Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-16-02037/USCOURTS-ca7-16-02037-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 16-2037

TEAMSTERS LOCAL UNION NO. 727 HEALTH AND WELFARE 

FUND, TEAMSTERS LOCAL UNION NO. 727 PENSION FUND, and 

TEAMSTERS LOCAL UNION NO. 727 LEGAL AND EDUCATIONAL 

ASSISTANCE FUND,

Plaintiffs-Appellees,

v.

L&R GROUP OF COMPANIES,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 11 C 1747 — Jorge L. Alonso, Judge.

____________________

ARGUED DECEMBER 2, 2016 — DECIDED DECEMBER 21, 2016

____________________

Before WOOD, Chief Judge, and EASTERBROOK and 

WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge. Three pension and welfare 

funds regulated by the Multiemployer Pension Plan 

Amendments Act (MPPAA), which is codified as part of the 

Employee Retirement Income Security Act (ERISA), filed 

Case: 16-2037 Document: 46 Filed: 12/21/2016 Pages: 6
2 No. 16-2037

this suit to collect what they described as shortfalls in contributions due during 2003 through 2008 from System Parking, 

Inc., which had entered into four collective bargaining 

agreements with Teamsters Local 727. But the funds did not 

sue System Parking. Instead they sued “L&R Group of 

Companies.” The answer to the complaint also used that 

name, as did the district court’s judgment. The mismatch between the litigant and the name of the business obligated to 

make contributions led us to call for supplemental briefs, 

which reveal that there is no such thing as “L&R Group of 

Companies.” This poses two problems under Fed. R. Civ. P. 

17. Rule 17(a) says that suits must be conducted in the name 

of the real parties in interest, and Rule 17(b) says that only 

persons or entities with the capacity to sue or be sued may 

be litigants.

The odd name “L&R Group of Companies”, which the 

opening brief on appeal described as “not a corporation” 

with no further detail, led us to wonder whether it might be 

a partnership, a holding company organized as a trust, or 

perhaps a membership organization. But the supplemental 

briefs reveal that it is none of these. Counsel for appellant, 

while styling their client as “L&R Group of Companies”, 

state variously that it is “a description that refers to a series 

of business entities” or a “rubric” that several companies use 

in their business. But a “description” or a “rubric” is not a 

juridical entity. See, e.g., Schiavone v. Fortune, 477 U.S. 21 

(1986) (the name of a magazine is not suable). Rule 17(a) says 

that litigation must proceed in the name of the real party in 

interest, and a “rubric” is not any kind of entity. You can’t 

sue a “rubric” any more than you could sue the Chicago 

River or the Magnificent Mile as a proxy for the City of Chicago. The judgment in this case directs “L&R Group of 

Case: 16-2037 Document: 46 Filed: 12/21/2016 Pages: 6
No. 16-2037 3

Companies” to pay almost $2 million, but a rubric does not 

have a bank account.

The supplemental briefs reveal the identity of the proper 

defendant. System Parking, Inc., changed its name to LR Sys, 

Inc., in November 2010. The next month all of its assets and 

liabilities were acquired by LR System Parking – Illinois, 

LLC (LR System Parking for short). Because this entity was 

not named in the complaint or served with process, a motion 

to dismiss the complaint would have been granted under

Schiavone, though the funds might have had time to sue it

before the statute of limitations expired. But no one paid any 

attention to this subject in the district court, and even now 

LR System Parking has not asked us to remand with instructions to dismiss. Nor has it suggested that the funds should 

be stuck with an uncollectable judgment. Still, we cannot 

continue the litigation against a rubric, so the question becomes whether this problem can be fixed in the court of appeals.

We think that the answer is yes, using the power granted 

by Fed. R. Civ. P. 21 to add or drop a party in lieu of dismissing the suit. Cf. 28 U.S.C. §1653. Rule 21 nominally applies only to district courts, but Newman-Green v. AlfonzoLarrain, 490 U.S. 826, 832–37 (1989), holds that appellate 

courts may exercise the same power—as the Supreme Court 

itself did in Mullaney v. Anderson, 342 U.S. 415 (1952). In

Newman-Green the Justices held that a court of appeals may 

dismiss a surplus litigant whose presence prevented the existence of complete diversity of citizenship. Here we need a 

substitution—a real party in lieu of a rubric—but Mullaney

shows that a court of appeals has that authority too, when 

the real party in interest does not object. Mullaney allowed 

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4 No. 16-2037

the addition of two litigants in the Supreme Court in order 

to avoid a problem with the original litigant’s standing to 

sue. Here all we need do is replace a name (L&R Group of 

Companies) with the real entity (LR System Parking) that 

everyone has taken the name to be a stand-in for. That’s 

within the bounds of the authority recognized by NewmanGreen, so we need not send the case back to the district court 

for formalities that quickly would propel the dispute back 

here.

Thus we arrive at the merits, and the district court’s 

thorough opinion, 2016 U.S. Dist. LEXIS 16359 (N.D. Ill. Feb. 

10, 2016), enables us to be brief. The judge held a bench trial, 

resolved ambiguities in the collective bargaining agreements, and considered two opposing audit reports—one 

conducted by a firm of auditors on behalf of the funds and 

showing that LR System Parking owed some $1.8 million 

(including late-payment penalties and interest) and the other 

conducted internally by LR System Parking and showing 

that the funds had been overpaid about $1.2 million. The 

judge concluded that: (1) the agreements require contributions for every hour workers are paid and not just for hours 

they work (so the employer owed contributions for paid vacation and sick-leave hours); (2) the auditor hired by the 

funds did not have a duty to offset overpayments when calculating underpayments (this was the only seriously contested issue about the quality of that audit); and (3) LR System Parking’s audit was unreliable. LR System Parking has 

abandoned its arguments on the choice between hours paid 

and hours worked, leaving only issues (2) and (3) for appellate resolution.

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No. 16-2037 5

The funds’ auditor counted underpayments and ignored 

overpayments. LR System Parking says that this spoils the 

audit. The district judge found otherwise, ruling that requiring the funds’ auditor to determine overpayments and offset 

them against underpayments would shift to the funds the 

burden of calculating and proving the amount of any overpayment. The trust documents assign that burden to employers. As the district judge saw things, the funds’ auditor 

was entitled to tally up the underpayments, while the employer’s auditor could tally overpayments and the court 

would do the offset. That makes sense and is certainly not an 

abuse of discretion.

This brings us to the district court’s decision that the employer’s audit was unreliable, so there was nothing to offset 

against the funds’ calculation. The judge gave three principal 

reasons (2016 U.S. Dist. LEXIS 16359 at *63–66): first, that the 

employer’s audit was done in-house rather than by an independent accounting firm; second, that the person who prepared it lacked any relevant experience; third, that LR System Parking relied on “murky” assumptions and did not try 

to explain why this audit differed from the funds’ professionally prepared audit. The judge summed up: “L&R litigated this issue by obfuscation.” The judge’s conclusion that 

the employer’s audit was unreliable is a finding of fact and 

thus must stand unless clearly erroneous. Fed. R. Civ. P. 

52(a)(6). We see no clear error in this finding. On this record 

the judge might well have accepted the employer’s calculation, but the evidence did not compel him to do so.

The judgment is affirmed, and the case is remanded 

with instructions to amend the judgment to specify LR SysCase: 16-2037 Document: 46 Filed: 12/21/2016 Pages: 6
6 No. 16-2037

tem Parking – Illinois, LLC, as the defendant and the entity 

responsible for payment.

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