Mason Tenders District Council Welfare Fund v. Blade Contracting, Inc.

Background

The plaintiffs are five Mason Tenders District Council labor-management benefit funds. The funds provide benefits including retirement, vacation, and training benefits, and are third-party beneficiaries of collective bargaining agreements between the Mason Tenders Union and employers.

Blade Contracting entered into a Master Independent Collective Bargaining Agreement with the Mason Tenders Union in 2006. The agreement required Blade Contracting to recognize the union as the exclusive bargaining agent for all employees and to make weekly fringe-benefit contributions based on the hours worked by its employees. It also allowed audits and provided for interest and other charges on delinquent contributions. Blade General Contracting, Inc. later signed a letter agreeing to be bound by a separate project labor agreement. The defendants are separate entities, but the record showed that they shared office and yard space, used the same payroll processor, occasionally shared employees, and had overlapping supervisory activities.

Blade Contracting worked on the Ingersoll Housing Project, a federally assisted, low-income senior-housing project in Brooklyn. In addition to its own employees and Mason Tenders Union workers, it hired low-income local laborers under the project’s federal hiring requirements. The project required prevailing wages and supplemental benefits. The defendants paid the local hires directly in cash and did not make fringe-benefit contributions for their work under the Master CBA.

An audit covering January 1, 2016, through March 28, 2021, identified $217,256.41 in contribution deficiencies and a $14,172.60 credit, for alleged net unpaid contributions of $203,083.81. After the lawsuit began, the defendants made two payments totaling approximately $52,352.24. The plaintiffs asserted that $150,731.57 remained unpaid, in addition to interest, liquidated damages, audit costs, and attorneys’ fees and costs.

The plaintiffs sued under Sections 502(a)(3) and 515 of the Employee Retirement Income Security Act, as well as Section 301 of the Labor Management Relations Act, seeking unpaid contributions and related relief. The opinion states that the plaintiffs’ state-law breach-of-contract claims appeared to have been abandoned and therefore were not considered in the motions.

Summary-judgment rulings

Both sides moved for summary judgment. Summary judgment is a ruling entered when the evidence shows that no genuine dispute over a material fact requires a trial and that one side is entitled to judgment as a matter of law.

The court denied the defendants’ motion. It granted the plaintiffs’ motion in part and denied it in part. The court resolved liability issues in the plaintiffs’ favor but did not approve the plaintiffs’ current damages calculations.

Local hires were covered employees

The court interpreted the Master CBA according to its plain language. Although the agreement did not define “employee,” the court held that the ordinary meaning of that term included the local hires. The agreement did not distinguish between employees performing prevailing-wage work and employees performing other work, and the defendants did not produce contracts or other evidence showing that the local hires were not employees covered by the agreement.

The court also held that the Master CBA applied to both union and non-union employees. It relied on provisions making the union the exclusive bargaining agent for all employees, defining covered employees by job classifications and work, and failing to distinguish between union and non-union employees. The fact that the local hires did not become union members did not eliminate the contribution obligation. The court therefore held that Blade Contracting was required to make fringe-benefit contributions for the local hires.

Contributions did not require violating wage laws

The defendants argued that paying contributions to the funds would have violated New York Labor Law § 220 because the local hires had to receive prevailing wages and supplemental benefits directly. The court recognized that contributions to a pooled fund, standing alone, might not provide the local hires with the full value of the prevailing benefits if the fund also covered non-prevailing-wage workers.

The court nevertheless held that this did not excuse the defendants’ obligations under the Master CBA and Section 515 of ERISA. Making the required contributions would not itself have violated state or federal law; instead, the defendants could have made the required contributions and then made additional payments, as necessary, so the local hires received the full prevailing-wage value. By making only direct cash payments and no required contributions, Blade Contracting failed to comply with the Master CBA.

Waiver and equitable estoppel

The defendants argued that the plaintiffs waived their claims or should be prevented from asserting them because a union shop steward allegedly knew that the defendants were not making contributions for the local hires and did not file grievances or object at the time.

The court rejected these defenses. It explained that the Second Circuit has recognized only limited defenses in Section 515 ERISA actions, including that the contributions were illegal or that the collective bargaining agreement was void. The defendants did not argue that the Master CBA was void, and the court had already concluded that the contribution requirement did not violate New York Labor Law. The court therefore found no available affirmative defense that would bar the ERISA claims.

Joint liability of the two companies

The court held that Blade Contracting and Blade General Contracting could be treated as a single entity for purposes of liability under either a “single employer” theory or an “alter ego” theory. These theories can allow a collective bargaining agreement signed by one company to be enforced against another company when the evidence shows sufficient operational, management, labor, business, or ownership connections.

The court relied on the companies’ common payroll processor, shared yard and office space, occasional sharing of employees, overlapping supervisory work, joint defense of the lawsuit, and Blade General Contracting’s involvement in contracts benefiting Blade Contracting. The defendants’ brief assertion that the companies had separate registrations, addresses, and activities was not supported with enough evidence to create a genuine factual dispute. The court therefore concluded that the defendants could be jointly and severally liable for the delinquent contributions and related amounts.

Damages and final order

The court stated that Section 515 plaintiffs may recover unpaid contributions, interest, liquidated damages, reasonable attorneys’ fees and costs, and other permitted relief. But it declined to approve the plaintiffs’ current calculations because the audit began on January 1, 2016, while the applicable six-year limitations period barred claims based on conduct before November 10, 2016, six years before the lawsuit was filed.

The plaintiffs were ordered to submit by April 30, 2025, supporting records for attorneys’ fees and costs and a proposed judgment with itemized unpaid contributions, interest, liquidated damages, other requested relief, attorneys’ fees, and audit fees. The defendants could respond by May 14, 2025, and the plaintiffs could reply by May 21, 2025. The defendants’ objections could address the revised amounts and requested fees and costs, but not the fact of their liability.