Court Opinion

ID: 9494230
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:32:45.6417+00
Date Added: 2024-06-11T17:56:17.673008
License: Public Domain

PREGERSON, Circuit Judge,
dissenting:
The majority today fashions a rule that imposes a difficult burden of production on the Plan Trustees and rewards employers who blatantly violate the record keeping duties imposed by ERISA. I respectfully dissent.
I.
The majority decision erodes the Brick Masons standard for shifting the burden of production • in an ERISA contribution case where the employer has failed to keep adequate records, as required by ERISA. In Brick Masons Pension Trust v. Indus. Fence & Supply, Inc., 839 F.2d 1333 (9th Cir.1988), our circuit followed the Eleventh Circuit and adopted for ERISA cases the burden-shifting scheme established by the Supreme Court in the context of Fair Labor Standards Act cases. Under this scheme, “once the trustees produce evidence raising genuine questions about the accuracy of the employer’s records and the number of hours worked by the employees, the burden shifts to the employer to come forward with evidence of the precise amount of work performed.” Brick Masons, 839 F.2d at 1338 (citing Combs v. King, 764 F.2d 818, 822-27 (11th Cir.1985)).
In Brick Masons, we adopted this burden shifting rule based on the legislative history of ERISA and public policy considerations. “Both the language and the legislative history of ERISA clearly require employers to keep records of their employees hours in order to permit the calculation of benefits due.” Id. at 1338 (emphasis added). We stressed in Brick Masons the importance of the record keeping requirements of ERISA when we stated that the “records employers are required to keep by ... ERISA may be the only evidence available to employees to prove that their employers have failed to compensate them in accordance with the statute.” Id. Finally, we determined that the burden-shifting scheme was necessary to ensure that employers did not benefit from their failure to maintain records. “An employer cannot escape liability for his failure to pay his employees the wages and benefits due to them under the law by hiding behind his failure to keep records as statutorily required.” Id.
Under our holding in Brick Masons, a Plan Trustee meets the burden of production in an ERISA contribution case by producing evidence that: (1) raises genuine questions about the accuracy of the employer’s records; and (2) raises genuine questions about the number of hours worked by the employees. Id. at 1337-38. In Brick Masons, we did not specifically address the question of who bears the burden of proving that the unreported work was covered by the collective bargaining agreement.
Faced with this question, the majority reformulates the Brick Masons burden *1069shifting scheme. The majority’s new formulation requires the Plan Trustee to “show that (1) the [defendant employer] failed to keep adequate records, and (2) that there exist some employees who (a) performed covered work that was (b) unreported to the trust funds.” Maj. Op. at 1065. The majority’s new formulation increases the burden on the Plan Trustee by requiring the Plan Trustee to show that the unreported work is covered by the collective bargaining agreement. This added requirement contravenes the policy concerns on which we based our decision in Brick Masons. Additionally, the majority’s new formulation raises the standard of proof required of the Plan Trustee. Under Brick Masons the Plan Trustee is merely required to “raise genuine questions” about the accuracy of the employers records and the number of hours worked. The majority’s new formulation requires the Plan Trustee to “show” that he satisfied the elements of his burden. The new formulation increases the burden on the Plan Trustee because it is more difficult to “show” that something exists, than it is to “raise a genuine question” whether something exists.
The facts of this case illustrate the difference between the Brick Masons standard and the majority’s new formulation. In this case, the Plan Trustees introduced evidence of an audit showing that the defendant employer, N.T. Audio, maintained incomplete records about the number of hours worked, and the work performed by its employees. As noted by the majority, N.T. Audio conceded the inadequacies of its records in its answers to interrogatories. Maj. Op. at 1066. The Plan Trustees also introduced evidence that N.T. Audio failed to report to the Plans work performed by employees who had previously performed covered work for N.T. Audio. Maj. Op. at 1066-67.
Under the majority’s new formulation, the burden would not shift to the defendant, N.T. Audio, because the Plan Trustees did not show that the unreported hours were for work covered by the collective bargaining agreement. But under the Brick Masons standard, the Trustees would have satisfied their burden. In order to shift the burden of production to the employer under Brick Masons, the Trustees simply needed to raise genuine questions about the number of hours worked by the employees. As the majority concedes, the Trustees demonstrated that the employees had a history of performing covered work for the defendant-employer. And, as the majority further concedes, the Trustees demonstrated that some work performed by these employees was unreported to the Plans. It is reasonable to infer from these facts that the.work performed by the employees was work covered by the collective bargaining agreement. Thus I would affirm the district court’s determination that the Trustees raised genuine questions about the number of covered hours worked by the employees. See Combs, 764 F.2d at 827 (“The trustees met their burden when they produced affidavits of two of Mrs. King’s employees and of the certified public accountant. These affidavits raised genuine questions about the accuracy of Mrs. King’s records and the number of hours worked by her employees.”) (emphasis added).
The majority’s new formulation of the Plan Trustees’ burden runs contrary to the policies identified in Brick Masons. The employer’s records may be the only reliable evidence the Trustees can use to establish liability for contributions to the Plans. Under -the majority’s formulation, an employer stands to benefit from its failure to keep records as required by ERISA. See 29 U.S.C. § 1059(a)(1) (“every employer shall ... maintain records with respect to each of his employees suffi-*1070dent to determine the benefits due or which may become due to such employees”); Central States Pension Fund v. Cent. Transport, Inc., 472 U.S. 559, 573, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985); (“[ERISA, 29 U.S.C. § 1059] requires] employers to maintain records on employees and to furnish to benefit plans the information needed for the plans’ fulfillment of their reporting duties.”). The majority suggests that the Plan Trustees in this case could attach affidavits from the employees to establish that the unreported work was covered by the collective bargaining agreement. This assumes that employees will be able to remember in detail the number of the hours and type of work performed in the past.1 If this assumption proves false, the Plan Trustees would not meet their burden under the majority’s formulation, and the case would end without recourse.
In contrast, under Brick Masons, once the Plan Trustees meet their burden to raise genuine issues, the burden shifts to the employer to prove that the unreported hours were for covered work. The employer could meet its burden in various ways. Of course, if the employer maintained accurate and reliable records documenting the number of hours and the type of work performed by each employee as required by ERISA, such records should suffice to end the litigation. See 29 U.S.C. § 1059. If, as is true in this case, the employer fails to abide by its statutory duty to maintain these records, the employer may still introduce other forms of evidence to meet its burden.
Michigan Laborers’ Health Care Fund v. Grimaldi Concrete, Inc., 30 F.3d 692 (6th Cir.1994) is the only circuit opinion to consider the question of who has the burden of producing evidence that work performed was work covered under the collective bargaining agreement. In Grimaldi Concrete, relying upon Brick Masons, the Sixth Circuit held that “an employer’s failure to maintain adequate records shifts the burden to the employer to prove that the work performed was covered or not covered.” Id. at 696. The employer in Gri-maldi Concrete failed to keep records showing “which laborers performed covered work, or how many hours were spent performing covered work.” Id. at 694. Because of this record deficiency, the trust fund “auditors were unable to determine the amount of work for which contributions were due.” Id. The Sixth Circuit found that the employer’s failure to maintain records shifted the burden to the employer “to prove what work was covered and what was not covered.” Id. at 696.
In short, I would adhere to the burden shifting standard articulated by Brick Masons, and hold that a Plan Trustee satisfies its burden of production by showing that the employer kept inadequate records and by raising genuine questions as to whether employees have performed covered work for which contributions were not paid. Applying this standard to the instant case, I would find that the Plan Trustees satisfied their threshold burden and affirm the district court.

. This burden also assumes that employees will be willing to testify against their employ*1071ers.