Case Information
*1 No. 18 ‐ 0857 ‐ cv(L)
32BJ N. Pension v. Nutrition Mgmt. Servs.
In the
United States Court of Appeals
For the Second Circuit
August Term, 2018 No. ‐ ‐ cv(L), ‐ 1843 ‐ cv(CON)
T HE 32BJ N ORTH P ENSION F UND A ND I TS B OARD OF T RUSTEES , Plaintiff ‐ Appellee ,
v.
N UTRITION M ANAGEMENT S ERVICES C OMPANY , AKA Nutrition Management Services Corp., AKA Nutrition Management Services,
Inc.,
Defendant ‐ Appellant. Appeal from United States District Court Southern District New York. No. cv ‐ — Katherine B. Forrest, Judge
A RGUED : M AY D ECIDED : A UGUST Before: N EWMAN J ACOBS , D RONEY , Circuit Judges
Defendant ‐ Appellant Nutrition Management Services Company (“NMSC”) appeals from a final judgment of the United States District Court for the Southern District of New York (Forrest, J. ). NMSC entered into a collective bargaining agreement (“CBA”) in required it to make pension contributions on behalf its employees to Plaintiff ‐ Appellee, the 32BJ North Pension Fund. After NMSC failed to make the required from to brought this action seeking contributions. Following bench trial, district court awarded included an interest rate set forth delinquency policy established pursuant to trust agreement referred to NMSC’s CBA with 32BJ union. district court held NMSC’s mere reference bound NMSC trust agreement and its delinquency policy, without concluding reference demonstrated intent be bound. argues that, until it executed amendment did not agree trust agreement, thus delinquency policy’s apply. We agree with NMSC. Accordingly, VACATE judgment REMAND for district court redetermine amount damages, consistent opinion, reconsider amount award attorney’s fees.
J OHN H OUSTON P OPE Epstein Becker & Green, P.C., New York, NY, for Defendant Appellant R ICHARD S COTT S IEGEL (Jeffrey S. Swyers, brief ), Slevin & Hart, P.C., Washington, DC, Plaintiff ‐ Appellee
D RONEY Circuit Judge :
This appeal primarily concerns whether, an action brought under Employee Retirement Income Security Act (“ERISA”) against an employer for unpaid pension fund contributions, U.S.C. §§ 1132(g)(2), employer was bound a term established by plan document where collective bargaining agreement (“CBA”) that employer signed only referred plan document but employer expressly agree by document. The district court this action so held, awarding Plaintiff ‐ Appellee 32BJ North Pension (“the Fund”) from included substantial component. The interest was established by Policy adopted under Agreement. held Defendant Appellant *4 employer, Nutrition Management Services Company (“NMSC”), bound by terms Trust Agreement because NMSC signed that, district court’s words, “specifically reference[d]” Trust Agreement. 32BJ N. Pension v. Nutrition Mgmt. Servs. cv ‐ (KBF), WL 4863095, at *7 (S.D.N.Y. 2017).
On appeal, NMSC contends it not agree Trust Agreement until entered into Memorandum Agreement (“MOA”) that, amending extending CBA, specifically adopted Trust associated policies, retroactive August 1, App’x 385. NMSC argues Agreement’s contributions should have been applied only beginning August from when delinquent began accruing. result court’s error, NMSC contends, awarded overstate amount owes least $200,000.
We clarify, consistent our precedent that of Supreme Court, an employer an ERISA action for terms an ERISA plan document (here, Trust Agreement) only if employer objectively manifests intent so bound, evaluated under ordinary principles contract interpretation. Applying those familiar principles here, we conclude NMSC bind itself Agreement—and interest established under its Policy—until agreed MOA modifying
We also reject Fund’s alternative argument applying plan ‐ based provisions so fundamental functioning fund trustees may unilaterally impose such provisions delinquent employer.
Accordingly, vacate judgment district court remand redetermine amount damages, *6 consistent with opinion, reconsider amount of its award of attorney’s fees light of redetermination.
FACTUAL AND PROCEDURAL BACKGROUND I. The Pertinent Agreements Other Documents
NMSC provides food services nursing homes New York state. One of nursing home clients is Hebrew Hospital Home of Westchester. employees nursing home are members union Local 32BJ AFL ‐ CIO (“the union” or “Local 32BJ”).
On September NMSC entered into a CBA Local 32E, predecessor union Local 32BJ. [2] Article 22 required “shall contribute Pension Fund” a fixed sum “all employees bargaining unit” who met certain conditions. App’x Importantly, Article 22 also stated, “[t]he *7 parties understand . . . will be held and managed under terms and provisions of Agreement and Declaration of Trust to be executed connection said . . . .” Id . operative “Agreement and Declaration of Trust” described Article 22 of was, at all times relevant to this case,
“Amended and Restated Agreement and Declaration Trust.” App’x 416–39. We refer to document as “Trust Agreement,” do parties. As pertinent appeal, Article VII, Section 8 specifies “[a]n Employer does pay Contributions when due shall obligated pay, addition any penalties required under any applicable Collective Bargaining union.” Introduction Multiemployer Plans , Pension Benefit Guaranty Corp., https://www.pbgc.gov/prac/multiemployer/introduction ‐ ‐ multiemployer ‐ plans (last visited July 30, 2019); see Bd. Trs. Glazing Health and Welfare Tr. v. Chambers , F.3d 835 (9th Cir. 2018) (describing such plans), reh’g en banc granted , F.3d (9th Cir. 2019). Such trust funds “are administered jointly employer designated trustees union ‐ designated trustees,” they allow multiple employers make “welfare benefit” “for benefit [a] union’s members.” Levy v. Local Union Number , F.3d 517–18 (2d Cir. 1994). In turn, such funds “provide welfare [or] pension benefits [union] employees .” Chambers F.3d *8 Agreement other contract,” inter alia “interest on the unpaid Contribution at such rate as the Trustees may fix from time time.” App’x 700, 432–33.
In accordance with interest provision in the Trust Agreement, Fund’s trustees in established the first version “Policy for Collection Delinquent Contributions,” which parties refer as “Delinquency Policy.” App’x 670–84. Article 2, Section 2.1, Part C Delinquency Policy established a 10% annual interest rate delinquent pension fund. Then, effective June 1, 2013, trustees established revised Policy, which lowered interest 9%.
On April 30, 2014, executed Memorandum Agreement (“MOA”) union, “continu[ed] full force” terms “for period from August 1, *9 through July 2014,” and also, among other things, added new Article applicable NMSC’s pension fund contributions. App’x 384–85. The new Article stated “the Employer [NMSC] hereby adopts and shall by [Trust Agreement] may be amended and rules and regulations adopted hereafter adopted by Trustees of each Fund connection provision and administration benefits collection of contributions.” App’x (emphasis added). II. The Fund’s Action Unpaid Contributions
Between failed make its required Fund. The Fund conducted two audits (the “First Audit” “Second Audit”) records, which discovered some these contributions, after filed suit. then conducted another audit (the “Third Audit”), increased the amount sought to recover action. The district court granted summary judgment as to unpaid contributions discovered by Second Audit. The district court held bench trial with regard issues surrounding remaining unpaid contributions discovered by First Third Audits. The district court also received post trial briefing interest NMSC was required pay for its unpaid contributions.
The district court issued findings fact conclusions law opinion on October The district court held was entitled recover remaining not resolved summary judgment, NMSC does not challenge holding (or summary judgment decision) regard amount principal owed. district court also held, however, required pay stated Policy on all
contributions, including those discovered in the Second Audit, compounding from when they became due beginning and thereafter. It rejected NMSC’s argument company Delinquency Policy’s interest rate until it executed 2014 MOA. The district court reasoned 1998 union “specifically reference[d]” Trust Agreement “[by] stating ‘will held and managed under terms and provisions [the Trust Agreement].’” 32BJ N. Pension 2017 WL *7 (quoting Article 22 Trust Agreement, App’x 412– 13). In turn, district stated, “reference[d]” Policy. Id filed unsuccessful motion reconsideration issue, timely appealed from district court’s final
judgment.
STANDARD OF REVIEW
“On appeal from a bench trial,” review “conclusions of law de novo ” “findings of fact for clear error.” Fed. Housing Fin. Agency FNMA v. Nomura Holdings Am., Inc., F.3d 85, n.54 (2d Cir. 2017). “Although amount recoverable damages is question fact, measure upon factual computation based question law.” Oscar Gruss & Son, Inc. v. Hollander , F.3d 186, (2d Cir. 2003) (internal quotation marks omitted). “Contract interpretation [is also] question law reviewed de novo appeal.” Phillips v. Audio Active Ltd. F.3d 378, (2d Cir. 2007).
DISCUSSION
On appeal, argues erred applying Policy’s beginning rather than from August 2013— effective date MOA.
In response, Fund contends—mirroring district court’s conclusion law following bench trial—that because “referenced” Trust Agreement, NMSC was already bound Trust Agreement (and any Policy established under authority) also argues even if agree before MOA, Fund’s trustees were entitled unilaterally impose rate NMSC.
In addition issues, parties also dispute whether court’s award attorney’s fees excessive.
We address these issues turn. *14 I. Whether Agreed Be Bound Policy in 1998
A. Applicable Law authorizes fiduciaries an employee benefit plan bring suit compel payment delinquent fund contributions. U.S.C. §§ 1132(g), In such an action “in which judgment favor plan awarded,” must award (A) unpaid contributions, (B) interest on unpaid contributions, (C) an amount equal greater of—(i) on unpaid contributions, or (ii) liquidated provided under plan an amount excess percent [unpaid contributions] . . . [and] (D) reasonable attorney’s fees costs .
U.S.C. § 1132(g)(2).
“[I]nterest shall determined using provided under plan, or, if none, rate prescribed “The term benefit ‘employee plan’ or employee ‘plan’ means an benefit welfare plan an employee pension benefit plan or plan both an employee welfare benefit plan employee pension benefit plan.” U.S.C. § 1002(3). *15 under section 6621 of title 26.” [9] Id § 1132(g). We have recognized “the plan,” id § 1132(g), may, as here, be “the trust agreement or contract under which the plan formed,” Silverman v. Teamsters Local Affiliated Health & Ins. , F.3d 277, 286 (2d Cir. 2014). To impose a plan ‐ provided interest rate a delinquent employer, there is an additional requirement: employer must a signatory—or otherwise have agreed bind itself—to the plan document (here, a Agreement). Jaspan v. Glover Bottled Gas Corp. F.3d 40–42 (2d Cir. 1996). In Jaspan , the trustees of the fund sought from the defendant employer liquidated *16 award fifty percent of employer’s contributions because employer failed to keep adequate payroll records for a future audit by fund. Id . at liquidated provision trust agreement that employer had not signed or otherwise agreed to to. Id . Merely “agree[ing] through . . . collective bargaining agreements pay to . . . Funds,” held, “not justify holding [the defendant employer] . provision[s] trust agreement that it never joined in.” Id argues Jaspan established way employers bind themselves plan does adhere ordinary principles contract interpretation. It relies our statement Jaspan “[h]ad parties intended bind [the employer] [the trust agreement’s] terms, they could easily have done so by having [the employer] sign referencing collective bargaining agreements.” Jaspan F.3d (emphasis added). In Fund’s view language, well as view in its trial findings, an employer to a trust agreement if merely “references” trust agreement. Appellees’ Br. at 21; 32BJ N. Pension , WL at *7.
Fund’s reading Jaspan incorrect. ultimate question, we made clear in quoted sentence, whether any signature plan document, “referenc[e]” to such a document in CBA, reflected employer’s “inten[t] bind” itself plan document. Id . Later Jaspan opinion, concluded “by undertaking collective bargaining agreement pay certain benefit funds, [the employer] bind itself liquidated provision contained governing trust agreement never agreed .” Id . (emphasis added). In other words, Jaspan merely invoked well ‐ established doctrine incorporation by reference. See, e.g. Ronan Assocs. v. Local 94A ‐ 94B , F.3d (2d Cir. 1994) (recognizing parties may “manifest[] intent” “incorporate reference terms may *18 be found other agreements they are not party”). Jaspan plainly requires an employer must objectively manifest intent be ERISA plan document, not merely note document’s existence, case, acknowledge future trust agreement will manage operation fund.
Moreover, Supreme Court has held collective ‐ bargaining agreements ERISA plan documents “must interpreted according ordinary principles contract law.” CNH Indus. N.V. v. Reese , S. Ct. (2018) (rejecting Sixth Circuit’s repeated use “inferences” about language were inconsistent with ordinary contract principles); M & G Polymers USA, LLC v. Tackett S. Ct. (2015) (“We interpret collective ‐ bargaining agreements, including those establishing plans, according ordinary principles contract law, least when those principles are inconsistent federal labor policy.”). As with all contracts, “[w]here words contract writing are clear *19 unambiguous, meaning be ascertained in accordance its plainly expressed intent.” M&G Polymers , 135 S. Ct. at 933 (internal quotation marks omitted).
B. Application the Documents Issue Applying these ordinary contract interpretation principles, next decide whether NMSC agreed be bound future in 1998 CBA, only when MOA was executed in “Where parties dispute contract meaning particular clauses, task determine whether such clauses are ambiguous when read context entire agreement . . . .” Law Debenture Tr. Co. N.Y. v. Maverick Tube Corp. F.3d (2d Cir. 2010) (internal quotation marks omitted). does dispute contention CBA MOA, amended extended CBA, must read together. stated, “[t]he parties understand
*20 Pension will be held and managed under the terms and provisions Agreement and Declaration Trust to be executed connection with said Fund.” App’x argues that language demonstrated NMSC’s intent bind itself terms a future Trust Agreement rules and regulations that trustees adopted under authority. disagrees, arguing that CBA language merely memorialized that NMSC’s contribution payments would be held trust would constitute illegal payments union, recognized future would be adopted by trustees govern operation Fund.
We agree with interpretation. language memorialized parties’ “understand[ing]” Fund—not NMSC—would be governed terms future trust agreement. Id Contrary Fund’s contention such language would meaningless, consistent parties seeking ensure would comply with Section 302 Labor Management Relations Act. See, e.g., Moglia v. Geoghegan , 403 F.2d 115 (2d Cir. 1968) (“Section 302 [of Labor Management Relations Act] . . . prohibit[s] establishment any union funds by means employer payments unless funds conform[] all respects specific dictates Section 302(c).”). By contrast, NMSC’s affirmative obligations Article were clearly set forth by stating “shall,” example, contribute certain sums furnish union certain information about covered employees. App’x
Our conclusion CBA demonstrate agreement subsequently adopted strengthened fact such reading would render language amendments meaningless. Contra, e.g., Marcic v. Reinauer Transp. Cos. F.3d (2d Cir. 2005) (“[W]e must avoid rendering any language superfluous.”). MOA *22 stated as follows:
By agreeing make required payments into Funds, Employer hereby adopts and shall be bound by Agreement and Declaration of Trust as may be amended and rules and regulations adopted or hereafter adopted by Trustees each connection provision and administration benefits and collection contributions.
App’x (emphasis added). “Hereby” means “as result this,” Hereby , Oxford English Dictionary (2d ed. 1989) , and “adopt” means “approve accept . formally,” Adopt id (3d ed. 2011). Thus, MOA, NMSC “hereby adopt[ed]” agreed “be bound” first time Trust Agreement, well as “the rules regulations” adopted under Trust Agreement’s authority. App’x Under Fund’s interpretation CBA, contrast, would have agreed future *23 1 rules and regulations; the language the 2014 MOA would be 2 superfluous. [11]
3 Therefore, NMSC not bind itself to the 4 until it executed the 2014 MOA, which was effective only as of 5 August 1, 2013. 12, [13]
[11] contends that 2014 MOA “clarified” the 1998 language. Appellee’s Br. at 4. It is unclear whether position is that only contributions that first became
delinquent after August 1, 2013, should have been assessed Delinquency Policy’s interest rate, or rather that all unpaid contributions (from and after) should have begun being assessed that interest rate August 1, 2013—or some other position. That issue has not been squarely presented to us, we leave it district consider first instance, subject law case usual principles forfeiture waiver by either party (if applicable). In addition, NMSC acknowledged at oral argument any revised award unpaid contributions also subject liquidated damages, also must be determined by court. NMSC also argues that, absent being Policy’s interest before August 2013, it required pay based statutory interest
on any delinquent contributions paid before commenced action. In support, relies primarily Iron Workers Dist. Council v. Hudson Steel Fabricators & Erectors, Inc. , F.3d (2d Cir. 1995). Our holding Iron Workers however, addressed different scenario: employer who had outstanding unpaid contributions at time suit was filed could not, we decided, escape remedies under U.S.C. § 1132(g)(2) by paying off “all delinquent contributions owed . . . after suit filed but prior judgment.” Id . at Notably, reasoned “an award liquidated should logically predicated upon amount originally issue since amount correctly measures damage caused *24 II. Whether the Fund Was Entitled to Unilaterally Impose the
Interest Rate on NMSC
The Fund also argues that even if NMSC did not agree to be bound to the prior to executing the MOA, applying stated in the Policy from onward so essential to Fund’s functioning that NMSC should be unilaterally bound to it. Fund relies on language Jaspan where we observed that other circuits had identified limited exception general rule that employers must agree plan document: provision that “enforc[es] against non [agreeing] employer . . right fund trustees audit employer’s records.” F.3d at Those circuits’ justification delinquency.” Id at (emphasis added). We not decide unpaid “originally at issue” include only those remain at time suit, although we acknowledged decisions from other circuits had so held. Id at 1506–07. Indeed, concedes that, extent language Iron Workers supports position, dicta. Appellant’s Br. n.7. does not respond argument on this issue, but do not deem concession because issue counterfactual; judgment before us does include statutory interest. We thus leave issue—if raised disputed remand—for consider first instance. exception, we observed, that “[f]und trustees have a fundamental duty to locate take control fund property—a duty for which right to audit crucial.” Id .
Our decision Jaspan however, unhelpful to this argument as well. There, decided a fund’s trustees could not enforce a liquidated damages provision to employer not agree because, although provision “may helpful trustees,” “is [as] essential their management Funds” right audit, enforcing such a provision against a non ‐ agreeing employer “raises far greater concerns [of] . . . fairness.” Id . Plan based interest provisions depart from default amounts provided are more similar a liquidated provision than right audit an employer’s records. For one, allowing fund’s trustees unilaterally impose employer an they selected presents considerable “concern[] [of] . fairness” employer. Id Indeed, case, substantial *26 portion the damages the Fund was awarded in the district court derives from interest rates to NMSC did not agree.
Moreover, less like the essential right audit employers’ records—and much like liquidated provision—parties would expect bargain over interest provisions that depart from the default amounts provided ERISA. Such bargaining evident here in MOA, where NMSC agreed with the union its associated rules and regulations for first time.
We therefore conclude that Fund’s trustees were not entitled unilaterally impose on NMSC plan ‐ based interest rate for unpaid contributions.
[14] also asserts NMSC forfeited district court its right challenge application Delinquency Policy’s interest rate. maintains that, its summary judgment motion, explicitly sought Policy’s interest rate on all NMSC not challenge rate brief opposing Fund’s summary judgment motion. We agree issue forfeited; after purported forfeiture occurred, considered question rendered decision merits. That sufficient preserve issue our review. See Jacques v. DiMarzio, Inc. F.3d (2d Cir. 2004) (“Because [the *27 III. Attorney’s Fees other primary issue raised on appeal that, its
view, district court awarded excessive attorney’s fees amount of approximately $160,000. [15] argues that Fund’s counsel overstaffed, block billed, and charged fees on fees. parties agree if we were vacate remand for redetermination damages, would be appropriate for district court reconsider its award attorney’s fees. Given result, we accordingly direct district court reconsider amount fee award after redetermining owed Fund. defendant’s] position on [issue] explicitly considered rejected by court . . . conclude issue [forfeited] appeal.”). provides successful suit recovery contributions, “the shall award plan reasonable attorney’s fees costs action, paid defendant.” U.S.C. § 1132(g)(2)(D).
1 CONCLUSION
2 For foregoing reasons, VACATE judgment 3 REMAND district court redetermine 4 amount damages, consistent opinion, reconsider 5 amount award attorney’s fees.
[1] title U.S.C. § refers “delinquent” contributions, while § 1132(g)(2) refers “unpaid” contributions. We use these terms interchangeably opinion.
[2] There no dispute Local 32BJ is CBA.
[3] a so ‐ called “Taft ‐ Hartley” trust fund, established pursuant Section 302(c) Taft Hartley Act (otherwise known Labor Management Relations Act). U.S.C. § 186(c). administers “multiemployer” plan, “is collectively bargained [ERISA] plan maintained more than one employer, usually within same related industries, labor
[4] parties submit trial controlled but only versions from But they agree language from Article VII, Section contained both submitted versions, relevant language contributions.
[5] extended during all relevant periods series memoranda agreement between Local 32BJ (or predecessor) until MOA. Those prior memoranda adopt Agreement.
[6] amounts awarded Third Audit are disputed appeal.
[7] Two appeals were filed this action: ‐ cv ‐ ‐ cv. former concerned interest, while latter concerned court’s award attorney’s fees. two appeals were consolidated Court.
[9] “underpayment rate” established under U.S.C. § 6621(a)(2) the sum of three percent plus “Federal short ‐ term rate,” the latter of which determined Secretary of Treasury (or Secretary’s delegate) then “rounded nearest full percent,” id § 6621(b)(1),(3). Between time of court’s judgment, appears underpayment rate ranged from low 3% high of 6%, being 4% for most of pertinent time period. See Index Applicable Federal Rates (AFR) Rulings, IRS, https://apps.irs.gov/app/picklist/list/federalRates.html (last visited July 2019) (setting forth monthly Federal “Short Term” rates). Without expressing opinion these rates might apply any delinquent contributions, observe underpayment rates pertinent time period were always lower than 9% 10% rates set forth operative versions Policy.
[10] agrees once executed MOA it provisions stated Policy.