Court Opinion

ID: 3003132
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:39:24.388324+00
Date Added: 2024-06-11T15:03:19.271162
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

Nos. 07-3960 & 07-3983

T RUSTEES OF THE C HICAGO
P LASTERING INSTITUTE
P ENSION T RUST, et al.,
                                                Plaintiffs-Appellees,
                                                  Cross-Appellants,
                                 v.

C ORK P LASTERING C OMPANY,
f/k/a G and J P LASTERING
C OMPANY, INC.,

                                              Defendant-Appellant,
                                                   Cross-Appellee.

           Appeals from the United States District Court
       for the Northern District of Illinois, Eastern Division.
       No. 03 C 6867—Sidney I. Schenkier, Magistrate Judge.

     A RGUED D ECEMBER 1, 2008—D ECIDED JULY 1, 2009

 Before B AUER, R OVNER, and E VANS, Circuit Judges.
  R OVNER, Circuit Judge. Beginning in 1984, G and J
Plastering Company (“G&J”) operated as a plastering
contractor in Cook County, Illinois, and surrounding
2                                       Nos. 07-3960 & 07-3983

counties. 1 Its employees were represented by multiple
unions, among them the Journeymen Plasterers’ Protective
and Benevolent Society of Chicago, Local 5 (“Local 5”),
until a November 2002 election, when the employees
selected a union other than Local 5 as their one and only
bargaining representative. As a consequence of that
election, G&J “exited” from the collective bargaining
agreement with Local 5 and ceased making contributions
to the various fringe benefit trust funds serving Local 5
members (the “Local 5 Funds”). When the Local 5 Funds
conducted an exit audit of G&J’s records to determine
whether G&J had any outstanding liability to the Funds,
they determined that G&J had not made the appropriate
contributions to the Local 5 Funds for work performed
within Local 5’s jurisdiction. They filed suit against
G&J pursuant to section 301 of the Labor Management
Relations Act of 1947, 29 U.S.C. § 185, and section 502(a)(3)
of the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1132(a)(3). After a three-
day trial, the district court found that G&J had not com-
plied with its obligations to the Local 5 Funds 2 and entered

1
   G&J sold its assets in 2006 to Elite Plastering Co., Inc., which
assumed G&J’s name. G&J in turn changed its name to Cork
Plastering Company. Cork is the defendant in this suit. How-
ever, because the defendant operated under the name of G&J
throughout the time period relevant to this litigation, that is
the name that we shall use.
2
   As discussed in greater detail below, Local 5 itself is a plain-
tiff based on the fact that G&J was obliged to collect and forward
working assessments (i.e., union dues) to Local 5 for work
                                                   (continued...)
Nos. 07-3960 & 07-3983                                         3

judgment in the Funds’ favor in the total amount of $1,109,
466.23. The court later awarded the plaintiffs costs
totaling $9,784.67. The award of costs did not include the
audit costs incurred by the Local 5 Funds, as the court
deemed the request for those costs lacking in adequate
detail. The parties have filed cross-appeals: G&J contends
that the district court erred in allowing the plaintiffs to
introduce certain testimony and other evidence in
support of their claims, and the plaintiffs contend that
the district court erred in denying their request for
audit costs. We affirm.

                               I.
  The period of time relevant to this case extends from
October 1, 1993 through November 14, 2002. The audit
conducted on behalf of the Local 5 Funds actually
extended as far back as February 1992, but the Local 5
Funds ultimately decided not to seek relief for any work
performed prior to October 1, 1993. Throughout the
relevant nine-year period, G&J conducted construction
plastering work in Cook, DuPage, and Lake Counties
(among others) in Northern Illinois. At any given time, it
had between twenty-five and thirty plasterers in its
employ.
 Prior to November 2002, the plastering employees of
G&J were represented by three different unions: Locals 56

(...continued)
performed by Local 5 members within Local 5’s jurisdiction.
But for ease of reference, we shall typically refer to the plain-
tiffs as the “Local 5 Funds.”
4                                  Nos. 07-3960 & 07-3983

and 74 of the International Union of Bricklayers and
Allied Craftsmen (the “DuPage Bricklayers”), Lake County
Area Plasterers’ Union Local 362/11 (the “Lake County
Plasterers”), and Local 5. Each union had its own geo-
graphic jurisdiction: the DuPage Bricklayers covered
DuPage County, the Lake County Plasterers covered Lake
County, and Local 5 covered Cook, Will, Kane, McHenry,
DeKalb, Kendall, Grundy, LaSalle, and Livingston Coun-
ties. Each union had its own set of trust funds for the
benefit of its members. G&J was bound to separate col-
lective bargaining agreements with each of these unions.
  Each of those agreements obligated G&J to make con-
tributions to the various trust funds on behalf of its
employees. There were six funds associated with Local 5,
and along with Local 5 itself, each of those funds is a
plaintiff in this suit: the Chicago Plastering Institute
Pension Fund, the Chicago Plastering Institute Health and
Welfare Fund, the Chicago Plastering Institute Retire-
ment Savings Fund, the Local No. 5 Journeymen Plaster-
ers’ Protective & Benevolent Society of Chicago
Apprentice & Training Fund, the Chicagoland Construc-
tion Safety Council (a Chicago-area council that promotes
safe practices in the construction industry), and the
Chicago Plastering Institute (a promotional trust fund
that collects and forwards contributions to the Chicago-
land Construction Safety Council). The first four of these
funds are employee benefit funds within the scope of
ERISA’s section 3, 29 U.S.C. § 1002(3); the remaining
two funds are non-ERISA funds.
 By the terms of the collective bargaining agreements,
G&J’s obligation to make contributions to one union’s
Nos. 07-3960 & 07-3983                                 5

funds versus those of another depended not on the
union to which an employee belonged, but rather on the
geographic territory in which the employee performed
plastering work. So whenever a G&J employee performed
plastering work within the territorial jurisdiction of
Local 5, G&J was obligated to make contributions to the
Local 5 Funds based on that work, regardless of whether
the employee performing the work was a member of
Local 5, the DuPage Bricklayers, or the Lake County
Plasterers. Similarly, G&J was separately obliged to
deduct working assessments (i.e., union dues) from
payments made to Local 5 members for work they per-
formed within Local 5’s jurisdiction. Those assessments
were payable to Local 5 itself rather than to the Local 5
Funds.
   As it turns out, however, G&J’s contractual obligation
to make contributions based on the territory in which
its employees performed plastering work was to a sig-
nificant extent superseded or rendered moot by two
external sets of agreements among the union locals and
their funds.
  First, as to two of the three unions that represented
G&J’s employees prior to the November 2002 election,
G&J’s contractual obligation to make fringe benefit con-
tributions based on the territory in which work was
performed was superseded by a separate directive to
make all contributions to the union that represented a
given employee—his “home local”—and to the fringe
benefit funds affiliated with that union. Beginning in
1991, the Northern Illinois District Council of Operative
6                                  Nos. 07-3960 & 07-3983

Plasterers and Cement Masons’ International Association
(the “OP Council”), a collective of union locals represent-
ing plasterers and cement masons including Local 5 and
the Lake County Plasterers, required contractors who
employed members of those locals to pay both benefits
and working assessments directly to a member’s benefit
office and local union, regardless of where the employee
was performing his work. That rule is known colloquially
as the “money-follows-the-man” rule. The rule did not
apply to work performed by members of the DuPage
Bricklayers, which was not a member of the OP Council.
Thus, as to G&J’s employees who were members of the
DuPage Bricklayers, the company’s contractual obligation
to make contributions based on where the employee’s
work was performed remained unaltered. This meant
that when a member of the DuPage Bricklayers
performed plastering work in Local 5’s territory, G&J was
obligated to make contributions to the Local 5 Funds. By
contrast, for work performed by members of Local 5 or
the Lake County Plasterers, the company would make
contributions based on the union membership of the
employee performing the work, no matter where the
employee’s work was performed. As we shall see, the
money-follows-the-man rule had the effect of confining
the bulk of G&J’s liability in this case to work performed
by members of the DuPage Bricklayers.
  Second, certain of the Local 5 Funds had reciprocal
agreements with their counterparts at other unions,
including the DuPage Bricklayers Funds, pursuant to
which they would forward contributions received for
work performed within Local 5’s jurisdiction by
Nos. 07-3960 & 07-3983                                    7

members of other unions to the funds affiliated with the
home locals of those workers. Local 5’s health and welfare
fund and its pension fund both were parties to such
agreements. In terms of the damages that the Local 5
Funds sought in this case for work performed by the
DuPage Bricklayers members within Local 5’s territory,
the reciprocal agreements took the company’s obligations
to those two funds off the table.
   In November 2002, the National Labor Relations Board
(“NLRB”) conducted an election among G&J’s plastering
employees to determine which union would thereafter
serve as their exclusive collective bargaining representa-
tive. The NLRB certified the DuPage Bricklayers as the
winner of that election on November 14, 2002. As a result,
Local 5 ceased being the representative of any of
G&J’s plastering employees, G&J “exited” the collective
bargaining agreement with Local 5, and G&J had no
obligation to make contributions to Local 5 or to any of
its fringe benefit funds for plastering work performed
after November 14, 2002.
  The end of Local 5’s tenure as a representative of G&J
employees and G&J’s corresponding obligations under
the collective bargaining agreement with Local 5
triggered an exit audit to determine the amounts of any
outstanding obligations to the Local 5 Funds. The plaintiffs
informed G&J that their auditors, the firm of Piotrowski &
Gebis (“P&G”), would be reviewing G&J’s contribu-
tions for the period from February 1, 1993 through Novem-
8                                   Nos. 07-3960 & 07-3983

ber 14, 2002.3 That audit commenced in February 2003.
Problems soon emerged. In response to a questionnaire
from the Local 5 Funds, G&J revealed that it had been
making contributions based on the home local of each
employee rather than the location of the work performed,
as required by the various collective bargaining agree-
ments. Still, it was possible, in view of the money-follows-
the-man rule and the reciprocal arrangement that some
of the Local 5 Funds had with their counterpart funds,
that the Local 5 Funds had received some if not all of the
monies to which they were entitled despite G&J’s error
in the method of contribution. The Local 5 Funds
decided that they would have their auditors review
G&J’s work records for the last eighteen months of the
audit period. G&J had preliminarily indicated that it
had records as to the location of the work performed by
its plasterers going back that far. If analysis of the
records for that period revealed that the Local 5 Funds
had been paid what they were entitled to, then the Funds
would assume that G&J had paid them what they were
owed in prior years. But when P&G asked the company
to provide whatever work location records it had for
that purpose, G&J finally disclosed that in fact it had no
records showing where its employees had performed
their work. Testimony at trial would later lead the trial
court to find that G&J had never kept such records,
notwithstanding its contractual obligation to make em-
ployee benefit contributions based on the territory in
which each employee was engaging in plastering work.

3
  The trial testimony suggested that this was the first audit
conducted at G&J since 1989, when one of its founding
partners left the business.
Nos. 07-3960 & 07-3983                                  9

  P&G thus was left to its own devices in attempting to
determine the extent of G&J’s outstanding liability to the
Local 5 Funds. Based on G&J’s payroll records, the
auditors attempted to ascertain instances in which the
company should have made, but in fact did not make,
contributions to the Local 5 Funds for work performed
within Local 5’s jurisdiction. Having in mind the money-
follows-the-man rule that applied to members of Local 5
and the Lake County Plasterers, the auditors’ principal
focus was on the hours worked by members of the DuPage
County Bricklayers. G&J owed contributions to the
Local 5 Funds for any hours worked by DuPage Brick-
layers within Local 5’s territory. But because G&J’s
records did not reveal where individual employees
worked on any given day, the dilemma posed to P&G was
how to determine what the company actually owed the
Local 5 Funds for work performed by DuPage Bricklayers
in Local 5’s territory. Given the lack of the data neces-
sary to make that determination, the auditors applied a
set of assumptions to the data available to them and
prepared what is known as a Report On Agreed-Upon
Procedures, with the “procedures” being the assumptions
agreed to between P&G and its clients. For example,
because G&J’s records did not reveal the locations in
which its employees had worked on any given day, P&G
assumed that all work performed by members of the
DuPage Bricklayers during the audit period was work
performed within Local 5’s territory, such that the com-
pany should have made contributions to the Local 5
Funds (excluding the pension and health and welfare
funds, which had reciprocal agreements with their coun-
10                                 Nos. 07-3960 & 07-3983

terparts) for the entirety of that work. G&J’s records
also revealed that the company had paid a number of
bonuses to its plasterers. But because G&J had no written
bonus plan and no documentation of the basis for the
bonuses, P&G assumed that all such bonus payments
were really compensation for hours worked and that
contributions to the Local 5 Funds should have been
made based on these payments. P&G applied these and
other assumptions to G&J’s payroll data and came up
with a calculation of what G&J owed the Local 5 Funds
in delinquent contributions. P&G partner Gary Gebis
would later discuss the set of assumptions P&G auditors
had applied both in his deposition and in his trial testi-
mony. Gebis made clear that he did not vouch for the
accuracy of the assumptions. P&G’s report, issued in
April 2004, thus was not one which expressed a profes-
sional opinion as to how much G&J actually owed in
delinquent opinions. Instead, it simply reflected what
the company might owe the Local 5 Funds given the
application of the various assumptions to G&J’s payment
records.
  The P&G report set forth roughly four categories of
work hours for which it was posited that contributions
were owing to the Local 5 Funds and to Local 5 itself:
(1) jurisdictional hours, based on the assertion that G&J
had erroneously made contributions to the DuPage Brick-
layers Funds rather than the Local 5 Funds for work
that was performed within Local 5’s territory, (2) hours
corresponding to payments given to employees that the
company described as bonuses (and as such would be
exempt from any contribution requirement) but which
Nos. 07-3960 & 07-3983                                    11

P&G had assumed were actually for work performed,
(3) working assessments (dues) owed to Local 5 for
hours worked by Local 5 members within Local 5’s juris-
diction, and (4) other hours for which P&G believed
contributions were owed. By P&G’s calculation, the
contributions and working assessments owed on these
hours totaled $849,982.72. That total was later reduced to
$815,861.02 when the plaintiffs withdrew, inter alia, any
claims for work performed from February 1, 1993 through
September 30, 1993. G&J rejected the analysis of the
audit in toto and denied any liability for unpaid contribu-
tions.
  Local 5 and the Local 5 Funds filed this suit while the
audit was underway. The parties consented to final
disposition by Magistrate Judge Schenkier, who conducted
a three-day bench trial. Over G&J’s objection, Judge
Schenkier admitted P&G’s audit report into evidence
and permitted Gebis to testify about the report although
he was not one of the line accountants who had con-
ducted the audit and prepared the report.
  Pursuant to a detailed set of factual and legal findings,
Judge Schenkier found G&J liable to the Local 5 Funds
for delinquent contributions, although he did not accept
as valid all of the assumptions underlying the P&G
audit and thus deemed G&J liable for a lesser amount
than the plaintiffs had claimed. Trustees of Chicago Plaster-
ing Inst. Pension Trust v. Cork Plastering, Inc., 2007 WL
6080197 (N.D. Ill. Aug. 27, 2007).
  The court concluded first that G&J had breached the
collective bargaining agreement with Local 5 by failing
12                                    Nos. 07-3960 & 07-3983

to make contributions based on work performed by
members of the DuPage Bricklayers within Local 5’s
territory. Id., at *22. The plaintiffs bore the burden of
showing the number of hours for which contributions
were owed, and normally this would simply be a matter
of setting forth the number of hours worked within
their jurisdiction. Id., at *22-*23. But G&J had failed to
keep records that would permit such a showing although,
the court pointed out, ERISA required it to keep such
records. Id., at *23, citing 29 U.S.C. § 1059(a)(1) and
Trustees of Chicago Painters & Decorators Pension, Health &
Welfare, & Deferred Sav. Plan Trust Funds v. Royal Int’l
Drywall & Decorating, Inc., 493 F.3d 782, 786 (7th Cir. 2007).4
G&J’s breach of this obligation did not relieve the Local 5
Funds of their burden of proof, nor did it permit pure
speculation as to the number of hours that should
have been reported but were not. 2007 WL 6080197, at *23.
   As a factual matter, the judge rejected G&J’s representa-
tion that its practice was to assign workers to jobs within
the territory of their home locals, such that a DuPage
Bricklayers member typically would have worked primar-
ily in DuPage County and would rarely if ever have been
assigned to work in Local 5’s jurisdiction. Id., at *9-*12. The
court noted among other points that although a
significant number of G&J’s plasterers were members of
the DuPage Bricklayers, G&J did substantially more work
in Local 5’s territory than in the DuPage Bricklayers’

4
  Section 1059(a)(1) requires an employer to “maintain records
with respect to each of his employees sufficient to determine
the benefits due or which may become due to such employees.”
Nos. 07-3960 & 07-3983                                   13

jurisdiction, so “there was a compelling need to assign
members of [the DuPage Bricklayers] to perform
plastering work in Local 5 territory.” Id., at *9. The court
surmised, then, that members of the DuPage Bricklayers
had in fact done some work within Local 5’s territory, and
that G&J had improperly made contributions to the
DuPage Bricklayers Funds for that work rather than to
the Local 5 Funds. Id., at *12.
  “But ‘some’ does not mean ‘all.’ ” Id. The court found no
factual basis for the plaintiffs’ premise, reflected in the
P&G report, that all work performed by the DuPage
Bricklayers members was performed within Local 5’s
jurisdiction, in view of evidence that some twenty-nine
percent of G&J’s billings during the relevant time period
were for work performed outside of Local 5’s territory
and twelve and one-half percent were for work done
within the DuPage Bricklayers’ territory. Id.
  However, given that seventy-one percent of G&J’s total
billings were for work performed in Local 5’s territory, the
court found it reasonable to infer that seventy-one
percent of its total work hours should have been reported
to Local 5, with corresponding contributions. Id., at *13.
Yet, it appeared that G&J had only reported forty-one
percent of its hours to Local 5. Id. The court inferred
that the difference—some 150,980 hours—comprised
hours that were worked by members of the DuPage
Bricklayers within Local 5’s territory and that should
have been reported to Local 5 but had not been. Id. The
court deemed the company liable to the Local 5 Funds
for those hours. Id.
14                                  Nos. 07-3960 & 07-3983

  The court went on to reject the plaintiffs’ bonus claim.
Id., at *14-*17, *25. Notwithstanding the lack of a written
bonus plan, the court found no support for the notion
that the bonus payments represented compensation for
hours worked. Instead, the evidence showed that these
were truly bonuses. Id., at *14-*17, *25.
   The court agreed that Local 5 itself was owed assess-
ments (dues) for work performed by its members within
Local 5’s territory. Id., at *19-*21. The evidence indicated
that there were twenty-four G&J employees reported as
Local 5 members during the audit period, but the P&G
report indicated that dues had not been contributed for
some 6,810 hours worked by these employees within
Local 5’s territorial jurisdiction. Id., at *20.5 G&J was
liable to Local 5 for these hours. Id., at *25, *29.
  Finally, the court found G&J liable for certain other
categories of unreported hours. These included some
560 hours worked by an individual G&J classified as a
manager but whom the court found to have been
engaged in plastering-related work for which the
company was obliged to make contributions. Id., at *17, *25
& n.6. There were also some 370 hours categorized by
G&J as “shop work,” which would be exempt from
any obligation to make fringe benefit contributions, but

5
  Over two-thirds of these hours had simply gone unreported,
although there was no dispute that Local 5 was owed assess-
ments for these hours. Some had been miscategorized as
management hours, whereas others had been mistakenly
reported to the DuPage Bricklayers instead of Local 5. 2007
WL 6080197, at *20 n.4.
Nos. 07-3960 & 07-3983                                    15

which the court found were actually hours devoted to
plastering work. Id., at *18-*19, *25 & n.6. And finally,
there were 10,088.75 hours that G&J claimed it had re-
ported to the Local 5 Funds but which the court found
it had not. Id., at *17-*18, *25 & n.6.
  The court concluded that G&J was liable for a total of
161,998.75 hours of unreported work to the four Local 5
Funds that qualified as employee benefit funds under
ERISA, another 11,018.75 hours to the Chicagoland Con-
struction Safety Council, a non-ERISA fund, and 6,810
hours to Local 5 for working assessments. Id., at *30. The
court directed the parties to calculate the amounts of
contributions and union dues owed for those hours.
The court also indicated it would add an award of prejudg-
ment interest at the rate of one percent per month pursu-
ant to 29 U.S.C. § 1132(g)(2)(B). Id. It announced its intent
to impose an additional amount equal to the award of
prejudgment interest as further damages, pursuant to the
“double-interest” provision of section 1132(g)(2)(C)(i). Id.
Finally, the court acknowledged that section 1132(g)(2)
provides for awards of attorney’s fees and costs, including
audit costs, and indicated that it would set a schedule
for the submission of materials that would permit the
court to determine what amounts to award the plaintiffs
for those fees and costs. Id., at *31.
  The parties subsequently prepared a joint submission
reflecting agreement as to some but not all of the amounts
owed pursuant to the court’s liability decision. R. 117. One
of the items as to which the parties disagreed was the
reasonableness of the $45,435.00 in audit costs for which
16                                    Nos. 07-3960 & 07-3983

the plaintiffs were seeking recompense. Although the
documentation produced to G&J in support of those
costs revealed the hours spent month by month on the
audit, the total amounts charged to the Local 5 Funds
for those hours, and the P&G employees who worked on
the audit, the submitted materials did not disclose the
qualifications, experience, and billing rates of the individ-
ual auditors nor were the time records itemized to
reflect what tasks each individual auditor had been
working on at any given time and the total hours spent
on various aspects of the audit.
   In a set of supplemental findings and legal conclusions,
the court awarded the plaintiffs $1,109,466.23 for unpaid
contributions and union dues and prejudgment interest
(and double interest), R. 128, but the court sustained
G&J’s objections to the audit costs and denied the plain-
tiffs’ request for these costs in toto, Trustees of Chicago
Plastering Inst. Pension Trust v. Cork Plastering, Inc., 2007 WL
3449493 (N.D. Ill. Nov. 14, 2007). The court found it
reasonable to expect that a request for an award of audit
costs be supported by the same type of detail used to
support attorney-fee requests. Absent such detail, the
court believed that it could not properly assess the rea-
sonableness of the requested costs. Id., at *2. The court
subsequently signed off on the plaintiffs’ bill of costs in
the reduced amount of $9,784.67. R. 131.

                              II.
  The parties present us with three issues on appeal, all of
them related to the audit. G&J contests the district court’s
Nos. 07-3960 & 07-3983                                    17

decision to admit the P&G Report On Agreed-Upon
Procedures into evidence. G&J views the audit report as
being founded on inadmissible hearsay; it also contends
that the report was prepared in anticipation of litigation
and is not otherwise admissible as a business record.
Second, G&J argues that the court should not have
allowed Gebis to testify about the report. The company
reasons that Gebis was not one of the line auditors in-
volved in conducting the audit and preparing the report;
nor was Gebis qualified as an expert who could opine
about the company’s liability to Local 5 and its Funds.
Finally, the plaintiffs cross-appeal, contesting the district
court’s decision to deny them any compensation for the
costs of the audit. In their view, the court inappro-
priately held their request for audit costs to the same
standards applied to attorney-fee requests and, alterna-
tively, failed to give them advance notice of its intent to
apply those standards and a reasonable opportunity to
meet them.

A. The P&G audit report
  The data underlying the P&G report was, as we dis-
cussed earlier, derived from G&J’s payroll records. But the
report’s conclusions as to what G&J owed Local 5 and the
Local 5 Funds based on that data were driven by a set of
procedures or assumptions agreed to by P&G and its
clients. The report was not an audit opinion in the
sense that it expressed a professional judgment about
what G&J owed the plaintiffs; P&G did not vouch for
the validity of the assumptions employed but merely
18                                    Nos. 07-3960 & 07-3983

tabulated what the company might owe assuming the
validity of the assumptions.
  The district court overruled G&J’s objections to the
admissibility of the report on several grounds. First, the
court noted that the data underlying the report was
derived from the company’s own payroll records. G&J
did not object to the authenticity or reliability of its re-
cords, nor did it contest the accuracy of the data pulled
from those records. 2007 WL 6080197, at *24; R. 148-1
at 104-05. G&J’s real objection was to the set of assump-
tions that P&G had applied to the data. Although those
assumptions were based to some extent on out-of-court
discussions between the auditors and their clients, that
fact did not render the report itself hearsay. R. 148-1 at 105.
The court noted that the assumptions were also based
on what the auditors had discovered in the course of
their audit. R. 148-1 at 103-04. Moreover, Gebis testified
and was subject to cross-examination as to what the
assumptions were and what they were based on. R. 148-1
at 105. Ultimately, the court concluded that doubts as to
the sufficiency and reliability of the assumptions went to
the weight to be given to the report rather than its ad-
missibility. R. 148-1 at 104, 105. “[I]f I find that the proce-
dures were good and that the analysis was correct, I’ll
accept it,” the court observed. R. 148-1 at 117. “[I]f I don’t,
I won’t.” Id. And as we have discussed, the court went
on to accept some of the assumptions set forth in the
report as valid and rejected others. For purposes of calcu-
lating the total number of hours for which G&J owed the
plaintiffs contributions and working assessments, the
court did rely on the report’s underlying data as to the
Nos. 07-3960 & 07-3983                                   19

hours falling into various categories, as there was no
objection to the accuracy of the data summarized in the
report.
  G&J’s threshold contention here is that the report should
have been excluded from evidence because it contains
inadmissible hearsay. This is not literally true: the report
is a long series of tabulations based on G&J’s payroll
records and it does not repeat any out-of-court state-
ments. But the report’s conclusions do reflect a series of
assumptions—for example, that all hours reported to the
DuPage Bricklayers Funds were for work performed within
Local 5’s territory and thus contributions for those hours
should have been made to the Local 5 Funds rather than
to the DuPage Bricklayers Funds. As discussed, the
Local 5 Funds agreed upon these assumptions with their
auditors, presumably in out-of-court discussions and
correspondence with P&G, which in turn prepared the
report in accord with those assumptions; the report is
thus entitled “Report On Agreed-Upon Procedures.”
Although the report does not recount these discussions,
G&J reasons that the report is necessarily based on the
marching orders that P&G was given and to that extent
the report is the product of inadmissible hearsay.
  There is no merit to this argument. The assumptions that
P&G applied in preparing the report obviously were
important in assessing the validity of the report’s asser-
tions as to what G&J owed Local 5 and the Local 5 Funds.
But the fact that those assumptions were conveyed to
the auditors in out-of-court discussions is neither here
nor there: the content of those discussions was not being
20                                  Nos. 07-3960 & 07-3983

offered into evidence, let alone for its truth, nor was
it necessary to recount such conversations in order to
evaluate the merit of any assumption that P&G em-
ployed. Auditors, like other professionals, are often asked
to analyze data based on a set of assumptions given to
them. See Am. Inst. Of Certified Public Accountants
Professional Stds., AT § 201 (describing agreed-upon
procedures engagements). The assumptions that P&G
applied to the data were not a secret. Gebis was
deposed before trial, and he answered G&J’s questions
at that time about the nature of the assumptions underly-
ing the report; he was similarly examined and cross-
examined at length during the trial on the subject of
these assumptions. The assumptions were not based on
facts that were known only to the plaintiffs and com-
municated in secret to P&G; they instead reflected the
plaintiffs’ conclusions about how various categories of
hours and payments reflected in G&J’s records should be
treated in assessing G&J’s liability to the Local 5 Funds.
As the district court recognized, these assumptions in
fact were derived from what G&J’s own records dis-
closed or failed to disclose about its methodology in
reporting hours and making contributions to the various
union locals and their respective funds. For example, the
assumption that all hours reported by members of the
DuPage Bricklayers represented work performed within
Local 5’s jurisdiction was premised on G&J’s failure to
keep records as to the jurisdictions in which its plasterers
were working at any given time. Similarly, the assump-
tion that the bonuses G&J paid to its employees were not
truly bonuses but rather were disguised payments for
Nos. 07-3960 & 07-3983                                       21

hours worked was based on G&J’s lack of a written
bonus plan or other documentation setting forth the
criteria for the bonuses. P&G did not vouch for the accu-
racy of the assumptions, nor did the court admit P&G’s
report on the premise that those assumptions were accu-
rate. The validity of the assumptions that the auditors
applied was debated throughout the proceedings in
light of the testimony and other evidence as to G&J’s
practices. It was that evidence, and not the content of any
out-of-court communications between P&G and its
clients, that led Judge Schenkier to accept some of the
assumptions as accurate and to reject others as unsub-
stantiated. There was no error in admitting the report
simply because it reflected these assumptions.
  We also reject G&J’s contention that the report should
have been excluded on the basis that it was not made or
kept in the ordinary course of business and was
prepared for purposes of litigation. See Fed. R. Evid. 803(6)
(deeming generally admissible records of regularly-con-
ducted business activity); United States v. Blackburn, 992
F.2d 666, 670 (7th Cir. 1993) (noting “well-established rule
that documents made in anticipation of litigation are
inadmissible under the business records exception”); see
also Lust v. Sealy, Inc., 383 F.3d 580, 588 (7th Cir. 2004). G&J
may well be right that the report itself does not qualify
as a business record. The testimony at trial did not
reveal any program by which the Local 5 Funds routinely
audited employers; in fact, it appears that G&J was last
audited in 1989. R. 148-1 at 44-45. See Paddack v. Dave
Christensen, Inc., 745 F.2d 1254, 1258 (9th Cir. 1984) (where
trust funds had no routine audit practice, compliance
22                                 Nos. 07-3960 & 07-3983

audit report prepared when funds suspected employer
may not have complied with its contribution obligations
not admissible as business record), cited with approval in
AMPAT/Midwest, Inc. v. Ill. Tool Works Inc., 896 F.2d 1035,
1044-45 (7th Cir. 1990). But the report would in any event
qualify for admission as a summary of voluminous busi-
ness records—namely G&J’s own payroll records. See
Fed. R. Evid. 1006; e.g., United States v. Weaver, 281 F.3d
228, 232-33 (D.C. Cir. 2002). The report, as we have dis-
cussed, merely tabulates data from G&J’s records to
show what the company might owe given certain assump-
tions. G&J does not contend that either the underlying
data or P&G’s calculations are inaccurate. Its quarrel has
always been with the assumptions that the auditors
applied to the data. As we have discussed, those assump-
tions were fully aired and their validity was assessed by
the court based on the totality of the evidence. To the
extent a given assumption was found to be invalid, the
court rejected the report’s application of that assumption.
But the payroll data summarized in the report was accu-
rate, and the court committed no error in admitting
the report as a summary of that data. See AMPAT/Midwest,
Inc., 896 F.2d at 1045.

B. Testimony of Gary Gebis
  Gebis, as we have noted, testified at length as to the
preparation of the report, the assumptions reflected in the
report, and the report’s conclusions as to what G&J pur-
portedly owed to Local 5 based on the application of
those assumptions to the company’s payroll records. The
Nos. 07-3960 & 07-3983                                    23

district court found that Gebis was sufficiently involved
in the P&G audit to enable him to testify about the
audit report and to lay a foundation for its admission.
The court noted that Gebis was P&G’s liaison with the
plaintiffs and in that capacity regularly communicated
with them about the audit; he spoke regularly with the
field auditors; and he signed off on the audit report after
reviewing all of the pertinent working papers. 2007 WL
6080197, at *24; R. 148-1 at 104.
  G&J nonetheless argues that the district court should not
have allowed Gebis to testify about the report. As it did
below, the company contends that because Gebis was not
one of the field auditors who did the legwork culminating
in the report, he lacked sufficient personal knowledge
about the report to give testimony about it. G&J also
suggests that Gebis should not have been permitted to
testify without being qualified as an expert witness pursu-
ant to Federal Rule of Evidence 702.
  Contrary to G&J’s contention, Gebis was certainly
qualified to lay a foundation for the admission of the
report notwithstanding the fact that he was not one of the
line accountants who actually conducted the audit. The
record reveals that Gebis, as the liaison with the Local 5
Funds, was in regular contact with the field auditors, met
with them to review their progress, consulted with them
when problems arose, and reviewed both their work
papers and the final report. Gebis himself recalculated all
of the totals in the report prior to his testimony to satisfy
himself of their accuracy, and he had also reviewed the
report overall to ensure that it complied with the
24                                    Nos. 07-3960 & 07-3983

standards of his firm and the American Institute of Certi-
fied Public Accountants. R. 148-1 at 62. Gebis was conver-
sant with the data and assumptions underlying the
report and testified at length about both during the trial.
He was qualified to lay an appropriate foundation for
the report and did so.
  The notion that Gebis was called on to deliver opinion
testimony and thus had to first be qualified as an expert
witness pursuant to Rule 702 is mistaken. Gebis certainly
had expertise as a certified public accountant, but neither
his firm’s report nor his testimony embodied an audit
opinion in the usual sense. Again, the report P&G prepared
reflects the analysis of data from G&J’s payroll records
in light of certain assumptions. The validity of those
assumptions was addressed and resolved separately at
trial. Neither party treated the report as that of an expert,
and G&J’s own briefs acknowledge as much. The district
court itself noted that Gebis had not been tendered as
an expert witness. R. 148-1 at 165-66.

C. Plaintiffs’ audit costs
  The plaintiffs challenge the district court’s denial of their
request to recover their auditors’ fees. The collection and
audit policy applicable to the Local 5 Funds does not
provide for cost-shifting, as the district court noted in its
initial opinion on this subject. 2007 WL 3449493, at *3. But
ERISA itself grants the district court authority to award
the plaintiffs their reasonable attorney’s fees and costs
in successful actions to collect unpaid fringe benefit
contributions owed to multi-employer plans, 29 U.S.C.
Nos. 07-3960 & 07-3983                                   25

§ 1132(g)(2)(D), along with “such other legal or equitable
relief as the court deems appropriate,” id. § 1132(g)(2)(E).
This court, among others, has construed the latter provi-
sion to include an award of audit costs. Moriarty ex rel.
Local Union No. 727, I.B.T. Pension Trust v. Svec, 429 F.3d
710, 721 (7th Cir. 2005) (citing Operating Eng’rs Pension
Trust v. A-C Co., 859 F.2d 1336, 1343 (9th Cir. 1988)).
  As we noted earlier, the district court’s decision to
deny the plaintiffs’ request turned on the adequacy of the
documentation the plaintiffs submitted in support of
their requests.
  Plaintiffs contest the decision on two grounds. First,
they contend that there is minimal precedential support
for the court’s decision to judge audit-cost requests by
the same standards applied to attorney-fee requests. They
note that only a few district courts have taken that path,
whereas other courts have approved requests without the
level of detail required for attorney’s fees. Second, they
assert that the district court held them to attorney-fee
standards without adequate forewarning and without
giving them a reasonable chance to comply with its
expectations. In view of the latter argument, we now
take the opportunity to set forth in greater detail how
this issue was developed, argued, and decided below.
   In connection with the parties’ joint submission on
damages, which followed up on the court’s liability
findings, Gebis submitted an affidavit identifying
various calculations of the amounts due to the plaintiffs,
and at the conclusion of that affidavit he stated that “[m]y
firm’s fees related to this matter since its inception and
26                                  Nos. 07-3960 & 07-3983

through October 17, 2007 are $45,435.00.” R. 117, Gebis
Dec. ¶ 7. No additional detail was provided (although
P&G’s time records had been produced to G&J). In the
parties’ joint submission noting the defendant’s objection
to an award of audit costs, G&J maintained that
without supporting documentation itemizing the work
performed, totaling the hours spent on each aspect of the
audit, and identifying the individuals who performed
the work, their qualifications, and their hourly rates, the
court could not engage in an appropriate review of the
reasonableness of the costs requested. R. 117 at 9.
  Subsequent to the filing of the joint submission,
the plaintiffs were given leave to file a memorandum
addressing the objections set forth by G&J in that submis-
sion to, among other things, the demand for audit costs.
R. 124. With the support of a supplemental declaration
from Gebis, the plaintiffs contended that the documenta-
tion they had submitted in support of the fee request
was adequate to establish its reasonableness. R. 124 at 6-7.
Attached to Gebis’s supplemental declaration were
copies of P&G’s time records, which had been provided to
G&J’s counsel before the joint submission was filed.
Those records reflected the hours expended on the audit
by P&G personnel during each semi-monthly period.
The plaintiffs also noted that G&J had been provided
with documentation as to which P&G auditors had
worked on the audit on any given day and for how long.
However, the firm’s auditors did not keep records detail-
ing the particular tasks in which they were engaged at
any one time. R. 124 at 6. Nonetheless, the plaintiffs
contended that the lack of such detail did not warrant
Nos. 07-3960 & 07-3983                                    27

denying the plaintiffs an award of their audit costs. There
was no allegation that the auditors had inflated their
hours; and the audit was complex, in no small part due
to G&J’s failure to keep records of where its employees
were working. R. 124 at 7. In his supplemental declara-
tion, Gebis stated that his firm had spent approximately
240 hours between December 1, 2002 and June 30, 2004,
primarily on the audit and preparation of the report, and
another 260 hours from June 30, 2004 to October 17, 2007,
primarily on the litigation. R. 124, Ex. 4, Gebis Supp. Decl.
¶ 3. Records attached to his declaration identified twelve
different individuals who performed work related to
the audit.
   As we have noted, the court denied the plaintiffs’ request
for audit costs. 2007 WL 3449493. The court found that
the plaintiffs had not sustained their burden of estab-
lishing the reasonableness of the costs they sought:
      We have no reason to doubt that plaintiffs’ records
    accurately state the time the auditors devoted to this
    matter. However, neither the records nor Mr. Gebis’s
    declaration discloses the background or experience of
    each of these individuals; the rates at which their time
    was billed; or what specific work each auditor per-
    formed on each date. Indeed, Mr. Gebis states that
    “P&G’s auditors do not make contemporaneous
    records, and P&G does not maintain records, of the
    particular audit tasks in which each auditor is
    engaged for each of the hours indicated in P&G’s
    billing records.” ([R.124], Ex. 4 ¶ 2.) As a result, the
    Court is unable to ascertain what work each
28                                   Nos. 07-3960 & 07-3983

     individual did on a given day; whether there was any
     unnecessary duplication of efforts owing to the large
     number of people who were assigned to work on the
     task; o[r] whether the hourly rates charged for the
     services are reasonable rates charged generally in the
     market for auditors with comparable experience
     performing comparable tasks.
Id., at *2. The court noted that such detail is routinely
expected in support of requests for attorney’s fees under
fee-shifting statutes, and in the court’s view, it was appro-
priate to demand such detail in support of a petition for
audit fees pursuant to section 1132(g)(2)(E). Id., citing
Trustees of Plumbers Local Union No. 1 Welfare Fund v. Philip
Gen. Constr., 2007 WL 3124612, at *14 (E.D.N.Y. Oct. 23,
2007); King v. JCS Enters., Inc., 325 F. Supp. 2d 162, 173-74
(E.D.N.Y. 2004).
  The court later denied the plaintiffs’ motion to recon-
sider its ruling. Trustees of Chicago Plastering Inst. Pension
Trust v. Cork Plastering, Inc., 2007 WL 4240739 (N.D. Ill.
Nov. 26, 2007). The court rejected in the first instance
the plaintiffs’ contention that because there was no local
rule requiring the type of detail the court had demanded
in support of an award of audit fees—as there was with
respect to attorney’s fees, see N.D. Ill. Local Rule 54.3—such
detail was not required. “The local rules of this district
do not set forth specialized requirements for presenting
disputes about an award of taxable costs under Fed. R.
Civ. P. 54(d), but no one would seriously dispute that
those costs may not be awarded unless they were neces-
sarily incurred and reasonable in amount.” 2007 WL
Nos. 07-3960 & 07-3983                                      29

4240739, at *1 (citing Cefalu v. Village of Elk Grove, 211 F.3d
416, 427-29 (7th Cir. 2000)). It was the plaintiffs’ burden to
establish the reasonableness of the audit costs they were
seeking, and the absence of a local rule identifying
what type of proof would suffice did not relieve them of
that burden. Id. Nor was the court persuaded to change
its mind by the plaintiffs’ citation to other district court
decisions which had awarded audit fees based on proof
comparable to that Gebis had tendered. See id., at *2. The
court noted that in some of those cases, the fee requests
were relatively small. In other instances, the fee requests
rested on contractual cost-shifting positions rather than
statutory provisions. But, in any case, the fact that other
courts, in the exercise of their discretion over such re-
quests, had not required the level of detail that the
court expected in this case in no way suggested that it
was beyond the court’s discretion to demand such sup-
port. Id. On similar grounds the court dismissed the
notion that because P&G had never kept itemized records
of what its auditors were doing at any particular time, the
court’s insistence on such detail was unprecedented and
therefore unfairly applied. Id., at *3. “[T]he auditors’
record keeping choices do not dictate what is required
under ERISA in order for the Court to decide whether,
and what, audit costs are reasonable and should be
borne by defendant.” Id. Finally, the court rejected the
plaintiffs’ alternative request that they be given another
opportunity to supplement their audit-cost request in
an effort to satisfy the court that at least some portion of
the costs they had incurred were reasonable and should
be awarded:
30                                      Nos. 07-3960 & 07-3983

     While plaintiffs may have been able to provide evi-
     dence to show the reasonableness of at least some of
     the audit costs, that is now a moot point. The time
     for plaintiffs to have made the effort to do so was
     before the Court’s ruling, not in a motion to recon-
     sider. Plaintiffs well knew that G&J asked the Court to
     deny any audit costs as a result of plaintiffs’ failure to
     substantiate their reasonableness. Plaintiffs filed a brief
     and a supplemental declaration from their auditor, Mr.
     Gebis, arguing that their substantiation was sufficient
     to support a full award of audit costs. Now that we
     have disagreed, plaintiffs are not entitled to a second
     bite at the apple to attempt to provide evidence that
     they should have provided—if they were able to do
     so—prior to our ruling.
Id. (record citations omitted).
  We have no doubt that it was within the court’s dis-
cretion to require the additional details it found missing
from the plaintiffs’ documentation. A district court neces-
sarily must assess the reasonableness of any fees and costs
requested. See Moriarty, 429 F.3d at 721 (“attorneys’ fees
and costs must be reasonable”). The audit costs re-
quested by the plaintiffs were driven by the same two
basic factors as attorney-fee requests—the number of
hours expended on the audit and the litigation, along
with the hourly billing rates of the auditors who worked
on the matter. The reasonableness of an attorney’s billing
rate depends on the experience and qualifications of the
professional. See, e.g., Jeffboat, LLC v. Dir., Office of Workers’
Comp. Programs, 553 F.3d 487, 490 (7th Cir. 2009) (citing
Nos. 07-3960 & 07-3983                                          31

Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 555 (7th
Cir. 1999)); Gautreaux v. Chicago Hous. Auth., 491 F.3d 649,
659 (7th Cir. 2007). The reasonableness of the time ex-
pended by an attorney on behalf of a client depends not
only on the total number of hours involved but also on
the particular tasks to which the attorney devoted his
or her time. See, e.g., A. Bauer Mech., Inc. v. Jt. Arbitration Bd.
of Plumbing Contractors’ Ass’n, 562 F.3d 784, 793 (7th Cir.
2009); Lightfoot v. Walker, 826 F.2d 516, 520-23 (7th Cir.
1987). It is not at all unusual for a court to determine
that some aspects of an attorney’s work were not fruitful,
were unnecessary, or merited less time than the attorney
devoted to them, and to deny compensation for those
portions of the attorney’s work. E.g., JCW Investments,
Inc. v. Novelty, Inc., 509 F.3d 339, 342-43 (7th Cir. 2007).
An auditor, like an attorney, is a professional whose time
is valued, to a great extent, by his experience and creden-
tials. As is also true of an attorney’s work, the reason-
ableness of the time an auditor has devoted to his client’s
cause depends on both the particular tasks he performed
and the time he expended on those tasks. We can think
of no reason why the work of lawyers and auditors is so
different that the reasonableness of their fees must be
judged by different standards.
  Consequently, it is entirely reasonable for a court asked
to compensate a party for the audit costs it has incurred
to demand information about the credentials and billing
rates of the auditors, along with itemization of the time
they devoted to the case. This information enables the
court to both assess the overall reasonableness of the
compensation requested and, if the court believes
32                                   Nos. 07-3960 & 07-3983

the total fees were too high, to have a reliable basis for
reducing the fee award by denying compensation for
time that was not well spent or reducing compensation
for time that was billed at excessive rates. Itemization
may not be necessary in all cases. Where an audit was
straightforward, the total number of hours devoted to
the audit was low, and the court has no reason to believe
that certain aspects of the audit were a waste of time, the
court may not feel it needs additional detail. But this
was a fairly significant audit, and the dollar amount
sought by no means minor. Moreover, the court knew
that there were certain aspects of the audit—e.g., the
claim that bonus payments were really payments for
hours worked—that it had rejected. In this context, it
was wholly reasonable for the court to expect more de-
tailed records in support of the costs requested, so that
the court could engage in an appropriate review of the
reasonableness of the request. See Masino v. Tucci Equip.
Rental Corp., 2008 WL 5451005, at *1-*2 (E.D.N.Y. Nov. 20,
2008) (Levy, M.J.), adopted, 2008 WL 5274342 (E.D.N.Y. Dec.
19, 2008) (Block, J.); Teamsters Local 814 Welfare Fund v.
Dahill Moving & Storage Co., 545 F. Supp. 2d 260, 269-70
(E.D.N.Y. 2008) (Sifton, J.); Trustees of Plumbers Local Union
No. 1 Welfare Fund v. Philip Gen. Constr., supra, 2007 WL
3124612, at *14 (Gershon, J.); King v. JCS Enters., supra, 325
F. Supp. 2d at 173-74 (Young, C.J.); Trustees of Four Jt.
Bds. Health & Welfare & Pension Funds v. Penn Plastics, Inc.,
864 F. Supp. 342, 350-51 (S.D.N.Y. 1994) (Leisure, J.).
  The plaintiffs were not deprived of adequate warning
that the court might hold them to these standards. It
should not have been a surprise to the plaintiffs that
Nos. 07-3960 & 07-3983                                         33

the court might deny their request for costs absent the
details that the court found lacking. First, information as
to the credentials of a professional and her billing rates,
and an itemized record of the time she devoted to particu-
lar tasks, are common-sense requirements. Such detail is
routinely expected in support of attorney-fee requests,
and the plaintiffs have supplied us with no logical
reason to think that audit fees should be treated differ-
ently. The plaintiffs also knew there were at least some
cases requiring such detail by virtue of G&J’s citation to
one such case in support of its objections to audit costs. R.
117 at 8, citing King, 325 F. Supp. 2d 162. Second, G&J did
expressly object to the costs on the ground they were not
adequately supported. G&J’s objections were set forth in
the parties’ joint submission to the court, and the plain-
tiffs had the opportunity to address those objections in
their response. They did respond, in fact, but rather than
attempting to supply the additional documentation
that G&J demanded, the plaintiffs instead contested the
validity of G&J’s objections. Even in the plaintiffs’
motion for reconsideration, the plaintiffs did not take the
opportunity to supply the level of detail the court was
seeking.6

6
  It is true that, at the conclusion of its liability opinion, the
district court said that it would set a briefing schedule on
unresolved issues such as the plaintiffs’ audit costs, attorneys’
fees, and court costs. 2007 WL 6080197, at *31. The parties
instead initiated that briefing with their joint submission on
damages, which set forth the items, including audit costs, as to
which they could not agree. In any event, the plaintiffs had
                                                   (continued...)
34                                      Nos. 07-3960 & 07-3983

  Any party seeking an award of costs carries the burden
of showing that the requested costs were necessarily
incurred and reasonable. The detail that the court expected
to demonstrate the reasonableness of the plaintiffs’ audit
costs was sensible, the plaintiffs were on notice that G&J
was objecting to the request based on the lack of such
detail, and the plaintiffs had an adequate opportunity
to supply such detail. Absent even such basic information
as a description of the credentials and billing rates of
P&G’s auditors, the district court did not abuse its dis-
cretion in denying the plaintiffs’ request for these costs
in whole.

                               III.
   The district court handled this case with a commendable
thoroughness and attention to detail. We find no error in
its decisions to admit the P&G audit report, to allow
accountant Gary Gebis to testify about that report, and to
deny the plaintiffs’ request for an award of their audit
costs.
                                                      A FFIRMED.

(...continued)
the opportunity to submit their follow-up memorandum
addressing G&J’s objection to audit costs. The plaintiffs have not
shown why this was not an entirely adequate opportunity to
set forth their position and to offer any support they had for
their audit costs.

                              7-1-09