U.A. Local No. 343 Pension Plan v. G.A.R. Plumbing Partners, Inc. ( 2021 )

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 U.A. LOCAL NO. 343 PENSION No. 2:19-cv-01381-JAM-DB PLAN, et al., 10 Plaintiffs, 11 ORDER GRANTING IN PART AND v. DENYING IN PART PLAINTIFFS’ 12 MOTION FOR SUMMARY JUDGMENT G.A.R. PLUMBING PARTNERS, 13 INC., 14 Defendant. 15 16 On July 22, 2019, U.A. Local No. 343 Pension Plan, U.A. 17 Local Nos. 343 and 355 Defined Contribution Plan, Plumbers and 18 Steamfitters Managed Health Care Plan, (collectively the “Benefit 19 Funds”), the Board of Trustees of the Benefit Funds, and U.A. 20 Local No. 343 ( “Plaintiffs”) filed this action against G.A.R. 21 Plumbing Partners, Inc. (“Defendant” or “G.A.R.”), seeking to 22 collect contributions owed by G.A.R. under a collective 23 bargaining agreement. Compl., ECF No. 1. Plaintiffs assert two 24 claims against G.A.R.: (1) failure to make required contributions 25 in violation of the Employee Retirement Income Security Act of 26 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and (2) breach of a 27 collective bargaining agreement and the trust agreement in 28 violation of the Labor Management Relations Act of 1947 (“LMRA”), 1 29 U.S.C. § 185. Compl. ¶¶ 21-28. 2 On August 28, 2020, G.A.R. filed a counterclaim against 3 Plaintiffs, bringing two claims for: (1) restitution of overpaid 4 amounts pursuant to ERISA, and (2) breach of a collective 5 bargaining agreement and the trust agreement in violation of the 6 LMRA. Countercl. ¶¶ 21-34, ECF No. 25. 7 Plaintiffs now move for summary judgment on their claims and 8 Defendant’s counterclaims. Mot. Summ. J. (“Mot.”), ECF No. 40. 9 Defendant filed an opposition, Opp’n, ECF No. 45, to which 10 Plaintiffs replied, Reply, ECF No. 46. For the reasons set forth 11 below, the Court GRANTS in part and DENIES in part Plaintiffs’ 12 Motion for Summary Judgment.1 13 14 I. BACKGROUND 15 G.A.R. is a plumbing services company owned and operated by 16 George Robertson and his wife. Def.’s Resp. to Pls.’ Statement 17 of Undisputed Facts (“SUF”) ¶¶ 6-7, ECF No. 45-4. G.A.R. is only 18 licensed to perform plumbing work, and its only source of revenue 19 is plumbing work. Id. ¶¶ 8-10. From April 1, 2012, to December 20 31, 2016, G.A.R. was a signatory to the U.A. Local 343 Master 21 Labor Agreement (“MLA”). Id. ¶ 1. The MLA requires 22 contributions into the Benefit Funds for all hours of covered 23 work, which includes plumbing work. Id. ¶¶ 3-4. 24 This lawsuit commenced after Plaintiffs performed a payroll 25 audit on G.A.R. for the April 1, 2012 to December 31, 2016 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for February 23, 2021. 1 period. Id. ¶ 11. The audit revealed that G.A.R. had not 2 reported any hours of covered work for the period between July 1, 3 2016 to December 31, 2016. SUF ¶ 30, ECF No. 41. Cash 4 disbursement journals and invoices for that period, however, 5 indicated that G.A.R. had made $20,368.93 in plumbing supply 6 purchases, signaling to the auditors that covered work may have 7 been performed. Id. Plaintiffs’ auditors shared this 8 information with the Chairmen of the U.A. Local 343 Benefit Funds 9 and explained it was customary under the circumstance here –where 10 adequate time records were not kept yet it appeared covered work 11 had been performed – to either presume full-time, forty hours per 12 week of work, or to divide the material purchases by the 13 journeymen wage rate; and then after adopting one of those two 14 presumptions, shift the burden to the employer to show the actual 15 hours of work performed. Id. ¶ 31. The Chairmen of the U.A. 16 Local 343 Benefit Funds decided to adopt a presumption of forty 17 hours of work per week and then shift the burden to G.A.R. to 18 demonstrate the actual hours of work performed for the July to 19 December 2016 period. Id. 20 G.A.R. appealed the presumption of forty hours per week of 21 covered work. Def.’s Resp. to Pls.’ SUF ¶¶ 33-34. During the 22 appeal process, G.A.R. did not provide time records or other 23 evidence showing the actual hours of covered work performed in 24 that period. Id. In February 2019, the Board of Trustees denied 25 G.A.R.’s appeal. Id. ¶ 35. A few months later, Plaintiffs 26 initiated this lawsuit to collect the delinquent contributions 27 they allege G.A.R. owes for covered plumbing work performed in 28 the latter half of 2016. See generally Compl. 1 Over a year later, G.A.R. filed its counterclaim for return 2 of ineligible pension contributions. See generally Countercl. 3 G.A.R.’s two counterclaims arise from a separate compliance audit 4 Plaintiffs performed on G.A.R. for the period from June 2012 5 through April 17, 2020. Id. ¶ 17. G.A.R. claims Plaintiffs 6 miscalculated and overbilled G.A.R. $30,229.77 for that nearly 7 eight-year period and seeks return of those funds. Id. 8 9 II. OPINION 10 A. Legal Standard 11 A Court must grant a party’s motion for summary judgment 12 “if the movant shows that there is no genuine dispute as to any 13 material fact and the movant is entitled to a judgment as a 14 matter of law.” Fed. R. Civ. Proc. 56(a). The movant bears the 15 initial burden of “informing the district court of the basis for 16 its motion and identifying [the documents] which it believes 17 demonstrate the absence of a genuine issue of a material fact.” 18 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is 19 material if it “might affect the outcome of the suit under the 20 governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 21 248 (1986). 22 Once the movant makes this initial showing, the burden 23 rests upon the nonmoving party to “set forth specific facts 24 showing that there is a genuine issue for trial.” Id. An issue 25 of fact is genuine if “the evidence is such that a reasonable 26 jury could return a verdict for the nonmoving party.” Id. 27 /// 28 /// 1 B. Analysis 2 Plaintiffs move for summary judgment as to their own claims 3 and Defendant’s counterclaims. Mot. at 1-2. 4 1. Plaintiffs’ Claims 5 Plaintiffs first argue they are entitled to summary judgment 6 on both of their claims under the MLA. Mot. at 7-8; Reply at 3- 7 5. Specifically, Plaintiffs contend that because G.A.R. failed 8 to keep records for the latter half of 2016 as it was required to 9 under ERISA, the Trustees were entitled under Section 165(f) of 10 the MLA to determine a formula for benefits owing between June 1, 11 2016 to December 31, 2016, which the Trustees did when they 12 adopted the forty hour per week presumption. Mot. at 8; Reply at 13 3. Section 165(f) of the MLA states: “If a payment obligation is 14 disclosed by the audit for which no fringe benefit payment was 15 received by the Trust Funds, and for which the number of hours 16 worked cannot be plainly ascertained, the Trustees will determine 17 the appropriate formula to be applied to compute the fringe 18 benefit contributions owed. The Individual Employer shall be 19 required to comply with such formula and make payments to the 20 Trust Funds immediately upon being advised of the amount due.” 21 As an initial matter, the Court agrees with Plaintiffs that 22 the language of this provision is unambiguous: Section 165(f) 23 clearly allows the Trustees to create a formula to compute the 24 amount of fringe benefits owed when the amount due cannot be 25 plainly ascertained and requires employers to comply with the 26 Trustees’ formula under such circumstances. Id. (emphasis 27 added). Thus, if it were undisputed that the hours worked by Mr. 28 Robertson in the 2016 period at issue could not be ascertained, 1 G.A.R. would be required to pay in accordance with the Trustees’ 2 formula under the clear language of the MLA. 3 In their Motion, Plaintiffs assume “it is undisputed GAR 4 failed to keep records of George Robertson’s time” and thus that 5 it is undisputed that the amount due is not plainly 6 ascertainable. Mot. at 7. Not so. Defendant makes clear in its 7 opposition brief and its response to Plaintiffs’ Statement of 8 Undisputed Facts that it does dispute whether the amount due for 9 the latter half of 2016 can be ascertained. Opp’n at 1-2; Def.’s 10 Resp. to Pls.’ SUF ¶¶ 13, 29-31. Yet, these arguments are left 11 largely unaddressed by Plaintiffs. See Reply. Most 12 significantly, Plaintiffs do not address Defendant’s response to 13 Undisputed Material Fact No. 13 (“Mr. Robertson and GAR did not 14 keep records of his time during this testing period of April 15 1,2012 to December 31, 2016”) in which Defendant cites to 16 deposition testimony and declarations to show there is genuine 17 dispute as to whether G.A.R.’s records for this period are 18 sufficient to ascertain the amount due. Def.’s Resp. to Pls.’ 19 SUF ¶ 13. Ignoring Defendant’s challenge to this critical fact 20 and the evidence Defendant points to in support of its challenge, 21 Plaintiffs instead focus on an undisputed fact: SUF ¶ 34 (“In its 22 appeal, G.A.R. did not provide records or other evidence showing 23 the actual hours of covered work performed by Mr. Robertson 24 during the period of July 1, 2016 to December 31, 2016.”). Reply 25 at 2. From this undisputed fact – that G.A.R. did not bring 26 forward records during its appeal to the Board of Trustees – 27 Plaintiffs ask the Court to infer that G.A.R. does not have 28 records at all for this period thereby triggering Section 165(f) 1 of the MLA. But the Court cannot draw this inference as a 2 matter-of-law, particularly given Plaintiffs’ failure to address 3 the evidence Defendant has brought forward in support of its 4 position that G.A.R. has sufficient records such that the number 5 of hours worked by Mr. Robertson is ascertainable. Def.’s Resp. 6 to Pls.’ SUF ¶¶ 13, 29-31. 7 Because there is a genuine factual dispute as to the 8 ascertainability of the hours of covered work performed by 9 Robertson in the latter half of 2016, there is also a genuine 10 question as to whether Section 165(f) of the MLA is triggered in 11 the first instance. Accordingly, Plaintiffs’ first argument that 12 they are entitled to summary judgment under Section 165(f) of the 13 MLA fails. 14 Next, Plaintiffs contend that even if the Court does not 15 grant summary judgment under the MLA, the Court may grant summary 16 judgment under the Ninth Circuit’s burden-shifting approach set 17 forth in Brick Masons Pension Trust v. Industrial Fence & Supply, 18 Inc., 839 F.2d 1333 (9th Cir. 1988). Mot. at 8-10; Reply at 5. 19 In Brick Masons, which concerned a collection action brought by 20 union benefit trust funds against two brick-mason employers, the 21 Ninth Circuit explained in relevant part that: “once the trustees 22 produce evidence raising genuine questions about the accuracy of 23 the employer's records and the number of hours worked by the 24 employees, the burden shifts to the employer to come forward with 25 evidence of the precise amount of work performed.” Id. at 1338. 26 Plaintiffs argue that G.A.R. has failed to meet its 27 evidentiary burden under the Brick Masons test. Mot. at 9. The 28 problem once again with Plaintiffs’ argument is that it proceeds 1 based upon a mistaken assumption that “G.A.R. concedes it kept no 2 records of Mr. Robertson’s time.” Id. Because Plaintiffs assume 3 this lack of records is undisputed, they further assume Brick 4 Masons is triggered in the first place and that the burden has 5 therefore shifted to G.A.R. Id. Yet, as discussed above, G.A.R. 6 does not concede this point. Rather, G.A.R. insists that its 7 records are sufficient to determine the work performed, bringing 8 forward evidence to support that position. See Opp’n at 1-2, 6; 9 Def.’s Resp. to Pls.’ SUF ¶¶ 13, 29-31. Notably, in reply, 10 Plaintiffs do not tackle Defendant’s arguments about the 11 sufficiency of the records head on, instead they simply repeat 12 “G.A.R. has not produced any evidence to meet its burden to prove 13 the precise amount of work performed.” Reply at 5. However, in 14 light of Defendant’s arguments as to the sufficiency of its 15 records, the Court cannot assume, as Plaintiffs do, that the 16 Brick Masons test is triggered in the first place let alone that 17 the burden has shifted to G.A.R. Id. 18 Accordingly, for the same reason Plaintiffs fail to show 19 they are entitled to summary judgment under the MLA, they fail to 20 establish an entitlement to summary judgment under Brick Masons: 21 there is a genuine dispute as to whether G.A.R.’s records are 22 sufficient to determine the amount of work performed. Because of 23 this genuine dispute of material fact, Plaintiffs are not 24 entitled to judgment as a matter of law on their two claims under 25 either the MLA or under Brick Masons. 26 2. Defendant’s Counterclaims 27 Plaintiffs also move for summary judgment on Defendant’s 28 counterclaims. Mot. at 12-15; Reply at 5-6. G.A.R.’s two 1 counterclaims are for: (1) restitution of overpaid amounts 2 pursuant to ERISA, and (2) breach of a collective bargaining 3 agreement and the trust agreement in violation of the LMRA. 4 Countercl. ¶¶ 21-34. 5 In opposition, G.A.R. appears to concede its second claim 6 fails as a matter of law because the LMRA does not provide a 7 cause of action for return of pension contributions. See Mot at 8 15; see also Award Service, Inc. v. N.Cal. Retail Clerks Unions, 9 763 F.2d 1066, 1071 (9th Cir. 1985) (refusing to recognize any 10 implied right of action for return of ERISA contributions under 11 the ERISA). As Plaintiffs point out in their Motion, the Ninth 12 Circuit made clear in Award Service that an employer seeking a 13 return of pension contributions has no right of action under the 14 LMRA and must instead proceed under Section 403(c)(2) of ERISA. 15 Id. G.A.R. does not dispute this in opposition. See Opp’n. 16 Accordingly, the Court finds G.A.R.’s second counterclaim fails 17 as a matter of law and grants summary judgment for Plaintiffs on 18 this claim. 19 As to its first counterclaim, G.A.R. properly proceeds 20 under Section 403(c)(2) of ERISA. Countercl. ¶¶ 21-34. Section 21 403(c)(1) sets forth the general rule that: “the assets of a 22 plan shall never inure to the benefit of any employer and shall 23 be held for the exclusive purposes of providing benefits to 24 participants in the plan their beneficiaries and defraying 25 reasonable expenses of administering the plan.” However, 26 Section 403(c)(2)(A) lays out an exception to the rule, 27 providing for the return of contributions to an employer where 28 there has been a mistake of fact: “In case of a contribution . . 1 . (ii) made by an employer to a multiemployer plan by a mistake 2 of fact or law . . . paragraph (1) shall not prohibit the return 3 of such contribution or payment to the employer within 6 months 4 after the plan administrator determines that the contribution 5 was made by such a mistake.” See also Award Service, 763 F.2d 6 at 1068 (noting that employers have a cause of action under 7 Section 403(c)(2) to recover mistaken contributions). 8 Plaintiffs advance two arguments as to why they are 9 entitled to summary judgment on Defendant’s Section 403(c)(2) 10 claim. Mot. at 12-14; Reply at 5-6. First, Plaintiffs argue 11 G.A.R. is not entitled to a refund because the Trustees have not 12 made a determination on G.A.R.’s request for return of 13 contributions and no refund can be made under Section 403 of 14 ERISA without such a determination that a refund is owing. Mot. 15 at 13-14; Reply at 5. To support their position, Plaintiffs 16 cite to Bds. of Trs. of the Northwest Ironworkers Health & Sec. 17 Fund v. Western Rebar Consulting, Inc., 2:18-cv-00486-BAT, 2020 18 WL 4000967 (W.D. WA. July 15, 2020) (granting motion to dismiss 19 defendant’s counterclaim seeking return of overpaid funds). 20 Reply at 6. In Western Rebar, plaintiffs, the board of trustees 21 for multiemployer plans regulated by ERISA and LMRA, filed an 22 action seeking unpaid contributions from the defendant-employer; 23 and the defendant-employer later filed a counterclaim seeking 24 return of incorrectly submitted funds, which plaintiffs moved to 25 dismiss. 2020 WL 4000967 at *1. 26 As an initial matter, this unreported opinion issued by a 27 magistrate judge in the Western District of Washington is not 28 binding on this Court. Further, the Western Rebar court’s 1 discussion of whether the defendant there had sufficiently 2 alleged a mistake of fact such that it was entitled to 3 restitution of its contributions and whether the defendant had 4 sufficiently alleged that the equities justified the return of 5 the contributions is of limited utility to this Court deciding a 6 motion for summary judgment. Id. at *1. For its part, 7 Defendant does not address Western Rebar nor does it bring 8 forward any authority of its own. See Opp’n at 6-7. 9 Despite Defendant’s failure to address Western Rebar, this 10 Court does not find Plaintiffs are entitled to judgment as a 11 matter of law under this lone non-binding authority. Western 12 Rebar does not clearly authorize this Court to grant summary 13 judgment for Plaintiffs merely because the Trustees have not 14 made a determination on G.A.R.’s request. 15 Second, Plaintiffs argue G.A.R. has failed to meet its 16 burden to show the equities favor restitution. Mot. at 14-15; 17 Reply at 5-6. As the Ninth Circuit explained in Award Service, 18 an employer seeking a refund under Section 403(c)(2)(A) must not 19 only show a mistake of fact, but also must establish that the 20 equities favor restitution. 763 F.2d at 1069. A court 21 determining whether the equities favor restitution may consider 22 “the effect on the beneficiaries of the Fund.” Laborers' Health 23 & Welfare Fund v. W.A. Rasic Constr. Co., 145 F.3d 1338, 1998 WL 24 279400 at *2 (9th Cir. 1998). 25 Plaintiffs contend the equities do not favor restitution 26 because there is a pending payroll testing audit that the 27 Trustees have reason to believe may show the underpayment of 28 contributions. Reply at 6. As such, the Trustees as fiduciaries eee EE IE OS NE OE OME III IIE IND IEE IN EIEIO III SUE IR EES Eee 1 are concerned about the beneficiaries and have therefore deferred 2 | their decision on G.A.R.’s request for return of the funds. Id. 3 In light of this concern about G.A.R.’s underpayment and the 4 effect on the beneficiaries of the Benefit Funds, the equities, 5 according to Plaintiffs, do not favor restitution. Id. 6 Defendant does not specifically respond to Plaintiffs’ 7 argument. See Opp’n. Instead, Defendant generally counters that 8 because “G.A.R. is a husband and wife-run plumbing business to 9 | whom [$30,229.77] would make a substantial impact,” the equities 10 favor their position. Opp’n at 7. Further, Defendant requests 11 | the Court order an immediate return of the $30,229.77. Id. 12 The Court finds that neither party has shown the equities 13 clearly favor their position, at least not as a matter of law. 14 Plaintiffs are therefore not entitled to summary judgment on 15 G.A.R.’s first counterclaim for return of ineligible 16 | contributions and G.A.R. is not entitled to a court order 17 requiring immediate return of the funds. 18 TILT. ORDER 19 For the reasons set forth above, the Court GRANTS 20 Plaintiffs’ motion for summary judgment only as to Defendant’s 21 second counterclaim. Their motion is DENIED as to all other 22 claims. 23 IT IS SO ORDERED. 24 | Dated: March 31, 2021 25 Me 26 Benlek, sunk 27 28 12