Trustees Chicago Pai v. Royal Int'l Drywall

In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 06-2367

TRUSTEES OF THE CHICAGO PAINTERS AND

DECORATORS PENSION, HEALTH AND WELFARE,

AND DEFERRED SAVINGS PLAN TRUST FUNDS,

Plaintiffs-Appellees,

v.

ROYAL INTERNATIONAL DRYWALL AND

DECORATING, INC., an Illinois corporation,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 01 C 2458—Rebecca R. Pallmeyer, Judge.

____________

ARGUED JANUARY 18, 2007—DECIDED JULY 3, 2007

____________

Before BAUER, MANION, and ROVNER, Circuit Judges.

MANION, Circuit Judge. The Trustees of the Chicago

Painters and Decorators Pension, Health and Welfare and

Deferred Savings Plan Trust Funds (“Trustees”) sued an

employer of its union members, Royal International

Drywall & Decorating, Incorporated (“Royal”). The

Trustees claimed that Royal violated collective bargaining

agreements by failing to compensate the Funds for each

2 No. 06-2367

hour the covered employees worked. Following a bench

trial, the district court found that Royal owed contribu-

tions to the Funds and, after further proceedings, entered

an award for damages. Royal appeals, contesting the

admission of expert testimony at trial, the district court’s

factual findings, and the amount of liquidated damages

awarded. We affirm.

I.

The district court fully recounted the background of

this case in its findings issued after the bench trial, so

we recite the facts only as necessary. See Trustees of the

Chicago Painters v. Darwan, No. 01-2458, 2004 WL 1459553

(N.D. Ill. June 29, 2004). Royal employed individuals,

known as “tapers,” to install drywall in residential tract

housing. Tract housing is a manner of constructing sub-

divisions with a limited number of model designs and

options. Historically, tapers received compensation by the

number of pieces of drywall they installed, not by the

hours they worked. However, a collective bargaining

agreement between Royal and its employees required

Royal to compensate the employees and contribute to the

Funds based on each hour worked, not by the piece. The

Trustees filed suit against Royal, alleging that Royal

violated the collective bargaining agreement by com-

pensating its employees by the piece, and not by the

hour, and claiming that the contributions made to the

Funds were insufficient for the actual number of hours

worked.

At trial, the Trustees claimed that Royal’s time sheets

inaccurately recorded the hours worked, and were instead

rigged to reflect the hours budgeted for the project. To

No. 06-2367 3

prove the actual number of hours worked, the Trustees

offered evidence of a “materials audit” that the Trustees

conducted on Royal. The audit used the amount of raw

materials Royal purchased for installation to calculate the

amount of drywall installed. Then, the number of hours

worked was calculated based on the average rate of

drywall installation for a taper. The parties vigorously

contested the average rate at which a taper works. Royal

also contended that its time sheets were accurate and

sufficient to calculate the contributions.

After hearing the evidence, the district court determined

that Royal’s time sheets for its employees did “not accu-

rately reflect hours actually worked.” Accordingly, the

court had to establish an alternative means of ascertain-

ing the hours worked in order to determine the proper

amount of contributions due to the Funds. The district

court, after considering testimony from experts, employees,

and various published sources, followed the materials

audit and settled on a rate of 2.86 boards of drywall per

hour. The determination of this rate is the crux of this

appeal. Based on this rate, and following further briefing

from the parties, the district court awarded the Trustees

$30,508.13 in unpaid contributions and $68,266.16 in

liquidated damages for the period of October 1, 1999,

through March 31, 2000. The district court also awarded

the Trustees $17,955.82 in liquidated damages for late

contributions and $712.08 in owed disbursements for the

period of December 1, 1998, through March 31, 2000. Royal

appeals.

II.

In an appeal from a bench trial, “[w]e review a district

court’s conclusions of law de novo, and we review its

4 No. 06-2367

findings of fact, as well as applications of law to those

findings of fact, for clear error.” Keach v. U.S. Trust Co., 419

F.3d 626, 634 (7th Cir. 2005) (citation omitted).

On appeal, Royal first objects to the district court’s

finding that the time sheets Royal maintained for its

employees were inaccurate. An employer must “maintain

records with respect to each of his employees sufficient to

determine the benefits due or which may become due to

such employees.” 29 U.S.C. § 1059(a)(1). The collective

bargaining agreement in this case required Royal to

contribute benefits based on the hours worked. Therefore

Royal had an obligation to maintain records of the hours

worked that would be “sufficient to determine the bene-

fits due.” Id. Royal did maintain time sheets; simply

maintaining time sheets, however, is not enough to

comply with the statute unless the time sheets are suf-

ficient to determine the actual hours worked, and thus the

benefits due. Previous cases in this circuit have character-

ized sufficient records as “reliable, contemporaneous

records,” Chicago Dist. Council of Carpenters Pension Fund v.

Reinke Insulation Co., 347 F.3d 262, 264 (7th Cir. 2003), that

demonstrate “accuracy” in recording the work performed,

Laborers’ Pension Fund v. RES Envtl. Servs., 377 F.3d 735,

739 (7th Cir. 2004) (citation omitted).

Royal claims that it properly maintained reliable, contem-

poraneous time sheets reflecting the hours worked. The

district court, however, made extensive findings about the

insufficient quality of Royal’s time sheets and records.

Specifically, the district court noted that “only five of the

263 time sheets for the period [at issue] record daily hours

worked; the remainder list only weekly totals.” While

weekly, instead of daily, totals of hours are not necessarily

insufficient under the agreement, other evidence raised

No. 06-2367 5

suspicion that the weekly totals were inaccurate. For

example, the district court noted that the hours budgeted

and the hours worked on the time sheets matched on a

substantial majority of the time sheets. The district court

also remarked on various notations made on the time

sheets, such as “a hand written calculation dividing the

number of hours budgeted (156.25) by the number of

crew members (4); the sheet assigns 39.25 hours to [the

crew chief], while each remaining crew member is re-

ported to have worked only 39 hours.” Furthermore,

employees testified that they regularly worked more

hours than were reflected on the time sheets, and the

district court found their testimony credible. Although

Royal presents alternative explanations for the quality

of the time sheets, the district court’s conclusion reflects a

reasonable examination of the evidence and testimony.

We are not “left with the definite and firm conviction that

a mistake has been committed.” Gaffney v. Riverboat Servs.

of Indus., 451 F.3d 424, 447-48 (7th Cir. 2006) (citation and

internal quotation omitted). Accordingly, based on the

exhibits and testimony, the district court did not clearly

err in concluding that Royal’s records were not credible

and did not satisfy the requirement to maintain sufficient

records to determine the hours actually worked by the

employees.1 United States v. Biggs, ___ F.3d ___, ___, No. 05-

6413, 2007 WL 1704104 (7th Cir. June 14, 2007) (“Although

1

Royal argues that the district court’s determination that the

time sheets were sufficient should be reviewed de novo. The

sufficiency of time sheets, however, is a factual question

requiring the district court to determine whether the time

sheets are, in fact, accurate. Further determining whether those

time sheets are sufficient to ascertain benefits requires an

application of the law to the facts. Both findings are re-

viewed for clear error. Keach, 419 F.3d at 634 (citation omitted).

6 No. 06-2367

we review for clear error, determinations of witness

credibility can virtually never be clear error.” (internal

quotation, citations, and footnote omitted)).

Because Royal’s records were insufficient, the district

court proceeded to seek another method for determining

the number of hours the employees worked in order to

calculate the proper benefits. It did so by finding an hourly

rate at which drywall tapers installed drywall boards, a

rate that the parties vigorously contested before the dis-

trict court. On appeal, Royal objects to the district

court’s admission of the testimony of two experts,2 John

Hull and Ian Parr, who offered their opinions on the rate

of drywall taping. We review de novo the district court’s

application of the principles articulated in Daubert v.

Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993),

which guides the admission of expert testimony under

Federal Rule of Evidence 702. That is, we review de novo

“whether (1) the proposed witness would testify to valid

scientific, technical, or other specialized knowledge and

(2) his testimony will assist the trier of fact.” Ammons v.

Aramark Unif. Servs., 368 F.3d 809, 816 (7th Cir. 2004)

(citations and internal quotation omitted). If we determine

2

Royal also argues that a third individual, Steven Klomfar,

should not have been admitted as an expert. Klomfar, how-

ever, was not offered as an expert and testified as a factual

witness based on his personal knowledge. Royal also mentions

a fourth individual in this section of its brief, Howard Levin-

son, an accountant who conducted the materials audit. Levinson

similarly was not offered as an expert at trial, and he did not

propose a productivity rate of his own. Instead, Levinson used

a rate provided by others and testified as to his own knowl-

edge of the audit process. We therefore need not conduct a

Daubert analysis of the testimony of Klomfar or Levinson.

No. 06-2367 7

that the district court applied the proper framework, the

district court’s decision to admit an expert’s testimony is

then reviewed for abuse of discretion. NutraSweet Co. v. X-L

Eng’g Co., 227 F.3d 776, 788 (7th Cir. 2000) (citations

omitted).

Following this standard, we first examine whether the

district court applied the proper framework. This step

“evaluates the reliability of the testimony” and should

“reject any subjective belief or speculation.” Ammons, 368

F.3d at 816 (citations and internal quotation omitted). The

court “must ensure that the expert testimony at issue ‘both

rests on a reliable foundation and is relevant to the task at

hand.’ ” United States v. Cruz-Velasco, 224 F.3d 654, 660 (7th

Cir. 2000) (quoting Daubert, 509 U.S. at 597). During the

bench trial, both proposed experts testified about their

experience, indicating “specialized knowledge” related to

the rate of installation of drywall. Fed. R. Evid. 702. Hull

testified to his extensive experience in taping drywall and

in training the apprentice tapers. Parr testified to his

extensive experience in cost estimating in the construc-

tion industry. Royal argues that the witnesses’ methodol-

ogy was insufficiently scientific or reliable. This court has

previously noted, however, that “[a]lthough the Daubert

Court identified a number of factors to be considered

when evaluating the admissibility of expert testimony—

including testing, peer review, error rates, and acceptability

within the relevant professional community—these factors

do not establish a definitive checklist.” Cruz-Velasco, 224

F.3d at 660 (citations omitted). The Daubert Court also

recognized that expert testimony was not limited to

scientific testimony by acknowledging that “Rule 702

also applies to ‘technical, or other specialized knowl-

edge[,]’ ” even though the Daubert opinion was “limited to

8 No. 06-2367

the scientific context because that is the nature of the

expertise offered” in that case. Daubert, 509 U.S. at 589-90

n.8. This court has “recognized that while extensive

academic and practical expertise in an area is certainly

sufficient to qualify a potential witness as an expert, Rule

702 specifically contemplates the admission of testimony by

experts whose knowledge is based on experience.” United

States v. Parra, 402 F.3d 752, 758 (7th Cir. 2005) (internal

quotation and citation omitted). Accordingly, we “consider

a proposed expert’s full range of practical experience as

well as academic or technical training when determining

whether that expert is qualified to render an opinion in a

given area.” Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th

Cir. 2000). Given the qualifications of Hull and Parr, their

testimony appears to be sufficiently reliable. Because it is

based on specialized knowledge as opposed to subjective

beliefs or speculations, the witnesses meet the first prong

of the two-part test under Rule 702. See Ammons, 368

F.3d at 816.

Next we examine whether the experts’ testimony

would assist the trier of fact. The district court referred to

Daubert in admitting the experts and noted that, in the

context of a bench trial, the judge would be able to consider

any shortcomings of their expertise drawn out through

cross-examination. See In re Salem, 465 F.3d 767, 777 (7th

Cir. 2006) (noting that if “the gatekeeper and the factfinder

are one and the same—that is, the judge—the need to make

such decisions prior to hearing the testimony is lessened”

(citation omitted)). The district court judge, the finder of

facts in this case, remained open to any criticism of their

testimony on cross-examination, but it can be inferred

from her statements that she considered their testimony

helpful in determining the facts. We conclude that their

No. 06-2367 9

testimony was relevant and helpful to the issues at trial.

Accordingly, under Daubert, Hull and Parr were qualified

to offer expert testimony regarding the rate of drywall

taping.

Since the district court applied the proper framework,

we next consider whether the district court abused its

discretion in admitting the testimony of the experts. The

district court aptly observed in overruling Royal’s objec-

tion to Hull’s testimony as an expert that he

worked for many years in the industry, directly,

himself, taping drywall, and now training for more

than 10 years, all the apprentices in the area, includ-

ing those employed by the defendant himself. If this

gentleman is not an expert on the issue of how

much can be reasonably expected [of] a drywall taper

to do in a day, I don’t know [if] there is such a person.

Regarding Parr, the district court observed that “[t]his is a

gentleman who does cost estimating on a regular basis,

he uses a source that’s widely recognized and agreed to

in the construction industry. . . . [and] has done [cost

estimating] for 30 years.” The district court exercised

discretion in admitting the experts, and we find no abuse in

admitting the testimony of these two individuals as experts

at trial. Royal’s objections are therefore without merit.

Royal next contends that the district court clearly erred

in determining the productivity rate to be 2.86 boards per

hour. Royal pointed out a number of inconsistencies and

inadequacies in the Trustees’ witnesses’ testimony and in

the documentary evidence. Contrary to Royal’s assertion,

the determination of the productivity rate is a factual

question separate from a legal interpretation of a col-

lective bargaining agreement, and is therefore reviewed

10 No. 06-2367

for clear error. Keach, 419 F.3d at 634 (citation omitted).

Royal submits a dozen alleged inconsistencies and errors

in the district court’s assessment of witnesses’ testimony

and documentary evidence. For example, Royal argues

that the court should have considered higher productivity

rates contained in several exhibits, and it should have

ignored the materials audit because it was flawed. Royal

also alleges that the district court mischaracterized the

testimony of Royal’s owner Salma Darwan and made

factual errors, such as finding that Royal hired more

apprentices than other contractors. Our review of these

objections and alleged flaws discloses no clear error in

the district court’s ultimate findings. Individually or

cumulatively, these objections do not overcome the ratio-

nale of the district court’s opinion; again, we are not “left

with the definite and firm conviction that a mistake has

been committed.” Gaffney, 451 F.3d at 447-48 (citation and

internal quotation omitted). To the extent that the parties

contest the burden of proof, we note that such burden

shifting is inapplicable once the question reaches the

fact finder. See Reinke, 347 F.3d at 265 (“This case was

tried . . . . [t]he only question that matters thus is whether

the district judge’s decision is clearly erroneous.”). Royal’s

objections to the 2.86 boards per hour productivity rate are

therefore without merit.

Finally, in a cursory, two-paragraph argument in its

opening brief, without citations to the record or authority,

Royal asserts that the district court’s award of liquidated

damages for late payments in the amount of $17,955.82

was without support in the record. We could consider

such “unsupported and undeveloped arguments” to be

waived. United States v. Turcotte, 405 F.3d 515, 536 (7th

Cir. 2005) (citations omitted). We will, however, address

No. 06-2367 11

Royal’s argument since proving a negative proposition is

inherently difficult and since we can discern the crux of the

argument. United States v. Newman, 144 F.3d 531, 543 n.13

(7th Cir. 1998) (noting “the difficulty in proving a nega-

tive proposition”). Royal’s argument fails regardless

because evidence in the record supports the district

court’s award of damages.

We review the district court’s award of damages for

clear error. Wheel Masters, Inc. v. Jiffy Metal Prods. Co., 955

F.2d 1126, 1131 (7th Cir. 1992) (“Our standard of review

of [the] damage award is the same as our standard of

review of any factual finding—the damage award cannot

be overturned unless the factual basis for the award is

clearly erroneous.”). The collective bargaining agreements

provided for liquidated damages of ten percent of the

amount owed for tardy contributions that remained unpaid

for twenty days after the month in which the hours were

worked. The district court’s damage award relied on a

document admitted at trial as Plaintiff’s Exhibit 15,3 in

3

Royal complains that the district court’s liquidated damages

award was based on a document and affidavit tendered to the

court in response to the district court’s request for additional

briefing on damages, but which was not admitted at trial. Royal

contends that only documents admitted at trial could be

considered in the supplemental briefing. Regardless, the

critical document listing the amount of liquidated damages

was admitted at trial as Plaintiff’s Exhibit 15. Supplementation

of the trial record before the district court, which Royal argues

the Trustees should have done, was arguably unnecessary.

Furthermore, if the district court desired to consider such

additional evidence (as it apparently did by citing to it in its

decision), such “decisions regarding the admission and exclu-

(continued...)

12 No. 06-2367

which an auditor calculated the liquidated damages for

late payments at $23,875.50. At trial, Royal’s owner was

asked if he had any basis for disputing the amount of

liquidated damages revealed by that audit, and he re-

sponded that he had none. The district court based the

liquidated damages on this amount, reducing the amount

by $5,044.18 (the sum of two months’ worth of penalties)

because a previous settlement and release between the

parties encompassed those two months, arriving at the

$17,955.82. Royal points to no authority in its opening

brief indicating that such uncontradicted evidence is an

insufficient basis for the award. Because this sum was

reasonably based on evidence that was admitted at trial

and contained in supplemental briefing, the district court

did not commit clear error in assessing $17,955.82 in

liquidated damages.

Royal similarly objects to the Trustees’ reliance on the

final audit report, arguing that the Trustees were required

to show each tardy payment, not just the total amounts. As

discussed above, however, the Trustees did produce

evidence of the total amount of liquidated damages

through the final audit and the requested supplemental

briefing, and further elicited from Royal’s owner that he

had no basis to dispute the totals. While Royal remained

3

(...continued)

sion of evidence are peculiarly within the competence of the

district court.” Adams v. City of Chicago, 469 F.3d 609, 612 (7th

Cir. 2006) (citation and internal quotation omitted). Royal had

the opportunity to respond to the Trustees’ briefing and ex-

hibits with its own proposed calculations, and the district

court did not abuse its discretion by admitting or relying on

the additional materials. Id.

No. 06-2367 13

free to produce evidence to contradict the Trustees’ evi-

dence, sufficient evidence was present in the record at trial

and in the supplemental briefing for the district court to

discern an amount of liquidated damages without commit-

ting clear error. Royal’s argument is therefore without

merit.

Royal also asserts that it cannot be held liable for liqui-

dated damages because the Trustees’ complaint did not

properly plead a claim for such damages. This is a distinct

argument against the award of liquidated damages and

Royal did not present this argument in its opening brief.

This argument is therefore forfeited. NLRB v. IBEW, Local

Union 16, 425 F.3d 1035, 1041 (7th Cir. 2005) (“An argument

raised for the first time in a reply brief is forfeited.”)

(citations omitted).

III.

The district court did not commit clear error in find-

ing that Royal’s time sheets were insufficient or in deter-

mining the productivity rate from which the contribu-

tions to the Funds could be calculated. Additionally, the

district court did not abuse its discretion in admitting

expert testimony to assist the trier of fact in determining

the rate of drywall installation to be used. Furthermore, the

district court did not clearly err in awarding the Trustees

liquidated damages. Accordingly, we AFFIRM the judg-

ment of the district court.

14 No. 06-2367

A true Copy:

Teste:

_____________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-02-C-0072—7-3-07