F.2d 336, 342-43 (D.C. Cir. 1991). A pension fund has no way of knowing whether the
employer’s information is accurate and must, therefore, conduct periodic audits. See Plymouth
Concrete, 803 F. Supp. at 172. The operative facts in a suit to compel payment based solely on
information provided by the employer thus are fundamentally different from the operative facts
in a suit to compel contributions after an audit reveals that the employer has failed to make all
required contributions. Jd.

In addition, this situation is more complex than an ordinary contractual arrangement. See
Plymouth Concrete, 803 F. Supp. at 172. As noted above, the definition of “a single core of
operative fact” turns on a fact oriented inquiry. Car Carriers, 789 F.2d at 593. Whether the
facts are related in time, space, and/or motivation, form a convenient trial unit, and whether
their treatment as a unit conforms to the parties’ expectations, business expectations, or usage
are all relevant. Restatement (Second) of Judgments § 24(2).

The two cases here, while stemming from the same underlying contract, do not in fact
arise from “a single core of operative fact” because an action premised on the right to prompt
payment “arise[s] out of different facts, at a different time, and from a different motivation than
a suit to compel an audit and to recover any deficiencies the audit reveals.” See id.; see also
May, 899 F.2d at 1011 (Logan, J., dissenting); ef Int'l Union of Operating Eng’rs—Employers
Constr. Indus. Pension, Welfare and Training Trust Funds v. Karr, 994 F.2d 1426, 1428 (9th
Cir. 1993) (the right to accurate computation of payments arises from the same core of operative
fact as the right to timely payments). Accordingly, the court finds that the present suit arises out
of a different set of operative facts as Moriarty I. This means that this case is not barred by

claim preclusion.

13


(b)(3)(B) will be deemed admitted unless controverted by the statement of the moving party.”
Local Rule 56.1(a)(3).

Adinamis did not respond to Moriarty’s Local Rule 56.1(b)(3)(B) statement of additional
facts. Accordingly, all of the facts raised by Moriarty in his Local Rule 56.1(b)(3)(B) statement
of additional facts are deemed admitted to the extent that they are supported by the record. With
that caveat, the following facts are derived from the parties’ submissions.

D. Facts

The following facts are undisputed unless otherwise noted.

1, Moriarty I

On July 8, 1998, Moriarty, in his capacity as trustee of the Local Union No. 727, LB.T.
Pension Trust, and the Teamsters Local Union No. 727 Health and Welfare Fund and the Local
Union No. 727 Legal Assistance Plan — the same funds involved in the present action — sued
Adinamis in a suit captioned Moriarty v. Adinamis Funeral Directors, Inc., No. 98 C 4139
(“Moriarty I’). Like the present suit, Moriarty J was brought under § 301(a) of the LMRA, 29
U.S.C. § 185(a), and § 502(a)(3) of ERISA, 29 U.S.C. § 1132(e)(2).

In Moriarity I, Moriarty claimed that Adinamis had failed to submit certain remittance
reports to the Health and Welfare Fund and Pension Plan, for January of 1997, February of 1998,
and June through September of 1998, He thus sought to compel Adinamis to: (1) file the
corresponding remittance reports; (2) pay delinquent contributions owed to the Funds, together
with interest and liquidated damages as provided by the collective bargaining agreement(s) and
trust agreements; (3) pay reasonable attorneys’ fees and costs; and (4) grant such other relief as

the court deemed just and equitable.


grouping constitutes a ‘transaction’... [is] to be determined pragmatically, giving weight to such
considerations as whether the facts are related in time, space, origin, or motivation, whether they
form a convenient trial unit, and whether their treatment as a unit conforms to the parties’
expectations or business understanding or usage,” Restatement (Second) of Judgments § 24(2)
(1982).

The Seventh Circuit has not defined the contours of the transactional approach in a case
involving an audit under similar circumstances (i.e., where there is some temporal overlap
between the two actions and no audit occurred in connection with the first action).? However,
the most factually analogous case in this district - Central States, S.E. and S.W. Areas Pension
Fund v. Plymouth Concrete, Inc., 803 F. Supp. 169 (N.D. Ill. 1992) — supports the conclusion
that a second suit to recover delinquent contributions to a pension fund after an audit is not
barred by claim preclusion principles because it effectively arises out of different facts than an
earlier suit seeking to collect delinquent contributions based on employee work history.

In Plymouth Concrete, a pension fund trustee filed a suit seeking delinquent contributions
on the basis of employee work history for the period of July, 1990 through December, 1990, Jd.
The case settled, and the court dismissed it with prejudice. Jd. at 171. Subsequently, after
Plymouth’s records were audited, the same trustee brought a suit seeking delinquent
contributions for the period between December 27, 1987, and September 21, 1991. Jd. at 170.
Plymouth filed a motion for summary judgment, contending that the second suit was barred by

the doctrine of claim preclusion because it arose of the same transaction as the first. Id.

2 Specifically, it will be recalled that Moriarity J sought contributions for January of 1997,
February of 1998, and June through September of 1998 (although the last discrepancies occurred
in February of 1998), On the other hand, in Moriarty IZ, contributions for April of 1990 through
December 31, 1999, are at issue.


Il. Discussion

Adinamis’ motion for summary judgment poses only one question: is Moriarty II barred
by the doctrine of claim preclusion? Adinamis contends that it is because the cause of action and
the parties are the same and there was a final judgment on the merits in Moriarty I.
Unsurprisingly, Moriarity disagrees, contending that claim preclusion is inapplicable because the
July 31, 2000 audit, which led to this action, picked up delinquencies occurring after the
judgment in Moriarty I, According to Moriarty, claim preclusion thus does not bar this action
because the identities of the claims are different.

A. Standard on a Motion for Summary Judgment

Summary judgment is proper when the “pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue of any material fact.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). The party opposing the summary judgment motion “may not rest upon the
mere allegations or denials of the adverse party’s pleading”; rather, it must respond with
“specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). A court
should grant a motion for summary judgment only when the record shows that a reasonable jury
could not find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986); Valenti v. Qualex, Inc., 970 F.2d 363, 365 (7th Cir. 1992).

B. Claim Preclusion

The doctrine of claim preclusion dictates that a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that were raised or could have been
raised in the original action in another subsequent action. Federated Dep't Stores, Inc. v.
Moitie, 452 U.S. 394, 398 (1981). In order for claim preclusion to apply to a federal action,

6


Because Adinamis failed to answer or otherwise respond to the complaint, Moriarty filed
a motion for entry of a default judgment. However, with respect to damages, Moriarty did not
perform an audit of Adinamis’ books and records. Instead, to determine the amount of
contributions Adinamis owed the Funds for January of 1997, February of 1998, and June through
September 1998, William Coli, the Funds’ administrator, extrapolated the number of employees
Adinamis had employed in the past by the monthly contribution rate detailed in the labor
agreements between the Funeral Directors Services Association of Greater Chicago and
Teamsters Local No. 727.

A $8,549.50 judgment was ultimately entered against Adinamis in Moriarity I. This
amount represented contributions, interest and liquidated damages due the Funds for January of
1997, February of 1998, and June through September of 1998 as estimated by Coli, as well as
attorneys’ fees and court costs. Adinamis did not appeal.

On February 27, 2001, Moriarty filed the present action (“Moriarty II’) pursuant to §
301(a) of the LMRA, 29 U.S.C. § 185(a), and § 502(a)(3) of ERISA, 29 U.S.C. § 1132(e)(2),
seeking a judgment compelling Adinamis to pay delinquent contributions owed to the Funds for
the period April 1, 1990 through December 31, 1999. Moriarty also sought interest, liquidated
damages and attorneys’ fees. Moriarty IJ arises from a July 31, 2000, audit of Adinamis, which
revealed delinquencies totaling: $33,049.74 to the Health and Welfare Fund, $22,485.63 to the

Pension Fund, and $100.06 to the Legal Assistance Plan.'

‘Moriarty commingles this fact into his response to a paragraph in Adinamis’ 56.1(a)(3)
statement, which states simply that Moriarty II was filed. (Adinamis’ Motion for
Summary Judgment, Facts at § 4; Moriarty’s 56.1(b)(3)(A) Statement at § 4). However,
because the facts concerning the audit are plainly evident and undisputed, and because
the audit and its findings are essential to resolve the parties’ arguments, the court has
included this information here.


the other hand, Moriarty asserts that Moriarty IT is not precluded because: (1) it seeks, among
other things, to recover delinquencies occurring after Moriarty I was decided; and (2) claim
preclusion does not bar a subsequent action to collect contributions uncovered by a new audit
because the audit effectively creates a new set of operative facts.

1. Post-Judgment Claims

The parties disagree as to whether Moriarty II seeks delinquencies for the time period
commencing after the judgment in Moriarty J but agree that the July 31, 2000 audit is accurate.
The audit reveals no discrepancies between Adinamis’ payroll records and contributions reported
and paid after the time periods covered by Moriarty J (January of 1997, February of 1998, and
June through September of 1998) as the last discrepancies occurred in February of 1998.
Accordingly, because nothing in the agreed-to factual record suggests that any discrepancies
occurred after the judgment in Moriarty [, Moriarty’s first argument is unpersuasive.

2. Impact of the Audit on the Core of Operative Facts

Moriarty alternatively asserts that claim preclusion does not bar a subsequent action to
recover contributions from Adinamis because the audit effectively creates a functionally
different and thus new claim. In response, Adinamis contends that the Seventh Circuit has
adopted the transactional approach to claim definition, and that, under this approach, the claims
asserted in Moriarty I and Moriarty II are identical.

The transactional approach, which was first set forth in the Restatement (Second) of
Judgments, is used to determine whether a second suit is in fact identical to a prior suit. See Car
Carriers, Inc. v. Ford Motor Co., 789 F.2d 589, 593 (7th Cir. 1986). The relevant inquiry under
the transactional approach is whether the two actions arise out of the same core of operative
facts. Id. This is a “decidedly fact-oriented” inquiry, id., and the determination of “what factual

8


finute Order Form (06/97)

“ United States District Court, Northern District of Iinois * ,

Name of Assigned J i Sitting Judge if Oth
oe Magara Tue Blanche M. Manning than Assigned Judge
CASE NUMBER 01 C 1378 DATE April 19, 2002
CASE Moriarty v. Adinamis
TITLE

[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the

MOTION: nature of the motion being presented.)

DOCKET ENTRY:
ql)

a

Filed motion of [ use listing in “Motion” box above.]

(2) a) Brief in support of motion due

(3) o Answer brief to motion due___._ Reply to answer briefdue__—-

(4) oO Ruling/Hearingon__sset for saat

(5) a Status hearing[held/continued to] [set for/re-set for]on set for saat

(6) o Pretrial conference{held/continued to] [set for/re-set for]on__—setfor__—ss aat__.
(7) o Trial[set for/re-set for}on___—__at

(8) Qa {Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OO FRCP4(m) O General Rule 21 OFRCP41(a)(1) OO FRCP41(a)(2).

10) @ [Other docket entry] For the reasons set forth in the attached memorandum and order, the present
ase is not barred by claim preclusion. Adinamis’ motion for summary judgment is, therefore, denied. Enter
emorandum and order.

a [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.
° S$ reat number of notices

PR 24

date docketed_~

WAM

date mailed notice

Notices mailed by judge’s staff. A

Notified counsel by telephone.
Docketing to mail notices.
Mail AO 450 form.

Copy to judge/magistrate judge

courtroom
RTS deputy’s
initials

Date/time received in
central Clerk’s Office mailing deputy initials



In contrast, in May, a divided panel of the Tenth Circuit held that claim preclusion barred
a pension fund from maintaining a second action to compel an audit and collect contributions.
899 F.2d at 1010. As the court explained, “[t]he contract provides remedies for late
contributions and provides the Fund with audit powers to ensure that contributions are accurate.
However, the existence of these two provisions within the contract does not justify two separate
trips to the courtroom.” Jd. It thus concluded that the Fund should have challenged the alleged
inaccuracy of the contributions when it challenged the timeliness of those contributions.

Importantly, the May court also analogized the pension contribution suits to breach of
contract suits. Jd. In the Tenth Circuit, a contract is a transaction, so under the transactional
approach, “all claims of contractual breach not brought in an original action would be subject to
bar of claim preclusion, so long as the breaches antedated the original action.” Id., citing
Restatement of Judgments § 62 comment h, at 250 (“All the breaches of a contract prior to the
commencement of the suit are treated as a single cause of action”). Because the trust agreement
which required the employer to make contributions is a contract, the May court held that all
claims arising from the alleged breach of that contract for a particular time period had to be
raised in a single action. Id. at 1010-11.

After reviewing these two cases, the Plymouth Concrete court noted that the contract
analogy was unpersuasive because it failed to take the realities of the operations of modern day
pension funds into account. 803 F. Supp. at 172. It pointed out that, “to hold that whenever the
Fund believes it must sue to prod a lax or recalcitrant employer into submitting required reports
or making payments shown as due on reports it has filed, it must conduct an audit of the
employer’s wage records or forever lose the right to complain of possible omissions or

inaccuracies in the contributions owed by that employer, imposes an unfair burden on pension

11


The Plymouth Concrete court applied the transactional test, and held that the second suit
was not barred because the audit effectively created a new set of operative facts which could
form the basis of a new, separate claim. Jd. at 172-73. In reaching this conclusion, the court
examined two cases that had dealt with the issue but reached opposite results, A.M. Nat’!
Pension Fund v. Industrial Gear Mfg. Co., 723 F.2d 944 (D.C. Cir. 1983) (second suit is not
barred), and May v. Parker-Abbot Transfer and Storage, Inc., 899 F.2d 1007 (10th Cir. 1990)
(second suit is barred).

In Industrial Gear, the time period at issue in the two cases overlapped, but the two
actions stemmed from two different audits: one audit sought contributions because the employer
was behind in its payments, while the other sought additional monies based on the Fund’s claim
that the employer’s contributions were inaccurate. 723 F.2d at 947-49. The court found that,
“[a]lthough the time period for which the Fund alleges injury overlaps in the two suits, the two
causes of action differ in that each asserts different rights, alleges different injuries, and arises
from different facts.” Jd. at 948-49.

In reaching this conclusion, the court noted that the first action addressed delinquent
contributions, based on information provided by the employer, while the second suit addressed
inaccurate contributions based on an audit. Jd. It also focused on the fact that the Fund has no
independent way to verify information in an employer’s monthly reports, and before it can file a
suit claiming that contributions are inaccurate, it must conduct an audit. Jd. at 948. On the other
hand, it is facially obvious whether contributions are late. The court, therefore, distinguished
between a claim based on failure to pay at all and a claim based on inaccurate payments, and

found that the claim preclusion principles did not bar the second action.

10


“three elements must be met: (1) an identity of the causes of action; (2) an identity of the parties
or their privies; and (3) a final judgment on the merits.” Roboserve, Inc. v. Kato Kagaku Co.,
121 F.3d 1027, 1034 (7th Cir. 1997).

Only the first prong of this test is at issue, as Moriarty correctly concedes that the second
and third prongs have been met. The court agrees, as the parties are the same and a final
judgment was entered in Moriarty I. See Brown v. J.I. Case Co., 813 F.2d 848, 854 (7th Cir.
1987) (identity of parties element satisfied where plaintiff and defendant remain the same);
Hawxhurst v. Pettibone Corp., 40 F.3d 175, 180 (7th Cir. 1994) (a default judgment is a final
judgment on the merits).

But are the claims in Moriarty I and Moriarty I the same? “A claim has “identity” with a
previously litigated matter if it arises from the same ‘core of operative facts’ as that earlier
action.” Brzostowski v. Laidlaw Waste Sys., Inc., 49 F.3d 337, 339 (7th Cir. 1995) (internal
citations omitted). Put another way, “{a] claim is deemed to have ‘identity’ with a previously
litigated matter if it is based on the same, or nearly the same, factual allegations arising from the
same transaction or occurrence.” Kratville v. Runyon, 90 F.3d 195, 198 (7th Cir. 1996). A party
must, therefore, bring all of her claims arising from a single transaction in one suit or lose those
claims forever. See id. A new case is nevertheless permissible if a new wrong occurs.
Supporters to Oppose Pollution, Inc. v. Heritage Group, 973 F.2d 1320, 1326 (7th Cir. 1992).
Likewise, a party may initiate new litigation in order to assert a claim that could not have been
presented in the first action. Id.

According to Adinamis, Moriarty II (which seeks contributions for April of 1990 through
December 31, 1999) arises out of the same core of operative facts as Moriarty I (which sought
contributions for January of 1997, February of 1998, and June through September of 1998). On

7


consisting of short numbered paragraphs, of any additional facts that require the denial of
summary judgment, including reference to the affidavits, parts of the record, and other
supporting materials relied upon ....” Local Rule 56.1(b)(3)(B). Finally, Local Rule 56.1(b)
provides that “[a]l] material facts set forth in the statement required of the moving party will be
deemed admitted unless controverted by the statement of the opposing party.” Jd.

Although the facts of this case are simple and straightforward, Moriarty has failed to
properly comply with the local rules. Specifically, in his responses to Adinamis’ statement of
facts, he commingles additional facts into his responses instead of simply admitting or denying
what Adinamis has averred and raising the additional facts in a separate Local Rule
56.1(b)(3)(B) statement of additional facts.

Failure to comply with Local Rule 56.1 is not a “harmless technicality.” Waldridge v.
Am. Hoechst Corp., 24 F.3d 918, 924 (7th Cir. 1994). A party who does not properly contest the
opposing party’s Rule 56.1(a)(3) facts is considered to have admitted those facts, to the extent
that they are properly supported by the record. Local Rule 56.1(b)(3); Midwest Imports, Ltd. v.
Coval, 71 F.3d 1311, 1312 (7th Cir. 1995); Tobey v. Extel/JWP, Inc., 985 F.2d 330, 333 (7th Cir.
1993).

Although Moriarty improperly comingled additional facts into his response to Adinamis’
statement of fact, he does not dispute any of Adinamis’ facts. Thus, the format of Moriarty’s
56.1(b)(3)(A) response is incorrect but does not inure to his detriment. However, the same
cannot be necessarily said for Adinamis’ failure to follow the local rules. Moriarty filed a
statement of additional facts pursuant to Local Rule 56.1(b)(3)(B). The moving party is entitled
to file “a concise reply in the form prescribed in ... [56.1(b)(3)] for a response.” Local Rule
56.1(a)(3). However, “[a]ll material facts set forth in the statement filed pursuant to section

3


I. Conclusion
For the above reasons, the court concludes that the present case is not barred by claim

preclusion. Adinamis’ motion for summary judgment is, therefore, denied.

DATE: 4. /9_9 a Berele vi Yan

Blanche M. Manning r
United States District Judge

Olev1378.s)

14


and the Local Union No. 727 Legal Assistance Plan (collectively, the “Funds”). As a trustee,
Moriarty is authorized to collect employer contributions owed to the Funds. Adinamis operates
in this judicial district and has been, at all times, an employer within the meaning of the LMRA
and ERISA.

B. Jurisdiction and Venue

Jurisdiction is proper under 28 U.S.C. § 1331 as this controversy arises under federal law,
namely § 301(a) of the LMRA, 29 U.S.C. § 185(a), and § 502(a)(3) of ERISA, 29 U.S.C. §
1132(e)(2). Venue is proper pursuant to 28 U.S.C. § 1391(b), as Adinamis is an Illinois
corporation. See 28 U.S.C. § 1391(c).

Cc. Local Rules

Under the local rules, a party seeking summary judgment must file “a statement of
material facts as to which the moving party contends there is no genuine issue and that entitle the
moving party to a judgment as a matter of law” consisting of “short numbered paragraphs,
including within each paragraph specific references to the affidavits, parts of the record, and
other supporting materials relied upon to support the facts set forth in that paragraph. Failure to
submit such a statement constitutes grounds for denial of the motion.” Local Rule 56.1(a)(3). In
the present case, Adinamis, the movant, has properly filed a statement of facts pursuant to Local
Rule 56.1(a)(3). So far, so good.

Local Rule 56.1(b) requires that a responding party submit a “concise response” to the
movant’s statement, which must contain “(a] response to each numbered paragraph in the
moving party’s statement, including in the case of any disagreement, specific references to
affidavits, parts of the record, and other supporting materials relied upon... .” Local Rule
56.1(b)(3)(A). Local Rule 56.1(b) also requires the responding party to submit “a statement,

2


y

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

THOMAS J. MORIARTY, Trustee on
behalf of the Teamsters Local Union
No. 727, 1.B.T. Pension Trust, and the
Teamsters Local Union No. 727 Health
and Welfare Fund, and the Teamsters
Local Union No. 727 Legal Assistance
Plan,

DOCKETED

APR
Plaintiff, 2 4 2002

v. No. 01 C 1378

ADINAMIS FUNERAL DIRECTORS,
LTD., an INinois Corporation,
Defendant.

Nd

MEMORANDUM AND ORDER

Plaintiff Thomas J. Moriarty (“Moriarty”) is the trustee of Local Union No. 727, the
1.B.T. Pension Trust, and the Teamsters Local Union No. 727 Health and Welfare Fund and
Legal Assistance Plan. He filed this action pursuant to § 301(a) of the Labor Management
Relations Act (“LMRA”), 29 U.S.C. § 185(a), and § 502(a)(3) of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1132(e)(2), seeking a judgment compelling
defendant Adinamis Funeral Directors, Ltd., (“Adinamis”) to pay delinquent contributions owed
to the Funds, Adinamis has filed a motion for summary judgment pursuant to Fed. R. Civ. P. 56,
claiming that this suit is barred by an earlier action between the parties. For the following
reasons, the court disagrees and the motion is denied.
I Background

A. The Parties

Plaintiff Thomas J. Moriarty (“Moriarty”) is a trustee and fiduciary of the Local Union

No. 727, L.B.T. Pension Trust, and the Teamsters Local Union No. 727 Health and Welfare Fund


funds while furthering none of the policies behind the doctrine of res judicata.” Id., quoting
May, 899 F.2d at 1011 (Logan, J., dissenting). Accordingly, the court held that the second suit
arising after the audit effectively arose out of different facts than the first, so the second suit was
not barred. /d. at 172-73.

The court finds this reasoning persuasive for two reasons: (1) it is consistent with the
policies underlying the claim preclusion rules; and (2) it takes into account the realities of fund
management. Res judicata and collateral estoppel exist to preclude relitigation of matters that
have already been litigated or to preclude litigation of matters that should have been litigated
previously. See C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure:
Jurisdiction § 4403 at 11 (1981). They encourage reliance on existing decisions, bar vexatious
or repetitious litigation, promote cost-effective litigation strategies, conserve the resources of the
courts and the parties, prevent inconsistent decisions, and promote finality. Id. at 11-17.

As shown by this case, litigation regarding delinquent pension contributions need not
arise from an audit. Moriarity J was filed when Adinamis failed to submit certain remittance
reports, and damages were calculated based on labor agreements, as opposed to an audit. When
a pension fund simply wishes to obtain reports or payments owing based on paperwork provided
by the employer, it should not have to conduct an audit in order to preserve their right to
challenge the amounts paid. In other words, forcing pension funds to conduct audits and
otherwise fully litigate every possible claim for a certain time period once that time period is
called into question for any reason will simply lead to the instigation of more litigation which
may not even be unnecessary. This flies in the face of the principles underlying res judicata.

Second, the realities of fund management are such that the trustees are dependent upon
employers’ honesty and accuracy in reporting. See Connors v. Hallmark & Son Coal Co., 935

12