Nesse v. Green Nature-Cycle, LLC

Background

Trustees of several employee-benefit funds and the funds themselves sued Green Nature-Cycle, LLC under the Employee Retirement Income Security Act of 1974 (ERISA), the Labor Management Relations Act, and a collective bargaining agreement. They sought unpaid fund contributions, liquidated damages, interest, and attorneys’ fees and costs. The plaintiffs alleged that Green Nature-Cycle failed to make required contributions for work its employees performed on Minnesota Department of Transportation landscaping projects in 2017. They identified $23,489.21 in unpaid contributions, while the other requested amounts awaited calculation.

The parties filed cross-motions for summary judgment. Summary judgment is a decision entered when the evidence shows there is no genuine dispute about a fact that could affect the outcome and one side is entitled to judgment under the law.

Whether Green Nature-Cycle Was Bound by the Agreement

The court held that Green Nature-Cycle was bound by the collective bargaining agreement at issue. The agreement had an “evergreen” provision stating that it would continue from year to year unless terminated in writing at least 60 days before the expiration date. On March 7, 2017, Green Nature-Cycle’s sole owner and president, Jeff Graham, signed an “Acceptance of Agreement.” That document stated that the employer accepted and agreed to be bound by the standard printed collective bargaining agreement negotiated by the landscape contractors’ committee and the Laborers’ District Council of Minnesota and North Dakota.

The plaintiffs provided evidence that the agreement in this case was the standard printed agreement referenced in Graham’s acceptance document and that a copy was sent to Graham on the day he signed. The court rejected Green Nature-Cycle’s arguments that an earlier-produced version of the agreement controlled or that the plaintiffs had conceded that the agreement ended on April 30, 2017. The court found no genuine factual dispute about the company’s obligation to the agreement.

Contributions for Non-Union Employees

The court rejected Green Nature-Cycle’s argument that it owed contributions only for employees who were union members. Under ERISA, an employer obligated to contribute to a multiemployer benefit plan under a plan or collective bargaining agreement must make those contributions according to the agreement’s terms.

The agreement applied to landscape work in Minnesota and required contributions for each hour worked by all employees covered by the agreement. It also stated that benefit-related wage rates applied from the first day of employment regardless of whether employees were union members. The court therefore held that the agreement unambiguously required Green Nature-Cycle to make contributions for all of its employees who worked on the covered Department of Transportation landscaping projects, including non-union employees.

Issue Preclusion and the Transportation Department Audit

Green Nature-Cycle asserted issue preclusion, a rule that can prevent a party from relitigating an issue already decided in an earlier proceeding. It argued that a Minnesota Department of Transportation audit had already resolved whether the company owed benefits for non-union employees.

The court rejected that defense. The audit addressed whether Green Nature-Cycle complied with prevailing-wage requirements, not whether the collective bargaining agreement required contributions for non-union employees. The auditor did not review the collective bargaining agreement. The court also noted that the plaintiffs had not been parties to, or in a legally recognized relationship with a party to, the audit and had no apparent opportunity to be heard during it. Thus, the audit did not preclude the plaintiffs from litigating the contribution issue.

Alleged Duplicate Recovery

Green Nature-Cycle argued that requiring it to pay the full amount of the claimed benefits would create a duplicate recovery because the project’s general contractor had paid wages and fringe benefits directly to Green Nature-Cycle employees after the audit.

The court rejected that argument. The record did not show that Green Nature-Cycle had paid contributions to the funds or that any such payments had been omitted from the plaintiffs’ calculations. More importantly, the agreement required Green Nature-Cycle to pay contributions directly to the funds. Payments made to employees did not substitute for that contractual obligation.

Audit Costs and Additional Relief

Green Nature-Cycle also argued that the plaintiffs should not recover costs associated with their own audit because they could have relied on the Department of Transportation’s audit. The court found that it was unclear whether the plaintiffs were seeking those audit costs in this case. It stated that any request for pre-suit audit costs would be more appropriately considered as part of a request for reasonable attorneys’ fees and costs or other relief under ERISA. The court also found that Green Nature-Cycle cited no supporting legal authority and had not shown that the two audits used identical or sufficiently overlapping information.

Disposition

Judge Eric C. Tostrud granted the plaintiffs’ motion for summary judgment and denied Green Nature-Cycle’s motion for summary judgment. The court declared Green Nature-Cycle liable under the collective bargaining agreement and ERISA for:

- $23,489.21 in unpaid contributions due from March 2017 to the present; - interest on all unpaid contributions; - the greater of interest on the unpaid contributions or liquidated damages provided under the agreement, as required by law; and - reasonable attorneys’ fees and costs of the action.

The court did not calculate the interest, liquidated damages, or attorneys’ fees and costs in this order. It directed the plaintiffs to submit a motion for entry of a money judgment, or allowed the parties to submit a stipulation describing those amounts, after which a final judgment would be entered.