United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
V. PARKER U.S. DISTRICT JUDGE
an action to recover fringe benefit contributions allegedly
owed to Plaintiffs, which are pension and welfare benefit
trust funds established and administered pursuant to Section
302 of the Labor Management Relations Act of 1947, as
amended, 29 U.S.C. § 186 (“LMRA”), and the
Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq. The
funds provide health care, pension, retirement, and
apprenticeship training benefits for members of Operating
Engineers Local 324, a labor union. Pursuant to an audit of
Defendant LGC Global FM, LLC (“LGC”), Plaintiffs
claim that LGC owes $272, 467.73 for unpaid contributions to
the funds for the periods October 2015-January 2016 and April
2018-June 2018. Plaintiffs seek to hold Defendant Avinash
Rachmale (“Mr. Rachmale”) personally liable for
the unpaid contributions as an ERISA fiduciary.
before the Court is Plaintiffs’ motion for partial
summary judgment in which Plaintiffs ask the Court to enter
judgment in their favor against LGC and Mr. Rachmale and
award Plaintiffs the above amount, in addition to fees and
costs, liquidated damages, and interest. (ECF No. 36.)
Plaintiffs also ask the Court to order LGC to submit to an
audit to determine amounts due and owing for all unaudited
periods beginning June 2016. The motion has been fully
briefed (ECF Nos. 41, 42) and the Court held a motion hearing
on September 11, 2019. At the Court’s request, the
parties filed supplemental material following the
hearing.(ECF Nos. 47, 48.)
and Procedural Background
initially named Lakeshore Rickman JV, LLC, was awarded a
contract in 2014 to perform operations management at a number
of Detroit Public Schools. (Defs.’ Resp. Ex. 1
¶¶ 2, 3, ECF No. 41-1 at Pg ID 412.) At first, the
company performed the work using its own employees.
(Id. ¶ 5, Pg ID 413.) It therefore entered a
collective bargaining agreement (“CBA”) with the
International Union of Operating Engineers Local 324
(hereafter “Local 324” or “Union”),
which covered the work performed by Stationary Engineers and
Boiler Operators in DPS buildings. (Pls.’ Mot. Ex. A, ECF
No. 36-2.) Roderick Rickman, Lakeshore-Rickman’s Chief
Executive Officer, signed the CBA on October 1, 2014.
was effective from August 13, 2014 through August 12, 2017.
(Id.) However, the CBA contained the following
This Agreement shall remain in full force and effect through
August 12, 2017, and thereafter shall be renewed from year to
year unless either party shall notify the other party in
writing at least sixty (60) days prior to any anniversary
date of this Agreement. Such written notice shall be sent by
registered or certified mail to the other party.
(Id. at Art. XXXVIII, Pg ID 313.)
the CBA, signatory employers were required to make
contributions to Local 324 funds according to contribution
rates set forth in the agreement. (Id.) The rates
were based on the hours worked by covered employees.
(Id.) Pursuant to the CBA, the Trust Agreements
establishing the plans, together with any insurance or
related agreements approved by a majority of the Plan
Trustees, were incorporated into the CBA. (Id.) The
Trust Agreement for the health care plan provides inter
alia that contributions employers are required to make
to the health care fund pursuant to the CBA “become
vested Plan assets at the time they become due and owing to
the Fund.” (Pls.’ Mot. Ex. G at 2, ECF No. 36-8
at Pg ID 355.) The Trust Agreement also grants the Trustee
authority “to impose a reasonable cost of collection
assessment upon a delinquent Employer, in the nature of
liquidated damages and not as a penalty, as decided by the
Trustees, for delinquent Contributions as well as attorney,
accounting, audit and related costs and fees.”
(Id. at 9, Pg ID 362.) Trust documents set forth the
liquidated damages to be paid on unpaid contributions, which
is at least 10% of the total amount due. (Pls.’ Supp.
Exs. A ¶¶ 3(b)-(d), Ex. B § 4.5, ECF Nos.
December 2015, LGC contracted with Tiskono & Associates,
LLC (“Tiskono”) to perform LGC’s
responsibilities under the DPS contract. (Defs.’ Resp.
Ex. 1 ¶ 7, ECF No. 41-1 at Pg ID 413.) It appears that
Tiskono assumed LGC’s responsibilities under the CBA;
however, LGC has not contested its continued liability as
signatory to the CBA if Tiskono failed to fulfill its
obligations. (See Id . ¶ 8.) Tiskono in fact
failed to meet its financial obligations under the CBA and
Local 324 filed a complaint with the National Labor Relations
Board against LGC, Tiskono, and another entity (“NLRB
Complaint”). (Id.; see also
Defs.’ Resp. Ex. 3, ECF No. 41-3.)
complaints filed in the NLRB action alleged that LGC failed
to meet its financial and other obligations under the CBA
since February 2016. (Defs.’ Resp. Ex. 3
¶ 18, ECF No. 41-3 at Pg ID 488; Defs.’ Supp. Ex.
1 ¶ 18, ECF No. 48-2 at Pg ID 827.) This included
LGC’s obligation to make contributions to the following
Local 324 funds: health and welfare plan; retirement savings
plan; and education and apprenticeship fund. (Id.)
The NLRB matter eventually was resolved through a settlement
agreement, which LGC President Shashidar Shastri (“Mr.
Shastri”) signed on March 21, 2017. (Defs.’ Resp.
Ex. 4, ECF No. 41-4 at Pg ID 502.)
settlement agreement, the charged parties agreed to inter
alia “make retirement, annuity, and training
fringe benefit contributions in the amount of $324, 600 to
satisfy the parties’ collective-bargaining agreement,
and comply with the contractual provisions requiring
continued fringe benefit fund contributions.”
(Id. at 2, ECF No. 41-4 at Pg ID 500.) The agreement
contained a “Scope of the Agreement” provision,
which reads in pertinent part:
This Agreement settles only the allegations in the
above-captioned cases, and does not settle any other cases or
matters. It does not prevent persons from filing charges, the
General Counsel from prosecuting complaints, or the Board and
the courts from finding violations with respect to matters
that happened before this Agreement was approved regardless
of whether General Counsel knew of those matters or could
have easily found them out.
(Id. at 3, Pg ID 501.)
to Mr. Shastri, now LGC’s Executive Vice President, LGC
entered into an agreement with Ringo Services, Inc.
(“Ringo”), pursuant to which Ringo performed the
DPS work from January 7, 2017 through March 30, 2018.
(Defs.’ Resp. Ex. 1 ¶ 14, ECF No. 41-1 at Pg ID
414; see also id. Ex. 5.) Mr. Shastri states that in
June 2017, he authorized Dan Ringo, Ringo’s President,
to exercise LGC’s right not to renew the CBA.
(Defs.’ Resp. Ex. 1 ¶ 17, ECF No. 41-1 at Pg ID
415.) In an email to Mr. Ringo dated July 3, 2017, Mr.
I recall you sent a mail/letter to Jim Arini notifying intent
[sic] not to renew CBA after expiry on August 12th, 2017
……… please confirm you sent the notice
by certified/registered mail as required by article XXXVII of
CBA. The clause required 60 day notice.
(Id. Ex. 6, ECF No. 41-6 at Pg ID 521.) Mr. Ringo
responded on the same Dated: “It was sent.”
fact, Mr. Ringo sent a letter to Jim Arini, Local 324’s
Business Representative, which stated:
Ringo Services will exercise its rights under Article XXXVII
of the Collective Bargaining Agreement and hence said rights
will be executed according to Article XXXVII of the current
(Pls.’ Reply Ex. 1, ECF No. 42-2.) The letter is dated
June 26, 2017. (Id.)
April through June 2018, LGC employed its own personnel to
work on the DPS contract. (Id. ¶ 15, Pg ID
415.) LGC did not make contributions to Plaintiffs’
funds pursuant to the CBA during this period or thereafter
because, according to Mr. Shastri, the CBA had long since
expired. (Id. Ex. 1 ¶ 15, ECF No. 41-1 at Pg ID
415.) Mr. Shastri provides that LGC treated all of its
employees as non-union employees during this period and
offered them benefits options available to non-union
employees. (Id. ¶ 18, Pg ID 416.) He further
provides that Local 324 continuously pressured LGC to sign a
new CBA during this period. (Id. ¶ 19, Pg ID
to his declaration, Mr. Rachmale is an officer of LGC.
(Defs.’ Resp. Ex. 7, ECF No. 41-7 at Pg ID 523.)
However, when asked to list each and every officer and/or
director of LGC, and the office that each holds or has held
for the past three years, Defendants answered: “As a
limited liability company, [LGC] does not have officers or
directors.” (Pls.’ Mot. Ex. D at 7, ECF No. 36-5
at Pg ID 336.) In response to Plaintiffs’ Interrogatory
No. 4, asking Defendants to state Mr. Rachmale’s duties
and responsibilities with LGC, Defendants responded:
“Avinash Rachmale’s responsibility is to sign
checks on behalf of the entity. He is not involved in the
management of the entity.” (Id. at 5, Pg ID
334.) Plaintiffs’ Interrogatory No. 5 asked:
Please state the name, job title and job duties of each
individual that makes determinations of what company bills
and/or invoices to pay, including but not limited to the
purchase of materials and/or supplies, and/or the payment of
employee benefit contributions to Plaintiff Funds.
(Id.) Defendants answered: Jinansh Shah, Account
Executive, and Neetu Khullar, Senior Accountant.
(Id. at 6, Pg ID 335.)
December 5, 2017, Plaintiffs filed this lawsuit against LGC
and Mr. Rachmale. Plaintiffs assert the following claims in
an Amended Complaint filed January 11, 2019: (I) against LGC
for breach of the CBA and violations of ERISA; (II) against
Mr. Rachmale for breach of his fiduciary duties in violation
of ERISA; (III) against LGC to hold it liable for
contributions due for Tiskono’s employees under the
theory that Tiskono is an alter-ego/single employer of LGC.
(Compl., ECF No. 34.) Pursuant to a Scheduling Order entered
initially in this matter on April 26, 2108,  and amended on
July 12, 2018 and again on August 13, 2018, the deadline for
discovery was December 12, 2018. Plaintiffs filed the pending
motion for partial summary judgment on February 11, 2019.
the pendency of this action, Plaintiffs’ auditor
completed audits based on records provided by LGC. According
to letters from the auditor to LGC, dated February 11, 2019,
the following contributions are owed for the periods October
2015 to January 2016 and April through June 2018: (a) Annuity
Fund: $22, 330.21; (b) Training Fund: $7, 443.41; (c) Pension
Fund: $66, 990.61; and (d) Health Care Fund: $175, 703.50.
(Pls.’ Mot. Ex. B, ECF No. 36-3.) In addition to the
$272, 467.73 in unpaid contributions, the audit results list
the liquidated damages due (i.e., 10% of the outstanding
contributions) and the cost of the audits. (Id.)
Standard of Review
seek partial summary judgment under Rule 56 of the Federal
Rules of Civil Procedure. Summary judgment pursuant to Rule
56 is appropriate “if the movant shows 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). The central inquiry is “whether the evidence
presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must
prevail as a matter of law.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251-52 (1986). After adequate
time for discovery and upon motion, Rule 56 mandates summary
judgment against a party who fails to ...