NEW ENGLAND CARPENTERS CENTRAL COLLECTION AGENCY; TRUSTEES OF NEW ENGLAND CARPENTERS PENSION FUND; TRUSTEES OF NEW ENGLAND CARPENTERS GUARANTEED ANNUITY FUND; TRUSTEES OF NEW ENGLAND CARPENTERS HEALTH BENEFITS FUND; TRUSTEES OF NEW ENGLAND CARPENTERS VACATION SAVINGS FUND; TRUSTEES OF NEW ENGLAND CARPENTERS TRAINING FUND; BOSTON TRUSTEES OF CARPENTERS APPRENTICESHIP & TRAINING FUND; TRUSTEES OF MASSACHUSETTS CARPENTERS APPRENTICESHIP & TRAINING FUND, Plaintiffs, Appellants,
LABONTE DRYWALL COMPANY, INC., Defendant, Appellee
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSSETTS. Hon. Richard G. Stearns, U.S. District Judge.
Thomas R. Landry, with whom Krakow & Souris LLC was on brief, for appellants.
Mark J. Ventola, with whom David L. Hansen and Sheehan Phinney Bass Green were on brief, for appellee.
Before Barron, Circuit Judge, Souter,[*] Associate Justice, and Lipez, Circuit Judge.
LIPEZ, Circuit Judge.
Plaintiffs-Appellants, the trustees for a group of union-related benefits funds and their collection agency, filed this action against Defendant-Appellee Labonte Drywall Company (" Labonte Drywall" ) seeking enforcement of an agreement that required the company to allow an audit of its records. After a one-day bench trial, the district court found that Labonte Drywall had terminated the pertinent agreement, and, hence, plaintiffs had no legal right to conduct the requested audit. We affirm.
We set forth the facts based on the record and findings of the district court. See McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 775 F.3d 109, 113 (1st Cir. 2014). Labonte Drywall was a New Hampshire corporation engaged in commercial drywall work until May 2007, when it converted to a limited liability company. Clermont Labonte is, and was at all relevant times, the sole member and owner of Labonte Drywall.
On January 31, 1996, Labonte, on behalf of Labonte Drywall, signed a statewide agreement with local Massachusetts unions affiliated with the United Brotherhood of Carpenters and Joiners of America (collectively referred to as the " Union" ). The agreement allowed Labonte Drywall to hire Union carpenters for its business. Paragraph 1 of the statewide agreement provided that: " [Labonte Drywall] accepts and agrees to abide by the collective bargaining agreements between the various contractor associations and the [Union] wherever those contracts shall apply. [Labonte Drywall] agrees that it shall abide by any amendments or successor agreements negotiated by the contractor associations and the [Union]."  The agreement added that its duration " shall be co-extensive with the terms set out in the collective bargaining agreements referred to in paragraph 1 unless either party to this statewide agreement gives notice of termination of this agreement in accordance with the applicable notice provisions in the collective bargaining agreement referred to in paragraph 1."
Article 31 of the collective bargaining agreement in effect from September 1, 2005 through August 31, 2009, provided as follows:
This agreement will expire on August 31, 2009 except that if neither party to this Agreement gives notice in writing to the other party on or before July 1, 2009 that it desires a change after August 31, 2009, then this Agreement will continue in effect until August 31, 2010 and so on each year thereafter unless on or before July 1 of each year thereafter, a notice is given by either party.
The collective bargaining agreement required employers to make contributions to various pension, annuity, health benefits, vacation, and training funds in accordance with its terms. The funds are " employee pension benefit plans" and " employee welfare benefit plans" within the meaning of § 3(1) and (2) of the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § § 1002(1) and (2). The contributions to the funds were to be made on a weekly basis on behalf of all employees covered by the collective bargaining agreement. The collective bargaining agreement also required employers to comply with the terms of the trust agreements for each fund. The trust agreements permitted the trustees, or their authorized representatives, to audit the pertinent payroll records of any employer whenever such audit is deemed necessary by the trustees.
Employers are generally audited on a three-year audit cycle. The audits are overseen by the Agency, which conducts approximately 150 to 200 audits per year. The purpose of the audits is to determine, among other things, whether any covered employees have worked hours for which contributions to the funds have not been remitted.
In January 2007, the Agency notified Labonte Drywall by letter that an audit would be conducted for the period from January 1, 2004 through the end of 2006 (the " 2007 audit" ). Leo Donohue, a payroll auditor for the Agency, conducted the audit. Dany Labonte, the son of owner Clermont, was authorized to act as Labonte Drywall's agent when responding to audit requests. Labonte Drywall provided materials requested during the audit. However, in a letter dated April 3, 2007, Dany Labonte informed Donohue that " Labonte Drywall has not had work or done work in the union now since December of 2005. The last job we did was Manchester Place for Moriarty in Manchester, NH. We lost so much money again on another union job that we are no longer bidding or doing any more union work." The letter was addressed to Donohue and contained Dany Labonte's name in type, but without a corresponding signature. At trial, Donohue did not recall receiving the April 3, 2007 letter.
At the conclusion of the 2007 audit, Donohue prepared a report claiming that Labonte Drywall had underreported a total of 24 hours of work by 38 employees in 2004, 4,765 hours of work by 74 employees in 2005, and 40 hours of work by one employee in 2006. There was no evidence in the record that any steps were taken by the Agency to enforce the collection of payments on the underreported hours.
In February 2010, the Agency informed Labonte Drywall that an audit would be conducted for the period from January 1, 2007 through December 31, 2009 (the " 2010 audit" ). Two months later, in April, the Agency's counsel, Christopher Souris, sent Clermont Labonte a letter demanding that Labonte Drywall cooperate with the 2010 audit. The same day, Souris, on behalf of the Union, sent Clermont a second letter, stating that Labonte Drywall " is operating nonunion companies" in violation of the collective bargaining agreement. That letter enclosed a questionnaire asking for 79 categories of information covering a six-year period, from January 1, 2004 through April 6, 2010. In particular, the Union expressed concern that Labonte Drywall was performing payroll services for other drywall companies, including C-D-Bee Drywall, LLC, and Progress Drywall, LLC.
In an e-mail dated July 1, 2010, Labonte Drywall's counsel Diana Wieland informed Souris that, while Labonte Drywall would provide the information requested in the questionnaire, the company believed that it had no existing bargaining relationship with the Union. Wieland followed up with a letter to Souris responding to the questionnaire. The letter repeated Labonte Drywall's claim that it had ceased performing drywall installation work in December 2005 ...