there is no dispute of material fact regarding the results of the revised Wolf Report, the Court will
enter judgment in the amount of $4,011.69 in favor of the Funds.

On the other hand, RES disputes the damages claimed by Graff Report. RES challenges both
the type of employees and the type of work included in the report. Specifically, RES claims that the
Graff Report improperly included hours worked by certain managerial employees (foreman and
supervisors) that are not covered under the Agreement. RES further claims that the Graff Report
improperly included hours spent by RES employee performing work outside the scope of the
Agreement. RES concludes that these errors resulted in a significant overstatement of its liability.

1 Supervisory Employees

The Funds claim that supervisory employees were included in the Graff Report because they
also held non-supervisory positions during the relevant time period. In support of its position, the
Funds cite a provision of the Agreement that requires contributions for supervisory employees if such
employees also held non-supervisory positions for which RES made contributions on their behalf.
RES does not dispute the that the Agreement requires as much or that the challenged supervisory
employees also held non-supervisory positions. Rather, RES argues that it has not been the Funds’
regular practice to include the hours of employees who later move into management positions. RES
does not, however, provide the Court with any evidence to support this assertion. The Court has
nothing to consider but the Agreement’s unambiguous and undisputed requirements regarding the
treatment of supervisory employees who also held non-supervisory positions for which RES paid
contributions. The Court must therefore conclude that there is no genuine issue of fact regarding
whether the Graff Report properly included RES’s supervisory employees. Accordingly, the Funds
are entitled to collect the delinquent contributions and associated damages relating to RES’s

supervisory employees included in the Graff Report.

4



dispute of fact exists regarding RES’s liability for unpaid contributions and associated damages as
claimed in the Graff Report. Judgement is therefore entered in the amount of $222,441.69 in favor of
the Funds. Lastly, the Court finds that the Funds are entitled to attorney's fees and costs incurred
prosecuting this action. The Funds shall file, within twenty-one days from the date of this Order, a
petition for attorney's fees and costs.

IT IS SO ORDERED.

August 6, 2003

United Stateg District Court Judge



performed. The Funds find this evidentiary burden in three courts of appeal decisions that require
employers seeking to challenge a fund’s audit to come forward with evidence showing the precise
amount of covered work performed by the company’s employees. Michigan Laborers’ Health Care
Fund v. Grimaldi Concrete, 30 F.3d 692, 696 (6% Cir. 1994); Brick Masons Pension Trust v. Industrial
Fence & Supply, Inc., 839 F.2d 1333, 1338 (9% Cir. 1988); Combs v. King, 764 F.2d 818, 822-27 (11°
Cir. 1985). The burden of coming forward with evidence is imposed on employers only if a fund
raises genuine questions about the accuracy of the employer's record keeping practices. Laborers’
Pension Fund v. A & C Environmental, Inc., 301 F.3d 768, 783 (7 Cir. 2002). Here, the Funds claim
that RES kept no contemporaneous time records reflecting the type of work performed, the date the
work was performed, or the work location. The Funds assert that this record keeping failure
prevented the Funds’ auditors from accurately determining the amount of covered work performed
by RES employees. RES does not submit a single document to contradict the Funds’ assertions.
RES has not come forward with any evidence whatsoever setting forth the hours worked on covered
projects, or the laborers who were working on those projects. The Court therefore finds that RES’s
has failed support its challenge with sufficient evidence. See Operating Engineers Pension Trusts v. B &
E Backhoe Inc., 911 F.2d 1347, 1354 (9 Cir. 1990) (employer does not meet burden of proof if it
does not come forward with evidence of the number of hours spent performing covered work).
Generally, when an employer fails to come forward with evidence of the extent of covered
worked performed by its employee, the fund is entitled, as matter of law, to recover contributions for
all hours worked by these employees during the quarter in which they were shown to have performed
some covered work for the employer. See, e.g., Michigan Laborers’, 30 F.3d at 696; Brick Masons, 839
F.2d at 1338. However, this rule does not apply to compel judgment against an employer when the

employer raises genuine issues of material fact as to the accuracy of the fund's calculations. Ilinois

6



2. Non-Covered Work

RES also claims that the Graff Report includes hours spent by RES employees performing
work outside the scope of the Agreement. RES argues that the Agreement only requires
contributions for work relating to asbestos removal but the Graff Report includes hours spent by RES
employees on wholly unrelated work, such as maintenance of RES equipment and waste hauling
activities. RES therefore claims that the Graff Report significantly overstates the number of hours
worked by RES employees. In response, the Funds dispute that the Agreement distinguishes between
covered and non-covered work. Rather, the Funds claim that as long the employee is covered under
the Agreement, then all work the employee performs is covered by the Agreement. Alternatively,
the Funds argue that even if the Agreement distinguishes between covered and non-covered work,
RES has not produced sufficient evidence to establish the precise time period during which its
employees performed work outside the Agreement’s scope.

The Funds’ argument that the Agreement fails to distinguish between covered and non-
covered is without merit. Multiple provisions of the Agreement refer to “covered” and “non-
covered” work. See, e.g., Joint Agreement covering June 1, 1998 - May 31, 2001, paras. 4(a), 5;
Asbestos Agreement covering June 1, 1998-May 31-2004, para. 4(a). Moreover, the Funds admit
that certain categories of work, namely the maintenance and cleaning of RES equipment, are not
within the scope of the Agreement. See Plaintiff's Response to Defendant's Rule 56.1 Statement of
Additional Facts, para. 4. The Funds’ argument is therefore untenable.

The Funds propose an alternative argument to support their position that the Court should
disregard RES’s contention that the Graff Report includes hours devoted towards uncovered work.
The Funds claim that they are entitled to judgment for all hours worked by RES employees because

RES fails to corroborate its challenges with evidence showing the precise amount of covered worked
5



Pension Fund v. Domas Mechanical Contractors, Inc., 778 F.2d 1266, 1271 (7 Cir. 1985). Section
1132(g)(2) also permits the prevailing party to collect the interest on the unpaid contributions plus
liquidated damages as provided for under the relevant benefit plan. Here, the Fund’s Trust
Agreements require RES to pay liquidated damages in the amount of 10 per cent of the principal
amount of delinquent contributions, and interest at a rate of prime plus 2 per cent on all delinquent
amounts from the date of delinquency forward. The Funds are entitled to these defined penalties.’
Operating Engineers Local 139 Health Benefit Fund v. Gustafson Construction Corp., 258 F.3d 645, 655
(7° Cir. 2001); Central States, Southeast and Southwest Areas Pension Fund v. Gerber Truck Serv., Inc.,
870 F.2d 1148, 1156 (7" Cir. 1989).

As RES has not produced any specific information refuting the Graff Report's calculations of
delinquent contributions, liquidated damages, or interests costs, judgement shall be entered in favor
of the Funds for the full amount claimed, or $222,441.69. See Chicago District Council of Carpenters
Pension Fund v. P.M.Q.T., Inc., 169 F.R.D. 336, 345 (N.D.IIL 1996) (defendants’ failure to provide
any documents to disprove the auditor's findings provided independent basis for court’s
determination that auditor's report was the proper measure of damages).

IV. Conclusion

The Court finds that no dispute of material facts exists regarding RES’s liability for unpaid

contributions and associated penalties as claimed in revised Wolf Report. Judgement is therefore

entered in the amount of $4,011.69 in favor of the Funds. Additionally, the Court finds that no

2The Funds also claim that RES owes $3,065.39 representing liquidated damages for
untimely paid late fees for the period December 1999 through December 2001. However, the
Funds do not support this allegation with any documentary evidence nor do they reference a
specific provision of the Trust Agreement allowing for this penalty. Accordingly, the Funds’
request is denied.



> Minute Ofder Form (06/97)

United States District Court, Northern District of Illinois

oe

Name of Assigned J ‘li i Sitting Judge if Oth
rae Magitrae Judge William J. Hibbler than Assigned Judge
CASE NUMBER 01C 72 DATE 8/6/2003
CASE LABORERS’ PENSION FUND, et al. vs. RES ENVIRONMENTAL SVCS., INC.
TITLE
{In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
Plaintiffs Motion for Summary Judgment (doc. #12)

DOCKET ENTRY:

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

(2) o Brief in support of motion due

(3) Oo Answer brief to motion due . Reply to answer brief due. :

(4) Oo Ruling/Hearing on set for at

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

(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at :

(@) a Trial(set for/re-set for] on at

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

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

OOFRCP4(m) (Local Rule 41.1 CFRCP4i(a\(1) CFRCP41(a)(2).

(ao) = [Other docket entry] Plaintiffs’ Motion for Summary Judgment (doc. #12) is granted. Judgment
is entered in favor of plaintiffs and against defendant in the amount of $226,453.38, plus reasonable
attommey’s fees and costs. Plaintiffs shall file its petition for attorney’s fee and costs by 8/28/03.
Defendant to file objections, if any, by 9/11/03. Enter Memorandum Order and Opinion. Alt pending
dates and motions are terminated as moot. :

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

No notices required, advised in open court.

No notices required. number of notices

Notices mailed by judge’s staff.

Notified counsel by telephone. ANG A 07 2003
wv J Docketing to mail notices. a . 2 »)
7 | Mail A0 450 form. : c

a°s'n
Copy to judge/magistrate judge. sunoo yas 4 .
str “ . ~ 99% €0 xe mailed notice
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initials
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BNL ERE Office railing deputy tials



Conference of Teamsters and Employers Welfare Fund v. Steve Gilbert Trucking, 71 F.3d 1361, 1367 (7
Cir. 1995). The only evidence offered by RES to challenge the audit’s accuracy is the affidavit of its
president, Wiley Stewart. In his affidavit, Steward alleges it has been his “personal experience that
the accounting firms who perform audits to verify the amounts of contributions that may be owed
regularly include employees and hours that are not covered by the Agreement.” Stewart Aff., para. 8.
Stewart's generalized past experiences do not create present disputes of fact. The affidavit also alleges
that the auditors included hours spent by five RES employees who performed non-covered work. But
Stewart does not explain how many hours were improperly included or what type of work these
employees performed. Nor does Stewart reference the Court to any documents supporting his
statements. Without such evidentiary support, Stewart’s non-specific and conclusory allegations
cannot create genuine issues of material fact regarding the Graff Report’s accuracy. See Lujan v.
National Wildlife Federation, 497 U.S. 871, 888 (summary judgment is not a place “to replace
conclusory allegations of the complaint or answer with conclusory allegations of an affidavit.”). As
RES has not provided any specific facts supporting its challenges, the Court finds that RES has not
raise a genuine issue of material fact regarding the accuracy of the Fund’s calculations. Accordingly,
the Funds are entitled to recover contributions for all hours worked by RES employees during the
time such employees were shown to have performed some covered work.

3. Liquidated Damages, Interests, Audit Costs, and Attorney's Fees

The final issue regards the Funds’ request for liquidated damages, interest, audit costs, and
attorneys fees. ERISA requires the court to award attorney's fees and costs to a prevailing fiduciary
in an action to collect delinquent fringe benefits fund contributions. 1132(g)(2). Given that section
1132(g) (2) is non-discretionary, the Funds are entitled to reasonable attorney's fees and costs

incurred attempting to collect the delinquent contributions, including the audit fees. Plumbers’
7


provided the Funds with information pointing out numerous errors in the report but the Funds have
repeatedly refused to adjust the claimed delinquency. To support its claim, RES attaches the
affidavit of its owner, Wiley Stewart, who states that the Graff Report improperly includes employees,
such as foreman and supervisors, who are not covered by the Agreement. Stewart also argues that
the Graff Report includes hours relating to work not within the scope of the Agreement. Stewart
concludes that these errors raise serious doubts regarding the Graff Report's accuracy, which preclude
the Court from deciding the matter on summary judgement.

In response, the Funds claim that RES’s managerial employees were properly included
because such employees also served as non-managerial employees during the relevant time period.
The Funds further argue that the Agreement does not distinguish between covered and non-covered
work, but focuses only on whether the employee is covered under the Agreement. Alternatively, the
Funds argue that the Court should disregard RES’s claims because RES has failed to support its
challenges with sufficient evidence.

IL. Standard of Review

Summary judgment is proper where “the pleading, depositions, answers to interrogatories, and
admission on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
56(c). In determining whether a genuine issue of material fact exists, the court must construe all
facts in the light most favorable to the non-moving party and draw all reasonable and justifiable
inferences in that party's favor. See Anderson v. Liberty Lobby, Inc., 477 US. 242, 255 (1986).

IIL Discussion

Asan initial matter, the Court notes that RES admits to owing the full amount of delinquent

contributions and corresponding penalties claimed in the revised Wolf Report. Accordingly, as
3



L Background

The Funds are multi-employer trust funds that provide fringe benefits to RES’s employees.
The Funds’ revenue is generated in part by contributions it receives from employers such as RES.
RES's contribution obligations are stated in a collective bargaining agreement negotiated between
RES and its employees’ union (the “Agreement”). The Agreement requires RES to make regular
contributions to the Funds on behalf of its employees covered therein for pension, health, and
welfare benefits and to submit monthly remittance reports identifying each covered employee and its
corresponding contribution. Additionally, the Agreement incorporates the Funds’ respective Trust
Agreements, which require RES to pay liquidated damages and interest if RES’s contributions
become delinquent.

In an effort to determine whether RES was making the required contributions, the Funds
designated two firms to audit RES’s books and records. The first audit, referred to as the Wolf
Report, focused on the period of July 1, 1994 to December 31, 1997 and found that RES owed
$74,452.66 in delinquent contributions, accrued interest, liquidated damages, and audit costs. The
second audit, referred to as the Graff Report, covered the period January 1, 1998 to July 31, 2001 and
found that RES owed $222,441.68 in delinquent contributions, accrued interest, liquidated damages,
and audit costs. After the audits were completed, a Funds representative met with RES to discuss
the results. In response to RES’s challenges regarding the Wolf Report, the Funds agreed to reduce
the total amount owed from $74,452.66 to $4,011.69.! RES also challenged the findings of the Graff
Report, but the Funds have refused to reduce the second audit’s total.

The focus of the present lawsuit is on the findings of the Graff Report. RES claims that it

'RES admits that it owes this revised amount. See Defendant’s Response to Plaintiff
Rule 56.1 Statement of Material Facts, para. 16.


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

LABORERS’ PENSION FUND and
LABORERS’ WELFARE FUND OF THE
HEALTH AND WELFARE DEPARTMENT
OF THE CONSTRUCTION AND GENERAL
LABORERS’ DISTRICT COUNCIL OF

)
)
)
)
)
CHICAGO AND VICINITY, )
) No. 01 C 0072
Plaintiffs, )
) Honorable William J. Hibbler
v. )
) poner
RES ENVIRONMENTAL SERVICES, INC, +) yo 0? 7003
an Illinois corporation, ) R
)
Defendant. )
MEMORANDUM OPINION AND ORDER

Plaintiffs, Laborers’ Pension Fund and Laborers’ Welfare Fund of the Health and Welfare
Department of the Construction and General Laborers’ District Council of Chicago and Vicinity (the
“Funds”), bring this civil action against defendant RES Environmental Services, Inc. pursuant to the
Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1132 et seq. (“ERISA”) and
Labor Management Relations Act of 1947, 29 U.S.C. § 185 et seq. (‘LMRA”). Through this lawsuit,
the Funds are attempting to collect delinquent employee benefit contributions required under a
collective bargaining agreement negotiated between RES and its employees’ union. The parties have
completed written discovery and the Funds now move for summary judgment. For the reasons

below, the Funds’ motion is granted.

QS