941 F.3d 311
7th Cir.2019Background
- IBEW Local 494 and NECA entered a CBA that incorporates trust agreements creating multiemployer benefit Funds (health, welfare, pension, annuity, apprenticeship, vacation/holiday).
- Veterans Electric, LLC joined NECA, assented to the CBA, and contributed to the Funds for union employees; signatory employers self-report contributions.
- The Funds sought to audit Veterans’ payroll on May 4, 2017; Veterans initially produced payroll for union employees only, which was roughly half of reported wages, and refused non-union payroll records as beyond the audit scope.
- The Funds sued after the audit stalled; during discovery Veterans later produced the additional payroll records and the Funds dropped fraud charges.
- The district court granted summary judgment for Veterans, narrowing trustees’ audit authority; the Seventh Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of trustees' audit authority over non‑union payroll records | Trust agreements and CBA — together with ERISA fiduciary duties — authorize audits of all employees, including non‑union | Audit limited to employees "covered by" the CBA; non‑union records fall outside audit scope | Reversed: trustees have the right to audit employer payroll records for all employees under the Trust Agreements and CBA; CBA language covers all employees regardless of union membership |
| Mootness after production of records and dismissal of fraud claims | Not moot: a live dispute remains over attorney’s fees and fee awards require some success on the merits | Moot because defendant complied and original claims were dismissed | Not moot: appeal is ripe because the Funds retain a cognizable claim for attorney’s fees |
| Entitlement to attorney’s fees (plaintiff and defendant cross‑appeal) | Funds may seek fees under ERISA and CBA § 14.06 | Veterans sought its own fees on cross‑appeal | Funds may pursue attorney’s fees; Veterans’ cross‑appeal for fees rejected |
Key Cases Cited
- Cent. States, Southeast & Southwest Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559 (1985) (upheld trustees’ audit authority under trust documents and ERISA fiduciary duties)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (fee award under ERISA requires at least some degree of success on the merits)
- Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) (discusses standards for fee awards and "some success on the merits")
- Pakovich v. Verizon Ltd. Plan, 653 F.3d 488 (7th Cir. 2011) (discusses ERISA fee‑award standards in this circuit)
- Santa Monica Culinary Welfare Fund v. Miramar Hotel Corp., 920 F.2d 1491 (9th Cir. 1990) (trust agreements can supply audit rights even if CBA is silent)
- Plumbers & Steamfitters Local No. 150 Pension Fund v. Vertex Constr. Co., 932 F.2d 1443 (11th Cir. 1991) (same conclusion as Ninth Circuit on trustees’ audit rights)
- Landmark Am. Ins. Co. v. Deerfield Constr., Inc., 933 F.3d 806 (7th Cir. 2019) (summary judgment standard applied on appeal)