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Electrical Workers Local 369 Benefit Fund, et al. v. Marine Electric Company

February 14, 2013



Plaintiff International Brotherhood of Workers, AFL-CIO, Local Union Number 369 ("Local 369"), a labor union, negotiated a Collective Bargaining Agreement ("CBA") with the National Electrical Contractors Association, Louisville Chapter ("NECA"). Defendant Marine Electric Company, a member of NECA, accepted the responsibilities of the CBA by signing a written letter of assent to NECA acting as its collective bargaining representative. Pursuant to the CBA, assenting employers such as Marine Electric were obligated to make contributions to the following trust funds (collectively, "Trust Funds"), each of which are plaintiffs in this action: the Electrical Workers Local 369 Benefit Fund; the Electrical Workers Local 369 Retirement Fund; the National Electrical Benefit Fund; the Louisville Electrical Joint Apprenticeship and Training Committee; and the Louisville Electrical-Management Cooperative Trust Fund.

Marine Electric notified Local 369 that it was suspending its operations and closing its business effective September 27, 2011. Marine Electric failed to make its contributions to the Trust Funds for August 2011 and for the portion of September 2011 when it was in operation. The Trust Funds, using contribution reports prepared by Marine Electric, have calculated the amounts of contributions that should have been made to them for each of those months; additionally, the Trust Funds each have rules specifying a particular amount of liquidated damages for delinquent payments and interest on unpaid contributions.

On September 28, 2011, Local 369 filed with the County Clerk of Jefferson County, Kentucky, an employee lien statement on behalf of its members who were employed by Marine Electric in the previous six months. The notice stated that the employees had a lien pursuant to KRS §§ 376.150, 376.160, and 376.180 on the property and effects involved in Marine Electric's business "for wages (including all benefits provided in the applicable collective bargaining agreements) due to said employees." The statement continued that the lien "shall be superior to the lien of any mortgage or other encumbrance thereafter created," and for "wages coming due to said employees within six months of distribution of Marine Electric Company's property or effects among creditors [the lien] shall be superior to the lien of any mortgage or other encumbrance theretofore or thereafter created."

Local 369 and the Trust Funds brought this action to collect unpaid contributions, liquidated damages, and interest owed to the Trust Funds. In addition, the plaintiffs seek to enforce the lien filed by Local 369. The plaintiffs state that this court has jurisdiction over the claim for unpaid contributions under the Employee Retirement Income Security Act of 1974 ("ERISA") and the Labor Management Relations Act of 1947 ("LMRA") and over the claim for enforcement of the lien pursuant to pendent jurisdiction.

The plaintiffs moved for summary judgment on the claim for unpaid contributions, liquidated damages, and interest, as well as for enforcement of the lien filed by Local 369. Marine Electric filed a combined response and a cross motion for summary judgment. In doing so, Marine Electric sought a declaration that Local 369's lien was not valid or enforceable. Alternatively, Marine Electric sought a declaration that the lien was not entitled to priority over secured claims. However, in its response and cross-motion, Marine Electric did not contest the plaintiffs' claim for unpaid contributions, liquidated damages, and interest.

To prevail on a motion for summary judgment, the movant must show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A genuine issue of material fact arises when there is sufficient evidence on which the jury could reasonably find for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1985). The disputed issue need not be resolved conclusively in favor of the non-moving party, but that party must present sufficient probative evidence which makes it necessary to resolve the parties' differing versions of the dispute at trial. First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-289 (1968). The evidence must be construed in the light most favorable to the non-moving party. Summers v. Leis, 368 F.3d 881, 885 (6th Cir. 2004).

First, the evidence put forth by the plaintiffs is sufficient to show that Marine Electric has failed to pay contributions for August and September 2011 that the CBA required the company to pay. Marine Electric having put forth no competing evidence as to that point, the court finds that summary judgment is warranted on the plaintiffs' claims that they are entitled to the unpaid contributions. Moreover, as Marine Electric does not contest in any way the calculations of the plaintiffs as to what the defendants owe in damages on those claims, the court will enter a final judgment on those claims using the plaintiffs' calculations of unpaid contributions, liquidated damages, and interest owed them by Marine Electric. Further, in their amended complaint and proposed order, the plaintiffs request that this court award them reasonable attorney's fees. 29 U.S.C. § 1132(g)(2) provides that the court shall award "reasonable attorney's fees and costs of the action, to be paid by the defendant" when a plan obtains a judgment in its favor for delinquent contributions. Accordingly, the court will award the plaintiffs reasonable attorney's fees and costs and will direct them to file supporting documentation as to the amount of attorney's fees and costs within thirty days of the entry of the order accompanying this opinion.

The court turns to the issue of the lien. Marine Electric contends that the lien is not valid or enforceable for two reasons. First, Marine Electric asserts that the Kentucky lien laws under which Marine Electric asserts the lien are preempted by ERISA. Second, Marine Electric argues that the lien is invalid under state law. The court takes up the preemption argument first.

The starting point of any preemption analysis is a presumption that Congress does not intend to supplant state law. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995)(citing Maryland v. Louisiana, 451 U.S. 725, 746 (1981)). Thus, federal law will not supersede state law "'unless that was the clear and manifest purpose of Congress.'" Id. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

ERISA comprehensively regulates employee benefit plans in order to protect participants in benefit plans and their beneficiaries. See 29 U.S.C. §§ 1001(b), 1002. As part of its comprehensive scheme, ERISA preempts some state laws relating to employee benefit plans. Travelers, 514 U.S. at 651. Specifically, ERISA provides that its provisions "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . ." 29 U.S.C. § 1144(a).*fn1 The Supreme Court has interpreted the phrase "relate to" to have its "broad common-sense meaning" of "'[h]aving a connection with or reference to'" a benefit plan. Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983)); see Travelers, 514 U.S. at 656.

The Supreme Court has stated that "the pre-emption clause is not limited to 'state laws specifically designed to affect employee benefit plans.'" Pilot Life, 481 U.S. 41, 48 (1987) (quoting Shaw, 463 U.S. at 98). In Pilot Life, the Supreme Court stated:

The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. "The six carefully integrated civil enforcement provisions found in § 502(a) of the statute as finally enacted . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly."

Pilot Life, 481 U.S. at 54 (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985)). However, while the Pilot Life decision suggested that ERISA preemption was "deliberately expansive," 481 U.S. at 46, the Supreme Court has since narrowed the scope of ERISA preemption. Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp., 399 F.3d 692, 697 (6th Cir. 2005). In Travelers, the Supreme Court directed courts to consider the objectives of the ERISA statute in order to guide the preemption analysis. 514 U.S. at 656. The Supreme Court continued that, in passing ERISA's preemption section,

Congress intended "to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government . . . , [and to prevent] the potential for conflict in substantive law . . . requiring the ...

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