Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Stromberg Metal Works, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA

WESTERN DIVISION

No. 5:21-CV-101-BO

SHEET METAL WORKERS’ HEALTH & )

WELFARE FUND OF NORTH CAROLINA, )

SHEET METAL WORKERS’ UNION TRAINING )

FUND OF NORTH CAROLINA; SHEET METAL )

WORKERS’ NATIONAL PENSION FUND; )

INTERNATIONAL TRAINING INSTITUTE FOR )

THE SHEET METAL AND AIR CONDITIONING)

INDUSTRY; NATIONAL ENERGY )

MANAGEMENT INSTITUTE COMMITTEE FOR)

THE SHEET METAL AND AIR CONDITIONING)

INDUSTRY; SHEET METAL OCCUPATIONAL )

HEALTH INSTITUTE TRUST; NATIONAL )

STABALIZATION AGREEMENT OF THE )

METAL INDUSTRY; and SHEET METAL )

WORKERS’ INTERNATIONAL SCHOLARSHIP )

FUND, )

Plaintiffs, )

)

v. ) ORDER

)

STROMBERG METAL WORKS, INC., )

Defendant. )

This cause comes before the Court on the parties’ cross-motions for summary judgment as

well as several motions to strike. The appropriate responses and replies have been filed, or the time

for doing so has expired, and a hearing on the matters was held before the undersigned on June 2,

2021, at Elizabeth City, North Carolina. Supplemental briefing was completed on July 20, 2021,

and, in this posture, the motions are ripe for ruling.

BACKGROUND

Plaintiffs commenced this action by filing a complaint on November 1, 2019, in the United

States District Court for the Middle District of Tennessee to recover unpaid fringe benefit

contributions pursuant to Section 515 of the Employee Retirement Security Income Act (ERISA),

29 U.S.C. § 1145, and Section 301 of the Labor Management Relations Act, (LMRA), 29 U.S.C.

§ 185. [DE 1]. Plaintiffs filed suit against defendant Stromberg Metal Works as well as a temporary

staffing agency, Triangle Servitek, and its agents Joel Garcia Castillo and Jasmine Castregon. The

case was transferred to this district on March 1, 2021. The Triangle Servitek defendants were

dismissed with the consent of plaintiffs by order filed June 1, 2021. Unless otherwise indicated,

the following facts are derived from the undisputed facts submitted by the remaining parties. [DE

75, 78].

Plaintiffs (the Funds or plaintiff Funds) are employee welfare and pension benefit plans

and joint labor-management organizations. ' Defendant Stromberg Metal Works (Stromberg) is a

commercial sheet metal fabrication and installation company with a regional office in Raleigh,

North Carolina. Stromberg employs workers represented by Local 5 and Local 100 of the Sheet

Metal, Air, Rail and Transport International Union and has been a signatory to their collective

bargaining agreements (CBA). The CBAs govern, among other things, working conditions, rates

of pay, and benefits for workers performing sheet metal work as defined by the CBAs. [DE 1]

Compl. 18. The CBAs provide for four classifications of workers performing sheet metal work

under the CBA: journeyman, apprentice, pre-apprentice, and classified. The CBAs further provide

for a ratio of journeyman to non-journeyman metal workers that Stromberg and other employer-

signatories must follow. The Local 5 CBA requires employer-signatories to maintain a 1-to-2 ratio

' The plaintiff Funds are comprised of a Health Fund, an Apprenticeship Fund, a Pension Fund, an

employee pension benefit plan, two employee welfare benefit plans, a joint labor-management

organization, and a joint labor-management health and safety organization. See [DE 78 {ff 1-8].

of journeyman to non-journeyman sheet metal workers, or one journeyman to one apprentice and

one pre-apprentice or classified worker.”

In addition to setting staffing ratios, the CBAs also set contribution rates at which

employer-signatories such as Stromberg contribute to the Funds for the benefit of employee-

participants. An employer is required to make contributions for employees as classified by the

CBA and other labor negotiation agreements. “The hourly contribution rates are significantly

higher for journeymen (e.g. $6.60 pension, $5.25 health) and apprentices ($4.49 averaged pension,

$5.25 health) than classified workers ($0.33 pension, $1.29 health.” [DE 1] Compl. § 28.

Local 5 and Local 100 operate a hiring hall which, under the CBA, employer-signatories

such as Stromberg are obligated to use as a first source of hiring. However, the CBAs permit

employers to hire workers not referred by the local unions under certain circumstances. When

workers are hired outside the local unions, the CBAs require that the employer refer the worker to

the local union for assessment of proper classification, including wage rate. Stromberg used the

services of five temporary staffing agencies: Triangle Servitek, LLC; G.A.B. Labor Solution, LLC;

Mechanical Labor Staffing, LLC; AEROTEK, Inc.; and Multi-Tech Mechanical Support. Former

co-defendant Triangle Servitek provided temporary sheet metal workers to Stromberg for various

jobs in North Carolina. Workers hired by Stromberg from a temporary staffing agency performed

the same type of sheet metal work for Stromberg as Stromberg employees. Because the parties

dispute whether workers hired through a staffing agency are “temporary employees” or “temporary

workers,” for the purposes of this order the Court refers to these workers as “temporary sheet metal

workers.” Although required by the CBA, Stromberg did not refer every worker it hired outside

2 Plaintiffs contend, and Stromberg does not disagree, that only the Local 5 CBA ratio is relevant

to this case because all of the temporary sheet metal workers addressed herein worked in the Local

5 jurisdiction in North Carolina.

Local 5 to the union hall for assessment and classification as a journeyman, apprentice, pre-

apprentice, or classified worker.

A Resolution 78 Agreement is a local agreement between employers and local unions to

amend terms applicable to a particular job site. Resolution 78 Agreement terms are typically more

favorable to the employer, allowing the employer to bid for work more competitively over non-

union employers. Stromberg and Local 5 entered into two Resolution 78 Agreements regarding

projects in North Carolina — the Mary Ellen Jones Project and the New Bern Project. Both the

Mary Ellen Jones and New Bern Project Resolution 78 Agreements set out terms more favorable

to Stromberg, including the ratio of worker classification on the project. The Mary Ellen Jones and

New Bern Project Resolution 78 Agreements are each one of the documents that govern the

amount of contributions Stromberg was required to make to plaintiffs during the time period for

which plaintiffs have sought delinquent contributions in this case. See [DE 61-3].

In April 2017, Local 5 filed a grievance alleging that Stromberg had violated the CBA by

using temporary sheet metal workers. Specifically, Local 5 alleged that Stromberg had violated

union hall hiring procedures and requested that all hours performed by non-referred bargaining

unit employees be paid to the Union and that the benefit funds be made whole. Stromberg then

filed its own grievance against Local 5, alleging that Local 5 was unable to provide manpower

needs for apprentices, pre-apprentices, and classified workers in the ratios agreed to under the

CBA. On July 14, 2017, Stromberg and Local 5 settled their dispute and entered into a Grievance

Settlement Agreement (2017 Settlement).

In October 2018, Local 5 filed another grievance under the CBA relating to Stromberg’s

use of temporary sheet metal workers. Local 5 argued that Stromberg had circumvented hiring hall

procedures and subcontracted work to companies/employees who were not signatories with Local

5. Local 5 requested that Stromberg make it whole for all lost wages, benefits, assessments, and

damages caused by Stromberg’s violation of the CBA. In December 2018, a meeting was held on

the October grievance at which Joseph Powell, a trustee of plaintiff Pension Fund and a

representative of SMART International Union, and Karla Campbell on behalf of plaintiff Health

Fund, among others, were present. Mr. Powell reviewed a draft of a settlement agreement and in

an email sent on January 3, 2019, indicated that the provisions of the eventual settlement agreement

would be retroactive. Local 5’s grievance was settled by a final settlement agreement signed

January 14, 2019 (2019 Settlement)? Paragraph 14 of the 2019 Settlement provides that

“Stromberg agrees to let go all temporary workers by January 31, 2019. In return, Local 5 agrees

not to go back against Stromberg for working dues, lost wages etc. based on the hiring of temporary

workers. Additionally, Local 5 will withdraw the pending grievance against Stromberg related to

the hiring of temporary workers.” [DE 62-2]. The 2019 Settlement was signed by representatives

of Local 5 and Stromberg Metal Works. The 2019 Settlement settled Local 5’s and Stromberg’s

dispute regarding the applicability of the terms in the CBA to an audit conducted by the Funds.

The Funds are governed by their plan trust documents and the CBA, though they do not

participate in the bargaining between the union and employers. Thus, the Funds must rely on

reports that signatory-employers like Stromberg submit to them and they are permitted to audit

employers to ensure compliance with the CBA. In November 2017, during a meeting of the Board

of Trustees of the Sheet Metal Workers’ Health and Welfare Fund of North Carolina, the trustees

concluded that a payroll audit of Stromberg Metal Works was needed. [DE 67-5 at 107]. This

decision was made following an issue that had arisen regarding Stromberg’s reporting practices

for temporary sheet metal workers. In June 2017, Stromberg had begun submitting reports and

3 The signatures reflect dates of January 14, 2018, but the agreement was signed in 2019. [DE 63]

Bigelow Decl. { 8.

payments reflecting the lowest worker classification rate to the Funds on behalf of some temporary

sheet metal workers. The trustees determined that an audit was “mandatory to clarify what

contributions should be received by the Fund and on whose behalf.” Jd. Stromberg contends that

it did not believe at the time that it owed any contribution to any of the plaintiff Funds for the

temporary sheet metal workers, but that it made contributions to “buy its peace” because Local 5

believed otherwise.

This suit followed plaintiffs’ receipt of an audit of Stromberg conducted by a third-party

auditor. Plaintiffs seek to recover what they allege to be unpaid fringe benefit contributions by

Stromberg under the applicable CBAs.

DISCUSSION

Motions to strike

“The resolution of evidentiary issues is within the court’s sound discretion, including any

involving affidavit evidence submitted at the summary judgment stage.” Francisco v. Verizon S.,

Inc., 756 F. Supp. 2d 705, 713 (E.D. Va. 2010).

A. Plaintiff's motion to strike declaration of William Blank and errata sheet [DE 82]

William Blank submitted to a deposition as a Rule 30(b)(6) designee for Stromberg on

September 15, 2020. On October 13, 2020, Mr. Blank submitted an errata sheet with changes to

five of his answers. Stromberg then submitted a declaration by Mr. Blank in support of its motion

for summary judgment which the plaintiffs contend contradicts his deposition testimony in key

ways.

Rule 30(e) of the Federal Rules of Civil Procedure provides that a deponent is permitted to

sign a statement listing any changes to the form or substance of his deposition and the reasons for

making the changes. Fed. R. Civ. P. 30(e)(1). “A change in ‘form’ would include correcting a

typographical error or a spelling error. A change in ‘substance’ would include the substantive

correction of a court reporter’s transcription (i.e., the witness answers ‘No,’ but the court reporter

records ‘Yes’). William L. Thorp Revocable Tr. v. Ameritas Inv. Corp., 57 F. Supp. 3d 508, 518

(E.D.N.C. 2014). The Rule “does not permit a party to make changes that substantively contradict

or modify [a] sworn deposition.” Jd. at 518.

Mr. Blank’s errata do more than correct the record. Rather, they reflect substantive

modifications of the sworn testimony. For example, Mr. Blank has attempted to correct his

testimony wherein he stated “My answer was no” to “My answer was no, except they are not

employees of the company.” This reflects neither a typographical correction nor a substantive

correction as defined above. The errata sheet is therefore appropriately stricken.

Plaintiffs further move to strike Mr. Blank’s post-deposition declaration. Plaintiffs argue

that Mr. Blank’s declaration directly contradicts his prior deposition testimony, and specifically

cite portions of the declaration concerning whether Stromberg hired temporary sheet metalworkers

[DE 60 § 20; DE 67-1 Blank Depo. p. 74; DE 83-1 Blank Depo. pp. 118-121] and whether

Stromberg owed contributions to plaintiffs [DE 60 f§ 31, 32; DE 67-1 Blank Depo. p. 94; DE 83-

1 Blank Depo pp. 109-111].

“If a party who has been examined at length on deposition could raise an issue of fact

simply by submitting an affidavit contradicting his own prior testimony, this would greatly

diminish the utility of summary judgment as a procedure for screening out sham issues of fact.”

Barwick v. Celotex Corp., 736 F.2d 946, 960 (4th Cir. 1984) (quoting Perma Research and

Development Co. v. Singer, 410 F.2d 572, 578 (2d Cir.1969)). “Even under more generous

articulations of the sham affidavit rule, litigants must explain subsequent inconsistent statements

in an affidavit in order to avoid the rule.” Adefila v. Davita, Inc., No. 1:13CV940, 2015 WL

268983, at *5 (M.D.N.C. Jan. 20, 2015).

The Court has reviewed the cited portions of the Blank Deposition transcript and the Blank

Declaration and determines that the only directly contradictory statement in the declaration is that

at paragraph thirty-two, where Mr. Blank declares that he understood “that Stromberg owed no

contributions to Plaintiffs for Stromberg’s use of the Temporary Workers .. ..” [DE 60 32]. This

is in direct contraction to his deposition testimony wherein he stated that he believed that

Stromberg may owe money to the plaintiff Health and Pension Funds. [DE 67-1 pp. 29-30].

Stromberg offers no explanation for this inconsistency, other than to argue it is not inconsistent.

The Court will strike paragraph thirty-two of Mr. Blank’s post-deposition declaration. The Court

declines, in its discretion, to strike any other portion of the declaration or the declaration in its

entirety. This motion is therefore granted in part and denied in part.

B. Stromberg’s motion to strike plaintiffs’ response to its statement of undisputed facts and

response to its statement of additional disputed facts [DE 86]

Stromberg moves to strike plaintiffs’ responses to its statements of undisputed and

additional disputed facts as being out of compliance with the Local Rules of the Middle District

of Tennessee regarding summary judgment briefing. This Court has similar rules in place

regarding statements of material fact in support of motions for summary judgment. Local Civil

Rule 56.1. In response to this motion, plaintiffs have submitted revised responses. [DE 92-1]. The

Court, in its discretion, deems these revised responses in substantial compliance with the Court’s

Local Civil Rules and therefore denies Stromberg’s motion to strike.

C. Stromberg’s motion to strike plaintiff's reply or, in the alternative, motion for leave to

file sur-reply [DE 87]

Stromberg seeks to strike plaintiffs’ reply in support of their motion for summary judgment

as exceeding the page limitation allowed in the Middle District of Tennessee. In response,

plaintiffs filed a reply in conformance with the page limitation, although Stromberg continues to

oppose the proposed substitute reply brief.

Plaintiffs’ original reply brief complies with this Court’s Local Civil Rule 7.2(f). The

Court, in its discretion, declines to strike plaintiff's reply. The Court further denies Stromberg’s

request to file a sur-reply. The motion is denied.

II. Motions for summary judgment

A. Legal standards

A motion for summary judgment may not be granted unless there are no genuine issues of

material fact for trial and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue

of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If that burden has been met,

the non-moving party must then come forward and establish the specific material facts in dispute

to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

588 (1986). In determining whether a genuine issue of material fact exists for trial, a trial court

views the evidence and the inferences in the light most favorable to the nonmoving party. Scott v.

Harris, 550 U.S. 372, 378 (2007). However, “[t]he mere existence of a scintilla of evidence” in

support of the nonmoving party’s position is not sufficient to defeat a motion for summary

judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

“A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. .

. . and [a] fact is material if it might affect the outcome of the suit under the governing law.”

Libertarian Party of Virginia v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (internal quotations and

citations omitted). Speculative or conclusory allegations will not suffice. Thompson v. Potomac

Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002). When deciding cross-motions for summary

judgment, a court considers each motion separately and resolves all factual disputes and competing

inferences in the light most favorable to the opposing party. Rossignol v. Voorhaar, 316 F.3d 516,

523 (4th Cir. 2003).

Multiemployer plans such as the plaintiff Funds come with benefits for both workers and

employers: “employees receive benefits that follow them throughout jobs within a particular

industry, and employers are able to offer those benefits while taking advantage of cost- and risk-

sharing mechanisms.” Bd. of Trustees, Sheet Metal Workers’ Nat'l Pension Fund v. Four-C-Aire,

Inc., 929 F.3d 135, 138 (4th Cir. 2019). To address the risks posed by multiemployer plans,

Congress amended ERISA to create a “separate federal cause of action permitting multiemployer

plans to collect contributions from employers so long as the plan is able to establish an obligation

to contribute under the terms of the plan’s governing documents or the CBA.” Id. at 139.

Specifically, Section 515 of ERISA provides that

Every 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

with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145. ERISA puts multiemployer plans such as plaintiffs “in a stronger position than

they otherwise occupy under common law contract principles.” Bakery & Confectionery Union &

Indus. Int’l Pension Fund y, Ralph’s Grocery Co., 118 F.3d 1018, 1021 (4th Cir. 1997). To that

end, employers may not raise defenses relating to claims they may have against the union or those

which would show that the employer and union agreed to different terms than those set forth in

the CBA in a Section 515 action. Jd. In sum, Section 515 actions are intended to streamline the

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process of collection of delinquent contributions to ensure that the benefits plans remain funded.

Four-C-Aire, 929 F.3d at 140.

Under Section 301 of the LMRA, federal district courts have jurisdiction over suits brought

for violations of contracts between employers and labor unions. 29 U.S.C. § 185(a). The Funds, as

third-party beneficiaries to the CBAs, may sue under Section 301. See Cement & Concrete

Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund & Annuity Fund v. Lollo,

35 F.3d 29, 34 (2d Cir. 1994).

B. Cross-motions for summary judgment [DE 57 & 65]

It is undisputed that the plaintiffs are multiemployer pension and welfare plans and

Stromberg is an employer as those terms are defined by ERISA. 29 U.S.C. § 1002. It is further

undisputed that Stromberg is a signatory to the Local 5 and Local 100 CBAs. Both the Local 5 and

Local 100 CBAs provide for a ratio of journeymen to non-journeymen that signatory employers

such as Stromberg must follow. The plain terms of the Local 5 CBA require Stromberg to maintain

at 1-to-2 employment ratio of journeymen to non-journeymen. See [DE 67-2] Dette Dep. Ex. 1 p.

19 § 30. The CBAs further require Stromberg to make contributions to the plaintiff Funds. Jd. Ex.

1 pp. 18-19.

The first issue between the parties is whether the temporary sheet metal workers hired by

Stromberg through staffing agencies were employees of Stromberg covered by the CBA. The CBA

covers “the rates of pay and conditions of employment of all employees of the employer engaged

in” sheet metal work. Jd. Ex. 1 p. 1 Article 1 § 1. The parties do not dispute that the temporary

sheet metal workers performed sheet metal work as defined by the CBA. Thus, the only question

is whether the temporary sheet metal workers were employees of Stromberg under the CBA.

11

The CBAs in this case do not define the term employee but that term is defined by ERISA

as “any individual employed by an employer.” 29 U.S.C. § 1002(6). To determine whether a

worker is an employee under ERISA, courts apply a common-law test which considers “the hiring

party’s right to control the manner and means by which the product is accomplished,” as well as

other relevant factors including “the skill required; the source of the instrumentalities and tools;

the location of the work; the duration of the relationship between the parties; whether the hiring

party has the right to assign additional projects to the hired party; the extent of the hired party’s

discretion over when and how long to work; the method of payment; the hired party’s role in hiring

and paying assistants; whether the work is part of the regular business of the hiring party; whether

the hiring party is in business; the provision of employee benefits; and the tax treatment of the

hired party.” Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992) (quotation and

citation omitted). “The determination of whether a [worker] qualifies as an employee under ERISA

is a mixed question of law and fact that a judge normally can make as a matter of law.” Jammal v.

Am. Fam. Ins. Co., 914 F.3d 449, 453-54 (6th Cir. 2019).

Mr. Blank, Stromberg’s Rule 30(b)(6) deponent, testified that, other than the entity through

which the temporary sheet metal workers were paid, there was no difference between a temporary

sheet metal worker and a Stromberg employee. [DE 67-1] Blank Depo. p. 74. Mr. Blank further

explained that temporary sheet metal workers hired through staffing agencies Aerotek and Triangle

Servitek would be controlled, managed, and supervised by Stromberg. /d. pp. 150-151. Mr. Blank

stated that to his knowledge only Stromberg employees gave temporary sheet metal workers

instructions about their work. Jd. pp. 49-50.

On the other hand, Stromberg did not pay payroll or social security taxes for the temporary

sheet metal workers nor did it select which temporary sheet metal workers were sent to it from the

12

staffing agency. See [DE 64-7] Castrejon Dep. p. 41-42. Stromberg also agreed not to hire-on any

temporary sheet metal workers provided by Triangle Servitek during the temporary staffing period.

Id. p. 46. Mr. Blank stated in his post-deposition declaration that Stromberg did not directly hire

or fire temporary workers, Blank Decl. J 20, but at his deposition he explained that a Stromberg

employee would have directed any temporary sheet metal workers as to where to work and with

whom, when they could take a break, and further observed their production and the quality of their

work. Blank Depo. pp. 48-49.

Even viewing the evidence and inferences in the light most favorable to Stromberg, the

record demonstrates that Stromberg controlled the manner and means by which the product was

accomplished by the temporary sheet metal workers, the primary inquiry under Darden. While

there are some additional factors which would weigh against a finding that the temporary sheet

metal workers were Stromberg employees for purposes of ERISA, those factors do not outweigh

those in favor of finding that the temporary sheet metal workers were Stromberg employees. For

example, though payroll and other taxes were withheld by the staffing agencies and the duration

of the relationship between Stromberg and the temporary sheet metal workers could be short, Mr.

Blank testified that the fact that temporary sheet metal workers would be let go at the end of a job

and rehired once there was more work was no different from Stromberg’s treatment of its own

employees. Blank Depo. p. 74. Stromberg hired the temporary sheet metal workers to perform

work that is a regular part of its business and Stromberg controlled where and how long the

temporary sheet metal workers would work and told them what to do. In sum, the Court concludes

that the temporary sheet metal workers were Stromberg employees for purposes of ERISA.

In addition to arguing that the temporary sheet metal workers were not its employees for

purposes of ERISA, Stromberg raises several other arguments in its Rule 56 motion against a

13

finding that it is ultimately liable for delinquent contributions to the Funds for its temporary sheet

metal workers.‘ First, Stromberg contends that under the Local 5 CBA contributions are due only

for four specific classes of employees — journeyman, apprentice, pre-apprentice, and classified

sheet metal workers. CBA Art. III § 1. Stromberg argues that “temporary worker” is not one of the

listed classifications, and thus Stromberg is not required to make Funds contributions on behalf of

these workers.

However, the temporary sheet metal workers were not classified by Local 5 as journeyman,

apprentice, pre-apprentice, or classified because, as it admits, Stromberg did not send all of its

temporary sheet metal workers to the union hall for classification in violation of the CBA. To hold

that Stromberg should be rewarded for its failure to comply with the terms of the CBA would go

against the intent of Section 515 actions, which is to “increase the reliability of [the Funds’ income

streams, reduce[] the cost and delay associated with collection actions, and reduce[] or eliminate[]

the cost of monitoring the formation of collective bargaining agreements.” Ralph’s Grocery, 118

F.3d at 1022.

Stromberg further argues that the 2017 and 2019 Settlements it entered into with Local 5

control the outcome of this case. Those settlements relate to Stromberg’s use of temporary sheet

metal workers, and Stromberg contends that they control whether Stromberg is liable to the Funds

for delinquent contributions. Stromberg’s arguments are unavailing.

The Funds and the union are separate and distinct legal entities. The Funds are not parties

to the CBA and their duties and interests are not necessarily the same as those of Local 5, or

Stromberg. Four-C-Aire, 929 F.3d at 140. This is underscored by the fact that an employer may

4 Plaintiffs have argued that Stromberg does not appear to contest the findings of the audit which

reflect that it failed to make some contributions of Local 5 and Local 100 members, and Stromberg

did not respond to this argument in its reply. See [DE 76; 79].

14

not use any defenses it has against the union in an action to recover unpaid contributions brought

under Section 515. Indeed, the Funds are not “required to comb through the other parts of the

collective bargaining agreement searching for additional terms related to [contributions]. Ralph’s

Grocery, 118 F.3d at 1024 (citing Central Pennsylvania Teamsters Pension Fund v. W & L Sales,

Inc., 778 F.Supp. 820, 830 (E.D.Pa.1991)).

Another court in this circuit considering a similar issue has held that “(t]he law is clear that

Plaintiffs [funds] are permitted to pursue their unpaid contributions from [the employer],

irrespective of any agreement that [the employer] may have reached with local union chapters or

pension funds associated with local union chapters.” Jnt’] Painters & Allied Trades Indus. Pension

Fund v. Madison Coatings Co., No. SAG-17-1559, 2019 WL 5625759, at *4 (D. Md. Oct. 31,

2019) (citing Ralph’s Grocery, 118 F.3d at 1021).> This Court agrees and concludes that the law

in this circuit clearly sets out that the ovtilenictt agreements between Local 5 and Stromberg are

not binding on the plaintiff Funds nor do they preclude the Funds from seeking delinquent

contributions from Stromberg.

Stromberg also argues that the CBA does not include an express promise to make

contributions to the Funds for work by temporary sheet metal workers, and that no temporary sheet

metal workers have made any claims to the Funds for benefits. But the Fourth Circuit has held that

where the CBA refers to “employees,” it refers to all, not some employees, and thus contributions

cannot be limited to employees with union membership. Clark v. Ryan, 818 F.2d 1102, 1105 (4th

Cir. 1987); see also Nesse as Trustees of Minnesota Laborers Health & Welfare Fund v. Green

Nature-Cycle, LLC, 7 F.4th 769, 776 (8th Cir. 2021); Maryland Elec. Indus. Health Fund vy.

MESCO, Inc., No. CIV.A. ELH-12-505, 2014 WL 853237, at *13 (D. Md. Feb. 28, 2014).

5 For this reason, the fact that a representative of the plaintiff Pension and Health Funds were

present at the meeting regarding Local 5’s October 2018 grievance is immaterial.

15

Therefore, contrary to Stromberg’s argument, acceptance of contributions on behalf of non-union

workers would not violate Section 302 of the LMRA.

Moreover, that there have been no claims to the Funds by temporary sheet metal workers

is inapposite — the Funds rely “upon contributions (and the investment income thereon) from all

signatory employers to finance the defined benefits due to beneficiaries.” Flynn v. R.C. Tile, 353

F.3d 953, 961 (D.C. Cir. 2004). This is the harm the Funds seek to remedy through this action.

Thus, even if Stromberg could establish that the temporary sheet metal workers are “not eligible

for and would never receive any fringe benefits from the Funds,” that fact is not relevant to this

Section 515 inquiry. Nesse, 7 F.4th at 778.

Finally, the Court considers Stromberg’s argument that it should not be required to pay the

journeyman rate for any work hours. The Funds contend that they do not know whether any of the

individual workers are journeymen, and that they have no way of knowing an individual worker’s

skill level. Rather, plaintiffs contend that they are entitled to rely on the default ratio established

by the CBA. The Court agrees with plaintiffs, as all of the relevant case law supports that in Section

515 actions the plaintiff benefits funds should not be required to “comb through the records” to

determine how much in delinquent contributions they are owed. Additionally, Stromberg

admittedly failed to refer its temporary sheet metal workers to the union hall for classification.

Stromberg has not cited any case in which a court required a benefit fund in a Section 515 action

to make a showing as to the classification of each worker for whom contributions are owed. The

Court is unpersuaded by Stromberg’s argument and concludes that the Funds are permitted to rely

on the ratio set forth in the CBA.

Accordingly, the Court determines that plaintiffs are entitled to summary judgment in their

favor on the issue of whether Stromberg is required to make contributions to the plaintiff Funds.

16

Stromberg’s request for entry of judgment in its favor on this issue is therefore denied. Remaining

for the Court’s determination is whether plaintiffs are entitled to summary judgment in their favor

on the amount of delinquent contributions owed.

Stromberg contends that there are genuine issues of material fact precluding summary

judgment on this issue, specifically because the audits on which plaintiffs rely are inadmissible

hearsay. Plaintiffs argue that using the ratio provided in the Local 5 CBA — a 1-to-2 ratio of

journeymen to non-journeymen — the amount of the delinquency owed by Stromberg for the

relevant period, 2015—2019, is $823,658.24. [DE 66 at 18]. Plaintiffs further contend that in

addition to unpaid contributions, ERISA mandates the sasiiticlit of liquidated damages and interest

on the delinquency. See 29 U.S.C. § 1132(g)(2). Plaintiffs calculate the liquidated damages and

interest due as totaling $430,658.16. Jd. Finally, plaintiffs seek attorney fees and costs. 29 U.S.C.

§ 1132(g)(2)(D).

Stromberg does not dispute that the plaintiff Funds have the authority to audit employers

or that the audit was conducted by an independent third-party, Calibre CPA Group, PLLC.

Stromberg contends that plaintiffs have provided no evidence that the numbers in these reports are

accurate and that the declarations of Don Dette, Kenneth Anderson, and Deanna Morris are

insufficient grounds on which to admit the audit reports as they did not participate in the audit and

have no personal knowledge of the information contained in therein. See Fed. R. Civ. P.

56(c)(2)(4).

Mr. Dette is the coordinator of the Sheet Metal Workers’ Union Training Fund of North

Carolina (Apprenticeship Fund). [DE 68]. Mr. Dette calculated the amount in delinquent

contributions owed by Stromberg to the Apprenticeship Fund using the Calibre CPA audit. Jd. Mr.

Anderson is the audit and delinquency manager for the Sheet Metal Workers’ National Benefit

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Funds. [DE 91-1]. Ms. Morris is the manager of collections at Southern Benefit Administrator.

[DE 91-2]. Mr. Anderson and Ms. Morris, in addition to providing copies of the third-party audit

reports, include their additional calculations of interest and liquidated damages based upon the

audit reports.

Stromberg does not contend that the audit reports replied upon by plaintiffs their affiants

are not authentic. And Stromberg has failed to cite any “legal authority suggesting that an auditor

or an affiant relying on an audit must physically observe each employee performing covered

employment for a court to rely on the audit or affidavit.” Nat'l Elec. Ben. Fund v. Rabey Elec. Co.,

No. 11-CV-00184-AW, 2012 WL 3854932, at *7 (D. Md. Sept. 4, 2012). Although Stromberg

also challenges the contents of the audit reports, it fails to create a genuine issue of material fact

by filing “specific, documentary evidence to this Court demonstrating that erroneous calculations

on particular employees form the basis of [the Funds’] damages claims.” Jd. 2012 WL 3854932,

at *6; see also Trustees of Painters Union Deposit Fund v. Ybarra Const. Co., 113 F. App’x 664,

669 (6th Cir. 2004) (without presenting documentation showing, among other things, that the

number of total hours was excessive, defendant had failed to raise a genuine issue of material fact

as to damages calculation).

Stromberg also challenges the fact that the Resolution 78 ratios were not applied during

the audit calculations. Plaintiffs’ declarations state that the auditors did not have sufficient

information to apply these ratios. Specifically, Mr. Anderson stated that “Stromberg did not

produce payroll records that would permit the auditor to apply the Resolution 78 variances to the

audits.” [DE 91-1]. ERISA requires employers to maintain records with respect to each employee

sufficient to determine any benefits which are or may become due. 29 U.S.C. § 1059(a)(1). This

provision “affects evidentiary burdens such that, when a plaintiff demonstrates the defendant’s

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failure to comply . . ., the burden of proving the accuracy of employment or benefit records shifts

to the defendant.” Colin v. Marconi Com. Sys. Employees’ Ret. Plan, 335 F. Supp. 2d 590, 606

(M.D.N.C. 2004). Here, Stromberg has admitted that it had the opportunity both to dialogue with

and provide information to the auditor and that it did not have complete and accurate payroll

records to provide. See [DE 74] Bigelow Decl. J 3, 8; [DE 63] Bigelow Decl. { 17. Although

Stromberg contends that Mr. Anderson’s statement about the production of payroll records is false,

it has not come forward with any documentary evidence which would raise a genuine issue of

material of fact on this issue. The Court determines that because there were insufficient records to

allow the auditor to apply the Resolution 78 ratio, plaintiffs are permitted to rely on the ratio agreed

to by Stromberg in the CBA.

Accordingly, as Stromberg has failed to create a genuine issue of material fact, the Court

determines that plaintiffs are entitled to summary judgment in their favor on their claim for

damages in the amounts requested. ERISA therefore mandates the award of attorney fees and costs.

29 U.S.C. § 1132(g)(2). Plaintiffs are directed to file a motion accordingly within twenty-one days

of the date of entry of judgment.

CONCLUSION

For the foregoing reasons, defendant’s motion for summary judgment [DE 57] is DENIED;

plaintiffs’ motion for summary judgment [DE 65] is GRANTED; plaintiffs’ motion to strike [DE

82] is GRANTED IN PART and DENIED IN PART; defendants’ motion to strike [DE 86] is

DENIED; defendant’s motion to strike [DE 87] is DENIED. Plaintiffs are awarded $823,658.24

in delinquent contributions for the audit period plus liquidated damages and interest on the

delinquency in the amount of $430,658.16.

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The Clerk of Court is DIRECTED to enter judgment accordingly. See Ray Haluch Gravel

Co. v. Cent. Pension Fund of Int'l Union of Operating Engineers & Participating Emps., 571 U.S.

177, 183 (2014). Plaintiffs are DIRECTED to file a motion for attorney fees and costs within

twenty-one (21) days of the date of entry of this order. A response and reply may be filed pursuant

to this district’s Local Civil Rules.

SO ORDERED, this _& &day of September, 2021.

LA

TERRENCE W. BOYLE

UNITED STATES DISTRICT JUDGE

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