond to it. Prior to the second scheduled hearing date, X-L agreed to produce numerous additional documents in response to the Plaintiffs' discovery requests, and Plaintiffs withdrew their motion to compel. XL produced additional documents, and Plaintiffs' accountants performed a financial examination.

         On December 31, 2014, X-L filed a counterclaim against Plaintiffs, seeking judgment “by the amount of the overpayment of [X-L]'s payment of contributions or ‘fringe benefits' from January 1, 2010 to the present.” On April 28, 2015, after receiving additional documents from X-L, Plaintiffs' accountants produced a report showing that during the examination period (January 1, 2011, through March 31, 2014), X-L had misreported and overpaid a total of $26, 728.18 to the Benefit Funds Plaintiffs, most of which should have been reported to the Outstate Funds.[3] The bulk of the misreported payments occurred in 2011 and 2012, with some in 2013 and none in 2014. For all periods in which contributions were received by the Benefit Funds Plaintiffs from X-L, the Benefit Funds Plaintiffs had provided the benefits for which the contributions were intended. For example, the amounts remitted to the Welfare Fund allowed the Welfare Fund to provide health insurance for the employee on whose behalf the contributions were received.

         After a mediation between X-L and the Outstate Funds related to X-L's underpayment of the Outstate Funds, X-L paid $31, 438.52 to the Outstate Funds for the period of January 1, 2010 through December 31, 2012. As part of that settlement, X-L was promised that the Outstate Funds would “process” the $31, 438.52 and refund the same to the Benefit Funds Plaintiffs under the Reciprocal Agreement. X-L was told that no refund could be made to it by Plaintiffs until Plaintiffs recovered the $31, 438.52 from the Outstate Funds. Between December 2015 and March 2016, the Outstate Funds remitted $28, 658.87 to the Benefit Funds, representing all monies they had received in welfare and pension contributions for employees who were members of the unions who had worked for X-L during the examination period, and for whom the Outstate Funds had transfer authorizations. During this time, Plaintiffs' counsel exchanged emails with X-L's counsel about how much money was being transferred.

         On March 7, 2016, X-L filed its Amended Counterclaim against Plaintiffs, which the Court has found asserted three claims: (1) that Plaintiffs breached the Site Agreement by failing to return payments of fringe benefits made based on inadvertent or immaterial error, or clerical mistake; (2) that Plaintiffs breached the Site Agreement by failing to enforce a “Reciprocal Agreement” included in the Site Agreement that requires Plaintiffs to recover fringe benefits paid to the Outstate Funds; and (3) that X-L is entitled to a return of its overpayments based on an equitable restitution theory.

         On March 11, 2016, this case went to mediation. Around the time of the mediation or after the mediation, Plaintiffs informed X-L that it was the written policy of the Benefit Funds not to provide a refund of pension contributions going back more than two years from the request. Because the bulk of the misreported payments occurred in 2011 and 2012, and the request was made in August 2014, this policy would prevent Plaintiffs from providing the bulk of the refund sought by X-L. Prior to the Court-ordered mediation in the instant action, Plaintiffs had not made X-L aware of this policy.

         Plaintiffs moved for summary judgment on their Complaint and X-L's Amended Counterclaims. In an earlier Memorandum and Order, the Court denied the motion as moot with regard to the claims in Plaintiffs' Complaint; granted the motion with regard to X-L's counterclaim asserting that Plaintiffs breached the Site Agreement by failing to return mistaken payments; and granted the motion with regard to X-L's counterclaim asserting that the Benefit Funds Plaintiffs breached the Site Agreement by failing to enforce the Reciprocal Agreement. The Court found that additional briefing was required with regard to the two remaining claims: X-L's counterclaim asserting that the Union Plaintiffs breached the Site Agreement by failing to enforce the Reciprocal Agreement, and X-L's counterclaim for equitable restitution. That supplemental briefing has now been received, and the Court will address the remaining portions of Plaintiffs' motion. The Court will also address X-L's motion for leave to file a second amended counterclaim, X-L's motion to conduct additional discovery, and Plaintiffs' request for attorney's fees.

         II. Legal Standard

         The Court shall grant a motion for 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). “A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case.” Othman v. City of Country Club Hills, 671 F.3d 672, 675 (8th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The moving party bears the initial responsibility of informing the court of the basis of its motion and of identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this initial burden, the nonmoving party must then set forth affirmative evidence from which a jury might return a verdict in his or her favor. Anderson, 477 U.S. at 256-57. The nonmoving party “may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Id. at 256. “Mere allegations, unsupported by specific facts or evidence beyond the nonmoving party's own conclusions, are insufficient to withstand a motion for summary judgment.” Thomas v. Corwin, 483 F.3d 516, 527 (8th Cir. 2007).

         III. Discussion

         A. Plaintiffs' Motion for Summary Judgment on X-L's Amended Counterclaims

         In the Court's prior Memorandum and Order dated June 22, 2016, this Court deferred ruling on Plaintiffs' motion for summary judgment as to two of X-L's counterclaims. The Court will now address Plaintiffs' motion for summary judgment as to those claims.

         1. Breach of the Site Agreement Based on Failure to Enforce the Reciprocal Agreement

         In Count II of its Amended Counterclaim, X-L alleges that Plaintiffs have breached the Site Agreement by failing to enforce their Reciprocal Agreement with the Outstate Funds and thereby recover fringe benefits paid by X-L to the Outstate Funds. The Court has already granted summary judgment in favor of the Benefit Funds Plaintiffs on this claim. The Court now addresses the Union Plaintiffs' contention that they are also entitled to summary judgment.

         X-L's position in its Amended Counterclaim is that the Union Plaintiffs breached the Site Agreement by failing to enforce the Reciprocal Agreement. To prevail on a claim for breach of a collective bargaining agreement, which is essentially a breach of contract claim, a plaintiff must demonstrate “(1) a contract between the plaintiff and defendant; (2) rights of the plaintiff and obligations of the defendant under the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff.” Erler v. Graham Packaging, No. 4:14-CV-931 (JCH), 2014 WL 6463338, at *3 (E.D. Mo. Nov. 17, 2014) (quoting Amburgy v. Express Scripts, Inc., 671 F.Supp.2d 1046, 1055 (E.D. Mo. 2009)). The undisputed evidence shows that X-L cannot establish the second element of this claim, because it cannot show that the Site Agreement obligated the Union Plaintiffs to enforce the Reciprocal Agreement. As Plaintiffs point out, the Site Agreement makes no reference to the Reciprocal Agreement and imposes no obligations on the Union Plaintiffs (or anyone else) to enforce the Reciprocal Agreement. See Site Agreement, Doc. 87-1, at pp. 9-65. Although X-L asserts that it signed the Site Agreement with the Union Plaintiffs “knowing that Plaintiffs and [the Outstate Funds] had previously signed a Reciprocal Agreement, ” that knowledge does not insert any contractual obligations into the ...


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