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Tharp v. Catron Interior Systems, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

September 10, 2014




This matter is before the Court on the parties' cross-motions for summary judgment. Plaintiffs in this case are: (1) Dave Tharp, Board of Trustees Chairman, and Doug Robinson, Board of Trustees Secretary, on behalf of Indiana/Kentucky/Ohio Regional Council of Carpenters Pension Fund (the "Pension Fund"); (2) Dave Tharp, Board of Trustees Chairman, on behalf of Indiana/Kentucky/Ohio Regional Council of Carpenters Defined Contribution Pension Trust Fund (the "Annuity Fund"); (3) Dave Tharp, Board of Trustees Co-Chairman, and William Nix, Board of Trustees Co-Chairman, on behalf of Indiana/Kentucky/Ohio Regional Council of Carpenters Welfare Fund (the "Welfare Fund"); (4) Dave Tharp, Board of Trustees Chairman, and Joe Coar, Board of Trustees Secretary, on behalf of Indiana Carpenters Apprenticeship Fund and Journeyman Upgrade Program ("JATC"); (5) Douglas J. McCarron, Board of Trustees Chairman, on behalf of United Brotherhood of Carpenters Apprenticeship Training Fund of North America ("UBCJA"); and (6) Indiana/Kentucky/Ohio Regional Council of Carpenters ("the Union"). The Pension Fund, Annuity Fund, Welfare Fund, JATC, and UBCJA, will be collectively referred to as the "Plaintiff Trust Funds." The Plaintiff Trust Funds have brought this lawsuit against Defendant Catron Interior Systems, Inc. ("Catron"), alleging violations of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132 and 1145. The Union brings suit under 29 U.S.C. § 185. Collectively, the Plaintiffs seek to compel Catron to allow Plaintiffs' payroll auditor to examine all necessary books and records to complete a payroll audit for the period of January 1, 2011 through December 31, 2011. The Complaint also seeks any delinquent contributions and deductions uncovered by the audit, but that issue is not currently before the Court. Both parties have moved for summary judgment on the issue of whether the Court can and should compel Catron to submit to an audit. For the reasons set forth below, Plaintiff Trust Fund's and the Union's motion is GRANTED and Catron's motion is DENIED.


The pertinent facts are undisputed. Plaintiff Trust Funds were created pursuant and subject to ERISA to provide benefits for employees working under the Union's collective bargaining agreements. Catron and Plaintiff Trust Funds have had a contractual relationship since 1991. Under the term of these agreements, Catron has adopted the latest collective bargaining agreement ("CBA") between the Union and Construction Employers Association of Central Kentucky. Catron has paid union wages since 2006 and agrees it is subject to the latest CBA which is scheduled to end on May 31, 2015. The CBA contains a grievance procedure, which requires arbitration for disputes between parties to the agreement. The CBA requires that employers pay certain hourly wages and fringe benefits to employees, and incorporates the subject trust agreements with Plaintiff Trust Funds.

On October 2, 2012, the Plaintiff Trust Funds selected Catron for an audit pursuant to its Payroll Audit Policy. Michelle Zimmerman, a CPA, notified Catron by letter and requested it provide records in preparation of the audit. On October 4, 2012, Jerry Yates, the business agent for the Union, attempted to contact Mike Catron ("Mr. Catron"), owner of Catron, by letter to tell Mr. Catron that several Catron carpenters had lost wages and fringe benefits. The letter also requested an audit. Catron did not receive either letter. Plaintiff Trust Funds and the Union then filed this lawsuit on December 21, 2012.

In early February 2013, Catron permitted an audit of its accounts. Plaintiffs' payroll auditor, Joan Forthofer ("Ms. Forthofer"), went to the Catron facility on February 27, 2013, to audit Catron's payroll records. Ms. Forthofer requested documentation regarding non-union employees and was given handwritten notes from Mr. Catron. Then, on March 27, 2013, Ms. Forthofer emailed Mr. Catron noting that she had classified a number of carpenters as non-union and their hours had not been reported. She stated that Mr. Catron should respond within 10 days if he disagreed with her classifications, and she requested supporting documentation. To date, Ms. Forthofer has not completed her audit report.


Summary judgment is only appropriate by the terms of Rule 56 where there exists "no genuine issue as to any material facts and... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. This notion applies equally where, as here, opposing parties each move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir. 1996). Indeed, the existence of cross-motions for summary judgment does not necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment Serv., Inc. v. Int'l Union of Operating Eng'rs., 335 F.3d 643, 647 (7th Cir. 2003). Rather, the process of taking the facts in the light most favorable to the nonmovant, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. "With crossmotions, [the Court's] review of the record requires that [the Court] construe all inferences in favor of the party against whom the motion under consideration is made." O'Regan v. Arbitration Forums, Ins., 246 F.3d 975, 983 (7th Cir. 2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).


The parties each seek summary judgment in their favor. Catron contends first, that the Plaintiff Trust Funds failed to exhaust administrative remedies, and second, that the claim is moot because an audit has already occurred. Plaintiff Trust Funds and the Union contend that they are not subject to the CBA's grievance procedure and that Catron has not submitted to a full audit, which is preventing them from completing the review process. As will be described below, the Court finds that Plaintiff Trust Funds are not required to seek arbitration and Catron has not fully submitted to an audit.

A. Applicability of Grievance Procedure

It is well settled that "[c]ourts have generally required participants to exhaust [an employee benefit plan's] administrative remedies before filing suit to recover benefits." Heimeshoff v. Hartford Life & Accident Ins. Co., ___ U.S. ___, 134 S.Ct. 604, 608 (2013). Catron relies on this concept to argue that the Plaintiff Trust Funds failed to exhaust administrative remedies, specifically the CBA's grievance procedures. The CBA provides that disputes between parties to the CBA should be submitted to a Joint Arbitration Committee. Rather than do that, the Plaintiff Trust Funds and Union brought suit in federal court.

The Supreme Court has also recognized a presumption in favor of arbitration between unions and employers, which supports the objectives of collective bargaining. However, the Supreme Court has not extended such a presumption to disputes between an employer and the trustees of employee-benefit funds. Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364, 371-72 (1984) ("We conclude, therefore, that the presumption of arbitrability is not a proper rule of construction in determining whether arbitration agreements between the union and the employer apply to disputes between trustees and employers, even if those disputes raise questions of interpretation under the collective-bargaining agreements."). Without this presumption, courts are to look at the intent of the parties in the governing documents. Id. at 372; Pipe Fitters' Welfare Fund, Local Union 597 v. Mosbeck Indus. Equip., Inc., 856 F.2d 837, 840 (7th Cir. 1988) (" Schneider stands for the proposition that courts must carefully examine the pertinent trust and collective bargaining agreements to determine whether parties intended to arbitrate disputes between trust funds and employers."). Thus the Court must examine the relevant trust documents.

Catron rejects the applicability of trust documents designated by Plaintiff Trust Funds, arguing that three of the designated documents were not produced in discovery. Specifically, Plaintiff Trust Funds produced three trust documents during discovery, including Falls Cities Carpenters District Council Pension Trust Fund Louisville, KY Agreement ("Falls Cities Agreement"), Lower Ohio Valley District Council Pension Trust Fund, and Agreement and Declaration of Trust of the Kentucky State District Council of Carpenters AFL-CIO Retirement Annuity Trust Fund. On summary judgment, Plaintiff Trust Funds designated the Falls Cities Agreement (Filing No. 26-5) and three additional trust documents: SIDC-Millwrights Local 1080 Multi-Employer Retirement Trust Agreement (Filing No. 26-6), Indiana Carpenters Welfare Trust Fund Agreement (Filing No. 26-7), and Northwest Indiana Carpenters Welfare Fund Trust Agreement (Filing No. 26-8). Further, Catron argues that it has not been provided with a contract or written documentation "as to how these three trust agreements [designated on summary judgment] were related to the five named Plaintiff Trust Funds." Filing No. 36, at ECF p. 2. The Court agrees with Catron that Plaintiff Trust Funds' citation to the new trust documents is puzzling. There is no indication or explanation that ties the trust documents designated on summary judgment to the named plaintiffs. And Plaintiff Trust Funds ...

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