Teamsters Local Union No. 727 Health and Welfare Fund, Teamsters Local Union No. 727 Pension Fund, and Teamsters Local Union No. 727 Legal and Educational Assistance Fund, Plaintiffs-Appellees,
L&R Group of Companies, Defendant-Appellant.
December 2, 2016
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 11 C 1747 - Jorge
L. Alonso, Judge.
WOOD, Chief Judge, and Easterbrook and Williams, Circuit
Easterbrook, Circuit Judge.
pension and welfare funds regulated by the Multiemployer
Pension Plan Amendments Act (MPPAA), which is codified as
part of the Employee Retirement Income Security Act (ERISA),
filed this suit to collect what they described as shortfalls
in contributions due during 2003 through 2008 from System
Parking, Inc., which had entered into four collective
bargaining agreements with Teamsters Local 727. But the funds
did not sue System Parking. Instead they sued "L&R
Group of Companies." The answer to the complaint also
used that name, as did the district court's judgment. The
mismatch between the litigant and the name of the business
obligated to make contributions led us to call for
supplemental briefs, which reveal that there is no such thing
as "L&R Group of Companies." This poses two
problems under Fed.R.Civ.P. 17. Rule 17(a) says that suits
must be conducted in the name of the real parties in
interest, and Rule 17(b) says that only persons or entities
with the capacity to sue or be sued may be litigants.
name "L&R Group of Companies", which the
opening brief on appeal described as "not a
corporation" with no further detail, led us to wonder
whether it might be a partnership, a holding company
organized as a trust, or perhaps a membership organization.
But the supplemental briefs reveal that it is none of these.
Counsel for appellant, while styling their client as
"L&R Group of Companies", state variously that
it is "a description that refers to a series of business
entities" or a "rubric" that several companies
use in their business. But a "description" or a
"rubric" is not a juridical entity. See, e.g.,
Schiavone v. Fortune, 477 U.S. 21 (1986) (the name
of a magazine is not suable). Rule 17(a) says that litigation
must proceed in the name of the real party in interest, and a
"rubric" is not any kind of entity. You can't
sue a "rubric" any more than you could sue the
Chicago River or the Magnificent Mile as a proxy for the City
of Chicago. The judgment in this case directs "L&R
Group of Companies" to pay almost $2 million, but a
rubric does not have a bank account.
supplemental briefs reveal the identity of the proper
defendant. System Parking, Inc., changed its name to LR Sys,
Inc., in November 2010. The next month all of its assets and
liabilities were acquired by LR System Parking - Illinois,
LLC (LR System Parking for short). Because this entity was
not named in the complaint or served with process, a motion
to dismiss the complaint would have been granted under
Schiavone, though the funds might have had time to
sue it before the statute of limitations expired. But no one
paid any attention to this subject in the district court, and
even now LR System Parking has not asked us to remand with
instructions to dismiss. Nor has it suggested that the funds
should be stuck with an uncollectable judgment. Still, we
cannot continue the litigation against a rubric, so the
question becomes whether this problem can be fixed in the
court of appeals.
think that the answer is yes, using the power granted by
Fed.R.Civ.P. 21 to add or drop a party in lieu of dismissing
the suit. Cf. 28 U.S.C. §1653. Rule 21 nominally applies
only to district courts, but Newman-Green v.
Alfonzo-Larrain, 490 U.S. 826, 832-37 (1989), holds that
appellate courts may exercise the same power-as the Supreme
Court itself did in Mullaney v. Anderson, 342 U.S.
415 (1952). In Newman-Green the Justices held that a
court of appeals may dismiss a surplus litigant whose
presence prevented the existence of complete diversity of
citizenship. Here we need a substitution-a real party in lieu
of a rubric-but Mullaney shows that a court of
appeals has that authority too, when the real party in
interest does not object. Mullaney allowed the
addition of two litigants in the Supreme Court in order to
avoid a problem with the original litigant's standing to
sue. Here all we need do is replace a name (L&R Group of
Companies) with the real entity (LR System Parking) that
everyone has taken the name to be a stand-in for. That's
within the bounds of the authority recognized by
Newman-Green, so we need not send the case back to
the district court for formalities that quickly would propel
the dispute back here.
arrive at the merits, and the district court's thorough
opinion, 2016 U.S. Dist. Lexis 16359 (N.D. 111. Feb. 10,
2016), enables us to be brief. The judge held a bench trial,
resolved ambiguities in the collective bargaining agreements,
and considered two opposing audit reports -one conducted by a
firm of auditors on behalf of the funds and showing that LR
System Parking owed some $1.8 million (including late-payment
penalties and interest) and the other conducted internally by
LR System Parking and showing that the funds had been
overpaid about $1.2 million. The judge concluded that: (1)
the agreements require contributions for every hour workers
are paid and not just for hours they work (so the employer
owed contributions for paid vacation and sick-leave hours);
(2) the auditor hired by the funds did not have a duty to
offset overpayments when calculating underpayments (this was
the only seriously contested issue about the quality of that
audit); and (3) LR System Parking's audit was unreliable.
LR System Parking has abandoned its arguments on the choice
between hours paid and hours worked, leaving only issues (2)
and (3) for appellate resolution.
funds' auditor counted underpayments and ignored
overpayments. LR System Parking says that this spoils the
audit. The district judge found otherwise, ruling that
requiring the funds' auditor to determine overpayments
and offset them against underpayments would shift to the
funds the burden of calculating and proving the amount of any
overpayment. The trust documents assign that burden to
employers. As the district judge saw things, the funds'
auditor was entitled to tally up the underpayments, while the
employer's auditor could tally overpayments and the court
would do the offset. That makes sense and is certainly not an
abuse of discretion.
brings us to the district court's decision that the
employer's audit was unreliable, so there was nothing to
offset against the funds' calculation. The judge gave
three principal reasons (2016 U.S. Dist. Lexis 16359 at
*63-66): first, that the employer's audit was done
in-house rather than by an independent accounting firm;
second, that the person who prepared it lacked any relevant
experience; third, that LR System Parking relied on
"murky" assumptions and did not try to explain why
this audit differed from the funds' professionally
prepared audit. The judge summed up: "L&R litigated
this issue by obfuscation." The judge's conclusion
that the employer's audit was unreliable is a finding of
fact and thus must stand unless clearly erroneous.
Fed.R.Civ.P. 52(a)(6). We see no clear error in this finding.
On this record the judge might well have accepted the
employer's calculation, but the evidence did not compel
him to do so.
judgment is affirmed, and the case is remanded with
instructions to amend the judgment to specify LR Systern
Parking - Illinois, LLC, as the ...