~4-
in the light most favorable to the nonmoving party. ee Pitasi v.

Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999).

A. Withdrawal Liability (Count I)

While defendants do not expressly concede that the Pension
Fund is entitled to summary judgment on its claim for withdrawal
liability, they admit that they have failed to make any withdrawal
liability payments and that they have failed to initiate
arbitration to challenge the Pension Fund’s assessment. Moreover,
defendants raise no defense to this claim. Accordingly, summary
judgment for the Pension Fund will be granted on Count I of the
Third Amended Complaint.

B. Delinquent Contributions (Count IT)

In Count II, plaintiffs allege that Hook Up was delinquent in
making contributions to the Funds based on reported work history,
in violation of the relevant collective bargaining agreements.
Hook Up admits that it agreed to be bound by the provisions of the
Funds’ Trust Agreements, which required Hook Up to “make continuing
and prompt payment to the [Funds] as required by applicable
collective bargaining agreements.” (Defendants’ Response to
Plaintiffs’ Statement of Material Facts, @ 21.) During the period
of November 2002 through August 2003, Hook Up reported employee
work history to the Funds that consisted of individuals on whose
behalf contributions were owed while such individuals were

receiving workers’ compensation pay. According to plaintiffs, Hook


-9-
Settlement Agreement executed by Local 773 and Hook Up did not
purport to resolve any claims for contributions to the Pension Fund
or Health and Welfare Fund.

Plaintiff’s motion for summary judgment will be granted as to
Count Il.

c. Audit Findings (Count IIT)

In Count III, plaintiffs claim that Hook Up owes additional
contributions, determined from an audit, based on unreported work
history. Plaintiffs have determined that Hook Up owes an
additional $1,959.60 to the Pension Fund and $1,285.60 to the
Health and Welfare Fund. Hook Up does not respond to plaintiffs
argument concerning this count, nor does it adequately deny the
relevant material facts as set forth by plaintiffs. Hook Up’s
argument regarding withdrawal, supra, does not apply to this claim
because the unreported work at issue occurred between February 1998
and November 2000, before Hook Up’s complete withdrawal from the
plan. Moreover, we have already rejected defendant’s remaining
arguments concerning delinquent contributions.

Summary judgment for plaintiffs will be granted as to Count
III. Pursuant to the Funds’ Trust Agreements, plaintiffs are also
entitled to recover the costs of performing the audit because Hook
Up failed to pay contributions and interest for the unreported

employee work history discovered through the audit.


-6-

Metal Workers’ Int’l Ass'n, Local 206 v. West Coast Sheet Metal

Co., 954 F.2d 1506 (9th Cir. 1992). Both cases are distinguishable
because the collective bargaining agreements at issue had been
terminated (in Laborers Fund, due to defendant’s notice of

termination, and in Sheet Metal Workers, due to the union’s

decertification). Here, the collective bargaining agreements were
not terminated.

Hook Up also argues that “it is likely that the dispute
concerning whether Hook Up is obligated for the health and welfare
and pension contributions in question for inactive employees, who
continue on worker’s compensation, is a question exclusively
reserved for resolution by the Collective Bargaining Agreement’s
grievance procedure.” (Defendants’ Response at 9.) Hook Up cites

Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364 (1984), in

which the Supreme Court recognized that although funds such as
plaintiffs are not normally required to exhaust remedies or
procedures set forth in a collective bargaining agreement as a
means to resolve disputes concerning delinquent contributions
before bringing suit, there are exceptions. According to Hook Up,
one exception that applies here is a situation where the collective
bargaining agreement evidences an intent that a pension fund is
expected to utilize the agreement for resolution of specific

disputes.


-~5-
Up owes the Pension Fund $65,136.00 and the Health and Welfare Fund
$70,537.30 regarding this reported work history.

Hook Up admits it has not paid the contributions that
plaintiffs seek. Hook Up contends, however, that its permanent
cessation of operations in August 2002 extinguished any obligations
to plaintiffs under any collective bargaining agreements. Hook
Up’s view is that after September 1, 2002, its obligation to make
contributions to the Funds ended because it discontinued all
operations covered by the pension plan.

As plaintiffs point out, Hook Up’s argument is based on a
misapprehension of the relevant statute. Under ERISA, a complete
withdrawal from a multiemployer plan occurs when an employer either
(1) “permanently ceases to have an obligation to contribute under
the plan” or (2) “permanently ceases all covered operations under
the plan.” 29 U.S.C. § 1383. In this case, Hook Up effectuated a
complete withdrawal from the plan through the second scenario--
permanently ceasing all covered operations. Thus, even though Hook
Up withdrew, it did not necessarily cease to have contribution
obligations pursuant to the collective bargaining agreements, which
required Hook Up to make contributions on behalf of individuals
receiving workers’ compensation-type pay.

Hook Up cites just two opinions in support of its argument,

Laborers Health & Welfare Trust Fund for Northern California v.

Leslie G. Delbon Co., 199 F.3d 1109 (9th Cir. 2000), and Sheet



-g-
contributions. Even if the Trustees were required to do so, Hook
Up has waived any right to arbitrate the issue. It has
participated in this litigation and has answered the Third Amended
Complaint. Hook Up failed to raise the issue until now, thus

waiving it. See Central States, Southeast & Southwest Areas

Pension Fund v. Central Transport, Inc., No. 94 C 774, Minute Order

(May 3, 1995) (citing Cabinetree of Wisconsin, Inc. v. Kraftmaid

Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir. 1995) (“Parties know
how important it is to settle on a forum at the earliest possible
opportunity, and the failure of either of them to move promptly for
arbitration is powerful evidence that they made their election--
against arbitration. Except in extraordinary circumstances not here
presented, they should be bound by their election.”)).

Hook Up's final argument regarding the delinquent
contributions claim is that Local 773, the union representing Hook
Up’s Macungie, Pennsylvania employees, filed a grievance claiming
inter alia that Hook Up failed to make certain Fund contributions
and secured an award relating to the delinquencies “which may be
among those demanded by the Plaintiffs in this litigation.”
(Defendants’ Response at 9 (emphasis added).) Hook Up’s argument
is both speculative and undeveloped; it fails to offer any evidence
that the union’s claim overlaps with the claims in this action.
Furthermore, while Local 773 may have asserted at one time that

Hook Up was liable for Fund contributions, Hook Up admits that the


Minute Order Form (06/97)

United States District Court, Northern District of Iinois

Name of Assigned Jud; Sitting Judge if Other
. ot Magisteate Sudee John F. Grady than Assigned Sudge
CASE NUMBER 03 C 3194 DATE 12/22/2004
CASE Central States, vs. Hook Up, Inc. et al
TITLE

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

MOTION:
DOCKET ENTRY:

(e0) Oo Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due

G3) o Answer brief to motion due___. Reply to answer briefdue__—.

(4) i Ruling/Hearingon_____sset for__—_att

(5) ao Status hearing[held/continued to] [set for/re-set for]on__—_setfor__—at

(6) ao Pretrial conference[held/continued to] [set for/re-set for]on___——ssetfor__—s se at__
(7) Oo Trial[set for/re-set for] on at

(8) a [Bench/Jury trial] [Hearing] held/continued to saat.

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

OOFRCP4(m) 1 Local Rule 41.1 C1 FRCP4i(a)(1) O FRCP41(a)(2).
ao) [Other docket entry] Plaintiffs Motion for Summary Judgment is Granted. Plaintiffs may prepare a draft judgment

order in accordance with this memorandum opinion (supported by affidavits as to fees and costs), submit it to opposing counsel
for any objections as to form or the amount of fees and costs, and submit a final draft order to the court by January 7, 2005.

gli oa [For further detail see order (on reverse side offattached to) the original minute order.]

No notices required, advised in open court.
3

No notices required. number of notices

V | Notices mailed by judge's staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form. docketing deputy initials

Copy to judge/magistrate judge.

42/22/2004

courtroom date mailed notice

KM deputy’s
initials

KM

Date/time received.in :
central Clerk's Offite *"-? mailing deputy initials



DATE:

ENTER:

-1ll-

December 22, 20

04

John /F. Grady,

United States District J

e



-10-

Dd. Interest, Liquidated Damages, Attorney’s Fees, & Costs

According to 29 U.S.C. § 1132(g) (2), “{i]n 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” the unpaid
contributions as well as interest on those contributions,
liquidated damages provided for under the plan in an amount not in
excess of twenty percent of the unpaid contributions, and
reasonable attorney’s fees and costs of the action. Because of the
mandatory nature of the statute, plaintiffs’ requests for interest
on the delinquent contributions (as determined from both the
reported work history and from the audit), liquidated damages,
costs, and attorney’s fees are granted.

CONCLUSION

For the foregoing reasons, plaintiffs’ motion for summary
judgment is granted. Plaintiffs may prepare a draft judgment order
in accordance with this memorandum opinion (supported by affidavits
as to fees and costs}, submit it to opposing counsel for any
objections as to form or the amount of fees and costs, and submit

a final draft order to the court by January 7, 2005.


~7-

Hook Up does not fully and accurately describe the exception
recognized by the Supreme Court in Schneider, and the case actually
supports plaintiffs’ position, not that of defendant. In
Schneider, the Court ruled that there is no presumption favoring
arbitration of disputes between an employer and an employee-benefit
trust fund. Rather, the trust fund agreement must be examined to
determine whether the parties intended to condition the trustees’
enforcement authority on exhaustion of the arbitration procedures
contained in the collective bargaining agreements. 466 U.S. at
371-72.

Although the collective bargaining agreement here does create
an arbitration procedure in relation to “questions of
interpretation concerning the requirement to make contributions on
behalf of particular employees,” the agreement does not indicate an
intent that the trustees of the Funds were required to exhaust
arbitration procedures before seeking judicial enforcement of the
contract. Additionally, the Funds’ Trust Agreements provide the
Trustees with the authority to initiate any legal proceedings that
they in their discretion deem to be in the best interest of the
Funds, a factor that the Court considered in Schneider. As noted
Supra, Hook Up admits that it was bound by the Trust Agreements.

Accordingly, plaintiffs were not required to exhaust any
arbitration proceeding set forth in the collective bargaining

agreement before bringing suit to seek the delinquent


~3-
the employer.” 29 U.S.C. § 1382 (numerals omitted). In October
2002, the Pension Fund calculated Hook Up’s withdrawal liability
($2,782,644.50) and sent Hook Up a notice of that liability anda
demand for payment. Hook Up admits that it did not make any
withdrawal liability payments, nor did it initiate arbitration to
contest the withdrawal liability assessment. The Funds also claim
that Hook Up failed to make contributions based on reported work
history in addition to misreporting some employees’ work history.

Plaintiffs subsequently filed the instant action seeking
payment of withdrawal liability (Count I); delinquent contributions
based on reported work history (Count II) and unpaid contributions
based on unreported work history that were revealed by an audit
(Count III). Plaintiffs also seek interest, liquidated damages,
attorney’s fees and costs, and audit costs. Plaintiffs now move
for summary judgment.

DISCUSSION

Summary judgment “shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and admissions
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 considering such a motion, the court construes the

evidence and all inferences that reasonably can be drawn therefrom


~2-
Hook Up, Inc. (“Hook Up”) and Hookup.Com, Inc. pursuant to the
Employee Retirement Income Security Act (“ERISA”) .*

Hook Up was an employer required to contribute to the Funds on
behalf of its employees under collective bargaining agreements
executed with various Teamsters Local Unions. On August 31, 2002,
Hook Up permanently ceased all covered operations under the Pension
Fund.

When Hook Up ceased operations, it effectuated a “complete
withdrawal” from the Pension Fund within the meaning of ERISA, 29
U.S.C. § 1383. When an employer withdraws from a multiemployer
plan, the employer becomes immediately liable for its proportionate
share of unfunded vested benefits. See 29 U.S.C. § 1381; Trustees

of the Chicago Truck Drivers, Helpers & Warehouse Workers Union

(Indep.) Pension Fund v. Rentar Indus., 951 F.2d 152, 153 (7th Cir.

1991).

ERISA provides that upon withdrawal, a multiemployer pension
fund shall “determine the amount of the employer's withdrawal
liability, notify the employer of the amount of the withdrawal

liability, and collect the amount of the withdrawal liability from

2 plaintiffs name defendant Hookup.Com, Inc. as an entity under the
“common control” with Hook Up and thus liable for the withdrawal liability
assessment. Defendants admit that as of August 31, 2002, Hook Up owned at least
80% of the total combined voting power of all classes of Hookup.Com stock
entitled to vote and/or at least 80% of the total value of shares of all classes
of Hookup.Com stock. (Defendants’ Response to Plaintiffs’ Statement of Material
Facts, @ 11.) Accordingly, defendants constitute a single employer within the
meaning of section 4001(b)(1) of ERISA, 29 U.S.C. § 1301(b) (1), and the
regulations promulgated thereunder. See Central States, Southeast & Southwest
Areas Pension Fund v. Johnson, 991 F.2d 387, 388-89 (7th Cir. 1993).



03-3194.041-5CD December 22, 2004

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

CENTRAL STATES, SOUTHEAST AND
SOUTHWEST AREAS PENSION FUND;
CENTRAL STATES, SOUTHEAST AND
SOUTHWEST AREAS HEALTH AND
WELFARE FUND; and HOWARD
McDOUGALL, Trustee,

Plaintiffs,
v. No, 03 C 3194

HOOK UP, INC., a Missouri
corporation; and HOOKUP.COM, INC.,
a Missouri corporation,

Defendants.

MEMORANDUM OPINION

This ERISA case is before us on the motion of plaintiffs for
summary judgment. For the reasons explained below, the motion is
granted.

BACKGROUND

Plaintiffs Central States, Southeast and Southwest Areas
Pension Fund (the “Pension Fund”); Central States, Southeast and
Southwest Areas Health and Welfare Fund (the “Health & Welfare
Fund”) (together, the “Funds”); and the Funds’ Trustee Howard

McDougall have filed this three-count action against defendants

‘\