Kyle Bragg, as Trustee v. Airway Cleaners, LLC

Background

Kyle Bragg, as Trustee, and the Trustees of the Building Service 32BJ Health Fund sued Airway Cleaners, LLC, under the Employee Retirement Income Security Act (ERISA) and the Labor-Management Relations Act. They sought unpaid contributions to the Fund for health-insurance benefits from July 1, 2021, through the date judgment would be issued.

The Fund is a jointly administered, multi-employer labor-management trust fund. Airway is party to a collective bargaining agreement with the Service Employees International Union, Local 32BJ, covering certain Airway employees at LaGuardia and John F. Kennedy airports. The agreement required Airway to contribute $649 per month for each eligible employee. Eligibility included employees working at least 30 hours per week, performing covered work, and having worked at least 30 hours per week as of December 30, 2020.

The agreement and the Fund’s Collection Policies required Airway to provide employee information, report status changes, and make monthly payments. Airway sent employee information to the Union on June 3, 2021, and the Fund uploaded the information to its Employer Self-Service system. From June through September 2021, the Fund repeatedly asked Airway to review the employee roster, report changes, provide hours worked, and pay the invoices. Airway first supplied a list of employees to terminate in the system on December 14, 2021. The Fund ended those employees’ coverage prospectively from that date.

Parties’ arguments

The Fund moved for summary judgment on its breach-of-contract and ERISA claims. It argued that Airway was required to pay contributions for covered employees and did not dispute that it had failed to make those payments.

Airway also moved for summary judgment. It argued that the Fund could not demand contributions without first auditing Airway’s records to determine which employees were eligible. Airway also contended that the Fund had unilaterally uploaded a deficient employee list and that Airway had not authorized the Union to provide the list to the Fund for contribution purposes.

Court’s analysis

The court applied the summary-judgment standard, under which judgment is appropriate when the evidence shows no genuine dispute over a material fact and the moving party is entitled to judgment under the law.

The court held that Airway did not dispute either its obligation to contribute for eligible employees as of July 1, 2021, or its failure to make those contributions. Those undisputed facts established that Airway breached the collective bargaining agreement under Section 301 of the Labor-Management Relations Act and violated Section 515 of ERISA.

The court rejected Airway’s argument that the Fund’s use of the employee list prevented summary judgment. Whether the Fund or the Union was responsible for uploading the list did not affect Airway’s obligation to make payments for eligible employees. The court also noted that Airway could have submitted a revised list or reported employment-status changes under the Collection Policies. The record did not show that Airway identified inaccuracies or attempted to correct the list before December 14, 2021. The Collection Policies allowed the Fund to charge contributions from the time of a status change until Airway gave notice of that change.

The court also rejected Airway’s argument that an audit was required before the Fund could seek payment. It found that ERISA does not require a multi-employer fund to audit every employer and that neither the collective bargaining agreement nor the Collection Policies required an audit before filing this action. The policies allowed regular or for-cause audits but did not mandate them under the circumstances presented.

Damages and disposition

Under ERISA, the Fund was entitled to unpaid contributions, interest, liquidated damages, and reasonable attorneys’ fees and costs. The Fund identified $2,520,608.08 in unpaid contributions, $254,683.28 in interest, $813,876.20 in liquidated damages, an unspecified amount of attorneys’ fees, and $470.10 in costs through August 18, 2023. The court found those figures stale because additional time had passed and stated that updated figures were needed before entering judgment for an accurate amount.

The court granted summary judgment in favor of the Fund and denied Airway’s cross-motion for summary judgment. It held that Airway was liable for unpaid contributions, interest, liquidated damages, reasonable attorneys’ fees, and $470 in costs. The Clerk of Court was directed to terminate the two motions.