1984), the Seventh Circuit held that non-parties to a CBA can be sued under Section 301(a)
where the dispute is “directly related to a provision in the collection [sic] bargaining agreement.”
First of all, the court in Chicago Area Vending Employers Ass'n did not expressly hold that a
non-party could be sued under Section 301(a) if the dispute is “directly related” to the collective
bargaining agreement. The quoted passage is part of the court’s analysis to the facts before it.
The court found that although the alleged non-party was “technically not a signatory to the
{collective bargaining] agreement” it is “arguably part of it.” Jd. The court then noted that “fiJn
addition this dispute is directly related to a provision in the collective bargaining agreement.” Jd.

In Chicago Area Vending Employers Ass'n a multi-employer bargaining unit
(“Association”) represented several employers in their relations with unions. /d, at *1. The
defendant employer in the case decided to make a side agreement directly with a union. Jd. The
side agreement with the union violated an agreement between the Association and the defendant
employer and also violated the collective bargaining agreement. Jd. at *9. The Association sued
the defendant employer. Jd. at 1.

Chicago Area Vending Employers Ass‘n is distinguishable from the instant case because
in Chicago Area Vending Employers Ass'n the court found that the “Association, [the defendant
employer,} and the Union were all parties to the collective bargaining agreement.” Jd, at *8. In
the instant case Fordham was not a party to the CBA. In Chicago Area Vending Employers Ass'n
the employer was specifically mentioned along with the association and other represented
employers in the definition of “Employer” in the collective bargaining agreement. Jd. at *8 n.4,
*9_ There is no mention of Fordham in the CBA in the instant case.

In Chicago Area Vending Employers Ass'n the association signed the collective

bargaining agreement on behalf of the defendant employer and acted as the agent of the


29 U.S.C. § 1132(e)(1) and (2). Plaintiffs allege that Fordham’s failure to make timely

contributions violates Section 515 of ERISA which provides:

Every employer who is obligated to make contributions to a multiemployer plan under the
terms of the plan or under the terms of a collectively bargained agreement shall, to the
extent not inconsistent with law, make such contributions in accordance with the terms
and conditions of such plan or such agreement.

29 U.S.C. § 1145. Fordham argues that we should dismiss the ERISA claim in Count IV for
the same reasons that Count III should be dismissed. Fordham argues that the Letter is not
sufficient to render itself a party to the CBA. Fordham points to the language of Section 515 or
ERISA that states that an employer is required to make “contributions to a multiemployer plan
under the terms of the plan or under the terms of a collectively bargained agreement... .”
(emphasis added). We do not agree that we should dismiss Count IV for the same reasons that
we dismissed Count III. The counts are based upon entirely different statutes which serve

different purposes and contain different language.

Plaintiffs point out that in Section 3(5) of ERISA the term “Employer” is defined as “any
person acting directly as an employer, or indirectly in the interest of an employer, in relation to an
employee benefit plan; and includes a group or association of employers acting for an employer
in such capacity.” 29 U.S.C. § 1002(5). We think that the language in Section 3(5) indicates that
Congress intended ERISA to cover a guarantor such as Fordham. Although Fordham was acting
in its own best interests by sending the Letter to the union, Fordham certainly was also acting
indirectly in the interest of Spectrum and the agreement in the Letter can properly be deemed to
be related to the CBA. This is not inconsistent with our prior finding in regards to the LMRA
which, according to case law and the statutory language, requires a closer nexus between

Fordham, the union and the CBA. Therefore, we deny Fordham’s motion to dismiss Count IV.


12(b)(1) motion for lack of subject matter jurisdiction a court "must accept the complaint’s well-
pleaded factual allegations as true and draw all reasonable inferences from those allegations in
the plaintiff's favor.” United Transp. Union v. Gateway Western Ry. Co., 78 F.3d 1208, 1210

(7" Cir. 1996).

DISCUSSION
Fordham argues that this court does not have jurisdiction to entertain Count Il of the first
amended complaint brought pursuant to Section 301(a) of the LMRA or Count IV brought
pursuant to Section 502(e)(1) and (2) of ERISA. Fordham claims that because it was not a party

to the CBA it cannot be held liable under the LMRA or ERISA.

1, Whether this Court has Jurisdiction under the LMRA
Fordham contends that the Letter is insufficient to render it liable under the LMRA.
Section 301(a) of the LMRA provides that:
Suits for violation of contracts between an employer and a labor organization representing
employees in an industry affecting commerce as defined in the chapter, or between any
such labor organizations, may be brought in any district court of the United States having
jurisdiction of the parties, without respect to the amount in controversy or without regard
to the citizenship of the parties.
29 U.S.C. § 185(a). Fordham contends that because Section 301(a) refers to contracts “between
an employer and a labor organization” that non-parties to a CBA cannot be sued under Section
301(a). Plaintiffs argues that Fordham sent the Letter to the union and thus “should be treated in

this case as a party to the collective bargaining agreement . . . ” Plaintiffs also contend that in

Chicago Area Vending Employers Ass'n v. Custom Coffee Serv., 1984 WL 21995, at *9 (7" Cir.



defendant employer. Jd. at *1. The relationships are completely different in the instant suit.
Spectrum Stone was not acting as a mere agent for Fordham in its dealings with the union.
Spectrum Stone dealt with the union in accordance with its own interests as was Fordham and
Fordham was not expressly or even figuratively dealing with the union under the CBA. In
Chicago Area Vending Employers Ass'n the association represented the defendant employer, but
the true relationship at issue was the one between the union and the defendant employer. In the
instant case there is no such nexus between the union and Fordham. Fordham was the developer
and merely wanted the condominium project to move forward. It was not concerned or involved
with the myriad of other issues dealt with in the CBA that pertained to Spectrum’s employees.

Plaintiffs make much of the fact that Fordham sent the Letter to the union and offered the
payment guarantee in order to get the work started again on the condominium project and to get
the union to agree not to picket. However, the no-picket concession sought by Fordham does not
indicate that Spectrum and Fordham were engaged in any sort of principal/agent relationship or
that their interests were joined. Fordham was simply looking out for its interests in getting the
project going. The Letter contained the guarantee promise, but the agreement not to picket by the
union is properly characterized as a separate agreement beyond the CBA between the union and
Fordham. Fordham was not directly seeking to mediate any sort of change of the CBA between
Spectrum and the union. Finally, the true relationship at issue in forming the CBA was between
the union and Spectrum. Fordham’s limited interest in keeping the project moving, and its single
Letter agreeing to pay Spectrum contributions is not sufficient to deem Fordham as a party to the
collective bargaining agreement as Plaintiffs seek.

The instant case is also distinguishable from Chicago Area Vending Employers Ass'n

because in that case the defendant employer engaged in conduct that was a violation of the


CONCLUSION
Based on the foregoing analysis we grant Fordham’s motion to dismiss Count

III and deny the motion to dismiss Count IV.

y

Samuel Der-Yeghiayan
United States District Court Judge

Dated: February 23, 2004


Minute Order Foren (06/97)

United States District Court, Northern District of Illinois

same tAsignet jue | Samuel Der-Yeghiayan _ Sine Judge Other
CASE NUMBER 02 C 9146 DATE 2/23/2004
CASE Laborers Pension Fund vs. Spectrum Stone
TITLE
IIn the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
DOCKET ENTRY:
qd) Qo Filed motion of [ use listing in “Motion” box above.]
(2) Qa Brief in support of motion due
(3) Qo Answer brief to motion due___. Reply to answer briefdue___.
(4) Qo Ruling/Hearingon_—ssetfor at
(5) Oo Status hearing[held/continued to] [set for/re-set for]on___—ssetfor__—_at
(6) 0 Pretrial conference{held/continued to] [set for/re-set for]on___—s set fort.
(7) o Trial{set for/re-set for] on__ at
(8) a {Bench/Jury trial] [Hearing] held/continued to__at
(9) ag This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) (Local Rule 41.1 CHFRCP41(a(1) CO FRCP41(a)(2).

(ao) (Other docket entry] Status hearing held and continued to 08/16/04 at 9:00 a.m. For the reasons
stated on the attached memorandum opinion, the Court hereby grants in part and denies in part defendant
Fordham 65 E Goethe, LLC’s motion to dismiss Counts II] and IV. Based on the foregoing analysis,
Defendant Fordham 65 E Goethe, LLC’s motion to dismiss Count II is granted and the motion to dismiss
Count [V is denied. All discovery is to be noticed in time to be completed by 05/24/04. Dispositive
motions with supporting memoranda are to be filed by 06/24/04. Responses to the dispositive motions,
is any, are to be filed by 07/08/04. Replies, if any, are to be filed by 07/15/04. Enter Memorandum
Opinion.

(i) [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. number of notices

FEB,.04.2004

Notices mailed by judge's staff.

Notified counsel by telephone.

v | Docketing to mail notices. Memorandum
Opinion distributed in open Court.

Mail AO 450 form.

Copy to judge/magistrate judge.

date mailed notice
courtroom

MW deputy’s
initials

Date/time received in ;
central Clerk’s Office raaiting depuly initials



provisions of the collective bargaining agreement. In Chicago Area Vending Employers Ass’na
covenant in the collective bargaining agreement prohibited the represented employers from
entering into a side agreement with the union. Jd. Thus, the court reasonably found that the
disputed conduct was closely related to the collective bargaining agreement despite the fact that
the agreement between the defendant employer and the Association prohibiting side deals came
into play. However, in the instant case Fordham merely guaranteed to make payments for
Spectrum Stone. There is no clause in the CBA in the instant case that required guarantors of
Spectrum Stone to make payments. Although, Fordham apparently did not honor its promise to
the union as expressed in the Letter, Fordham did not violate the CBA and the current dispute
cannot be deemed “directly related” to a provision of the CBA as Plaintiffs contend. We
acknowledge that justice demands that Fordham honor its obligations if Plaintiffs can show that
the Letter created binding contractual obligations, but the LMRA is not the proper mechanism for

Plaintiffs to use in obtaining relief. Therefore, we grant Fordham’s motion to dismiss Count III.

IL, Whether this Court has Jurisdiction under ERISA

Fordham argues that this court does not have jurisdiction under ERISA for
Count IV. Section 502(e) of ERISA states:

(1) Except for actions under subsection (a)(1)(B) of this section, the district courts of the
United States shall have exclusive jurisdiction of civil actions under this subchapter
brought by the Secretary or by a participant, beneficiary, fiduciary, or any person referred
to in section 1021(f)(1) of this title. State courts of competent jurisdiction and district
courts of the United States shall have concurrent jurisdiction of actions under paragraphs
(1)(B) and (7) of subsection (a) of this section.

(2) Where an action under this subchapter is brought in a district court of the United
States, it may be brought in the district where the plan is administered, where the breach
took place, or where a defendant resides or may be found, and process may be served in
any other district where a defendant resides or may be found.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LABORERS’ PENSION FUND and
LABORERS’ WELFARE FUND OF THE
HEALTH AND WELFARE DEPARTMENT
OF THE CONSTRUCTION AND GENERAL
LABORERS’ DISTRICT COUNCIL OF
CHICAGO AND VICINITY, JAMES S.
JORGENSEN, Administrator of the Funds,

FEB 2 4 2094
Plaintiffs,
v. No. 02 C 9146
SPECTRUM STONE, INC., SPECTRUM
STONE GROUP, INC., and TERESA FISTER,
individually and doing business as Spectrum

Stone, Inc.,

Defendants.

we SS SSS Sewer

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant Fordham 65 E Goethe, LLC’s (“Fordham”)

motion to dismiss Counts III and IV of Plaintiffs’ first amended complaint. For the reasons

stated below we deny the motion in part and grant the motion in part.

BACKGROUND
Plaintiffs are multi-employer benefits funds (“Funds”). Fordham is a real estate
development company. In January of 2000 Fordham entered into an agreement with a general
contractor for the construction of condominiums. The general contractor entered into a

subcontract with Defendants Spectrum Stone, Inc. and Spectrum Stone Group, Inc. (collectively

44


referred to as “Spectrum Stone”) to install the masonry at the project. Defendant Teresa Fister
(“Fister”) is the owner of Spectrum Stone. Plaintiffs contend pursuant to a collective bargaining
agreement (“CBA”) Defendants Spectrum Stone and Fister are obligated to make contributions
to the Funds. Plaintiffs brought this action alleging in Count I that Spectrum Stone and Fister
failed to report contributions owed to the Funds, failed to pay all contributions owed to the
Funds, and failed to maintain a surety bond to guarantee the payment of wages, and pension and
welfare contributions. Plaintiffs also allege in Count II that Spectrum Stone and Fister failed to
honor their obligations under the collective bargaining agreement to pay unpaid union dues.
Plaintiffs allege that Spectrum Stone was not able to meet its CBA obligations because of
financial difficulties and that work stopped on the condominium project. Ina letter dated August
9, 2002 (“Letter”) from Fordham to the union, Fordham agreed to guarantee all of Spectrum
Stone’s obligations to pay wages and benefits contributions to the Fund. Plaintiffs contend that
the Letter also confirmed that the union would relinquish its right to picket and to conduct work
stoppages which enabled the Spectrum Stone employees to restart working on the condominium
project. Plaintiffs bring Count III pursuant to Section 301(a) of the Labor Management Relations
Act “LMRA”). Plaintiffs allege in Count III that Fordham failed to pay contributions owed to
the Funds for pension benefits, health and welfare benefits, fund training, and union dues.
Plaintiffs bring a similar claim in Count IV pursuant to Section 502(e)(1) and (2) of the

Employment Retirement Income Security Act of 1974 (“ERISA”).

LEGAL STANDARD
A party may move to dismiss claims over which a district court lacks subject matter

jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). In deciding whether to grant a