ERISA-Seventh Circuit Reverses District Court Decision Approving Claims For Fringe Benefits

In Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc., Nos. 14-3413 & 14-3336 (7th Cir. 2016) the case had been brought by four carpenter union fringe benefit funds (“the Funds”) under § 301 of the Labor Management Relations Act (“LMRA”) and § 502(a) of ERISA. The Funds allege that Schal Bovis, Inc., a general contractor that builds large and small buildings in the Chicago metropolitan area, failed to make fringe benefit payments for work performed by nonunion labor, as was required under collective bargaining agreements. The Funds started with 36 claims of unpaid fringe benefits, but proceeded to trial on only four claims.

The district court granted summary judgment to the Funds on all four claims on the issue of liability. From summary judgment, the parties proceeded to a bench trial on damages, and from there both parties appeal. Schal Bovis appeals the granting of summary judgment for two of the four claims, the calculation of damages for those two claims, and the amount of attorneys’ fees awarded. The Funds cross-appeal the calculation of damages for one of the claims and the admission of certain evidence for that calculation.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) reversed the district court’s grant of summary judgment on the two claims that Schal Bovis appeals, and remanded the case for further proceedings. In the first of these claims, the Court held that the non-union subcontractor should be considered a single employer with the union signatory who ultimately performed the work. Consequently, the Funds are prevented from claiming fringe benefits for the work performed in that claim because Schal Bovis subcontracted the work to a union signatory as required by the collective bargaining agreement. In the second of these claims, the Court held that the collective bargaining agreement prevented the carpenters’ union from claiming work which was the existing practice of other trade unions. Since Schal Bovis presented undisputed evidence that the work performed in the second claim was the existing practice of another trade union—the union to which Schal Bovis subcontracted the work—the Funds cannot claim fringe benefit contributions for the work.

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