826 F.3d 397
7th Cir.2016Background
- Schal Bovis, a general contractor, was party to collective bargaining agreements with the Chicago Regional Council of Carpenters that required payment of fringe benefits for work falling within the Union’s jurisdiction and restricted subcontracting to non‑signatories unless certain procedures were followed.
- The Agreement’s Section 1.1 broadly defined the Union’s jurisdiction but included a limiting proviso: the Union would not interfere with existing practices of other building‑trades unions.
- The Funds audited Schal Bovis for 2006–2007 and reduced an initial 36 claims to 8, then to 4 claims pursued at summary judgment (totaling about $203,000 alleged unpaid contributions).
- Two contested claims: (1) Canac Kitchens — Schal Bovis subcontracted cabinetry work to Canac (non‑signatory), but Canac used sister company Qualifit (a union signatory) and shared ownership/operations with Qualifit.
- (2) Edward Don — Schal Bovis subcontracted kitchen/hood/stainless equipment work that was performed by RB Hoods (a Sheet Metal signatory); evidence showed the Sheet Metal Workers historically performed stainless steel kitchen equipment installation.
- District court granted summary judgment to the Funds on liability for all four claims; damages later awarded. Parties appealed; this opinion addresses Canac and Edward Don claims.
Issues
| Issue | Plaintiff's Argument (Funds) | Defendant's Argument (Schal Bovis) | Held |
|---|---|---|---|
| Whether Schal Bovis violated the Agreement by subcontracting cabinetry to Canac (non‑signatory) | Canac was a non‑signatory subcontractor so Schal Bovis breached by failing to track hours/pay contributions | Canac and Qualifit are a single employer; Qualifit (a signatory) actually performed the work, so no breach | Reversed: single‑employer doctrine applies; Canac/Qualifit are a single employer, so Schal Bovis did not breach |
| Whether stainless steel kitchen equipment installation in Edward Don claim falls within the Union’s enforceable jurisdiction | Installation falls within the Union’s broad jurisdictional definition so contributions are owed | Section 1.1’s proviso bars the Union from claiming work that is the existing practice of another union (Sheet Metal Workers); RB Hoods (Sheet Metal) performed the work | Reversed: limiting proviso controls; undisputed evidence showed the work was the Sheet Metal Workers’ existing practice, so Funds cannot recover |
| Whether summary judgment standard should be clear‑error or de novo | Clear‑error applies to mixed law/fact issues in ERISA cases without jury | De novo review appropriate because key questions are legal (single‑employer doctrine and contract interpretation) | De novo review applied for these legal questions |
| Whether Funds’ prior withdrawals of similar claims created an arbitrariness/ERISA plan‑administration defense | Funds treated similar claims differently but did not act arbitrarily | Schal Bovis argued inconsistency/arbitrary administration of benefits enforcement | Court found evidence insufficient to establish arbitrary administration for Edward Don and did not decide on Canac after single‑employer ruling rendered that moot |
Key Cases Cited
- Moriarty v. Svec, 164 F.3d 323 (7th Cir. 1998) (describing the single‑employer doctrine factors and totality‑of‑circumstances test)
- Trs. of Pension, Welfare & Vacation Fringe Ben. Funds of IBEW Local 701 v. Favia Elec. Co., 995 F.2d 785 (7th Cir. 1993) (articulating four‑factor single‑employer inquiry)
- Lippert Tile Co. v. Int’l Union of Bricklayers & Allied Craftsmen, Dist. Council of Wis. & Its Local 5, 724 F.3d 939 (7th Cir. 2013) (example applying single‑employer analysis to conclude entities constituted a single employer)