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Sheet Metal Workers Local 19 v. Keystone Heating and Air Conditioning

filed: May 30, 1991.

SHEET METAL WORKERS LOCAL 19 AND SHEET METAL WORKERS WELFARE, PENSION, VACATION, APPRENTICE, ANNUITY & INDUSTRY FUNDS OF LOCAL UNION NO. 19, APPELLEES
v.
KEYSTONE HEATING AND AIR CONDITIONING, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. Civil No. 89-01004.

Becker, Nygaard and Samuel A. Alito, Jr., Circuit Judges.

Author: Alito

Opinion OF THE COURT

ALITO, JR., Circuit Judge

Keystone Heating & Air Conditioning ("Keystone") appeals from a final judgment in favor of the Sheet Metal Workers Local 19 ("the Union") and the Sheet Metal Workers Welfare, Pension, Vacation, Apprentice, Annuity and Industry Funds of Local 19 ("the Funds") for, among other things, "work assessment fees" (union dues) and fund contributions that Keystone was found to owe under a collective bargaining agreement. Although we conclude that many of Keystone's arguments lack merit, we hold that the district court erred in denying Keystone's request for a jury trial on the Funds' claims for delinquent contributions under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq . We therefore reverse in part and affirm in part.

I.

The Funds and the Union filed a complaint against Keystone in the United States District Court for the Eastern District of Pennsylvania, invoking federal jurisdiction under Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185; Sections 502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145; and 28 U.S.C. § 1337. The complaint alleged that Keystone and the Union were parties to a collective bargaining agreement that required the company to make contributions to employee benefit funds and to submit to periodic audits to verify the payroll figures upon which those contributions were based. The complaint also asserted that the company had refused to permit an audit. The complaint sought (1) "an accounting of all amounts due to the various benefit funds, based upon examination of [Keystone's] payroll records," (2) counsel fees, interest, and costs, (3) "injunctive relief ordering [Keystone] to remit employer reports and contributions in a timely fashion," (4) "statutory penalties as provided by Section [502] of ERISA," 29 U.S.C. § 1132, and (4) "other relief as the Court deems just and proper."

Keystone answered and demanded a jury trial. The Union and the Funds subsequently moved to strike Keystone's jury trial demand. Asserting that they were basing their claims for an accounting, counsel fees, interest, costs, and statutory penalties solely on Section 502 of ERISA, 29 U.S.C. § 1132, and not Section 301 of the LMRA, the Fund and the Union contended that Keystone was not entitled to a jury trial on these claims because Section 502 authorizes only equitable relief. By contrast, the Union and the Funds did not challenge Keystone's demand for a jury trial on the claims for dues and the cost of an audit under Section 301 of the LMRA, 29 U.S.C. § 185.

Shortly before trial began, an audit based on records supplied to the plaintiffs in discovery was completed. A few days later, the Union and the Funds moved for leave to file a motion for partial summary judgment less than ten days before the scheduled pretrial hearing (see Fed. R. Civ. P. 56(c)), contending that Keystone's failure to provide timely discovery had precluded an earlier motion. Relying on the deposition of Keystone's chief executive officer, David A. Peppelman, the text of the collective bargaining agreement, and other related documents, the Funds and the Union contended that there were no genuine issues of fact regarding the existence of a collective bargaining agreement or Keystone's obligations under the agreement.

On the day the trial began, the district court addressed the issues presented by the plaintiffs' submissions. The court ruled that Keystone was entitled to a jury trial only on the plaintiffs' claims under Section 301 of the LMRA, 29 U.S.C. § 185, for dues and the cost of the audit. The court also ruled as a matter of law that Keystone was a party to and was bound by the collective bargaining agreement. In addition, the court ruled as a matter of law that Keystone's failure to make contributions constituted a breach of contract and that the only remaining factual issues were (1) whether the employees for whom the plaintiffs were seeking contributions had performed work covered by the collective bargaining agreement and (2) whether the plaintiffs were entitled to the cost of the audit.

The court impanelled a jury but structured the trial so that the jury considered the disputed factual issues only with respect to the plaintiffs' LMRA claims for dues and the cost of the audit. At the conclusion of the evidence, the court instructed the jury to answer the following three special interrogatories: (1) whether the plaintiffs had proven that Keystone employed persons (other than three employees for whom contributions had been made)*fn1 who performed work covered by the collective bargaining agreement; (2) whether the plaintiffs had proven that the audit of Keystone's payroll records accurately reflected the number of covered employees and the hours they had worked; and (3) whether the plaintiffs had proven that this audit was reasonably necessary. The jury answered "yes" to all three interrogatories, and the court then ruled that the Union was entitled to $56,382.38 in dues and that the Funds were entitled to $747 for the cost of the audit.

Acting as finder of fact with regard to the ERISA claims, the court found that the Funds had proven that they were entitled to a total of $1,350,121.93 for delinquent contributions, interest, and 20% liquidated damages. The court subsequently awarded plaintiffs attorneys' fees. Keystone appealed.

II.

Keystone contends -- and we agree -- that it was entitled to a jury trial on plaintiffs' claims for fund contributions, interest, and statutory penalties. In analyzing this issue, we will address two subsidiary questions. First, upon which provision or provisions of ERISA did the plaintiffs rely in seeking this relief? ...


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