Hawaii Carpenters Trust Funds v. H.E. Johnson Company, Inc.
1:18-cv-00041
D. Haw.May 8, 2018Background
- Plaintiffs (Hawaii Carpenters Trust Funds) sued H.E. Johnson Co. (HEJ) alleging HEJ failed to make benefit contributions required by a Collective Bargaining Agreement (CBA), invoking LMRA, ERISA, and MPPAA. The suit was filed Jan 31, 2018.
- HEJ moved for summary judgment, asserting it terminated the CBA by delivering a written termination notice to the Union on March 3, 2016, which—per CBA terms—made the agreement expire Aug 31, 2016 and ended HEJ’s contribution obligations.
- HEJ submitted a declaration (Brian Hall) and the March 3, 2016 notice; the notice lacks a date-stamp or receipt evidence; HEJ did not present testimony from a Union recipient.
- Plaintiffs produced declarations from Union/administrator custodians (HRCC and HBAI) stating they have no record of receipt, that normal receipt protocols were not followed, and that audits were requested and in fact occurred after August 2016.
- The central factual dispute is whether the Union received HEJ’s termination notice (receipt is required under the CBA). The Court allowed supplemental briefing on whether the termination defense is available in a trust-fund collection action.
- The Court denied HEJ’s summary judgment motion because a genuine dispute of material fact exists as to whether the termination notice was received; the Court also denied Plaintiffs’ request for Rule 56(h) sanctions because any allegedly bad-faith declarations had no effect on the outcome.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HEJ validly terminated the CBA by written notice | Plaintiffs: Union never received the March 3, 2016 notice; records and custodians show no receipt and normal protocols were not followed | HEJ: Hand-delivered notice on March 3, 2016 (181 days before Aug 31, 2016) thus terminating the CBA and ending contribution obligations | Denied summary judgment: genuine dispute of material fact exists about receipt of the notice; Court cannot find termination as a matter of law |
| Whether a unilateral termination defense is available in a trust-fund collection action | Plaintiffs: Termination is generally not a legitimate defense to collection under Ninth Circuit precedent (contract defenses limited) | HEJ: Bla-Delco’s rule is limited; where CBA’s grievance/arbitration procedure does not allow arbitration of termination, employer may raise termination defense | Court: Bla-Delco is narrow; termination defense can be considered in limited circumstances here, but HEJ still not entitled to summary judgment due to factual dispute |
| Whether post-filing correspondence and audits estop HEJ from claiming termination | Plaintiffs: Trust Funds repeatedly requested audits and performed audits after Aug 2016, undermining HEJ’s claim it ceased obligations | HEJ: Contends delivery to union suffices regardless of Trust Funds’ records or audits | Court: Plaintiffs’ post-termination audit activity supports a factual dispute whether HEJ’s obligations ended; favors denying summary judgment |
| Whether sanctions under Fed. R. Civ. P. 56(h) are warranted for alleged bad-faith declarations | Plaintiffs: HEJ filed declarations knowingly misrepresenting facts (e.g., that no audits occurred after Aug 2016); request fees/sanctions | HEJ: Declarations were not material to the disposition, and statements were not necessarily knowingly false | Court: Denied sanctions—any alleged bad-faith declarations did not affect the outcome (summary judgment denied), so 56(h) relief unwarranted |
Key Cases Cited
- Carpenters Health & Welfare Trust Fund for California v. Bla-Delco Constr., Inc., 8 F.3d 1365 (9th Cir.) (termination defense to trust-fund collection actions is generally not legitimate)
- S.W. Administrators, Inc. v. Rozay's Transfer, 791 F.2d 769 (9th Cir.) (limitations on contract defenses in ERISA/trust-fund collections due to beneficiaries’ reliance)
- NLRB v. Vapor Recovery Sys. Co., 311 F.2d 782 (9th Cir.) (written-notice provisions effective upon receipt)
- West Coast Sheet Metal Co. v. Sheet Metal Workers' Int'l Ass'n, Local 206, 954 F.2d 1506 (9th Cir.) (decertification/absence of bargaining relationship can void obligations to contribute)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard; burden-shifting)
- Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (summary judgment: nonmovant must show specific facts creating genuine issue)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard re: materiality and genuine dispute)