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Kelly v. Gas Field Specialists, Inc.

United States District Court, M.D. Pennsylvania

July 5, 2017

FRANK KELLY and TODD C. RAY, As Trustees of the PLUMBERS AND PIPEFITTERS LOCAL NO. 520 HEALTH AND WELFARE FUND; PLUMBERS AND PIPEFITTERS LOCAL NO. 520 PENSION FUND; PLUMBERS AND PIPEFITTERS LOCAL NO. 520 ANNUITY FUND, Plaintiffs
v.
GAS FIELD SPECIALISTS, INC., Defendant

          MEMORANDUM

          Christopher C. Conner, Chief Judge

         Plaintiffs Frank Kelly and Todd C. Ray, as trustees of the Plumbers and Pipefitters Local No. 520 Health and Welfare Fund, Pension Fund, and Annuity Fund, commenced the above-captioned action pursuant to Section 502(a) and Section 515 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132(a), 1145, against defendant Gas Field Specialists, Inc. ("Gas Field"). The court previously entered summary judgment against Gas Field on the question of liability and reserved the issue of damages for further proceedings. (Doc. 36). In lieu of a bench trial, the parties stipulated to relevant facts (Doc. 50) and submitted briefs articulating their respective positions regarding proper damages. (See Docs. 52, 53). We set forth our findings of fact and conclusions of law herein pursuant to Federal Rule of Civil Procedure 52(a).

         I. Findings of Fact and Procedural Background[1]

         Plaintiffs Frank Kelly and Todd C. Ray are trustees of the Local 520's Health and Welfare Fund, Pension Fund, and Annuity Fund (collectively, "the Funds"). (Doc. 35 at 2). Each Fund is structured as a multiemployer employee benefit plan within the meaning of Sections 3(3) and 3(37) of ERISA. (Id.); see also 29 U.S.C. § 1002(3), (37). The parties agree that Gas Field is an "employer" and Local 520 is an "employee organization" within the meaning of the statute. (See Doc. 35 at 2); see also 29 U.S.C. § 1002(4)-(5).

         Local 520 is party to a collective bargaining agreement, identified by the parties and herein as the "2012-2015 Agreement, " with the Mechanical Contractors Association of Central Pennsylvania ("MCA"). (Doc. 35 at 2). Local 520 is also party to collective bargaining agreements with employers that are not MCA members, such as Gas Field. (Id.) Gas Field became a party to the 2012-2015 Agreement by virtue of a document titled "RECOGNITION / JOINDER, " referred to by the parties as the "2012-2015 Recognition, " which provides that Gas Field "adopts and agrees to be bound by the terms and conditions of the [2012-2015 Agreement]." (Id. at 2-3).

         The Funds, through the trustees, commenced this action on January 2, 2014. (Doc. 1). Therein, the trustees sought an audit of Gas Field's relevant employment and payroll records, as well as any applicable damages authorized by the 2012-2015 Agreement and ERISA. (See id.) Following a period of discovery, the parties filed cross-motions (Docs. 21, 27) for summary judgment limited to the issue of liability. The parties vigorously disputed whether the 2012-2015 Agreement obligated Gas Field to contribute to the Funds on behalf of all Gas Field employees, regardless of union or job status, or only on behalf of Local 520 employees assigned to designated Gas Field projects. (See Doc. 35 at 8-9). We resolved that the plain language of the 2012-2015 Agreement-stating that same "shall apply to and cover all employees of an Employer"-refuted Gas Field's proposed limitation. (Id. at 10-11). Hence, we granted the Funds' motion, denied Gas Field's motion, and deferred entry of judgment pending a determination of damages. (See Docs. 35, 36).

         The Funds hired auditors to review Gas Field's payroll records and identify employees covered by the 2012-2015 Agreement as interpreted by the court. (See Doc. 50 ¶ 2). The auditors thereafter identified all employees covered by the 2012-2015 Agreement for whom no contributions were made (the "covered employees"). (See id. ¶ 3). The parties agree that, based on the court's summary judgment ruling and the auditors' findings, Gas Field's delinquencies for the covered employees are as follows:

• Pension Fund: $646, 021.14 in contributions, $96, 903.17 in liquidated damages, and $184, 608.17 in interest;
• Annuity Fund: $248, 055.66 in contributions, $37, 208.35 in liquidated damages, and $70, 993.25 in interest; and
• Health and Welfare Fund: $648, 467.35 in contributions, $97, 270.10 in liquidated damages, and $185, 893.68 in interest.

(Id. ¶¶ 4-6).

         For covered employees on whose behalf Gas Field did not make requisite Fund contributions, Gas Field provided certain alternative benefits. (See id. ¶¶ 8-9). Gas Field provided health insurance at a cost of $146, 166.23, and contributed to a 401(k) retirement plan in the amount of $25, 566.31. (Id.) II. Conclusions of Law Gas Field does not dispute the accuracy of the auditors' calculations. (See id. ¶¶ 6-8). Gas Field instead asserts that its provision of alternative benefits to the covered employees either (1) immunizes it from an ERISA damages award, at least with respect to the Health and Welfare Fund, or (2) entitles it to an offset or credit for the amount of alternative benefits provided. (Id. ¶¶ 7-9; Doc. 52 at 2-4). Neither argument has merit.

         Section 515 of ERISA provides that:

[e]very employer who is obligated to make contributions to a 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 ...

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