The Board of Trustees, in their capacities as Trustees of the Laborers Health and Welfare Trust Fund for Northern California v. Slauson ( 2024 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 THE BOARD OF TRUSTEES, IN THEIR Case No. 20-cv-05416-DMR CAPACITIES AS TRUSTEES OF THE 8 LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN FINDINGS OF FACT AND 9 CALIFORNIA, et al., CONCLUSIONS OF LAW 10 Plaintiffs, 11 v. 12 STEVEN SCOTT SLAUSON, 13 Defendant. 14 15 Plaintiffs Boards of Trustees for the Laborers Health and Welfare Trust Fund for Northern 16 California, Laborers Pension Trust Fund for Northern California, Laborers Vacation-Holiday 17 Trust Fund for Northern California, and Laborers Training and Retraining Trust Fund for Northern 18 California filed the complaint alleging that Defendant Steven Scott Slauson, individually and dba 19 Triple S Electric Co. (“Triple S”), breached the terms of a collective bargaining agreement in 20 violation of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132, and the 21 Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, by failing to pay employee fringe 22 benefit contributions, liquidated damages, interest, and audit fees. 23 The court held a bench trial.1 Following the trial, the parties submitted proposed findings 24 of fact and conclusions of law. [Docket Nos. 99 (Pls.’ Prop. FF/CL), 100 (Def.’s Prop. FF/CL).] 25 Pursuant to Federal Rule of Civil Procedure 52(a), the court makes the following findings of fact 26 and conclusions of law. 27 I. FINDINGS OF FACT 1 1. The Laborers Health and Welfare Trust Fund for Northern California; Laborers Pension 2 Trust Fund for Northern California; Laborers Vacation-Holiday Trust Fund for Northern 3 California; and the Laborers Training and Retraining Trust Fund for Northern California 4 administer contributions from employers on behalf of the Laborers’ International Union of 5 North America (“Laborers Union”). TTI 100-01. The Trust Funds are employee benefit 6 plans created by written Trust Agreements subject to and pursuant to section 302 of the 7 LMRA, 29 U.S.C. § 186, and are multi-employer employee benefit plans within the 8 meaning of sections 3, 4 and 502 of ERISA, 29 U.S.C. §§ 1002, 1003 and 1132. Exs. 5 9 (Trust Agreement, Pension Trust Fund), 6 (Trust Agreement, Health and Welfare Trust 10 Fund), 7 (Trust Agreement, Vacation-Holiday Trust Fund), 8 (Trust Agreement, Training 11 and Retraining Trust Fund). 12 2. Triple S is a licensed electrical contractor. It is a for-profit entity solely owned by Stephen 13 Scott Slauson. [Docket No. 70 (Jt. Pretrial Statement) at 8-15 (Joint Statement of 14 Undisputed Facts, “JSUF”), 1, 2.] At all times relevant, Triple S was an employer within 15 the meaning of section 3(5) and section 515 of ERISA, 29 U.S.C. §§ 1002(5), 1145, and an 16 employer in an industry affecting commerce within the meaning of section 301 of the 17 LMRA, 29 U.S.C. § 185. 18 3. On March 21, 2008, Slauson executed a Memorandum Agreement on behalf of Triple S. 19 JSUF 4, Ex. 4 (Memorandum Agreement). The Memorandum Agreement states that it is 20 between “the undersigned individual employer and the Northern California District 21 Council of Laborers for and on behalf of all affiliated Local Unions in the 46 Northern 22 California Counties.” Memorandum Agreement. The Memorandum Agreement was 23 signed by Jose A. Moreno on behalf of the Northern California District Council of 24 Laborers (“District Council”) and Bruce Wibben on behalf of Laborer’s International 25 Union of North America, Local 304 (“Local 304”). Ex. 4. 26 4. The Memorandum Agreement incorporates the 2006-2010 Laborers’ Master Agreement 27 between the Association of Construction Employers and the District Council (“Master 1 Agreement”) by reference. JSUF 4; Memorandum Agreement. Specifically, the 2 Memorandum Agreement states that “the individual employer agrees to comply with all 3 wages, hours, and working conditions set forth in the Laborers’ Master Agreement for 4 Northern California by and between the Association of Construction Employers and the 5 Union June 26, 2006 through June 30, 2010 (which agreement is incorporated herein by 6 reference . . . ) . . .” Memorandum Agreement. 7 5. By executing the Memorandum Agreement, Triple S understood that it agreed to be bound 8 to all the obligations of the Master Agreement and the Trust Agreements and that pursuant 9 to said Agreements, it was required to pay hourly contributions for each hour paid for 10 and/or worked for by its employees that performed work covered under the Master 11 Agreement, including overtime pay, shift pay, and show-up time pay. JSUF 5. 12 6. Trust Fund contributions or reports that are not paid or postmarked for payment by the 25th day of the month immediately following the month for which the contributions are 13 due are deemed delinquent pursuant to the Trust Agreements. JSUF 12. Pursuant to the 14 Trust Agreements, delinquent contributions are assessed interest at a rate of one and one- 15 half percent (1.5%) per month until receipt of payment and liquidated damages are 16 assessed on delinquent contributions at a flat rate of one hundred fifty dollars ($150.00) per 17 month to reflect the internal administrative costs incurred by the Trust Funds’ 18 administrator in monitoring and tracking such late contributions. JSUF 13, 14. 19 7. The Memorandum Agreement states that it remained “in full force and effect until June 30, 20 2010, and [] continue[d] thereafter for the term of any future modifications, changes, 21 amendments, supplements, extensions or renewals of or to said Master Agreement . . . 22 negotiated between the parties thereto unless either party to this Memorandum Agreement 23 [gave] written notice to the other of the desire to change or cancel not more than ninety 24 (90) days nor less than sixty (60) days prior to June 30, 2010, or June 30th of any year in 25 which the Master Agreement may terminate.” JSUF 6, Ex. 4. 26 8. Local 304 dispatches construction workers within the jurisdiction of the Master 27 Agreement. JSUF 7. In 2008, Triple S asked Local 304 to dispatch general laborers to a 1 job in Hayward, California. Local 304 dispatched Rudy Argueta and Renee Hernandez to 2 work as General Laborers (Construction Specialist Group 1) for Triple S in 2008. Triple S 3 paid contributions for Argueta and Hernandez from 2008 to September 2012. JSUF 8-10. 4 9. Triple S last paid contributions to the Trust Funds for the month of September 2012. JSUF 5 15. 6 10. On February 19, 2013 Triple S sent a letter to Fernando Estrada, Business Manager of 7 Local 304 requesting a credit the Trust Funds purportedly owed to Triple S. In the letter, 8 Triple S stated that “Local 304 has 30 days from the receipt of this letter to honor the 9 credit” and that “Triple S will terminate the agreement, if the credit isn’t honored . . .” 10 JSUF 18; Ex. 11. Local 304 forwarded the letter to the Trust Funds’ Administrator. JSUF 11 18. 12 11. February 19 is more than ninety days prior to June 30. JSUF 19. 12. On April 2, 2013, the Accounts Receivable Manager for the Trust Funds’ Administrator, 13 the Laborers Funds Administrative Office of Northern California, Inc. (“LFAO”) sent a 14 letter to Slauson in response to Triple S’s February 19, 2023 letter. The LFAO informed 15 Slauson that no credit was owed to Triple S, and that Triple S had a balance due of for 16 under-paid contributions for the months of April and November 2011. JSUF 20, Ex. H. 17 13. For the months of October 2012 through October 2013, Triple S submitted Employer 18 Reports of Contributions to the Trust Funds, reporting that no hours were worked by any 19 Laborers during the reported months. JSUF 16. The Trust Funds stopped sending 20 Monthly Contribution Reports after October 2013. JSUF 17. 21 14. On or about February 24, 2014, the Union’s business manager sent a letter to Triple S 22 stating that, according to the Union’s records, Defendant was “bound by a memorandum 23 agreement that incorporates the terms of the Laborers Master Agreement 2012-2015.” The 24 letter informed Triple S that the Laborers Master Agreement 2012-2015 provided for a 25 $1.60 hourly wage increase effective June 30, 2014, and that for contractors who signed a 26 2014-2019 Laborers Master Agreement Extension, the hourly wage increase would be only 27 $1.35. The letter invited Triple S to accept the terms of the extension by executing a new 1 Memorandum Agreement. JSUF 21. Triple S did not execute a new Memorandum 2 Agreement. JSUF 22. 3 15. On or about December 20, 2017, the Trust Funds notified Triple S that it would conduct an 4 audit to determine if Triple S had properly reported contributions to the Trust Funds for the 5 period 2014 through 2018 (the “Audit Period”). The letter requested that Triple S contact 6 the Trust Fund’s field auditor within ten working days to schedule the audit. JSUF 23, 7 Exs. 9, 13, TTII 252. This notice resulted in an exchange of communications between the 8 parties that continued through February 2018 regarding Triple S’s status as signatory to the 9 Master Agreement and Memorandum Agreement. The Trust Funds disagreed with Triple 10 S’s position that it had timely terminated the Master and/or Memorandum Agreements. 11 JSUF 24, Exs. 14, 15, 16, 17. Additional communications with Triple S’s counsel 12 continued through October 2018, after which the parties reached an agreement whereby Triple S agreed to submit to an audit, expressly reserving the right to contest the Trust 13 Fund’s right to conduct the audit. JSUF 25, Exs. T, U, V, W, X, Y. 14 16. The Trust Funds provided a complete list of documents needed for the audit in December 15 2018, which Triple S provided. The Trust Funds’ auditors reviewed the documents at 16 Triple S’s counsel’s office in December 2018. The Trust Funds requested additional 17 documents from February 2018 to October 2019 to complete the audit. JSUF 26, Ex. AA. 18 17. The Trust Funds completed an audit covering the Audit Period. Ex. 9, TTI 117-18. 19 Argueta and Hernandez both worked for Triple S during the Audit Period. JSUF 11. 20 18. Plaintiffs filed this action on August 5, 2020. JSUF 27. 21 II. CONCLUSIONS OF LAW 22 Plaintiffs seek employee fringe benefit contributions and associated charges that they claim 23 are due under the 2014-2019 Master Agreement for Argueta and Hernandez’s work for Triple S 24 during the Audit Period (2014 through 2018). See Pls.’ Prop. FF/CL 14 ¶ 18 (citing Ex. 2, 2014- 25 2019 AGC/Laborers Master Agreement). Plaintiffs’ theory is that by signing the 2008 26 Memorandum Agreement, Triple S became obligated to pay contributions under the 2006-2010 27 1 Agreement. They dispute that Triple S timely or properly terminated the Memorandum 2 Agreement. See Pls.’ Prop. FF/CL 10 ¶ 4; 12 ¶ 9. 3 “ERISA requires employers to contribute to employee benefit plans in accordance with the 4 terms of collectively bargained agreements.” Trs. of Screen Actors Guild-Producers Pension & 5 Health Plans v. NYCA, Inc., 572 F.3d 771, 774 (9th Cir. 2009) (citing 29 U.S.C. § 11452). To 6 succeed on their ERISA claim under 29 U.S.C. § 1145, Plaintiffs must show: “(1) the trust fund is 7 a multi-employer plan as defined by 29 U.S.C. § 1002(37); (2) the defendant is an employer 8 obligated to contribute under the plan’s terms; and (3) the defendant failed to contribute in 9 accordance with the plan.” Bd. of Tr. of the Sheet Metal Workers Health Care Plan of N. Cal. v. 10 Gervasio Env’t Sys., No. C03-04858-WHA, 2004 WL 1465719, at *2 (N.D. Cal. May 21, 2004). 11 The first element is not at issue; rather, the parties’ dispute centers on whether Triple S was 12 obligated to pay contributions under the 2014-2019 Master Agreement and whether it failed to 13 contribute in accordance with that agreement. 14 The court concludes that Plaintiffs did not meet their burden to establish that Triple S was 15 required to pay contributions for work performed pursuant to the 2014-2019 Master Agreement. 16 Slauson executed the Memorandum Agreement on behalf of Triple S in 2008. JSUF 4. The 17 Memorandum Agreement expressly incorporates the 2006-2010 Laborers’ Master Agreement 18 between the Association of Construction Employers (“ACE”) and the District Council by 19 reference. JSUF 4; Memorandum Agreement. The excerpts of the 2006-2010 Master Agreement 20 in evidence state that the agreement was “made and entered” on June 26, 2006 and that it was 21 effective from June 26, 2006 through June 30, 2010. Ex. D.3 Defendant does not dispute that 22 “[b]y executing the Memorandum Agreement, Triple S understood that it agreed to be bound to all 23 the obligations of the [2006-2010] Master Agreement and the Trust Agreement and that pursuant 24 to said Agreements, it was required to pay hourly contributions for each hour paid for and/or 25 2 29 U.S.C. § 1145 states, “[e]very employer who is obligated to make contributions to a 26 multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance 27 with the terms and conditions of such plan or such agreement.” 1 worked for by its employees that performed work covered under the Master Agreement, including 2 overtime pay, shift pay, and show-up time pay.” JSUF 5. David Thomas, assistant to the District 3 Council’s business manager, testified that “when an employer signs a Memorandum Agreement . . 4 . [i]t binds them to the current Laborer’s Master Agreement,” and that in this case, the Master 5 Agreement in effect at the time Triple S signed the Memorandum Agreement was the 2006-2010 6 Master Agreement. TTI 58-59, 66. 7 Thomas further testified that an employer does not need to be a member of an employer’s 8 association such as ACE or Associated General Contractors of California, Inc. (“AGC”) to 9 become a signatory to a memorandum agreement negotiated between the union and the 10 employer’s association. Independent employers may also bind themselves to a master agreement. 11 Thomas explained that an employer may decide not to join such an association to avoid paying it 12 “an hourly amount for every employee they have on the job,” although they “don’t get the 13 expertise” of the association and “don’t have bargaining rights when [the union and association] 14 actually negotiate the agreement because they’re not a member [of the association].” TTI 67. 15 The Memorandum Agreement contains a provision specifying the period of time it governs 16 the parties’ relationship and obligations and states that this period is subject to renewal. The 17 Memorandum Agreement provides that “this Agreement shall remain in full force and effect until 18 June 30, 2010, and shall continue thereafter for the term of any future modifications, changes, 19 amendments, supplements, extensions or renewals of or to [the 2006-2010] Master Agreement 20 which may be negotiated between the parties thereto unless either party to this Memorandum 21 Agreement gives written notice to the other . . . ” JSUF 6, Memorandum Agreement (emphasis 22 added). Based on the plain language of this provision, the term “the parties thereto” refers to the 23 parties to the 2006-2010 Master Agreement, which were ACE and the District Council. See Ex. D 24 (Excerpts of 2006-2010 Master Agreement) at 1. In other words, the Memorandum Agreement 25 was effective from March 21, 2008, the day it was executed, until June 30, 2010, and continued 26 for the term of any extensions of the 2006-2010 Master Agreement that were negotiated by ACE 27 and the District Council. 1 2006-2010 Master Agreement, they did not present evidence that the 2014-2019 Master 2 Agreement was “negotiated between” ACE and the District Council as required by the 3 Memorandum Agreement. Instead, the 2014-2019 Master Agreement states that it is “between the 4 Associated General Contractors of California, Inc. and the Northern California District Council of 5 Laborers of the Laborers’ International Union of North America.” Ex. 2 at 1. The 2014-2019 6 Master Agreement does not identify ACE as a party.4 Therefore, the 2014-2019 Master 7 Agreement was not a “modification[ ], change[ ], amendment[ ], supplement[ ], extension[ ] or 8 renewal[ ] of or to [the 2006-2010] Master Agreement.” See Memorandum Agreement. 9 Additionally, the 2014-2019 Master Agreement states that it “modifie[s], amend[s] and 10 chang[es]” several enumerated prior agreements, but it does not list any agreement dated June 26, 11 2006, the date of the 2006-2010 Master Agreement. See Ex. 2 at 1. 12 Plaintiffs did not present evidence explaining the connection between the 2006-2010 13 Master Agreement between ACE and the District Council and the 2014-2019 Master Agreement 14 between AGC and the District Council. They also did not present evidence supporting their claim 15 that the 2014-2019 Master Agreement is a modification of or successor to the 2006-2010 Master 16 Agreement, or evidence that supports that Triple S otherwise agreed to be bound by the 2014-2019 17 Master Agreement. Accordingly, Plaintiffs did not establish that Triple S was obligated to make 18 employee contributions for work covered by the 2014-2019 Master Agreement between AGC and 19 the District Council and did not establish a violation of 29 U.S.C. § 1145. 20 // 21 // 22 // 23 // 24 // 25 26 4 Similarly, the 2012-2015 Master Agreement states that it is between the “Associated General 27 Contractors of California, Inc.” and “the Northern California District Council of Laborers of the Wl. CONCLUSION In summary, Plaintiffs did not prevail on their claim for delinquent contributions under 29 2 U.S.C. § 1145. Judgment is granted to Defendant on that claim. Defendant’s request for 3 attorneys’ fees and costs pursuant to 29 U.S.C. § 1132(g)(1) is denied. 4 KES DISTR IG> 5 ay oO IT IS SO ORDERED. = ON 6 Ay Dated: March 25, 2024 Ey RED > Sy ORDE ’ [Fir 1s SO 8 Da NV] Ryu Wi □□ 9 A\ \ Pees Toga \ □□□ ON fuse DSSS © 11 Ly oS DISTRICS a 12 15 16 = i Z 18 19 20 21 22 23 24 25 26 27 28