82.

83.

84.

Pension Fund's computer system. The date specified as the last day of the initial term of
the contract is entered as the "Cont[ract) Expire Date", even though the contract may
rollover pursuant to an Evergreen Clause (R 211-12; p. 435 of DX F). This date is
entered at the time the contract is processed by the Contracts Department which is
typically long before the initial term of the agreement could end (R 211-12). For
example, the 1980 Agreement was received by the Contracts Department on May 7, 1982
(p. 6 of PX 1) so at or about that date, the "Cont{[ract] Expire Date" of June 30, 1983 was
entered in the Pension Fund's computer, even though the 1980 Agreement contained an
Evergreen Clause.

The Pension Fund's computer also separately reflects the "Contract Status" of an
employer's agreement (R 209; DX F). If an employer terminates its obligation to
contribute to the Pension Fund, the computer screen shows the employer’s contract status
as "Terminated", if an employer has not terminated its obligation to contribute, the
computer indicates that the “Contract Status" is “Active". (R 212). In addition, if an
employer has terminated its obligation to contribute to the Pension Fund, the computer
indicates a "withdrawal code" other than "01" and reflects the date of the employer's
withdrawal (R 211-12; p. 435 of DX F). The withdrawal information appears in
connection with the assessment of withdrawal liability.

After the earliest expiration date of a collective bargaining agreement is reached, the
Pension Fund does not perform an independent investigation to determine whether the
contract is continuing pursuant to an Evergreen Clause because it is not cost effective for
it to do so (R 220).

On May 4, 1999, the Pension Fund’s ICON screen showed that the Defendants' "Contract

-19-


Cc. The Defendants Have Reaffirmed The Collective Bargaining Agreements
Through Their Course Of Conduct.

As indicated above, an employer can adopt a labor contract through its course of conduct.
Capito) Husting, Inc. Kabbes and Effingham have adopted the 1989 Extension Agreement (and
the underlying 1980 Agreement) and the 1983 Extension Agreement by
a. Remitting contributions to the Pension Fund through the present date in

accordance with the Certification Clause;

b, Remitting contributions to the Illinois Conference of Teamsters Welfare
Fund until 2000;
(om Cooperating with the audit in accordance with the trust agreement which

was incorporated in the 1980 Agreement; and
d. Indicating that they desired to provide pension benefits to their employees.
It is not necessary for the Pension Fund to show that the Defendants adopted the contract in their
entirety ~ an employer can adopt through its conduct parts os an agreement such as the pension

clause, Local 9925 W/F v. Sunbelt Sales, Inc., 932 F.Supp. 1135, 1141 (M.D. Fla. 1990) affd,

932 F.2d 977 (11" Cir. 1991). Cf, Caporale v. Mar Les, Inc. (recognizing existence of limited
contractual obligation to contribute to a fund). At a minimum, the above conduct demonstrates
that the Defendants adopted the pension clause of the labor agreements, Therefore, they are
contractually obligated to remit the contributions sought by the Pension Fund.

D. Effingham Is Liable For Contributions Under Kabbes' Contracts Because
Kabbes And Effingham Are A Single Employer.

xxxii. This Court has jurisdiction to determine whether the terms of Kabbes Collective
Bargaining Agreement should be applied to the employees of Effingham. There is no

dispute concerning union representation, nor are there allegations of unfair labor

-40-


XxXvi.

xxvii.

1983 Extension Agreement. Therefore, that agreement and the underlying 1980
Agreement must be presumed to be still in effect and obligate the Defendants to
contribute to the Pension Fund.

The Defendants’ claim that the termination of at least the 1980 Agreement is obvious
based upon the April 15, 1986 letter from Local Union 26 to Kabbes. However, this
letter was signed before either the 1983 Extension Agreement and the 1989 Extension
Agreement were signed. Therefore, these agreements must supercede the April 15, 1986
letter. Moreover, the April 15, 1986 letter indicates that Local 26 sought to modify a
collective bargaining agreement that purportedly expired on June 30, 1986. Neither the
1980 Agreement or the 1983 Extension Agreement expired on that date, so the notice
could not possibly terminate those agreements.

Further, the April 15, 1986 letter requesting contract modifications does not comport with
the duration clauses of the 1980 Agreement, which indicates that termination will occur
only if a notice indicated a desire to terminate the contract is service. A notice to

terminate a collective bargaining agreement must be clear and explicit. Louisiana

Bricklayers Welfare Fund v. Alfred Miller Contracting Co,, 157 F.3d 404, 409 (5" Cir.
1998); Office & Professional Employees Local 42 v. United Automobile Workers Local

174, 524 F.2d 1316, 1317 (6 Cir. 1975). The April 15, 1986 letter does not purport to

cancel the contract, it merely invites Kabbes to negotiate modifications to some terms of

3

The Defendants assert that if this is true, the contribution rate must drop to the $16

rate contained in the 1980 Agreement, not the higher $24 rate set forth in the 1989
Extension Agreement. However, the Pension Fund's rules are incorporated in the 1980
Agreement, including the rule prohibiting employers from decreasing the contribution rate
(R 270; § 3.01(a)(4) of PX 5). Therefore, even if the 1989 Extension Agreement
terminated, the Defendants are contractually obligated to contribute at the higher $24 rate
under the Plan documents,

-36-


xi.

xii.

xiii.

xliii.

sought by the fund but (2) the equitable doctrine relieves the employer of the duty to pay.
The Seventh Circuit recognized in Gerber Truck that it is the Department of Labor's view
that a defined benefit pension plan such as the Pension Fund must provide pension credit
to employees regardless of whether employers fulfill their duty to pay corresponding
contributions. 870 F.2d at 1153. Thus, if equitable defenses are allowed and proved,
ERISA funds will probably be required to pay benefit claims without receipt of the
corresponding contribution payment. Ultimately, the shortfall will be borne by other
employers, Such a result will certainly undermine the financial soundness of
multiemployer funds which ERISA and the LMRA were designed to foster.

Teamsters & Employers Welfare Trust of Illinois v. Gorman Brothers Ready Mix, 283
F.3d 877 (7" Cir. 2002) suggested that a defense of laches could apply to an ERISA claim
for contributions. However, that Court relied upon the fact that the plan in that case had
failed to point to any plan language that would be violated by the invocation of Jaches.
Id. at 883.

Here, the Defendants’ laches defense must be rejected because it is inconsistent with the
provisions of the trust agreement requiring Kabbes and Effingham to pay all required
contributions to the Pension Fund and requiring the Trustees to collect all contributions
owed to the Pension Fund.

In addition, as noted by the Teamsters dissent, the parties in that case did not brief the
issue of whether courts may decline to enforce the terms of an ERISA plan based on
equitable grounds. Id. at 888.

B. Kabbes And Effingham Have Not Established The Elements Of Laches.

Laches requires a showing of unreasonable delay in filing suit and prejudice to the

-45-


L. Wente 69 29.111 years 18.661 years
$400 at current age $149 at current age

(R 269; PX 38).

42. William Pals was an employee of Kabbes from 1968 to 1999 (pp. 430-38 of DX F).

43. Pals applied for retirement benefits in March, 1999 (pp 438-42 of DX F).

44. At that time, he represented that he was a member of Teamsters Local 26 (p. 438 of
DXF).

45. William Pals retired on May 12, 1999 and began receiving a monthly pension benefit for
life of $421.07 (R 269; PX 38).

46. Without credit earned based upon his employment by Kabbes from April 1992 to May 12,
1999, Pals' monthly benefit would be $400.00 and he would owe the Pension Fund the
difference between the $421.07 he has received since May 1999 and the $400 he would
be entitled to receive (50 months x $21.07 = $1,053.50) (R 269; PX 38). This
prospective benefit reduction and liability for the overpayment would probably impose a
significant hardship on a 69 year old individual who is receiving a relatively small
monthly pension.

D. Facts Relating To the Pension Fund's Audit.

47. The Trust Agreement permits the Pension Fund to audit the records of participating
employers (R 8; Art. III, § 5 of PX 4; DX KK).

48. Central States’ Special Bulletin 85-6 issued to participating employers and local unions
on August 1, 1985 (which would include Kabbes and Effingham), informed participating
employers and unions that audits conducted by the Pension Fund would conform to
Article III, Section 5 of the trust agreements, as interpreted by the Supreme Court

(DX Kk),

-13-


108.

109.

120.

lil.

112.

113.

114.

115.

Effingham (R 154).
For the period at issue, medical insurance for those employees of Kabbes for whom
contributions were not paid to the Illinois Conference of Teamsters Welfare Fund, was
provided under a policy with Pekin Insurance that is issued in the name of Effingham
Asphalt (R 127-128, 283).
Drivers for Kabbes and Effingham are paid at the same wage rate (R 126).
Union and non-union drivers for Kabbes and, Effingham are paid at the same wage rate
(R 126, 127).
The duties of union and non-union drivers are the same (R 127).
Kabbes does not reimburse Effingham for services rendered by Effingham employees, for
rent or for general office supplies (R 119-120).
Neither Kabbes nor Effingham keep any records of the value of services provided by
Effingham to Kabbes (R 156-159).
Neither Kabbes nor Effingham keep any records of any payment or benefit given by
Kabbes to Effingham for services rendered or expenses (R 156-159).
John Kabbes handles the union negotiations on behalf of Kabbes and Effingham (R 120).
CONCLUSIONS OF LAW
JURISDICTION.
Section 306(a) of the Multiemployer Pension Plan Amendments Act of 1980, adding
§ 515 to ERISA, provides:
Sec, 515. 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.

-23-


practices. Larry G. Lewis Funeral Directors, Ltd, 150 F.3d at 775; Moriarty v. Svec, 164

F.3d 323, 334 (7th Cir. 1998),

xxxiii, Alternatively, if Effingham is not bound by a Collective Bargaining Agreement because
the parties have not located copies of these Agreements, it is bound by Kabbes'
Agreements (i.e., the 1980 Agreement, the 1983 Extension Agreement and the 1989
Extension Agreement) because it is a single employer with Kabbes. These entities share
common management and common ownership and have an interrelation of operations
and a centralized control of labor relations. Thus, Kabbes and Effingham are a single
employer and Effingham is obligated to make contributions to the Pension Fund to the
same extent as Kabbes. Moreover, because Kabbes and Effingham are a single employer,
they are both jointly liable for the full amounts owed to the Pension Fund by both entities.

WI. LACHES DEFENSE IS WITHOUT MERIT.

A. Laches Does Not Apply To A Claim By A Multiemployer Plan For
Contributions Under ERISA.

xxxiv. ERISA does not mention equitable defenses such as laches. While the federal courts
have the power to create federal common Jaw, this can occur “only where the federal
statute does not expressly address the issue before the court [and only if the proposed
common law] is consistent with the policies underlying the federal statute in question."
Nachwalter v. Christie, 805 F.2d 956, 959-60 (11th Cir. 1986); cf. Upholsterers’ Union
Pension Fund v, Artistic Fumiture of Pontiac, 920 F.2d 1323, 1327 (7th Cir. 1990)
(common law "successorship" liability doctrine created based upon the "congressional
policies underlying ERISA"). Laches is a species of estoppel. Teamsters Employees

Welfare Fund v. Gorman Bros. Ready Mix, 283 F.3d 877 (7" Cir. 2002). Where the

proposed common law is estoppel, it is necessary to examine the relevant statutory

-41-


10.

11.

12.

13.

Article I, Section 2 of the 1980 Agreement indicates that covered employees are "truck
drivers and all yard help." (PX 1).

Article XVII of the 1980-1983 Agreement requires Kabbes and Effingham to pay to the
Pension Fund contributions on behalf of each covered employee who works two (2) days
or parts of two (2) days during the week (PX 1).

Under Article XVII of the 1980 Agreement, Kabbes also agreed to pay contributions to
the Illinois Conference of Teamsters Welfare Fund on behalf of covered employees

(PX 1).

Article XIX of the 1980 Agreement provides as follows with respect to the duration of the
1980 Agreement:

ARTICLE NO. XIX - TERMINATION OF AGREEMENT

This Agreement shall be in full force and effect from July 1, 1980 to and

including June 30, 1983 and shall continue in full force and effect from year to

year thereafter unless written notice of desire to cancel or terminate the

Agreement is served by either party upon the other at least sixty (60) days prior to
annual date of expiration.

It is further provided that where no such cancellation or termination notice is

served and the parties desire to continue said Agreement but also desire to

negotiate changes or revision in this Agreement, either party may serve upon the

other a notice, at least sixty (60) days prior to June 30°, of any contract year,

advising that such party desires to continue this Agreement but also desires to
revise or change terms or conditions of such Agreement.

(PX 1). A clause in a labor agreement such as Article XIX of the 1980 Agreement that indicates

that the contract will continue in effect from year to year after a specified earliest possible

expiration date absent a written notice of termination is known as an "Evergreen Clause."

R 206).

14.

John Kabbes, on behalf of Kabbes, signed an agreement extending the 1980 Agreement

(the "1983 Extension Agreement"). The 1983 Extension Agreement contains an

~4-


XXL.

xxiii.

Defendants, the Defendants were obligated to contribute to the Pension Fund from April
1992 to June 2003.
The Pension Fund has not waived any theory of recovery based upon this theory. A
complaint need not allege a particular legal theory. Albiero v. City of Kankakee, 122
F.3d 417, 419 (7th Cir. 1997). In this case, the Amended Complaint alleged that the
Defendants had failed to accurately report work history for all covered employees and,
therefore, delinquent contributions were owed. Legal theories supporting this wrong can
be interchanged without altering the complaint.
In addition, the Defendants have always been fully aware of the Plaintiffs’ theories of
recovery including the Certification Clause claim.

2. Even If The Certification Clause Is Disregarded, The Defendants

Were Obligated To Contribute Because The Labor Agreement Was
Never Terminated.

The Defendants claim that their contractual relationship with Local 26 ended April 30,
1992 and therefore, the Pension Fund cannot collect anything after that date. Termination
of a contract is not presumed, and the Defendants bear the burden of establishing that
termination occurred, Armout Co. v. Celic, 294 F.2d 432, 436 (2TM Cir. 1961).
Moreover, § 515 of ERISA severely limits employer defenses in ERISA cases. 29 U.S.C.
§ 1145; Gerber Truck Co, The Defendants’ termination defense is only available if the
termination of the agreements is incontestable from the face of the agreement. Where, as
here, the contract is either unclear or termination is disputed, § 515 of ERISA bars
consideration of the contract termination defense. Carpenters Health & Welfare Trust v,

Bla-Delco Const., Inc., 8 F.3d 1365, 1369 (9" Cir. 1993); Residential Roofers Welfare

Fund of Philadelphia v. A & B Metal, Inc., 976 F.Supp. 341, 348 (E.D. Pa. 1997);

-34-


85.

86.

87.

Status" was "Active", its withdrawal code was "01" and its withdrawal date was a fall
back date of 0/1/01 (p. 435 of DX F). This means that as of May 4, 1999, the Pension
Fund’s records did not indicate that Kabbes and Effingham's contractual obligation to
contribute to the Pension Fund had terminated (R 209, 211-13; p. 435 of DX F).

At the same time, the Pension Fund’s computer records showed that the "Cont[ract]
Expire Date" of April 30, 1992 (pp. 430, 433 and 435 of DX F). This occurred as a result

of the earliest expiration date being entered on the computer in May 1992 when the 1983

Extension Agreement and the 1989 Extension Agreement were processed and does not
indicate that the Pension Fund believed that Kabbes and Effingham's contracts had
expired (R 209-13). It simply reflects that the earliest possible expiration date had
passed,

Ultimately the term "expired" and “terminated” do not have the same meaning to the
Pension Fund. In the Pension Fund's view, an agreement that has passed its earliest
expiration date is "expired" even though it rolls over from year to year under an
Evergreen Clause. On the other hand, if an agreement has been properly terminated and
the parties’ bargaining relationship is ended, the Employer is designated as "Terminated"
on the Pension Fund's records (R 211-12). It is apparent that Local 26 also shares this
understanding since it advised the Pension Fund that Kabbes and Effingham's contracts
had "expired" but it assumed they had rolled over under the Evergreen Clause (p. 620 of
DX M).

The Pension Fund’s records also showed that from June 30, 1983 through at least
September 6, 1988, the Collective Bargaining Agreement between Local Union 26 and

Kabbes and Effingham had "expired" (DX B & D). This was not changed until 1992

~20-


Defendants' employees. Moreover, Defendants never questioned the existence of their
liability and the Pension Fund reasonably believed that there was a contractual basis for
the payment of contributions. As a result, the Defendants paid contributions and the
Pension Fund provided pension credit to the Defendants' employees and it has paid
pension benefits to retired employees based upon the contributions. It is not fair to the
Pension Fund or the Defendants’ employees for the Defendants to now belatedly assert
there is no contract.

Four other factors also significantly undercut the Defendants' contract defense. First,
under the NLRA, it is a criminal offense punishable by a fine and imprisonment for an
employer to remit contributions to a fund such as the Pension Fund unless there is a
contract that requires the contributions. 29 U.S.C. § 186(c)(5)(B) and (D). The
Defendants continued to remit contributions to the Pension Fund after April 1992 — in
fact, they continued to remit contributions after they asserted their contract defense in this
case through the date of trial. The Court will not lightly infer the commission of a felony
by the Defendants.

Second, the Defendants never disputed the existence of a contract requiring contributions
until after this case was filed. It is true that they refused to pay the contributions revealed
to be owed by the audit but that was because they believed that their liability was limited
to employees who were union members. Only after the Defendants learned that the union
membership defense was invalid under controlling authority, Gerber Truck, 870 F.2d at
1150; Central States Pension Fund v. Central Cartage Co., 69 F.3d 1312 (7 Cir. 1995),
did they devise the contract defense. It is clear the contract defense is merely a pretext to

get around the invalidity of the union membership defense.

-26-


94, Kabbes and Effingham both deliver materials to job sites (R 282; PX 26).

95.  Kabbes and Effingham use the same types of trucks (PX 26).

96. | When a job bid comes in, whichever company is available to do the work will get the job,
and the work is interchangeable (PX 26).

97, The property known as 1601 West Wabash Avenue, Effingham, Illinois, is owned by
Effingham Asphalt (R 116).

98. During the 1990's, John and Richard Kabbes delegated much of the day-to-day
management of Kabbes Trucking to Richard Goldstein (R 119, 163).

99. During the 1990's much of the day-to-day operations of Effingham were delegated to
Richard Goldstein (R 119).

100. Kabbes and Effingham share the same business telephone number (R 116).

101. Effingham office employees answer the phone and set up jobs for Effingham and
Kabbes, without distinguishing between their work for the two entities (R 117-120).

102. Effingham’s office manager, Jane Sudkamp, performs work for both Kabbes and
Effingham, but is only paid wages from Effingham (R 117, 285, 286).

103. After Goldstein died, Jane Sudkamp’s duties have included the preparation of
contribution reports, for both Kabbes and Effingham, that are submitted to the Pension
Fund (R 135, 136).

104. General office supplies purchased by Effingham are used by both Effingham and Kabbes,
but the cost of these supplies is paid solely by Effingham (R 286, 287).

105. These costs are not allocated between Effingham and Kabbes (R 119, 120, 287).

106. Effingham pays the phone bill and the electric bill for 1601 West Wabash (R 117-118).

107. Seventy (70%) or seventy-five (75%) percent of Kabbes’ work is performed for

-22-


xxiv,

Central States Pension Fund v. Steel Express, Inc., No. 99 C 877 (N.D. Ill. 2000) (copy

attached as Exhibit 1).

The Defendants argue that the termination defense can be considered because it is so
obvious that the labor contracts terminated. This argument is based upon the 1989
Extension Agreement which does not contain an Evergreen Clause and provides that it
would only “remain in effect and full force through April 30, 1992". However, this
section of the 1992 Extension is captioned "Termination of this Modified Extension"
(emphasis added) and nothing indicates that the underlying 1980 Agreement or the 1983-
1989 Extension were also being terminated. Where "clear and specific language" is used
in the termination clause of a labor agreement, the federal courts are uniform in their

strict interpretation of such language." Trustees of BAC Local 32 Ins Fund v. Fantin

Enterprises, Inc., 163 F.3d 965, 969 (6" Cir. 1998). Here, the duration of the 1989
Extension Agreement clearly extinguishes only the Extension Agreement and does not
effect the 1983 Extension Agreement or the 1980 Agreement. As indicated above, the
1983 Extension Agreement and the 1989 Extension Agreement were signed at the same
time in 1992 (see, { 16, infra.), The Evergreen Clause in the 1983 Extension Agreement
requiring a written notice to terminate is meaningless if termination was automatic under
the 1989 Extension Agreement as the Defendants contend. At best, the duration clause of
the 1989 Extension Agreement is unclear and the Defendants' claim that the entire
agreement (including the 1980 Agreement and the 1983 Extension Agreement) expired is

not a valid defense to the Pension Fund's claim. Bla Delco Const.; A & B Metal, Inc.;

Steel Express, Inc.

The Defendants provided no evidence of the required written notice of termination of the

-35-


68.

69.

70.

71.

72.

73.

43).
Effingham did not report Dasenbrock and Wernsing as employees on EBCC Forms or
TAD Forms and did not pay any contributions on their behalf because Effingham did not
believe that they were union members (R 55-57, 98, 99, 179; PX 29, 43).
Effingham failed to report the following weeks of work for the following truck drivers for
the period of June 1994 through June 14, 2003:

Tom Dasenbrock 155 weeks

William Wernsing 295 weeks
In addition, the audit revealed minor reporting errors with respect to Effingham truck
drivers David Carroll, Donald Miller and Michael Thoele had been misreported and as a
result, one week of additional contributions was owed on each of these individuals (R 55-
57; PX 29).
Contributions were due to the Pension Fund from Kabbes and Effingham at a rate of
$21.00 per week for the period of October 21, 1990 through April 27, 1991 and $24.00
per week for the period of April 28, 1991 through June 14, 2003 (R 55-57, 179; PX 1, 2,
3, 29, 43). At these rates the contributions owed to the Pension Fund by Kabbes and
Effingham total as follows:

Effingham $12,936

Kabbes $27,297
Interest on the amounts owed by Kabbes and Effingham for 1990 through 1999 was
$10,548.86 through February 15, 2001 (PX 29).
John Kabbes was informed of the audit findings for 1990 to 1999 by letter dated January

23, 2001 (R 54-55; PX 29).

-17-


27.

28.

29.

and Effingham or Kabbes (R 151).

The audit that triggered this case was initiated by a request from Pat Gleason of Local 26
in 2000 (R 61; DX J & K). Gleason advised the Pension Fund that Kabbes and
Effingham had at least 5 unreported eligible employees (DX J & K). Gleason advised the
Pension Fund that the labor agreement “expired in 1992," however, he advised the
Pension Fund that Local 26 believed that the contract had continued in effect under the
Evergreen Clause (DX M). Gleason also advised the Pension Fund that he believed
contributions were owed to the Pension Fund on all employees regardless of union
membership (DX M). Gleason must have believed that the Defendants were still
contractually obligated to contribute to the Pension Fund or there would have been no
reason for him to request an audit.

On July 28, 2000, Bill Bounds of Local 26 also advised the Pension Fund's auditors that
the Defendants’ employees had refused to strike so the Defendants no longer had a
contract with Local 26. As a result, he had issued union "withdrawal cards" to the 6
union employees "covered by the contract" (DX V), However, Bounds did not indicate
when this alleged action occurred.

Facts Relating To Contribution Payments.

The Pension Fund relies upon participating employers to self-report the work history of
their eligible employees. Based upon the reports submitted by the employers, the Pension
Fund sends a monthly contribution bill. The Pension Fund has created reporting forms
for participating employers to use to report changes in the covered workforce (e.g.,
layoffs, new hires, sick leaves, etc.) which are known as "Billing Change and Corrections

Forms” or "Employee Billing Change and Corrections Forms” (hereinafter collectively


xviii.

collect delinquent contributions. Giordono v. Jones, 867 F.2d 409, 416 (7" Cir. 1989)
(Easterbrook, J. concurring) (district court's determination that funds contribution claims
was barred under almost identical fact pattern and legal claims as Mar Les, was wrong

under Robbins v. Lynch); Illinois District Council of Bricklayers v. R & R Masonry, Inc,

1996 WL 627635 *4 n.7 (N.D. Ill. 1996). (While Mar Les appears to be viable in suit
between unions and employers, "Mar Les repeatedly has been questioned, criticized
and/or ignored in the context of suits brought by funds to recover unpaid contributions")
(copy attached as Exhibit F); Divane v. Knlt Electric Co., 1996 WL 41686 *3 (N.D. Ill.
1996) ("[T}he continued precedential value of Caporale [v. Mar Les] may be questionable
in light of [the) more recent (although distinguishable) cases [of] ... Gerber Truck

[and] ... Robbins v. Lynch") (copy attached as Exhibit G); Carpenters Fringe Benefit
Fund v. Able Bros. Const,, 813 F.Supp. 643, 649 (N.D. Ill. 1993) ("{I]n light of ...

holdings in [Robbins v.] Lynch {and] Gerber Truck ... the value of Caporale [v. Mar Les’

is questionable"); Murphy v. Gullo Int'l, Development Co,, 1989 WL 51168 *2 (N.D. Ill.

1989) ("Mar Les has been often distinguished or ignored and seldom, if every followed ...

The present status of Mar Les is uncertain at best [due to] ... Gerber Truck ... [and}
Robbins v. Lynch” (copy attached as Exhibit H).

Mar Les is also distinguishable for several reasons other than the statute under which the
case was filed. First, unlike the employer in Mar Les, the Defendants had a longstanding
relationship with the union and they did have a copy of the underlying labor agreements
so at the time they signed the Certification Clause, what they were agreeing to do was

clearly spelled out. Second, in Mar Les, there was no evidence of any certification clause

like the one at issue in this case so contrary to the Defendants' claim, Mar Les does not

-32-


xii.

xiii.

xiv.

(E.D. N.Y. 1997); Sullivan v. Cirone, 1995 U.S. Dist. LEXIS 874 (N.D. Ill. 1995);

Bevona v. Galbreath-Ruffin Co., 690 F.Supp. 234 (S.D. N.Y. 1988); IGLWU Retirement

Fund v, Levy Bros. Frocks, Inc., 1987 U.S. Dist. LEXIS 7731 (S.D. N.Y. 1987), reversed,

846 F.2d 879 (2TM Cir. 1988); Giordono v. Jones, 1987 U.S. Dist LEXIS 13227 (N.D. ILI.

1987) aff'd 867 F.2d 409 (7" Cir. 1989); Robbins v. Mainline Hauling Co., 590 F.Supp.
1050 (E.D. Mo. 1984).

The Defendants also argue that the Certification Clause is not a sufficient basis for the
Pension Fund's claims for four reasons, none of which have merit. First, the Defendants
argue that the clause is insufficient to obligate them to contribute to the Pension Fund
because there is evidence that they were not in compliance with the other provisions of
the labor agreement and the union allegedly agreed that the collective bargaining
relationship had ended. The Defendants assert that the payment of contributions in
accordance with a certification clause is only one factor to be considered in determining
whether an employer has adopted a labor contract which can be overcome by other
evidence, such evidence of its non-compliance with other provisions of the collective
bargaining agreement.

The alleged termination of the collective bargaining relationship is irrelevant because an
employer can agree to pay contributions after the relationship ends. Bidlack v.
Wheelabrator.”

Nor is it necessary for the Court to decide whether a certification clause alone is sufficient

2

Of course, either the Pension Fund or the Defendants could decide that it does not

want to continue a month-to-month relationship, but that has not yet occurred in this case
since the Defendants continue to pay and the Pension Fund continues to accept their
payments, and as shown below the Defendants remain obligated to contribute under the
collective bargaining agreements.

-29-


Pension Fund that it was still trying to get a contract renewal and Kabbes was
working under expired contract (DX B). This establishes that as of September 6,
1988, neither the 1983 Extension or the 1989 Extension were signed.

As of August 12, 1991, the Pension Fund's computer record indicated that Kabbes'
contract expired on June 30, 1983 (p. 2 of DX D). If the Pension Fund had the
1983 Extension Agreement and/or the 1989 Extension Agreement as of that date,
the computer record would have reflected an expiration date of April 3, 1989 or
April 30, 1992 (R 2i2y.

A log of a telephone conversation between the Pension Fund and Local 26 dated
August 23, 1991 indicates that the Pension Fund was calling because it "need[ed]
CBAs since 1983" (p. 3 of DX D). The log indicates that Local 26 advised the
Pension Fund that neither Kabbes nor Effingham had signed a contract since 1983
and the employees would not go on strike so as far as Local 26 was concemed, the
Pension Fund "should and can terminate them." (p. 3 of DX D). Based upon this
conversation, the Pension Fund employee suggested to her supervisor that it may
be advisable to ask the Trustees to consider terminating Kabbes and Effingham's
participation (p. 1 of DX D). This establishes that as of August 23, 1991, the
1983 Extension Agreement and the 1989 Extension Agreement had not been
signed.

One of the Pension Fund's managers (Thomas Baxa) testified that the Pension
Fund initially received both the 1983 Extension Agreement and the 1989
Extension Agreement on April 30, 1992 (R 222-26). This testimony is supported

by the "April 30, 1992 [Date] Received" stamped on both the 1983 Extension

-6-


15.

(PX 3).

16.

Evergreen Clause which indicated that it would remain "in full force and effect from July
1, 1980 through April 30, 1989 and each year thereafter unless written notice of
termination or desired modification is given at least sixty (60) days but no more than
ninety (90) days prior to the expiration date by either of the parties hereto." (the "1983
Extension Agreement") (PX 2).

John Kabbes, on behalf of Kabbes, signed an agreement extending the 1980 Agreement
from May 1, 1989 to April 30, 1992 (the "1989 Extension Agreement") (PX3). The 1989

Extension Agreement did not contain an Evergreen Clause. Instead, it provided as
follows with respect to duration:

TERMINATION OF THIS MODIFIED EXTENSION

This Agreement shall be effective May 1, 1989 and remain in effect and full force
through April 30, 1992. It is agreed that throughout the month of April 1992 this
Agreement shall be open for changes and modifications if negotiations are on
going but not settled by April 30, 1992, a thirty day extension shall be in effect if
agreed to in writing by both parties.

The 1983 Extension Agreement and the 1989 Extension Agreement are undated. The
evidence establishes that these documents were signed contemporaneously in early 1992.
This is established by the following:

a Ina telephone conversation on September 3, 1987, Local 26 advised the Pension
Fund that the parties had agreed to extend the 1980 Agreement (DX GG). Ina
telephone conversation on September 10, 1987, Local 26 indicated that it was still
trying to get a renewal agreement (DX GG). These conversations establish that
the 1983 Extension was not signed as of September 1987.

b. Ina telephone conversation on or about September 8, 1988, Local 26 advised the


74,

75.

76.

77.

78.

79.

80.

81.

Despite his medical condition, Goldstein continued to actively work for Kabbes and
Effingham until at least mid-April 2001 (PX 17(c)).

Kabbes and Effingham wanted to pay contributions on behalf of all of their non-reported
truck drivers, but did not do so because they believed they were ineligible since they were
not union members (R 130, 141-42; PX 27).

The audit fees and costs incurred by the Pension Fund total $3,524.00 (R 177-179;

PX 39).

Prior to the initiation of this lawsuit, neither Kabbes nor Effingham ever informed the
Pension Fund that they believed that the 1980 Agreement or Extension Agreements had
expired and had no force or effect (R 48, 53-4, 101-02, 136-137, 139, 164-5, 203; PX 7-
19).

At no time prior to the audit in 2000 was the Pension Fund aware that Kabbes and
Effingham had not reported all of their eligible employees to the Pension Fund (R 99).
No employee of the Pension Fund ever told the Defendants that they did not need a
collective bargaining agreement in order to contribute to the Pension Fund or that
contributions only had to be made on behalf of union members (R 131, 138).

The Pension Fund has never received a written notification of an intent to terminate from
the Fund, Kabbes and Effingham continued to report employees and otherwise acted as
though they are currently obligated to contribute to the Pension Fund (R 80, 97, 191-2;
PX 7-19).

Facts Relating to Pension Fund Documents.

When a collective bargaining agreement is initially submitted to the Pension Fund, it is

reviewed by the Contracts Department which enters the stated initial term into the

-18-


20.

21,

22.

23.

24.

25.

26.

contribution rates set forth in the 1989 Extension Agreement (R 129-30; PX 7-9, 37) so
these employees were necessarily included in the rebill. The fact that Effingham paid the
rebill on its employees at the same time as Kabbes and contributed to the Pension Fund
after April 1992 at the higher rate required by the 1989 Contract Extension, establishes
that Effingham signed the 1983 Extension Agreement and the 1989 Extension
Agreement.

By letter dated April 15, 1986, Local Union 26 advised Kabbes that it "desire[d] to
negotiate certain changes and modifications in our now existing collective bargaining ...
[that] expires on June 30, 1986." [DX HH).

However, no collective bargaining agreement between Local Union 26 and Kabbes had
an expiration date of June 30, 1986 (PX 1& 2).

The April 15, 1986 letter indicated that Local 26 wanted to negotiate "changes or
modifications", it did not indicate that Local 26 desired to cancel or terminate any
agreement (DX HH). No evidence was presented that a written notice to terminate or
cancel the 1980 Agreement was provided at trial.

As indicated above, the 1983 Extension Agreement was not signed until 1992 (qj 16,
infra), therefore, the April 15, 1986 letter could not have terminated the 1983 Extension
Agreement.

No evidence of a written notice of a desire to terminate or modify the 1983 Extension was
been presented at trial.

No evidence that Effingham provided a written notice of its desire to cancel or terminate
its 1980 Agreement or the 1983 Extension Agreement has been presented.

After April 30, 1992, there were no collective bargaining negotiations between Local 26


ii,

16

ii.

Under 29 U.S.C. § 1132(e)(1), this Court has jurisdiction over the Pension Fund's suit to
collect contributions allegedly owed by Effingham and Kabbes under the collective
bargaining agreements and the Pension Fund Trust Agreement.

CONTRACTUAL LIABILITY.

A. Liability For The Period Prior To April 30, 1992.

Kabbes does not dispute its contractual obligation to contribute to the Pension Fund
through April 1992 under the 1989 Extension Agreement. Therefore, there is no dispute
about Kabbes' liability for contributions on behalf of Douglas Kinkelaar at least for the
period of October 21, 1990 through April 30, 1992.

B. Liability For Contributions After April 30, 1992.

An employer can contribute to a multiemployer trust fund such as the Pension Fund only
if the basis upon which the payments are being made is specified in a binding written

agreement. 29 U.S.C. §186(c)(5); Central States Pension Fund v. Gerber Truck Service,

Inc., 870 F.2d 1148, 1153-54 (7" Cir. 1989) (en banc). However, the written agreement
does not have to be a collective bargaining agreement. Id. For example, this Court has
previously held that the Pension Fund’s Trust Agreement is sufficient to obligate an
employer to contribute to the Pension Fund after collective bargaining agreement

termination. Central States Pension Fund v, Beelman Truck Co., 653 F.Supp. 678, 680

(N.D. Ill. 1987) (Norgle, J.). The Seventh Circuit has also held that the writing requiring
contributions does not have to be a collective bargaining agreement. Gariup v. Birchler
Ceiling Co., 777 F.2d 370, 375 (7 Cir. 1985). Further, the written agreement does not
have to be a signed agreement; all that is required is that there be sufficient conduct to

manifest an intent to be bound to a writing. Capito!-Husting Co. V. NLRB, 671 F.2d 237,

-24-


iW
|

(yea States District Court, Northern District of Ilinois

Minute Oeder Form (06/97)

Nam Casiqnahindsey Sitting Judge If Other
Magistrase Judge than Assigned Judge
7 ER. 02 C 1809 DATE 11/17/2004
Case” Central States Pension Fund vs. Kabbes Trucking, et al.
‘LE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
M oro? of the motion being presented. ]
Bench Trial Judgment

DOCKET ENTRY:
() Oo Filed motion of [ use listing in “Motion” box above.]
(2) oa Brief in support of motion due
(3) Oo Answer brief to motion due___. Reply to answer briefdue__.
(4) Qa Ruling/Hearingon set fora
(5) Oo Status hearing{held/continued to] [set for/re-set for]on____esetfor__——_att
(6) oO Pretrial conference(held/continued to] [set for/re-set for]on____setfor___—sat__
(7) Qa Trial{set for/re-set for]on_ at
(8) o (Bench/Jury trial] [Hearing] held/continued to__—_aat
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) (Local Rule 41.1 OFRCP41(a)(1) 0 FRCP41(a)(2).

ao @ (Other docket entry] | The Clerk shall enter judgment for Plaintiffs in the amount of $54,305.86,
pursuant to Rule $8. See Opinion and Order of November 17, 2004. Plaintiffs shall file a proposed order
indicating interest owed by Defendants since February 16, 2001, liquidated damages owed by Defendant,
and attorneys fees and costs owed by Defendant. Plaintiffs shall file this proposed order on or before
December 6, 2004. Defendants may file a response to this proposed order on or before December 20,

2004. Plaintiffs may file a reply to Defendant’s response on or before January 3, 2005.
(11) (\o [For further detail see order (on reverse side ofittached to)the original le Avge —
— a

v
No mxjces required, advised in open court. Docu vent:

No notices required. number of notices

Notices mailed by judge's staff,

Notified counsel by telephone.

X_ | Docketing to mait notices.

x Mail AO 450 form.

Copy to judge/magistrate judge.

deputy’ 23:5 Wd LIAN AGO

initials

Datetime rosie in 4
contrat Clerk"s Offic.



xhvi.

xvii.

Iv.

Nor can the Defendants establish prejudice as a result of any delay caused by the
Plaintiffs. They claim prejudice as a result of statements attributed to Goldstein which
they now claim are inaccurate. They claim that as a result of Mr. Goldstein’s subsequent
death, his testimony related to the audit is unavailable to them. The only alleged
inaccurate statements by Goldstein relate to the representations he made to the Pension

Fund's auditors concerning the relationship between Kabbes and Effingham so there

_ could only be prejudice if the court rules in the Pension Fund's favor based upon the

single employer doctrine. Since the court believes that Effingham is obligated to
contribute based upon the Certification Clause and its admission that it signed the same
contracts as Kabbes that were not terminated, there is no prejudice at all.

Further, any prejudice sustained by the Defendants has been caused by their own acts,
rather than any delay of the Plaintiffs. The Defendants delegated to Goldstein the duty to
assist with the audit with the knowledge of his serious medical condition. The audit was
conducted in December 2000 and the findings provided to the Defendants in January
2001. Goldstein continued working for the Defendants until at least the middle of April
2001. The Defendants took no steps to question him concerning statements or
information he provided to the Pension Fund in relation to the audit in the 4 months
following the audit, or the 3 months following the audit findings, even though they knew
the Pension Fund was demanding payment. Goldstein was available to the Defendants
during this entire time. Any prejudice that is caused by their inability to question him
now is the result of their own conduct.

DAMAGES.

Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2), provides:

-47-


(R 10-20; PX 7-19).

33.

34.

35.

36.

37.

38.

The EBCC Forms submitted by Kabbes and Effingham from 1990 through March 2003
were regularly, but not always, signed by John or Richard Kabbes directly below the
Certification Clause (PX 7-15). The TAD Forms submitted after 1999 were signed by
Jane Sudkamp or Richard Goldstein (PX 16-17; R 134-136). Goldstein was delegated
the responsibility for preparing the EBCC Forms and the TAD Forms that were submitted
to the Pension Fund until his death in 2001 (R 119, 146-7). After Goldstein's death, Jane
Sudkamp was delegated the responsibility for submitting the TAD Forms to the Pension
Fund (R 118).

The purpose of requiring employers to reaffirm their obligation to contribute under the
Certification Clause is to insure that the employer is contractually obligated to continue
making contributions to the Pension Fund (R 17, 19, 221, 252).

After April 30, 1992, Kabbes and Effingham did not alter either the manner in which they
had previously submitted EBCC Forms (and TAD Forms after 1999) or the manner in
which they remitted contributions (R 136).

After April 30, 1992, Rich Goldstein was delegated the duty to communicate with the
Pension Fund on behalf of Kabbes and Effingham (R 118-119).

Kabbes and Effingham continue, to the present day, to report work history and pay
contributions to the Pension Fund for some of their truck drivers (R 80, 129, 130; PX 18-
19).

During the period after April 1992 until some time in 2000, Kabbes and Effingham also
temitted contributions to the Illinois Conference of Teamsters Welfare Fund on behalf of

the same employees who were listed on the reporting forms that were submitted to the

-li-


30.

31.

32.

referred to as "EBCC Forms"). Sometime after 1999, another reporting form known as a
Turnaround Document ("TAD Form") was used. It is only necessary for an employer to
submit an EBCC Form or a TAD Form for a month where there has been a change in the
covered workforce; if an EBCC Form or a TAD Form has not been submitted, the
Pension Fund assumes that there has been no change in the covered workforce and bills
the same amount for each week that was billed for each week of the prior month (R 10-
20).

Kabbes and Effingham submitted EBCC Forms to the Pension Fund prior to Aprit 30,
1992, which as noted above (see { 19, infra.), identified only Kabbes as the employer

(R 129-30; PX 7-9, 35-38). Although Kabbes and Effingham now claim that their
contractual obligation to contribute to the Pension Fund ended on April 30, 1992, they
submitted EBCC Forms and TAD Forms reporting the work history of certain eligible
employees for the period of May 1992 through April 2003 (R 133; PX 9-19, 35-38).
Kabbes and Effingham completed EBCC Forms by entering the names of their
employees, the employees' social security numbers, and the employees’ current status
(e.g., laid off, on sick leave, rehired, etc.). On the TAD Forms, the employees on whose
behalf the Pension Fund was billing were listed and Kabbes and Effingham noted any
changes or additions on the TAD Form (R 10-20, 133; PX 7-19).

The EBCC Forms, the TAD Forms as well as the monthly bills submitted to employers by
the Pension Fund contain a Certification Clause which states:

The employer hereby reaffirms his obligation to make contributions required by

the Collective Bargaining Agreement and further represents that all employees

eligible to participate in the Fund, in accordance with the rules of the Fund and the

‘Employee Retirement Income Security Act of 1974’ are being reported and only
those eligible employees are being reported."

-10-


the trustees cannot possibly forfeit their ability to collect a promised payment because of their
conduct (or inaction).
xxxvi. ERISA also imposes strict duties upon trustees including the duty to operate the funds in

strict conformity with the governing writings. Central States Pension Fund v. Central

Transport, Inc., 472 U.S. 559, 572-73 (1985); see also, Prohibited Transaction
Exemption 76-1, 41 Fed. Reg. 12740 (Trustees who fail to collect promised contributions
from a solvent employer violate prohibited transactions provisions of ERISA). Like the
LMRA, the ERISA written agreement requirement prohibits trustees from explicitly
forgiving an employer's written contribution promises so the liability cannot be excused
by virtue of the trustees’ conduct.

XXXVii. Additionally, the creation of equitable defenses will undermine Congress’ goal of
insuring the solvency of multiemployer funds. With ERISA, Congress sought to
protect "the continued well-being and security of millions of employees and their
dependents" by establishing "minimum standards .., assuring the equitable
character of such plans and their financial soundness." 29 U.S.C. § 1001(a).
Congress' objective was to "mak{e] sure that if a worker has been promised a
defined pension benefit upon retirement — and if he has fulfilled whatever
conditions are required to obtain a vested benefit — he actually will receive it.”
Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 375 (1980).
Section 302(c)(5) of the LMRA is also designed to insure the employees actually
receive promised benefits. Gariup v. Birchler Ceiling Co., 777 F.2d 370, 375 (7th
Cir. 1985).

XXxviii. When it added Section 515 to ERISA in 1980, Congress sought "to alleviate

-43-


xvi.

xvii.

and employees because it means more money is available for benefits at lower
contribution rates). Since the Certification Clause is critically important to the Pension
Fund as well as employers and employees, and certainly is not unconscionable, it should
be enforced. Id.

The Defendants’ third argument about the Certification Clause is based upon the decision
in Caporale v. Mar Les, Inc., 656 F.2d 242 Cin, 1981). In Mar Les, a non-union
employer signed two memorandums of understanding that incorporated an industry wide
collective bargaining agreement, but the employer never received a copy of the collective
bargaining agreement. Over a two year period, the employer paid contributions to the
union fund on behalf of only one of its 10 employees. The Seventh Circuit held that there
was no mutual assent to the labor contract because a copy was never delivered to the
employer so it did not know the terms of its undertaking and the employer did not comply
with any of the terms of the agreement other than partial compliance with the obligation
to contribute to the Pension Fund.

The Mar Les decision is easily distinguishable because it was brought under the LMRA,
not ERISA. 656 F.2d at 242-3. In subsequent decisions, the Seventh Circuit has
repeatedly held that an employer's claim that it did not subjectively believe that it had a
contract is not a valid defense in an ERISA trustee suit like this case because § 515 of
ERISA makes such funds "like a holder in due course in commercial . . . entitled to
enforce the writing [it receives] without regard to understanding or defenses applicable to

the original parties." Gerber, 870 F.2d at 1149, see also, Robbins v. Lynch, 836 F.2d 330

(7" Cir. 1988). Mar Les was not an ERISA case, so while the decision may still be valid

in a suit between a union and employer, it does not apply to a trustee suit under ERISA to

-31-


2) In any action under this Subchapter by a fiduciary for or on behalf

of a plan to enforce section 1145 of this title in which a judgment

in favor of the plan is awarded, the court shall award the plan ~

(A) the unpaid contributions,

(B) interest on the unpaid contributions,

(C)  anamount equal to the greater of --
(i) interest on the unpaid Contributions, or
(ii) liquidated damages provided for under the plan in an amount
not in eXCess of 20 percent (or such higher Percentage as may be
Permitted under Federal or State law) of the amount determined by
the court urider subparagraph (A),

(D) reasonable attomey's fees and Costs of the action, to be Paid
by the defendant, and

(©) such other legal or equitable telief as the court deems
appropriate,

xlviii. The Pension Fund trust agreement provides that:


XV.

to adopt a collective bargaining agreement in its entirety because the unique language in
the certification clause in this case only required the Defendants to adopt the pension
clause of the labor agreements and did not require adoption of the labor agreements in
their entirety. Since the Certification Clause did not incorporate the labor agreements as a
whole, evidence that the Defendants failed to comply with other provisions of the
collective bargaining agreement is irrelevant. The only relevant evidence is that each
month, the Defendants reaffirmed the duty to contribute to the Pension Fund in
accordance with the labor agreements and paid contributions to the Pension Fund thereby
creating a contractual obligation limited to the duty to contribute to the Pension Fund.
Second, the Defendants dismiss the Certification Clause as "boilerplate." However, it
does not invoke fraud, unconscionability or material mistake, so it cannot avoid the
Certification Clause for this reason. Operating Engineers Local 130 Fund v. Gustafson
Const., Co., 258 F.3d at 650. Moreover, the Certification Clause is actually critically
important to participating employers, employees and the Pension Fund. Absent an
affirmation of liability, it may be a crime for am employer to make payments and a fund
to accept employer payments; the Certification Clause eliminates any doubt about the
legality of payments by creating a contractual commitment between the employer and the
Pension Fund. This contractual commitment eliminates the risk of erroneous benefit
payments by the Pension Fund and insures that employee expectations are not frustrated
{as they will be in this case if the Defendants’ defense is accepted). Further, the
Certification Clause reduces the Pension Fund's litigation costs by eliminating the need to
litigate the issue of whether an employer that has contributed to the Pension Fund (like

the Defendants) was contractually required to do so (which is good for both employers

-30-


17.

18.

19,

Agreement and the 1992 Extension Agreement by the Pension Fund's Pension
Department (PX 42b and 42c), The Contract Update Checklist that the Pension
Fund's Contracts Department prepares upon receipt of a contract was not
completed until May 1992 and indicates that the Contracts Department received
the 1982 Extension Agreement and the 1989 Extension Agreement on May 8,
1992 (DX I and R 222-24).

f. The 1989 Extension Agreement increased the pension contribution rate to be paid
by Kabbes effective May 1, 1989 (PX 42(c)). After processing the 1989
Extension Agreement, the Pension Fund retroactively billed Kabbes and
Effingham $5,000 in May 1992 to account for the increased pension rate in April
1992 (R 227-229). Kabbes and Effingham paid the retroactive billing in June
1992 (R 227, 228).

Effingham was also a signatory to a collective bargaining agreement with Local 26 that

required it to contribute to the Pension Fund on behalf of its truck drivers (R 121, 155;

p.3 of DX D).

The parties have stipulated neither the Pension Fund nor Effingham can locate copies of

the agreements signed by Effingham (R 148).

Effingham signed the same 1983 Extension Agreement and the 1989 Extension

Agreement that were signed by Kabbes (R 122-23). This is established by Effingham's

conduct since 1992. The employees of both Kabbes and Effingham are reported to the

Pension Fund on the same reporting forms that identify Kabbes as the employer (R 129-

30; PX 7-18, 35-38). Several Effingham employees were reported to the Pension Fund

on these reports for the period covered by the rebill that resulted from the higher


88.

89.

90.

91.

92.

93.

when the 1983 Extension Agreement and the 1989 Extension Agreement were received
by the Pension Fund (R 209-13; DX B & D). During this 9-year period from June 30,
1983 through April 30, 1992, Kabbes and Effingham continued to contribute to the
Pension Fund and the Pension Fund accepted the contributions and provided pension
credit to the covered employees (R 70, 97, 129-30, 136, 191-92, 214; PX 7-19, 37, 38;
DXF).

Just like it did not believe the Defendants’ obligation to contribute ended when the
Pension Fund's computer records began to reflect a "Contract Status” of "Expired" from
June 1983 to April 1992, the Pension Fund has never believed that the Defendants’ labor
agreements with Local 26 terminated in 1992 (R 60, 70, 80, 97, 100, 247 and pp. 436,
447 of DX F). The Pension Fund has always believed that agreements have rolled over
from year to year under the Evergreen Clauses of the 1980 Agreement and the 1983
Agreement (R 70, 191-92; p. 636 of DX K; p. 620 of DX M).

The fact that the Pension Fund does not believe that the Defendants’ obligation to
contribute has ceased is also established by the fact that the Pension Fund has never
assessed withdrawal liability (p. 623 of DX M).

Facts Relating To Single Employer Issue.

Both Kabbes and Effingham are engaged in the trucking industry with a principal
business address of 1601 West Wabash Avenue, P.O. Box 307, Effingham, Illinois 62401
(R 116).

Kabbes and Effingham perform primarily the same work (DX K).

Kabbes and Effingham both spread materials at job sites (R 144, 282).

Kabbes and Effingham both stockpile materials at job sites (R 282; PX 26).

-21-


xxix,

Evergreen Clause. As a result, a contract that is designated as “expired” frequently has
actually rolled over under an Evergreen Clause. What is really significant is the fact that
the Pension Fund's records describe the Defendants' contract as "Active". Steel Express,
at p. 15 (Exhibit I). Third, the date entry relied upon by the Defendants was made by a
jow level Pension Fund employee without any management responsibility and does not
bind the Pension Fund. Id., see also, MCI Communications v. AT & T, 708 F.2d 1081,
1143 (7th Cir. 1983) ("opinions of [low level] employees without management
responsibility are not properly considered to be admissions of the corporation.”)

The Defendants' argument about the Pension Fund's computer record documents is
ultimately based upon semantics only. There is no question that the initial term of the
Defendants' extended contract "expired" by 1983, but because no notice of termination
was sent, the agreement was renewed from year to year thereafter. As Judge Holderman
held in Steel Express, the characterization of the contract as "expired" in the Pension
Fund's records is not inconsistent with the Pension Fund's assertion that it was renewed
each year after that date. Steel Express, Inc,, at 15. The Pension Fund does not equate
“expired" with "terminated" nor does Local 26 (see Fact Findings J 86) and this
understanding comports with the common labor law usage of these terms. See ¢.g.,
Trinidad Corp. v. National Maritime Union, District 4, 81 F.3d 769, 771 (8th Cir. 1996)
{duration clause’ labor provided that after the expiration date, the collective bargaining

agreement would continue in effect from year to year"); Se-Ma-No Electric Co. 284

NLRB 1006, 1007 (1987) (Evergreen Clause "keeps the contractual terms in effect

beyond the expiration date"); KWC Furniture Co., 247 NLRB 541 (1980) ("The April 1

expiration date passed without either party giving a notice of termination ... [so the

-38-


Xxxi.

agreement] automatically renewed itself"); cf. Bright v, Coastal Lumber Co., 962 F.2d
365, 368 (4th Cir. 1992) (lease provided that "at the expiration of ... ten years the contract
remains renewable from year to year").

The Defendants also argue that it is obvious that the contracts terminated because Judge

Scott held in Illinois Conference of Teamsters Welfare Fund v. Kabbes Trucking Co.,

Case No. 01-3297 at p. 54 (C.D. Ill. June 25, 2003) that "There is no issue of proper
termination in this case because the 1989 [Extension Agreement], the last CBA which
Kabbes Trucking was signatory, expired in 1992." This statement is dicta because the
fund in that case did not seek to bind Kabbes to the 1989 Extension Agreement, but
instead to significantly higher contribution rates that were required by the 1995-1998 and
1998-2001 labor contracts that had been paid by the Defendants ($2.50 per hour vs. $4.36
per hour). Moreover, Judge Scott clearly misread the 1989 Extension Agreement — as
noted above, the duration clause of the 1989 Extension Agreement indicates that it was
the only writing that would have ended in 1992. She was also unaware of the fact that the
1983 Extension Agreement was signed at the same time as the 1989 Extension
Agreement so her reading would improperly render the duration clause of the 1983
Extension Agreement surplusage. Thus the dicta in that case should not be followed.
Ultimately, there is no evidence supporting the Defendants’ claim that the 1980
Agreement or the 1983 Extension Agreement had terminated. Therefore, these contracts
remain in effect and mandate payment of the contributions sought by the Pension Fund.
Alternatively, termination has certainly not been clearly established so the termination

defense is barred by § 515 of ERISA. Bla-Delco, Inc; Steel Express.

-39-


vii.

viii.

ix,

Third, the Defendants admit that they wanted to contribute to the Pension Fund on behalf
of all of the individuals included in the Pension Fund's audit, but they have now
inexplicitly changed their minds.

Fourth, it is significant that the Defendants have not filed a counterclaim seeking the
return of the contributions they paid after April 1992. As indicated above, the credit
eamed by the Defendants’ employees after April 1992 must be cancelled if there was no
contract. Larry T. Lewis Funeral Directors, Ltd, 150 F.3d at 776-77. If the Defendants
really believed that there was no contract, they would have filed the mandatory
counterclaim seeking the return of the contributions they paid after April 1992,

1 The Certification Clause obligated the Defendants to
contribute after April 1992,

An employer can be contractually obligated to contribute to a fund after collective
bargaining agreement termination under plan documents such as a trust agreement,

‘entral States Pensi id v. Beelman Truck Co., or a participation agreement. Central
States Pension Fund v. Behnke, Inc,, 883 F.2d 454 (6 Cir. 1989). Further, an employer
can create a right to provide fringe benefits that survives termination of a collective
bargaining relationship. See, ¢.g, Bidlack v, Wheelabrator Corp., 993 F.2d 603 (7" Cir.
1993) (en bane) (employer can be obligated to provide retiree health benefits after end of
bargaining relationship).

Under the Certification Clause contained on the billing forms submitted to the Pension
Fund, the Defendants reaffirmed their obligation to contribute to the Pension Fund. This
very same Certification Clause has been held to bind an employer to contribute to the

Pension Fund after termination of a collective bargaining agreement. Central States

Pension Fund v, Joe McClelland, Inc,, 1993 WL 243409 (N.D. Ill. 1993), aff'd 23 F.3d

-27-


contribution rates associated with each benefit class do not change over time (R 265;

§ 3.01(c) of PX 5). To acquire higher benefits from the Pension Fund, the collective
bargaining parties must negotiate a higher contribution rate that is associated with a
higher benefit class (R 265; § 3.01{c) of PX 5).

Local Union 26 (“Local 26") of the IBT is a labor organization which, at all relevant
times, represented, for the purposes of collective bargaining, certain employees of Kabbes
and Effingham (R 34, 120).

Kabbes is an Illinois partnership (R 114). All of the partners in the Kabbes Trucking
partnership are members of the Kabbes family (R 114).

Effingham is an Illinois corporation (R 115). The current shareholders of Effingham are
the Richard J. Kabbes Family Limited Partnership, the John R. Kabbes Family Limited
Partnership and the Hoene Family Limited Partnership (R 114-115). The partners of the
Hoene Family Limited Partnership are Robert J. Hoene and Mary K. Hoene (R 115). The
partners of the Richard J. Kabbes Family Limited Partnership are Richard J. Kabbes and
Carolyn Kabbes (R 115). The partners of the John R. Kabbes Family Limited Partnership
are John R. Kabbes, Jane C. Kabbes, Douglas J. Kabbes, Gregg A. Kabbes, Brad W.
Kabbes, and Todd A. Kabbes (R 115).

The officers of Effingham are John Kabbes, Richard Kabbes, Mary Hoene and Robert
Hoene (R 115-116).

Mary Hoene is the sister of John and Richard Kabbes (R 115).

Facts Relating To The Labor Agreements,

Kabbes signed a collective bargaining agreement with Local 26 covering the period from

July 1, 1980 to June 30, 1983 (the "1980 Agreement") (PX 1).


xliv.

xlv.

defendant as a result of the unreasonable delay. Gorman Bros. Ready Mix, 283 F.3d at
880. To establish laches, the Defendants must show that the Pension Fund did
something to reasonably induce them into believing that they would not be sued. Jd at
882. As shown above, the Pension Fund was unaware of its claim until the audit in
December 2000 and suit was filed in March 2002. The Pension Fund demanded payment
in January 2001 (PX 29) and followed up with phone calls seeking payment (R 174-5),
The Defendants could not possibly have reasonably believed that the claim had been
dropped after only 15 months so it did not unreasonably delay in filing suit.

Further, the laches defense fails because the Defendants' failure to pay the contributions at
issue in this case had nothing to do with the Pension Fund’s delay. At no time did the
Pension Fund ever suggest to the Defendants that it would not collect the contributions at
issue in this case. Instead, the Pension Fund demanded payment (PX 29) and followed up
with demands for payment (R 174-5).

Moreover, the reliance of the Defendants on the Pension Fund’s delay must be
reasonable. Gorman Bros. Ready Mix, 283 F.3d at 883-84. As direct parties to the
collective bargaining agreements, the Defendants could not have reasonably relied on the
Pension Fund's silence when the collective bargaining agreement and controlling law
establish that contributions must be paid on all employees regardless of union

membership status. cf. Central States Pension Fund v. Kroger Co,. 226 F.3d 903, 915

(7" Cir. 2000) (rejecting estoppel defense because "Kroger, the party asserting estoppel,
obviously knew of its practice of designating the [permanent] employees in question as
{ineligible} casuals and, therefore, it was in a better position than the Fund to know the

truth that its practice did not comport with the CBA.") 226 F.3d at 915.

-46-


certain problems which tend to discourage the maintenance and growth of
multiemployer plans." 29 U.S.C. §§ 1001(a)(1) and 1001(c)(2). Congress
indicated that unpaid employer contributions as well as the lengthy, complex and
costly litigation that was required to collect promised payments was a "serious
problem" and a principal cause of the financial instability of multiemployer
funds.‘ To alleviate this problem, Congress "gave statutory status to employers’
contribution duties under multiemployer plans,” Artistic Furniture, 920 F.2d at
1328, and substantially narrowed the range of available employer defenses in
order to enhance accurate actuarial planning and reduce the costs associated with
employer delinquencies. Central States Pension Fund v, Gerber Truck Serv., Inc.,
870 F.2d 1148 (7th Cir. 1989) (en banc). Further, the sponsors of § 515 explicitly
endorsed the decision in Lewis v. Mill Ridge Coals, 298 F.2d 552 (6th Cir. 1962)
where the court held that defenses based upon alleged trustee misconduct could
not be recognized, thereby further demonstrating that Congress intended Section
515 to foreclose defenses premised upon fund conduct. 126 Cong. Rec. 23039,
August 25, 1980 (Rep. Thompson); 126 Cong, Rec. 23288, August 26, 1980
(Sen. Williams).
xxxix. Congress’ explicit desire to protect employee expectations and assure the financial
soundness of funds cannot be reconciled with the creation of equitable defenses to trustee
collection suits. Such defenses are premised upon the assumptions that: (1) the employer

is contractually obligated by its collective bargaining agreements to pay the contributions

‘ Staff of Senate Committee on Labor and Human Resources. 96" Cong. 2d Sess.
$1076, the Multiemployer Pension Plan Amendments Act of 1980, Summary of Analysis
and Consideration at 43-44 (Comm. Print 1980).

~A4-


49.

50.

51.

52.

53.

34.

55.

56.

37.

58.

Special Bulletin 85-6 does not require non-participating employers to permit an audit of
their records (DX KK).

On or about May 23, 2000, the Pension Fund sent a letter to Kabbes which notified
Kabbes that the Pension Fund intended to perform an audit of its records to verify that all
required contributions had been paid for the period from December 29, 1996 to December
25, 1999 (R 34, 35; PX 20).

The May 23, 2000 letter notified Kabbes that the Pension Fund was entitled to the audit
pursuant to the Pension Fund Trust Agreement, Article III, Section 5 and that the purpose
of the audit review was to identify all eligible plan participants and verify that
contributions were properly reported for all eligible plan participants (R 36; PX 20).

To conduct the audit, payroll ledgers, individual earning cards, IRS forms, seniority lists,
personnel files, time cards and daily driver logs are reviewed (R 36).

Rich Goldstein was delegated the authority to represent Kabbes and Effingham in relation
to the audit, including making statements to the auditors (R 38, 138; PX 21).

This delegation was made with the knowledge that Mr. Goldstein was in poor health

(R 154-155).

The audit was postponed twice at the request of Kabbes due to Goldstein’s health which
prohibited him from participating in the audit (R 44).

The audit was conducted on December 5 and 6, 2000, and included a review of both
Kabbes' and Effingham's payroll records (R 45, 46; PX 24).

At no time did Kabbes or Effingham object to the audit or question the Pension Fund's
right to review the records of either Kabbes or Effingham (R 45, 46; PX 21).

Goldstein told the auditors that both Kabbes and Effingham employed truck drivers who

-14-


63.

64.

65.

66.

19).
The Pension Fund's audit was eventually expanded back to 1990 and forward through
June 14, 2003 (R 55-6, 171, 179; PX 29, 43).
The audit revealed that for all or part of the period of October 1990 through June 14,
2003, Kabbes employed Jed Goeckner, David Hess, Norbert Hille, Douglas Kinkelaar
and Lee Meinhart as truck drivers (R 51-53, a 179; PX 29, 43). Payroll records were
not available for the period prior to May 1994 go findings were estimated for the two
employees who were employed before May 195d (Hille and Kinkelaar) (R 56-7). Kabbes
has never challenged the accuracy of the estimated audit amounts (R 57-58).
Kabbes did not report Goeckner, Hess, Hille, Kinkelaar and Meinhart as employees on
EBCC Forms or TAD Forms and did not pay any contributions on their behalf because
Kabbes believed that they were not union members and assumed that eligibility for
benefits turned on union membership (R 55-57, 179; PX 7-19, 29, 43).
Kabbes failed to report the following weeks of work for the following truck drivers for
the period of October 21, 1990 through June 14, 2003:

Jed Goeckner 89 weeks

David Hess 131 weeks

Norbert Hille 353 weeks

Douglas Kinkelaar 486 weeks

Lee Meinhart 169 weeks

(R 55-57, 98, 99, 179; PX 29, 43).

67.

During all or part of the period of June 1994 through June 14, 2003, Effingham employed

Tom Dasenbrock and William Wernsing as truck drivers (R 55-57, 98, 99, 179; PX 29,

-16-


Ul. FINDINGS OF FACT AND CONCLUSIONS OF LAW
Facts Relating To Parties And Relationships.
The Pension Fund is an employee benefit plan and trust funded by contributions remitted
by multiple participating employers pursuant to negotiated collective bargaining
agreements with local unions affiliated with the International Brotherhood of Teamsters
("IBT") on behalf of employees of those same employers. All principal and income from
such contributions and investments thereof is held and used for the exclusive purpose of
providing pension benefits to participants and beneficiaries of the Pension Fund and
paying the administrative expenses of the Pension Fund (Trial Transcript at pp. 11-12 and
Art. I, Sec. 1, Art. I, Sec. 1, Art. Ill, Sec. 1 and Art. IV, Sec. 16 of Plaintiffs' Ex. 4).'
Operation of the Pension Fund is govermed by the Pension Fund Trust Agreement ("Trust
Agreement") (R 8; PX 4). The Pension Fund is managed by a Board of Trustees
consisting of an equal number of employer and union selected representatives (Art. II,
Sec. 2 of PX 4).
The Trustees of the Pension Fund have adopted a defined benefit plan (R 262; §§ 4.01 to
4.09 of PX 5). The Pension Plan establishes approximately 40 schedules of benefits,
called benefit classes, which differ in amount of retirement benefits provided, amount of
associated contribution rate and on the availability of certain deferral privileges (R 262;
§ 3.01(d)(1) and (2) of PX 5). For each benefit class, the Trustees have published
specified contribution rates which are negotiated by the loca) unions and employers (such

as the Defendants and Local 26) (R 262; § 3.01(c) and (d)(1) and (2) of PX 5). The

1

Subsequent references to the pages of the trial transcript will be designated as

"(R __)." Subsequent references to the Plaintiffs’ trail exhibits will be designed as
"(PX __)." Subsequent references to the Defendants' trial exhibits will be designated as
"DX _)."

-2-


xxviii.

the contract. Where, as here, the contract requires a notice of termination, a notice that

does not purport to cancel the contract is ineffectual. Central States Pension Fund v.

Gerber Truck Service, Inc., 870 F.2d 1148, 1156 (7" Cir. 1989) (en banc); Office &

Professional Employees Local 42 v. United Automobile Workers Local 174, 524 F.2d
1316, 1317 (6" Cir. 1975); Steel Express, at pp. 12-14 (Exhibit I); Luden's, Inc. v. Local

Union No. 6, 805 F.Supp. 313, 322 (E.D. Pa, 1992 vacated on other gmnds, 28 F.3d 347

(3 Cir. 1994)); Central States, Southeast and Southwest Areas Pension Fund v, McLain
Trucking, Inc., 1990 WL 141426 at *3 (N.D. Ill. Sept. 21, 1990) (copy attached as

Exhibit J); In re: Eazor Express, Inc., No. 84-130 (Bkrey. W.D. Pa. Dec. 5, 1985) (copy
attached as Exhibit K).

The Defendants next argue that termination is obvious because the Pension Fund's
computer records indicate the contract status was "expired." This very same argument
was rejected by Judge Holderman in Steel Express for several reasons. First, whether the
contract terminated is an issue of law so the Pension Fund's alleged Segal opinion on the
issue is irrelevant. Steel Express at p. 15 (Exhibit I). Indeed, the Pension Fund is not
even a party to the labor contract so its alleged opinion could not be probative. Id.
Because the contract language itself is clear, any alleged misunderstanding by the Pension
Fund is irrelevant. Ilinois Conference of Teamsters Welfare Fund v. Mrowicki, 44 F.3d
451, 459-60 (7th Cir. 1994). Further, the records relied upon by the Defendants do not
even indicate that the Pension Fund believed that the contract was terminated. The
“expiration” date for a labor contract is entered on the Pension Fund's computer records at
the time the contract is received and after that date passes, the Pension Fund's computer

records automatically reflect to the contract as "expired" regardless of whether there is an

-37-


iii.

243 (7" Cir. 1982).

The Pension Fund has advanced three theories in support of its claim that the Defendants
were contractually obligated to contribute to the Pension Fund for the disputed period of
April 1992 through June 2003. First, they maintain that both Kabbes and Effingham are
bound by the pension clause of the 1980 Agreement, the 1983 Extension Agreement and
the 1989 Extension Agreement by virtue of the Certification Clause contained on the
reporting forms submitted by the Defendants. Second, the Pension Fund argues that the
1980 Agreement and the 1983 Extension Agreement has never terminated and continue in
effect to this day. Third, the Pension Fund contends that the Defendants adopted the
provisions of the 1980 Agreement, the 1983 Extension Agreement and the 1989
Extension Agreement through their course of conduct.

In evaluating the Pension Fund’s theories, it is important to remember that the federal
courts are to liberally apply contract law in determining whether an enforceable labor
agreement exists in order to effectuate federal labor and pension policies. Capital-

Husting, 671 F.2d at 242; Trustees of Atlanta Iron Workers Pension Fund v. Southern

Stress Wire Co., 724 F.2d 1458, 1459 (11" Cir. 1983). The primary policy relevant in
this case is the objective of ERISA and the NLRA of insuring that the Defendants’
employees receive promised benefits. 29 U.S.C. § 1001(a), Gariup, 777 F.2d at 375. If
the Defendants’ assertion that they have no contractual obligation to contribute to the
Pension Fund is accepted, this goal will be frustrated because the pension credit earned by
the Defendants' employees from April 1992 through the present must be cancelled.

Moriarty v. Larry G. Lewis Funeral Home Directors, Ltd, 150 F.3d 777, 776-77 (7" Cir.

1998). As shown above, the benefit reductions would have a catastrophic effect on the

-25-


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

EASTERN DIVISION
CENTRAL STATES, SOUTHEAST AND )
SOUTHWEST AREAS PENSION FUND, )
and HOWARD McDOUGALL, Trustee, )
) Case No. 02 C 1809
Plaintiffs, )
)
v. )
| ) Honorable Charles R. Norgle
KABBES TRUCKING COMPANY, an )
Illinois Partnership, and i ) semen Hy
EFFINGHAM ASPHALT COMPANY d/b/a ) ia apr seamen rose |
KABBES TRUCKING COMPANY, ) .
Defendants. ) Nov 1 8 2004
OPINION AND ORDER .
CHARLES R. NORGLE, District Judge ' Pees

I, INTRODUCTION

Plaintiff Central States, Southeast and Southwest Pension Fund (“Fund”) is an employee
benefit plan and trust. The Fund and its Trustee bring this action pursuant to the Employee
Retirement Income Security Act. of 1974 (“ERISA”), alleging that Defendants owe contributions
to the Fund for the period from October 1990 to January 2002. Counsel submitted, and the court
reviewed, pretrial proposed findings of fact and conclusions of law. The court then conducted a
bench trial on June 18, 2003. The court heard evidence from both parties, and entered an Order
asking the parties to submit post trial findings of fact and conclusions of law. Based on the
totality of the evidence, the court adopts the findings of fact and conclusions of law proffered by

the Plaintiffs, which are recited as follows.

: vo
ra)


damages in the amount of 20% of the unpaid contributions or withdrawal
liability. The interest rate after entry of a judgment against an Employer
for contributions or withdrawal liability shall be due from the date the
judgment is entered until the date of payment, shall be computed and
charged to the Employer on the entire judgment balance at an annualized
interest rate equal to two percent (2%) plus the prime interest rate
established by Chase Manhattan Bank (New York, New York) for the
fifteenth (15th) day of the month for which the interest is charged and shall
be compounded annually.

(R 8; Art. XIV, Sec. 4 of PX 4).

xtix.

i.

hii.

Titi.

Kabbes owes delinquent contributions to the Pension Fund totaling $27,297, plus interest
in the amount of an annualized interest rate equal to two percent (2%) plus the prime
interest rate established by Chase Manhattan Bank (New York, New York) for the
fifteenth day of the month for which the interest is charged.

Effingham owes delinquent contributions to the Pension Fund totaling $12,936, plus
interest in the amount of an annualized interest rate equal to two percent (2%) plus the
prime interest rate established by Chase Manhattan Bank (New York, New York) for the
fifteenth day of the month for which the interest is charged.

The interest owed by the Defendants totaled $10,548.86 through February 15, 2001. The
Pension Fund shall submit a schedule detailing interest through the date of judgment
within 7 days of the entry of the Court's Findings of Fact and Conclusions of Law.
Kabbes owes to the Pension Fund liquidated damages under Section 502(g)(2) of ERISA,
29 U.S.C. §1132(g)(2) in the amount of doubling of the interest or single interest plus
20% of the unpaid contributions, whichever is greater.

Effingham owes to the Pension Fund liquidated damages under Section 502(g)(2) of
ERISA, 29 U.S.C. §1132(g)(2) in the amount of doubling of the interest or single interest

plus 20% of the unpaid contributions, whichever is greater.

-49-


xix.

indicate that such a clause cannot be enforced. Third, the memorandums of
understanding in Mar Les incorporated the entire "lengthy contract" between the union
and several contractor associations so the Court believed that evidence of non-compliance
with the other provisions of collective bargaining agreement showed that there was no
assent to the contract. 642 F.2d at 243. In this tease, the Certification Clause only
incorporates the duty to remit contributions 6 ae Pension Fund, so evidence of the
Defendants’ non-compliance with the provisiga of the collective bargaining agreement is
irrelevant.

The Defendants final argument is that the Certification Clause is not significant because
they did not always sign the reporting forms, This argument has no merit because so
many forms were signed that the Defendants clearly manifested their intent to be bound.
Further, as noted above, the intent to be bound by an agreement does not necessarily
require that an employer actually sign the agreement; all that is necessary is conduct
which manifests the intent to be bound. Capito]-Husting, Inc., 671 F.2d at 243, Even
when the Defendants did not sign the reporting forms, they manifested their intent to be
bound by the Certification Clause by completing the reporting forms and submitting their
checks (which were signed) that paid the amounts that were revealed to be owed by the
reporting form. In Chicago Tile Institute Welfare Fund v, Picha Title Co,, 1995 WL
54231 (copy attached as Exhibit D), the court held that the employer had manifested its
intent to be bound by signing only 6 of 18 reporting forms. This Court agrees that the
Defendants manifested their intent to be bound by the Certification Clause by completing
the reporting form and remitting payment, regardless of whether the forms were signed.

Since the Certification Clause created a valid contract between the Pension Fund and the

-33-


provisions and objective with particular care because "rules of estoppel will not be
permitted to thwart the purposes of the statutes of the United States." Kaiser Steel Corp.
vy. Mullins, 455 U.S. 72, 81 n.6 (1982). The defense of laches should not be created in
ERISA contribution cases because the defense is inconsistent with the language of ERISA
and the LMRA and will frustrate the policies underlying the statutes.

xxxy. As noted above, Section 302(c)(5) of the Labor Management Relations Act prohibits
payments by employers to multiemployer. funds unless "the detailed basis on which such
payments are to be made is specified in a written agreement with the employer." 29
US.C. § 186(c)(5). Section 302 mandates that written fringe benefit promises be
enforced as written to prevent "corruption of collective bargaining through bribery of
employee representatives by employers, extortion by employee representatives, and the
possible abuse by union officers of the power which they might achieve if welfare funds
were left to their sole control." Arroyo v. United States, 359 U.S. 419, 425-26 (1959).
Based upon Section 302(c)(5), the Supreme Court indicated in NLRB v, Amax Coal Co.,
453 U.S. 322 (1981), that trustees of multiemployer funds are powerless to modify an
employer's written pension promises:
The management-appointed and union-appointed trustees (of multiemployer
funds] do not bargain with each other to set the terms of the employer-employee
contract; they can neither require employer contributions not required by the
original collectively bargained contract, nor compromise the claims of the union
or the employer with regard to the latter's contributions. Rather, the trustees
operate under a detailed written agreement, 29 U.S.C. § 186(c)(5)(B) ... Indeed,
the trustees have an obligation to enforce the terms of the Collective Bargaining
Agreement regarding employee fund contributions against the employer "for the
sole benefit of the beneficiaries of the fund."

Jd. at 336-37 (emphasis added). Since Section 302(c)(5) eliminates the authority of trustees to

explicitly agree to a reduction or cancellation of an employer’s pension contribution obligation,

-42-


Xi.

1246 (7" Cir. 1994) (copy attached as Exhibit A), see also, Operating Engineers Local

139 Benefit Fund v. Gustafson Construction Co., 258 F.3d 645, 650 (7th Cir. 2001) (The

certification clause is "boilerplate . . . but it was entitled to some weight ... and maybe a

lot, as we suggested in Moriarty v. Larry G. Lewis Funeral Directors, Ltd, 150 F.3d 773,

775 (7th Cir. 1998). People generally are held to the agreements they sign and are not
permitted to fob them off as ‘boilerplate’ without invoking fraud, unconscionability or
material mistake."). Other courts have also held that payment of contributions in

accordance with a certification clause creates an enforceable contractual duty to pay

contributions. Central Pennsylvania Teamsters Pension Fund v. Frey's Motor Express,
Inc., 1994 WL 2533 (E.D. Pa 1994) (copy attached as Exhibit B); Laborers Pension Fund

vy. E, Guerra Co., 2000 WL 1349148 (N.D. Ill. 2000) (copy attached as Exhibit C);
Chicago Tile Institute Pension Fund v. Picha Tile Co., 1995 W 584231 (N.D. Ill. 1995)

(copy attached as Exhibit D); Trustees of the Flint Michigan Laborers Pension Fund v.
In-Puls Const, Co., 835 F.Supp. 972 (E.D. Mi. 1993); Trustees of the Hotel Motel &

Restaurant Employees Fund v. Wright, 1985 WL 17678 (W.D. Wa. 1985) (copy attached
as Exhibit E); Weber v. Anspach, 473 P.2d 1011 (Or. Sup. Ct. 1970).

The Defendants cite a number of cases where the courts indicated that an employer did
not adopt a collective bargaining agreement by merely remitting contributions to a fund.
These cases are easily distinguishable because there was no certification clause
mentioned in any of the cases cited by the Defendants. Caporale v. Mar Les, Inc, 656

F.2d 242 (7" Cir. 1981); Carpenters Amended Health Benefit Fund y. Holleman

Construction Co., 751 F.2d 763 (5" Cir. 1981); Moglia v. Geoghegan, 403 F.2d 110 (2TM

Cir. 1968); Brown v. Dominic Prisco Transport, Inc., 1997 U.S. Dist. LEXIS 23709

-28-


Pension Fund (R 127).

39. The Pension Fund provides pension credit to employees based upon the work history
reported by participating employers. The Pension Fund has awarded credit to the
employees of Kabbes and Effingham based upon the work history reported for the period
of April 1992 through the present (R 262, 266; PX 37, 38; pp. 430-37 of DX F).

40. The benefit entitlement of David Althoff and David Carroll will be significantly reduced
if the credit they earned after April 1992 based upon the work history reported by
Effingham on their behalf is eliminated. Neither of these individuals have retired. The

impact on their benefit would be as follows:

BENEFIT AS OF 5/31/03, BENEFIT AS OF 5/31/03
INCLUDING POST 4/30/92 EXCLUDING POST 4/30/92
NAME AGE REDIT CREDIT
D. Althoff 50 19.20 years 8.775 years
$312.14 at age 65 $98.54 at age 65
D. Carroll 58 24,525 years 14.125 years
$400.00 at age 60 $148.90 at age 65

(R 267, 269; PX 37).

41. The benefit entitlement of Kenneth Hollscher and Leroy Wente will be significantly
reduced if they lose the credit they eamed after April 1992 based upon the work history

reported by Kabbes on their behalf. Neither of these individuals have retired. The impact

on their benefit would be as follows:

BENEFIT AS OF 5/31/03, BENEFIT AS OF 5/31/03
INCLUDING POST 4/30/92 EXCLUDING POST 4/30/92
NAME AGE CREDIT CREDIT
K. Hoelscher 63 33.050 years 14.400 years
$434.59 at current age $167.46 at age 65

-12-


. rr)

liv. | Kabbes and Effingham are liable to the Pension Fund attorneys fees and costs associated
with prosecuting this action. Attorneys' fees and costs will be handled in accordance with
Local Rule 54.
lv. Kabbes and Effingham are liable to the Pension Fund the audit fees and costs of $3,524
associated with conducting the audit.
HI. CONCLUSION
For the foregoing reasons, judgment is entered for Plaintiffs in the amount of $54,305.86.

IT IS SO ORDERED.

ENTER: Atay!

Charles Ronald Norgle, Judge
United States District Court

DATE: M17-0f


59.

60.

61.

62.

were not being reported to the Pension Fund because they were not union members (R 48;
PX 22, 25, 26).

Goldstein advised the Pension Fund's auditors that he believed that union membership
was a requirement for eligibility to participate in the Pension Fund (R 42, 43; PX 22, 25,
26).

Goldstein advised the Pension Fund's auditors that contributions would have been made

on behalf of the non-union employees if he had' known that union membership was not a
requirement (R 47; PX 25, 26).

John Kabbes and Goldstein were present at the "audit closing meeting” which occurred
after the auditors had reviewed the payroll records of Kabbes and Effingham. At the
meeting, the auditors advised John Kabbes and Goldstein that contributions were owed
on behalf of the unreported Kabbes and Effingham employees (R 51).

The Pension Fund's auditors testified, and Jack Kabbes confirmed, that at no time were
the Pension Fund's auditors advised that either Kabbes or Effingham believed that they
did not owe anything on the unreported employees because they had no contractual
obligation to contribute to the Pension Fund or because either Kabbes or Effingham
believed that their contract had expired (R 48, 53-54, 101-02, 136-37; PX 22, 25 and 26).
In fact, Jack Kabbes advised the auditors that he would be willing to prospectively
contribute on the non-union employees (PX 27). The first time either Kabbes or
Effingham asserted that there was no contractual obligation to contribute to the Pension
Fund was after this case was filed. Despite asserting that there is no existing contractual
relationship, Kabbes and Effingham, as noted above (ff 30, 37, infra.), continued to remit

contributions to the Pension Fund through the date of the trial (R 80, 129, 130; PX 18-

-15-