good morning ladies and gentlemen our first case for this morning is teamsters local seven twenty seven against the ellen our group of companies with mr campbell's up report my client the owner group of companies asked that the court reversed the district court's decision with respect to the teamsters fines delinquent contribution claim to what is the eleanor group of companies that your your brief says it's not a corporation and i tried to figure out what it is and couldn't find it even exists so the owner group of companies there are a conglomerate of other into t's that phone parking facilities that are all that i think we need to know what it is rule seventeen says that litigants must have the capacity to sue and be sued and if this is just an umbrella name for other companies it doesn't have the capacity to sue and be sued you know all the briefs talk about his contributions only by something called system parking which doesn't appear to be party to this case and then we have a separate problem under rule seventeen about the fact that litigation has to be in the name of the real party in interest so i at least would like to know what system parking sorry what ellen our group of companies name you can't sue a name you have to sue a juridical entity system parking maybe an entity or maybe some corporation it's the right entity but a name a trade name a business is not something you can sue it's not a juridical entity so we need to know exactly what the our in our group of companies is and why it is a why it exists and need to know to submit to the court that during the period the entity was systems working you know so i wonder so that we can move on for the rest of your argument i'm going to ask you to file with the court within seven days a statement that describes the tracks as through from system parking which i take it is a corporation that you need to confirm that who owns it now who is either the individual human being or the corporation or the l l c or whatever it is that owns this not just a trade name eleanor a group of companies unless that somehow got incorporated somewhere although you say in your disclosure statement that it's not a corporation but if you could give us all of the pertinent details about that you can move on at this point in your argument we would do that your honor for asking that the and there's no legal support with respect to the delinquency contribution claim the court opens its order by saying that in order for the funds to prevail they must show that the defendant failed to make contributions in accordance with the collective bargaining agreement so let me tell you the most significant problem i have with your position if you look at the fund agreements and if you look at the district court opinions the obligations to contribute are essentially employee by employee they some people are full time some people are part time some people have a certain job description other people have a different job description  all of those things factor in but what the contribution article says is that each employer agrees that there should be an absolute obligation to the trust fund that is to say to give these contributions and the funds we're looking in that sense about who know about the contributions that were brought they made it very clear to your clients that they were not looking for overpayments with respect to any particular person and they also invited you on several occasions to come to them with solid numbers to show overpayments and you never did not with you know any kind of audited statement prepared by a certified accountant of some type some expert and so it seems to me it's entirely ok for for them to see what's supposed to come in from our point of view and if there's something else the ball was in your court and you dropped it you're in it with respect to after the audit it came out there were various meetings that eleanor had with the funds trying to figure out  how they were calculating that they were i understand and the fund kept saying if you think there's a problem with overpayment you need to cut you do you need to do the research you need to come back and give us the numbers and you didn't we did not and in any kind of time not with any kind of solid numbers your honor the record would show that within in two thousand and nine after several meetings eleanor did come back with a calculation that showed there were at least two hundred twenty thousand dollars an overpayment the funds took that and they said you know what you're right then they changed the way they calculated it because they went back they gave you the credit for that and they said that you've made different mistake which was looking at hours worked instead of hours paid and when they went through and scrub the whole set of numbers for that it turned out that it netted out in a way that was unfavorable to you because it wasn't only eleanor that would have made that calculation that's exactly how the funds calculated their initial killer unary got it so when they came back after we said there's two hundred twenty thousand dollars  overpayment they came back and said oh but wait we've changed the way we calculate it there's really three hundred thousand dollars that you really they didn't change so much as remember how this all works month to month there'd be a statement we think from the fines we think this is what you owe but there was all sorts of language in those statements saying that it's up to you who to check this you're the ones after all with the payroll records you're the ones who can figure it out you're certi these payments are correct and you did that for years with an employee who apparently wasn't doing her job very well but that's what you did and he really did that but also part of this process is the send out each month a contribution toward and it has listed on there all the people that contributions are to be made for and the funds even admits that when our employee you know when ours employees would cross names off and submit it to the funds they would be times that the fund would just miss it and so they end up sending back the report and our employee is filling it out and so there these are just mistakes that are made but i want to go back to you if i could the fact that the funds have to the whole purpose of the audit is to show that they are consistent that the contributions are being made consistent with the collective bargaining agreement i understand that and i'm saying the funds told you we are looking for under payments we are not your auditor and so again on this employee by employee faces if the exact right amount was paid that was fine if not enough was paid they counted it's an underpayment if too much was paid as they told you repeatedly they just zeroed it out nobody was hiding anything they were entirely plain about that you didn't just go out and hire an in auditing firm to do this work for you you had all your payroll records seems like it would have been worth the fee but you didn't do that we did it internally well not with somebody with any kind of qualifications well i disagree because if you look at mr marino who is the person who did the funds arctic he's not a c p a he's not accountant right and so we're we had our internal person who deals with third party audits do the audit he took care to figure out the c p a language he looked over the detailed reports that the funds provided he flew to chicago to meet with the funds to figure out that he was calculating it the same way and then he directed the calculation of the audit so there's no fish no law that says you have to have an independent third party who is an accountant to do an audit because mr marino wasn't and  marino wasn't interested he had been doing all the artists for the fun since two thousand and three and he did he did whatever the fund manager told him even though it wasn't required by the fund trustees or the fund trust agreements i want to get back to something the judge would raise but i want to see if you can answer this directly why should the funds be penalize for the employer's failure to supervise its own employee in accurately calculating and submitting contributions court i don't believe the court that the fines are penalized the fines didn't audit mr philips who own system parking at the time was under the understanding that any future audits because they deal with this before any future audits would include overpayments that's what he but the loans were crystal clear when this started that that's not what they were doing and there's no written record of that undertaking in the sun's actually take a position that would be inconsistent with a receipt for them to undertake something that would be to the detriment of the funds in other words pay money out of the funds to you so i did so we've stressed it's particularly with multi employer funds the essential role that britain documentation of obligations play specific calculation as it related to over payments but it wasn't a manipulation of the audit because it wasn't like a real audit like an independent audit they claim it's independent but they were doing an audit to this looks like an overpayment before you know it's an overpayment you've got to dig into the records you've got to see was this person for example correctly characterized as part time or should they have been full time was there a problem with vacation pay being either counted or not counted if it's something that requires a positive amount of work to do and so resources would have to be put into checking these  overpayments as opposed to just saying ok in this instance it doesn't look like there was an underpayment so we're going to put this off to one side move on to the next employee i disagree with what you just one radio want to but it could take some work to figure out what they were supposed to do which is to find whether or not there were consistent contributions based upon the collective bargaining agreement so every time that defines looked at a person they had the payroll records and when they looked at those payroll records it was simple to term determine were there any hours work if there weren't any hours work then there were no contributions that were due they then zeroed it out so there's no more work in doing the full audit then doing what they did they intentionally wynnie and said anytime there's an overpayment we're going to claim that it's consistent with the collective bargaining agreement even though there were no hours worked for those people well it's i mean you are assuming that they had a duty to figure out the amount of the overpayments and net everything out that's actually the question it's it's not something you can start with an assumption they invited you to come to them from the very first conversation when your guy said oh i thought you were going to do overpayments as well and they said no we aren't but they said you can come back to us and that's the moment when you didn't come back to them you waited a couple you know months and and we did we showed some overpayments early on then they modified how they calculated it and then mr francis got involved and he came back and did the i can show you what what morning your honour's may please the court my name is linda martin and i peer before you on behalf of the teamsters funds some smart money turn this around wouldn't it have been very easy to write another line or two of code and have the program spit out at least the obvious overpayments before you accuse them of being you know so deeply in the hole i don't see what the huge amount work is here well your honor system parking in allen our would have had to have proved to the funds that one the overpayments were a mistake of fact or law and two that the equities require a favor of that they be given a credit or a refund and that just didn't happen in this case eleanor is asking the funds to pay their auditor to do to make these assumptions and make these determinations that are really that proof so that they can justify it to get the show it that they should be making night repayment so by the way are we talking about a period when all of the payments are coming from system parking or do you have any light to shed on this ellen our group of companies question your honor at the period covered by the all at during the period of the audit or the period covered by the audit system parking what the employer and system parking h a collective bargaining agreement with the teamsters local number seven twenty seven and tour and at some point i think it's september twenty ten eleanore are purchased system parking so whoever ellen are is must have had a bank account some how to write and when they purchased system parking your honour's they assumed the terms of the collective bargaining agreement and the parking or anyone else as the defendant who do you think is liable on this judgement if you get a judgment against a name that is not the dreaded call entity how do you collect it then you presumably have to collect it from the something else whatever that is your honor when they purchase system parking systems parking was no longer an entity all we had was this eleanor group who came to us and dealt with us under the collective bargaining agreement join in the briefing on that issue that would be fine thank you we will expect also seven days for you thank you so so the question then really  really in a sense moved straight to the law on rest to sion in saying that even if there was some kind of overpayment that in and of itself is not enough to require an order are we pretty clear on these numbers that people are throwing around about how much was paid and how much was underpaid how much was overpaid how how that nets out your honor i believe the auditors final report as judge alonso found was accurate and correct why and mr marino the auditor testified in detail about how that or that was done by in addition to that william francis who was a witness for ellen r testified that when he went through the auditor the funds ordered there is audit that the delinquency amount that the auditors found was an accurate amount what their quarrel is is that they should have automatically given a credit and that they should never had to have proved the decision that that employee was not a rogue employee she just didn't do her job well as you had pointed out but it's more than that it's more than that they have is this really just about who bears the risk of loss of that employee's failure to do her job well her negligence essentially and the fact that over some five or six year period of time she isn't monitoring the bills that come in thirds of the alleged over payments were made five to seven years ago two thirds of the one in a quarter million dollars is roughly eight hundred twenty nine thousand dollars she made that that mistake was made over and over she was never supervised no one ever double checked her records but yet they start a five month after month after month to the fines that this is the correct amount of hours and this is the mount contribution the funds don't have the payroll records they have to rely on the employer to be honest and truthful and correct and they do an audit to make sure that they actually were correct and that they honestly gave us the amount of money that was of the burden is not on the funds to look for and show them that think perhaps they made a mistake you know there are supposed to check their own records they should be auditing their own records know that's just not we're not able to do that except that it does seem that in the course of doing your audit it became apparent i guess there are different situations maybe some situations where murk than others but it seems to have become apparent that there were some over payments but let me ask you this in the record that now is before us is there any clear indication how these alleged over payments relate to different funds who have three sons here so if ellen are under contributed fund a bit over contributed to be is that a problem it's not clear from the report that eleanor has submitted your honor there and that trial there was no evidence explaining the assumptions that mr francis made there was no evidence how he interpreted the collective bargaining agreement and how he applied that and there was never a breakdown as you're asking of what constitutes that one than a quarter million dollars it's essentially you know they did this to the farm they did this t trial court and they're saying it to you today your honor here's our report you look through it you figure it out you do the math and i'm sure if you do it you know agree with us but that's not how it works we need to understand you know did you they had calculations that differed from the auditors will walk is that based on your interpretation of the collective bargaining agreement did you look at the pay low records which they admit they never did when they did their report did you look at the payroll records and see if that employee was a full time employee or part time employee makes a big difference because a part time employee can get full time benefits depending on the number of hours that they work in a given period of time so if they don't come back to the signs with their own audit done with methodology that are generally accepted in the accounting profession is it the case that the funds you know just even in a hypothetical situation will accept a report like that around and work out what a net payment due is or is is it a more absolute approach on the funds part it's a more absolute approach on the fun records mr francis admitted that he never did you know a true audit would look at the payroll records and reconcile as you said earlier an employee by employee by employee that just never happened assumptions for me but never explained because you know interpretations were made but never explained the funds would need that information your honor to make a determination as to whether or not there were really over payments and what the overpayment amount would big we may not agree with they're in charge for taishan we may have to work that out with them but and as you aptly pointed out earlier they had proximately sixteen months from december  two thousand and eight when they received the preliminary report report until april twenty ten when we got the first letter saying you owe us money they never ever explained anything to us and in fact your honour's we didn't even get their report until months later and when we did there was no explanation it was here it is you figure it out so their response to that i think in part is yes mr francis didn't dig into the payroll records but if i'm remembering correctly they said he simply accepted the b and k data about what the payroll records would show and they say how can you object to that we can object to your honor because mr francis also testified he gave one example where he recalculate the amount he reduced the amount of the contribution that he believed was owed for someone who was an employee who had worked ninety eight hours in that month a full time employee can take vacation time can be sick for a couple of weeks and would still get the full time contribution he never looked at the payroll records to make that determination and so ok because i wasn't ask you that that's one example then where even though it might look like the hours are favor on that that paid time off which would be your sick time your vacation your bereavement personal time off must count as hours worked in order to get that contribution and then of course that applies to part time and full time employees why which is why it's so critical that you have the payroll records and go through this payroll records and just accepting the hours that being chained notes in their report just isn't sufficient enough without the payroll record you know other questions if there's anything else you'd like to tell us you're free to do your honors and i would just do this quickly i would just reemphasize to you you know the equities in this case that system parking and eleanor subsequently there was a sixteen month gap from the time the preliminary audit until we received our first notice that there were over payments but there was no proof again most of these alleged over payments for five to seven years ago proximately eight hundred twenty nine thousand dollars i don't think it's the plants responsibility to reimburse someone who didn't do their own job in checking their own records and as the judge noted the funds are in bad shape they've been spending deficit they've been deficit spending for a uterus and by example the health and welfare fine at the time of trial only had five months of reserves but they have fifty five hundred participants and beneficiaries to give back hundreds of thousands of dollars that allegedly were overpaid five to seven years ago would really significantly damage the stability of those fun your time sure thank you very much anything further with you campbell much was rippin to how much was for legal and educational but also submit to you that the funds had all of the payroll records because eleanor submitted it to them and the funds put those paper with the information from those pa individual detail reports and that's exactly what mr francis used in creating his in creating eleanor's audit we'd also submit to the court that the equities do favor restitution here but we believe that the court should be looking at the diff delinquency in the first instance to say is there actually a delinquency and then get to the focus of the over the counter claim which is is ellen are entitled to rest in essence what the fund is asking is that by their accounting or by their accounting of that in their audit that they can show that there is a delinquency even though they had one point two million dollars more than was eleanor isn't it what they're looking for is the difference between what the funds claim is their deficiency or delinquency and eleanore claims is the overpayment eleanor's audit just completes the full audit that the funds should have been doing and that it wouldn't have cost the funds any more money to do because they already had all the information and they just  they just zeroed it out they knew and they know exactly how much money they have of eleanor's which to me to court that our briefing on these matters and ask that the court reverse the