Opinion
2:03CV00541TC
April 14, 2004
ORDER
This case involves late contribution payments by Defendant Associated Pipeline Contractors, Inc. ("Associated") to the Utah AGC Teamsters Welfare Trust ("Trust"). On October 1, 2003, Associated moved for judgment on the pleadings under Fed.R.Civ.P. 12(c), or in the alternative, summary judgment under Fed.R.Civ.P. 56. Associated contends that the Trust is not entitled to recover liquidated damages resulting from Associated's delinquent contributions.
For the reasons set forth below, Defendants' motion is DENIED.
Background
The Trust manages employment benefits for International Brotherhood of Teamsters, AFL-CIO ("Union") members in accordance with the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 141-97, and the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1461. Associated was required to make periodic payments to the Trust These payments represented employee benefits earned by Associated's Union employees for work performed under the National Pipeline Collective Bargaining Agreement ("CBA") between the Union and the Pipeline Contractors Association, including health and disability benefits. In November and December 2002, and January and February 2003, Associated was late making the required payments. Thereafter, the Trust sued Associated on June 12, 2003, alleging that Associated hads violated ERISA, 29 U.S.C. § 1132 and 1145, and the LMRA, 29 U.S.C. § 185. Associated seeks $15, 635. 51 in liquidated damages with interest and attorneys' fees.
Analysis
Summary Judgment Standard.
"[B]ecause the parties submitted materials outside of the pleadings, " the court considers the motion a motion for summary judgment Biester v. Midwest Health Services, Inc., 77 F.3d 1264, 1265 (10th Cir. 1996); see also Fed.R.Civ.P. 12(c) ("If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment.") Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial burden of demonstrating that there is an absence of evidence to support the non-moving party's case. Celotex Corp, v. Catrett 477 U.S. 317, 324 (1986). A court must construe all facts and reasonable inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Pueblo of Santa Ana v. Kelly. 104 F.3d 1546, 1552 (10th Cir. 1997).
Once the moving party has carried its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by . . . affidavits, or by the "depositions, answers to interrogatories, and admissions on file, 9 designate "specific facts showing that there is a genuine issue for trial." Celotex. 477 U.S. at 324 (quoting Fed.R.Civ.P, 56(e)); see also. Gonzales v. Millers Cas. Ins. Co., 923 F.2d 1417, 1419 (10th Cir. 1991). The non-moving party must set forth specific facts showing a genuine issue for trial; mere allegations and references to the pleadings will not suffice. Anderson v. Liberty Lobby. Inc., 477 US. 242, 248 (1986).
ERISA Claims
In its complaint, the Trust sought liquidated damages under ERISA, 29 U.S.C. § 1132 and 1145. The question of whether ERISA damages are appropriate depends on the existence of "unpaid" contribution payments. Courts addressing this issue have almost unanimously agreed that if the employer makes the payments before suit is filed, no "unpaid" contribution payments exist and the remedies of § 1132(g) are not available. Iron Workers Dist. Council of W. N.Y. and Vicinity Welfare and Pension Funds v. Hudson Steel Fabricators Erectors. Inc., 68 F.3d 1502, 1506-08 (2d Cir. 1995) (remedies of 29 U.S.C. § 1132 and 1145 not available if employer pays unpaid contributions prior to suit); Carpenters Amended Restated Health Benefit Fund v. John W. Ryan Constr. Co., Inc., 767 F.2d 1170, 1171-75 (5th Cir. 1985) (same); Gilles v. Burton Constr. Co., 736 F.2d 1142, 1146 n. 6 (7th Cir. 1984) (same);Carpenters Joiners Welfare Fund v. Gittleman Corp., 857 F.2d 476, 478 (8th Cir. 1988) (same); Idaho Plumbers Pipefitters Health Welfare Fund v. United Mech. Contractors. Inc., 875 F.2d 212, 215 (9th Cir. 1989) (same); but see Michigan Carpenters Council Health and Welfare Fund v. C.J. Rogers Inc., 933 F.2d 376 (6th Cir. 1991), (holding that (he remedies of 29 U.S.C. § 1132 and 1145 are not available if employer pays the unpaid contributions before judgment is entered).
Associated made all its required payments by March 28, 2003, approximately two months before the filing of the complaint. Accordingly, no "unpaid" contributions existed at the time of suit and the remedies found in 29 U.S.C. § 1132 and 1145 are not available to the Trust.
Contractual Claims under the Collective Bargaining Agreement and the Trust Agreement
Apparently recognizing that its ERISA claims must fail, in its opposition to Associated motion the Trust focused only on its contention that it is entitled to contract remedies because Associated violated the CBA and the Revised Trust Agreement and Declaration of Trust ("Trust Agreement") by its failure to make timely contributions. The Trust maintains that it is entitled to liquidated damages, interest, costs, and fees as provided by those agreements.
But Associated argues that the Trust itself violated the CBA by failing to give notice to Associated that Associated was delinquent in its payments. Further, Associated maintains that the Trust was required to resolve this dispute through arbitration. Associated bases these arguments on the ground that the Trust executed Schedule B to the CBA, it by doing so became a signatory to the CBA and was therefore bound by its terms.
Looking first at Associated's arguments that the Trust violated the provisions of the CBA, the initial inquiry is which parties executed which agreements. The Union and the Pipeline Contractors Association were the original signatories to the CBA, (Comp., Ex. A at 115; id, Exs. B and C.) Associated, although not an original signatory of the CBA is bound by the CBA because it entered into a separate agreement whereby it agreed to by bound by the terms of the CBA. (Comp. Ex. B; Def.'s Mem. in Supp. at 4; Rep. Mem. in Supp. at 2 (Associated admitting it was bound by the CBA).) But the Trust was not an original signatory to the CBA and any argument to the contrary would be based on an impermissible blurring of the Union and the Trust, which are separate entities.
Regarding the Trust Agreement, only the individual trustees of the Trust, representing both employers and the Union, are signatories. As with the CBA, individual employers enter into separate agreements whereby they agree to be bound by certain terms of the Trust In this case, Associated entered into "Schedule B, " and by doing so, expressly agreed to make contributions as required by the Trust Agreement:
IT IS AGREED by and between the undersigned Employer [Associated] and the International Brotherhood of Teamsters that such Employer subscribes to the various agreements and declarations of trust [the Trust Agreement] and policies and procedures of the particular funds into which such Employer will be required to make contributions pursuant to the National Pipe Line Agreement [the CBA]. and agrees to be bound thereby and to amendments made or to be made thereto; and authorizes the parties to such trust agreements to name the trustees and successor trustees, and to administer the trusts; and does hereby ratify and accept such trustees and the terms and conditions of said trusts as fully and as completely as if made by the said undersigned Employer.
(Comp. Ex. C, (CBA, Schedule B) (emphasis added).)
Associated appears to argue that the Trust also executed Schedule B and therefore is bound by the terms of the CBA. But Associated's argument is not persuasive for several reasons. First, although parties other than Associated signed Schedule B, the Trust did not. The Union and its local affiliate "accepted" Associated's entrance into the Trust Agreement through Schedule B. (Def.'s Mem. in Supp. at Ex. 3.) Although the Trust is also listed as having "accepted" Associated's entrance into the Trust Agreement, there is no signature of any trustee or any person representing the Trust. (Id.)
Associated's position on which parties have signed the CBA has been somewhat inconsistent. At one point, Associated admitted that "it agreed that it had entered into the [CBA] Agreement with the Union." (Def.'s Mem. in Supp. at 4.) Associated also argued as if the Trust signed the CBA and is bound by its provisions: "[t]he [CBA] Agreement expressly obligates the Trust to provide the principal officer of Associated and the Union with at least 5 days notice that fringe benefit contributions were more than 30 days delinquent." (Id. at 8.) Thereafter, Associated stated that "[n]either the Trust nor Associated signed the [CBA] Agreement." (Rep. Mem. in Supp. at 5.) Despite these inconsistencies, because Associated's counsel appeared to take the position, at the hearing on this matter, that both Associated and the Trust entered into the CBA, and this position is most advantageous to Associated, the Court assumes that is in fact what Associated meant to argue. Also, Associated could not credibly argue that it did not enter the CBA because it was required to enter it to employ Union employees and it later made the contributions as required by the CBA and the Trust Agreement.
Second, and most important, even if the Trust had signed Schedule B, it did not become a signatory to the CBA or bound by the CBA's provisions. Those parties that did sign Exhibit B did nothing more than acknowledge and agree that Associated is bound by the terms of the Trust Agreement.
For the above reasons, the Trust is not bound by the provisions of the CBA and, necessarily, are not in violation of the CBA by failing to notify Associated of its late payments and by filing this lawsuit rather than submitting to arbitration. Liquidated Damages as a Penalty.
Associated argues what the Trust is seeking is, in essence, a penalty against Associated for its failure to timely make contribution payments. According to Associated, the Trust is precluded from recovery because liquidated damages are prohibited under federal common law when such damages constitute a penalty. Associated relies on the decision inIdaho Plumbers and Pipefitters Health and Welfare Fund v. United Mech. Contractors. Inc., 875 F.2d 212 (9th Cir. 1989). In Idaho Plumbers, also an ERISA liquidated damages case, the Ninth Circuit affirmed the district court's decision to void the liquidated damages provision of the collective bargaining agreement because such a provision was void under federal common law as a penalty. See also Parkhurst v. Armstrong Steel Erectors. Inc., 901 F.2d 796, 798 (9th Cir. 1990) (liquidated damages awarded under collective bargaining agreement, not 29 U. S, C. § 1132, are void as penalty).
Associated argues that the Sixth Circuit took this position as well in Michigan Carpenters Council Health and Welfare Fund v. C.J. Rogers. Inc., 933 F.2d 376 (6th Cir. 1991). But Associated takes the holding of that case too far. In Michigan Carpenters, the court merely remanded for a determination of whether the liquidated damages provisions of the collective bargaining agreement were void as a penalty; it did not find that such provisions were void. Michigan Carpenters. 933 F.2d at 390 ("caution[ing]" district court to "examine whether the liquidated damages provisions in the operative collective bargaining agreements constitute a penalty under federal common law.").
But the Seventh Circuit Court of Appeals took a different view. InOperating Eng'rs Local 139 Health Benefit Fund v. Gustafson Constr. Corp., 258 F.3d 645 (7th Cir. 2001), the court noted that the ERISA liquidated damages provision of 29 U.S.C. § 1132 for "unpaid" contributions is itself a penalty provision, not a compensatory provision. Operating Eng'rs. 258 F.3d at 654-55. Therefore, the court reasoned, even if contract-based liquidated damages provisions are, in essence a penalty, such damages are still appropriate. In other words, according to the Seventh Circuit, if ERISA can expressly provide a penalty, so can the parties in the collective bargaining agreement. The court also stressed that the agreements containing these liquidated damages provisions are bargained over, and drafted by, "consenting adults that are, substantial organizations."Id. 655. On this basis, and the "guidance" provided by the ERISA 29 U.S.C. § 1132 penalty provision, the Seventh Circuit declined to follow what it called "the antiquated" rule of contracts that penalties cannot be recovered.
In the present case, the CBA and the Trust Agreement were entered into and negotiated by "substantial organizations"-labor unions and businesses-with the knowledge and sophistication necessary to understand contract requirements. Additionally, unlike the relatively high liquidated damages provision of 18% allowed in Operating Eng'rs. the provision in the present case is only 5%. Accordingly, the court concludes that the liquidated damages provisions of the CBA are not void as a penalty
Liquidated Damages Under the CBA and the Trust Agreement.
Associated's final argument is that the CBA itself prohibits an award of liquidated damages. In support of this argument, Associated points to the following language from Schedule B to the CBA:
IT IS AGREED by and between the undersigned Employer [Associated] and the International Brotherhood of Teamsters that such Employer subscribes to the various agreements and declarations of trust [the Trust Agreement] and policies and procedures of the particular funds into which such Employer will be required to make contributions pursuant to the National Pipe Line Agreement [the CBA], and agrees to be bound thereby and to amendments made or to be made thereto; and authorizes the parties to such trust agreements to name the trustees and successor trustees, and to administer the trusts; and does hereby ratify and accept such trustees and the terms and conditions of said trusts as fully and as completely as if made by the said undersigned Employer; provided, however, that no amendments or provisions of said trust agreements shall bind the Employer for any financial obligations beyond that set forth in the National Pipe Line Agreement pursuant to which such contributions are made.
(Comp. Ex. C, (CBA, Schedule B) (emphasis added).)
Associated argues that while it must make contributions to the Trust, it is relieved from the liquidated damages provision of the Trust Agreement by the following language: "no amendments or provisions of said trust agreements shall bind the Employer for any financial obligations beyond that set forth in the" CBA.
The court is mindful that collective bargaining agreements are often governed by special rules. As the Sixth Circuit Court of Appeals explained: "`A collective bargaining agreement is not governed by the same principles of interpretation applicable to private contracts. `"Int'l Union. United Mine Workers of Am. v. Apogee Coal Co., 330 F.3d 740, 744 (6th Cir. 2003) (quoting Operating Eng'rs Pension Trusts v. B E Backhoe. Inc., 911 F.2d 1347, 1352 (9th Cir. 1990) (citing Transp.-Communication Employees Union v. Union Pac. R. R. Co., 385 U.S. 157, 160-61 (1966) (collective bargaining agreement is not a private contract between two private parties, but is rather a generalized code to govern a myriad of cases and parties))). A court may consider extrinsic evidence of the parties' intent at the time of execution if the collective bargaining agreement is ambiguous.Id." Whether the language of a written agreement is ambiguous is a question of law that `may be resolved summarily."' Id. (quoting Parrett v. Am. Ship Bldg. Co., 990 F.2d 854, 858 (6th Cir. 1993)), "Summary judgment is appropriate only when no question exists as to intent" Id.
In the present case, there is no ambiguity. As demonstrated by the plain language of the Trust Agreement quoted above, Associated agreed to make contribution payments as required by that agreement. (Comp. Ex. C, (CBA, Schedule B).) Moreover, examination of other provisions of the Trust Agreement confirms this conclusion. When a court is determining the meaning of a collective bargaining agreement, it is "hornbook law" that the court cannot view the terms and provisions of the contract in isolation, but must instead consider the relevant provisions in light of the entire agreement. Blackie v. State of Me., 75 F.3d 716, 722 (1st Cir. 1996); See also. Brooks. Tarlton. Gilbert Douglas Kressler v. U.S. Fire Ins. Co., 832 F.2d 1358, 1366 (5th Cir. 1987) (using location of contract terms in particular section of contract to aid interpretation). Here, the "Contributions" section of the Trust Agreement has eight sections. (Pl.'s Mem. in Opp., Ex. A at 30-40.) The first, second, and fifth through eighth sections pertain to the Employer's contribution obligations and the powers of the trustees.(Id. at 30-39.) Importantly, the third section also relates contribution obligations. (Id at 31-32.) Specifically, the third section provides for liquidated damages for late contributions.(Id.) Therefore, when viewed in the context of the entire agreement, it is clear that the liquidated damages section is not an "amendment or provision, beyond that [provision] pursuant to which such contributions are made." On the contrary, the liquidated damages section is part of the provision "pursuant to which such contributions are made." Stated differently, the liquidated damages provision for late contributions is part of die overall "Contributions" obligations that Associated agreed to when it signed the CBA.
Based on the foregoing, Associated's Motion is DENIED.
SO ORDERED
BY THE COURT.