Opinion
Case No. C06-400-JPD.
July 31, 2006
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION AND SUMMARY CONCLUSION
Plaintiff, Northwest Administrators, Inc., brings this action to compel defendant, Midland Transportation, Inc., to submit to an audit of certain employee tax and payroll records in connection with its administration of a trust fund that provided health and welfare benefits for defendant's employees. This matter comes before the Court upon plaintiff's motion for summary judgment. Dkt. No. 7. Defendant opposes the motion. Dkt. No. 11. Having carefully considered the parties' papers, supporting materials, and the balance of the record, the Court GRANTS plaintiff's motion for summary judgment. Dkt. No. 7. Further, the Court GRANTS plaintiff's request for attorney's fees in the amount of $6,029.25.
The docket and pleadings refer to defendant as "Midland Trucking," but the documents involved in this case refer to defendant as "Midland Transportation, Inc."
II. FACTS AND PROCEDURAL HISTORY
The relevant facts of this case are brief and are not disputed by the parties. See Dkt. No. 11 at 2. On May 18, 1988, certain labor unions and employers executed the Washington Teamsters Welfare Trust Agreement and Declaration of Trust ("Trust Agreement"). Dkt. No. 8, Ex. A. The Trust Agreement created the Washington Teamsters Welfare Trust Fund ("Trust Fund" or "Trust"), which provides certain life, accident, and health insurance for the employees of employers who contribute to the Trust Fund. Id. at art. III. The Trust Fund is governed by a board of trustees ("Trustees"). Id. at art. II. Employers bound by a collective bargaining agreement are required to contribute to the Trust Fund. Id. at art. IV. On June 8, 2001, defendant and Teamsters Local 760 ("Local 760") entered into a Collective Bargaining Agreement ("CBA") that remained in effect from July 1, 2000, to June 30, 2004. Ex. B at art. 10. On June 8, 2001, Local 760 and defendant also signed the Washington Teamsters Welfare Trust Subscription Agreement ("Subscription Agreement"). Ex. C. The Subscription Agreement bound defendant to the terms of the Trust Agreement and provided that the Trustees retained "the sole discretion and authority to interpret the terms of the Trust's benefit plans, the plans' eligibility requirements, and other matters related to the administration and operation of the Trust and its benefit plans." Id. On June 20, 2001, defendant signed a Special Agreement — Non-Bargaining Unit Employees ("Special Agreement") in which it agreed to contribute to the Trust Fund for the benefit of all employees not covered by the CBA. Ex. D.
Unless otherwise noted, all subsequent citations to the record are to Dkt. No. 8 and make reference only to the appropriate exhibit number.
Among other things, the CBA required defendant to make certain contributions to the Trust Fund or to provide comparable benefits through alternative programs. Ex. C at art. 5. The CBA required defendant to continue to pay into the Trust Fund in the "same amount and manner as required in the [CBA] until" a subsequent CBA is reached or the employer gives notice that it intends to "cancel its obligation." Id. Similarly, the Subscription Agreement and Special Agreement were to remain in effect during the term of the CBA. Exs. D and E. The parties do not dispute that defendant was bound to its payment obligations to the Trust Fund through May 31, 2005.
In May 2005, defendant notified the Trust Fund that it would terminate its obligations under the Trust Agreement and transfer its benefits to another fund effective May 31, 2005. Dkt. No. 8 at ¶ 20. In a letter dated February 21, 2006, plaintiff notified defendant that it would conduct a close-out audit of defendant's contributions for the period of January 1, 2002, to May 31, 2005, ("Relevant Period") in order to verify that defendant had fulfilled its contribution obligations. Ex. E. The letter requested that defendant provide certain employee tax and payroll records to facilitate the audit. Id. In a letter dated March 2, 2006, however, defendant, through counsel, refused to submit to the audit. Ex. F. It argued that it had no obligation to do so because the request had been made after the termination of its obligation to the Trust. Ex. F.
On March 9, 2006, plaintiff, though its attorneys, sent defendant a second written request for the audit. Ex. G. The letter cited to particular portions of the Trust Agreement and requested that the documents be produced no later than March 20, 2006. Id. Defendant did not produce the documents. On March 21, 2006, plaintiff filed this action to compel defendant to submit to the audit. Dkt. No. 1.
Plaintiff has moved for summary judgment. Dkt. No. 7. Plaintiff argues that the Trust Agreement requires defendant to submit to the audit for the Relevant Period, even though the request was made after defendant terminated its obligations under the Trust Agreement. Id. at 8-14. Plaintiff also moves the Court to award attorney's fees. Id. at 15-17. Defendant opposes the motion for summary judgment. Dkt. No. 11. Defendant argues that plaintiff's request for records relating to all of its employees is overbroad and that issues of fact exist as to what employees are covered. Id. at 3-8. Defendant also argues that it has no obligation to produce the requested documents because the request was made after it terminated its participation in the Trust. Id. at 8-10. It also argues that plaintiff's requests were not made for the "proper administration" of the Trust. Id. Although defendant argues that attorney's fees and costs should not be awarded, it provides no substantive argument on this issue.
III. JURISDICTION
The Court has jurisdiction over this action pursuant to 29 U.S.C. §§ 1132(e)(1) and (f) (1974). Pursuant to 28 U.S.C. § 636(c), the parties have consented to have this matter heard by the undersigned United States Magistrate Judge. Dkt. No. 21. Venue is proper because the subject Trust Fund is administered in the Western District of Washington. 29 U.S.C. § 1132(e)(2).
IV. ANALYSIS
A. Summary Judgment Standard.
Summary judgment is appropriate, when viewing the evidence in the light most favorable to the nonmoving party, there exists "no genuine issue as to any material fact" such that "the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A material fact is a fact relevant to the outcome of the pending action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Genuine issues of material fact exist when the evidence would enable "a reasonable jury . . . [to] return a verdict for the nonmoving party." Id. In response to a summary-judgment motion that is properly supported, the nonmoving party may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts demonstrating a genuine issue of fact for trial, and produce evidence sufficient to establish the existence of the elements essential to his case. See Fed.R.Civ.P. 56(e); Celotex Corp. v. Cattrett, 477 U.S. 317, 323 (1986). A mere scintilla of evidence, however, is insufficient to create a factual dispute. See Anderson, 477 U.S. at 252. To defeat a motion for summary judgment, the non-moving party must make more than conclusory allegations, speculations, or argumentative assertions that material facts are in dispute. T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-32 (9th Cir. 1987).
B. Plaintiff Has Authority to Audit Defendant For The Period Defendant Was Covered by the Trust.
A trust for health or pension benefits is a contract governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., as amended (1988). ERISA requires that the assets of employee benefit plans be held in trust pursuant to a written trust agreement. Id. at §§ 1102(a), 1103(a). The language of a trust agreement defines the rights and obligations of the parties to the trust to the extent they are consistent with ERISA. Id. at § 1145; Santa Monica Culinary Welfare Fund v. Miramar Hotel Corp., 920 F.2d 1491, 1493-94 (9th Cir. 1990) (internal citations omitted).
Article IX, Section 1 of the Trust Agreement provides:
Each Employer shall promptly furnish to the Trustees on demand any and all records of his Employees, concerning the classification of such employees, their names, Social Security numbers, amount of wages paid and hours worked and any other payroll records and information that the Trustees may require in connection with the administration of the Trust Fund. . . . The Trustees or their authorized representatives may examine the payroll books and records of each Employer whenever such examination is deemed necessary or advisable by the Trustees in connection with the proper administration of the Trust Fund.
Ex. A (emphasis added). Further, the Subscription Agreement provides that the Trustees "retain the sole discretion and authority to interpret the terms of the Trust's benefit plans, the plans' eligibility requirements, and other matters related to the administration and operation of the Trust and its benefit plans." Ex. C. Hence, pursuant to the plain terms of the Trust Agreement and Subscription Agreement, the Trustees enjoy broad audit rights in order to ensure that employers fulfill their contribution obligations to the Trust. These broad audit rights are not uncommon and are consistent with the common law rights of trustees and the terms of ERISA. Central States, Southeast Southwest Areas Pension Fund v. Central Transp., Inc., 472 U.S. 559, 571-74 (1985) ( Central States II); Dkt. No. 8 at ¶ 19.
Defendant argues that it is not retroactively required to submit to the audit because it had terminated its obligations to the Trust effective May 31, 2005. Dkt. No. 11 at 8-10. The plain language of the Trust Agreement, however, belies this assertion. The Trust Agreement explicitly empowers the Trustees to examine defendant's records " whenever such examination is deemed necessary or advisable by the Trustees in connection with the proper administration of the Trust Fund." Ex. A at art. IX, § 1 (emphasis added). The Trustees have determined that such an audit is appropriate in this case to ensure that defendant fulfilled its contribution obligations during the Relevant Period. Dkt. No. 8 at. ¶ 20. Hence, Trust Agreement explicitly provides the trustees with the authority to request the audit in this context.
There is persuasive authority in the Ninth Circuit that supports this conclusion. For instance, in Building Service Employees Pension Trust v. Horsemen's Quarter Horse Racing Ass'n, 609 F. Supp. 1075, 1080 (N.D. Cal. 1985), a union trust fund brought suit to compel defendant employers to produce certain employment and payroll records to ensure proper compliance with the trust. The defendant employer argued that it was not obligated to comply with the request because its contractual obligations to the trust had expired with the parties' collective bargaining agreement. Id. at 1079. The court, however, concluded that the plain language of the relevant trust instrument required defendant to disclose the documents. Id. at 1080.
In this case, the Trust Agreement provides broad rights to compel an audit of relevant records. Like the Trust Agreement, the agreement in Building Service provided for broad audit rights to ensure compliance. The relevant section provided that "[t]he Pension Plan Trustees may require of any Employer . . . any reasonable information, data and documents relevant and suitable for the purposes of the administration of the Trust and Pension Plan." Building Service, 609 F. Supp. at 1078. Even more compelling, plaintiffs in this case have the "sole authority" to interpret the scope of those rights under the Subscription Agreement. Although the Ninth Circuit has not had an opportunity to address this issue, Building Service has been cited with approval in at least one other federal court. See Rudd v. Baker Furniture, 967 F. Supp. 984, 988 (M.D. Tenn. 1997) (directing retroactive audit after expiration of collective bargaining agreement incorporating trust agreement). Defendant points to no authority that compels a contrary result.
Defendant cites Boggs v. Boggs, 520 U.S. 893, 839 (1997), but only for the proposition that the purpose of ERISA is to ensure the proper administration of employee pension plans for the benefits of employees and beneficiaries. Dkt. No. 11 at 8-9. Boggs sheds no light on defendant's argument regarding post-CBA expiration audits.
Defendant's assertion that summary judgment should be denied because an issue of fact exists regarding whether plaintiff's audit request was not made for the "proper administration" of the Trust is without merit. Termination audits such as the one sought here are routine. Dkt. No. 8 at ¶ 19. Moreover, previous audits of defendant in connection with the Trust Fund have been made in accordance with the terms of the Trust Agreement and applicable regulations. Dkt. No. 18 at ¶¶ 5-8. Audit requests that include information relating to covered and non-covered employees are within the broad rights of the Trustees, and Trustees generally. Ex. A at art. IX, § 1 (providing that the trustees may request "any other payroll records and information" required in connection with the administration of the Trust Fund); Central States II, 472 U.S. 559, 572-74 (noting that trustees have a duty to investigate and determine the identities of trust beneficiaries). Defendant's conclusory allegations to the contrary are insufficient to defeat plaintiff's motion. T.W. Elec. Service, Inc., 809 F.2d at 630-32.
C. The Scope of Plaintiff's Request is Not Overly Broad.
Defendant argues that it need not comply with plaintiff's audit because the request is "overly broad." Dkt. No. 11 at 3-8. It argues that it is not obligated to comply with the request because the audit requires a review of records involving employees allegedly not covered by the CBA. The authorities relied upon by defendant for this proposition, however, are either inapposite, inaccurately cited, or unpersuasive.
For instance, defendant cites Central States, Southeast Southwest Areas Pension Fund v. Central Transp., Inc., 698 F.2d 802 (6th Cir. 1982) ( Central States I), for the proposition that broad requests for records that include both covered and non-covered employees are not enforceable, unless the party seeking the audit shows reasonable cause. Dkt. No. 11 at 6. That case, however, was reversed by the Supreme Court in Central States II. 472 U.S. at 564. In Central States II, the Supreme Court specifically noted that trustees have an obligation to investigate and determine the identities of trust beneficiaries and that such audit requests are consistent with that duty and the purposes of ERISA. Id. at 572-74.
Defendant relies upon Building Service and Central States, Southeast and Southwest Areas Pension Fund v. CRST, Inc., 641 F.2d 616 (8th Cir. 1981) (en banc), overruled on other grounds by Robbins v. Prosser's Moving and Storage Co., 700 F.2d 802 (8th Cir. 1983), for the same proposition. Dkt. No. 11 at 6-7. As discussed above, the Court in Building Service actually directed that the disclosure of the requested documents be made. Although the court in CRST did find that a request for documents containing information relating to covered and non-covered employees was overbroad, that case was decided before Central States II and is, in any case, not binding on this Court.
Building Service distinguished Central States I and CRST by noting that the funds in those cases "sought records of employees who were never covered" by the applicable agreements. 609 F. Supp at 1080. Although defendant appears to be arguing that is the case here, all of those cases were decided prior to Central States II.
The defendant offers no binding or persuasive authority that compels this Court to conclude that plaintiff lacks the authority to compel the requested audit. Accordingly, plaintiff is entitled to summary judgment in its favor.
D. Plaintiff is Entitled to Attorney's Fees.
Plaintiff argues that the Court should direct an award of reasonable attorney's fees and costs. Dkt. No. 7 at 15-18. It has offered the declaration of Thomas A. Leahy in support of the request, which indicates plaintiff's counsel has incurred fees and costs in the total amount of $6,029.25. Dkt. No. 19. Defendant opposes the request, but offers no substantive arguments as to why it should be denied. Dkt. No. 11 at 2.
ERISA empowers the Court, "in its discretion," to grant a "reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). To determine whether an award is appropriate, the Court must consider the following factors:
(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees against the opposing party would deter others from acting under similar circumstances; (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions.Miramar Hotel Corp., 920 F.2d at 1495 (citing Hummell v. S.E. Rykoff Co., 634 F.2d 446, 453 (9th Cir. 1980). A court need not find that all five factors weigh in favor of the movant in order to direct an award attorney's fees. McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1173 (9th Cir. 1999).
In this case, the balance of Hummell factors tips sharply in favor of granting plaintiff's motion for attorney's fees. Although both parties suggest that the other is acting in bad faith, there is no specific evidence of such behavior by either party. There is no evidence in the record as to defendant's ability to satisfy an attorney's fee award. The defendant did not address this issue in its response. The third Hummell factor is not particularly helpful; the Court can only speculate as to whether an award in this case would discourage future litigants from asserting the same arguments.
The fourth and fifth Hummell factors weigh heavily in plaintiff's favor. Plaintiff requested the audit at issue to ensure defendant had properly complied with its obligations under the Trust Agreement and other documents. The audit was thus requested for the benefit of the Trust Fund's participant's and beneficiaries. Finally, the Court finds the fifth Hummell factor particularly persuasive. The strength of the plaintiff's position on the merits suggests an award of attorney's fees is appropriate in this case.
V. CONCLUSION
For the reasons discussed above, the Court GRANTS plaintiff's motion for summary judgment. Dkt. No. 7. Defendant is directed to submit to the requested audit. In addition, the Court GRANTS plaintiff's request for attorney's fees and costs in the amount of $6,029.25.