Central Pennsylvania Teamsters Pension Fund v. McCormick Dray Line, Inc.

PENNSYLVANIA TEAM- CENTRAL FUND; PENSION Central

STERS

Pennsylvania Teamsters Health & Wel- Fund; Joseph J.

fare Samolewicz

v. LINE, DRAY

McCORMICK

INC.; James Webb. Pennsylvania Health

Central Teamsters Joseph J. Appellants.

Samolewicz,

No. 95-1740. Appeals,

United States Court

Third Circuit.

Argued March 1996.

Decided June Schnader, (argued)

Frank C. Sabatino Lewis, PA, Harrison, Philadelphia, Segal & Appellants. for Marshall, (argued) Den- Craig Hudson S. Warner, Philadel- nehey, Goggin, & Coleman PA, phia, Appellees. NYGAARD, SAROKIN, and

Before: ALDISERT, Judges. Circuit OF THE COURT OPINION SAROKIN, Judge. Circuit question poses the of whether This case agree- provision a collective eligibility for ment which establishes participation in a health and welfare ee mutual as the can be result reformed contracting parties. Because by the mistake plan, we involves a case available that reformation is not conclude to the un- party beneficiaries and that third rely on its are entitled to derlying agreement lan- plain notwithstanding that such guage negli- negoti- was the result of the mistake or McCormick and Local 764 gence contracting parties. change ated a Eligibility in the portion Clause Health and Welfare Here, Pennsylvania the Central Teamsters Specifically, contract. (“Welfare Fund”) Health & negotiat- Clause delinquent seeks to recover funds from following language: ed to include (“McCormick”). Lines, Dray McCоrmick Inc. Eligibility Employees 2. Section of argues that these funds are not (A) employee An shall be deemed to be an sought they pursuant are because eligible employee member if such agree- bargaining to a clause a collective ee has worked at least 60 hours for the ment that McCormick avers was the result of employer during preceding month a “mutual mistake” or a “scrivener’s error.” agreed The district court and ruled in favor

of McCormick. We reverse. Sixty The

(B) Any newly employee hired quali- shall I. fy eligible as an employee member after (45) forty-five working days or on sixti- trucking company employ- McCormick is a day eth calendar whichever comes first. drivers, ing approximately sixty of whom (“JA”) Appendix Joint at 484. Before this twenty-two are union drivers. union negotiated clause could be included in the represented drivers are Teamsters Local bargaining collective Greenawalt (“Local union”). Union No. 764 764” or “the approval had to obtain from the Welfare From the 1970s until McCormick was agree, reluctantly, Fund. The fund did to party to a of bargaining series collective approve language. language This same agreements During with Local 764. appeared then also in the 1985 collective period, Charles Greenawalt was the Presi- bargaining agreement. Representative dent and Business for Local principal negotiator and was the he for just Greenawalt testified that before the bargaining negoti- Local 764 in the collective bargaining agreement Union’s 1985 collective ations. James Webb been has President of expire, was suggested about to he received nego- McCormick since and in that role language Fund, per from the Welfare as with the union tiated on behalf of McCor- usual, language and incorporat- was then mick. Afterwards, ed into the draft contract. negotiated Greenawalt and Webb over the agreements Included bargaining these dollar required amount McCormick would be provisions requiring were that McCormick to contribute the Welfare Fund. Webb monthly make contributions to the Welfare any requests change never made any of behalf of the union for drivers language, including other Welfare Fund purposes providing of them with medical Eligibility Clause. for benefits themselves and their families. Typically, just prior before the time that agreed Once Greenawalt Webb bargaining agreement collective contract, ex- would essential terms of the Greenawalt pire, the Welfare Fund would copy send to Lo- sent Agreement Webb a “suggested” cal 764 accompanied by health and welfare asking a letter that Webb language for “[pjlease collective Agreement] get review [the agreement. Greenawalt would then ask back to [him] additions correc- secretary incorporate his “suggest- tions which [Webb] to be fe[lt] need[ed] language ed” into draft of the prior agreement. new col- made” to signing the bargaining agreement. If par- lective specifiсally Webb testified that he never ties to a Eligibility checked the Clause the contract changes wanted “suggested” made to this specif- because had not been language, they negotiate ic negotiations. those changes No were made changes themselves and then them proposed language, submit the Fund’s and the 1988 approval. the Welfare Fund formally executed.

HOI pursue grievance. did not a formal following the execution Webb year one About Instead, adopted practice noticed new Agreement, Webb notifying newly each hired of Article Eligibility Clause in the Agree- there had been an error in the 1988 language that the same include XII did ment, explaining they to each of them past bar- two collective appeared had eligible would become for health and welfare Eligi- Specifically, agreements. gaining only they completed benefits after provided rele- XII Article bility Clause day day 45th work or their 60th calendar part: vant sign requiring acknowledging them to a form Employees Section were aware of this. quali- employee shall newly Any hired A. routine auditors conducted a ex- employee as eligible member fy as payroll of immediately amination McCormick’s records on month day of the first the if behalf of the Welfare Fund and the employee such Pension employment following his (B) payroll Fund. This audit of Subsection revealed that requirements the meets making had not been contribu- below. next newly tions on behalf of hired be deemed to be an shall employee An B. Eligibility accordance with the it Clause as employee if such member eligible actually appeared Agreement. at 60 least hours for the worked has ee In particular, the auditors discovered that during preceding the month. Employer $27,930.00 delinquent McCormick owed Eligibility Unlike the 202-08. Clause at JA contributions to the Welfare Fund. There appeared Agree- in the 1983 and 1985 that dispute plain no that under the ments, this clause included no additiоnal re- the Agreement, McCormick owes the quirement employee work at least 45 $27,930.00. days prior eligibility. to learning testified that Webb after that Webb testified he called John Klein- audit, again he called at John Kleinfelter felter,1 the administrator the Welfare during Welfare Fund. testified that his He Fund, to find out how the mistake oc- conversation, told him “[W]e Kleinfelter ha- curred, of pooh-poohed and that “John kind you money, ven’t come after for we? laughed and ha-ha’d and about it.” JA at you ... know it a mistake.” [W]ell JA was. Greenawalt, 302. Webb also contacted in- testified, however, at 309. Greenawalt that that, forming agreed him unless Local 764 to he to spoke language, Kleinfelter about the Eligibility reform Clause to be identical too, him and that Kleinfelter never told it to Agreements, the 1983 and 1985 he it was was a mistake but that the standard pursue grievance a formal under the every language they sent at the end of con- parties’ bargaining agreement. collective if had not wanted tract that McCormick he as Greenawalt testified that “was sur- it, they agree gone to to should have back to prised as was” learn [Webb] to actual change for approval Fund it. the Welfare Eligibility language in the Clause. JA at However, failing he in its 416. further testified After efforts to recover the funds, point at which the error was discovered was the Welfare com- Agreement signed long against so after the was that menced this action McCormick on 22, Meanwhile, 1991, April change unilaterally he reluctant 1993. Donald was replaced he union be President of because feared the could held Deivert Greenawalt as Therefore, liable the Welfare Fund. on Local On June 1993—almost two 18,1989 August formally Greenawalt advised months after the Fund filed the agree Webb Local 764 would not instant action in execut- federal court —Webb modify Eligibility Agreement ed Clause and that a Memorandum of with Dei- vert, acknowledging an grievance file a with the that there was error McCormick should testimony, Agreement. if it Deivert’s Association wished American Arbitration however, Agree- signed indicates that he to pursue the issue. 1. Kleinfelter has since died. (here promisee union). out of fear he Union would

ment id. (citing See J. Perillo, drivers sued and the union would lose Calamari & J. be The Law Contracts (3d jobs 1987)). § if did not. 17-10 he ed. Such in- defenses clude fraud in inducement, breach of both filed In March of cross- contract and mutual mistake. summary judgment. The district motions summary judgment granted in favor of court 1960, however, Supreme Court held McCormick, finding that that the rule is employee different for benefit was Clause plans that are third-party beneficiaries pur language in reformation because the suant bargaining agreements. result a mutual mistake or clause In Lewis v. Corp., Benedict Coal 361 U.S. Pennsylvania a scrivener’s error. Central 459, 470-71, 489, 495-96, 80 S.Ct. 4 L.Ed.2d Fund, Teamsters Pension et al. v. McCor (1960), the Court held an employer Lines, Inc., 93-2118, Dray slip op. mick No. could not raise the union’s breach a collec (E.D.Pa. 1994 WL 665641 Nov. tive agreement as a defense 1994) (hereinafter Opinion”). “Memorandum benefit suing for appeal ‍​‌​​‌​‌​​​​​‌​​​‌‌​​‌​​​‌​​​​​​​​‌‌‌​​‌​​‌​‌‌‌‌‌‍This followed. delinquent contributions unless such de preserved in fense was “unequivocal words” II. bargaining in the collective agreement. jurisdiction The district court had over this arriving conclusion, In at its the Court brought Employee action under the Retire- explained that a “collectivebargaining agree- (“ERISA”), Security Act ment Income 29 typical third-party is ment ... not a benefi- § seq. pursuant et 28 468, U.S.C. 1001 to U.S.C. ciary at contract.” Id. 80 S.Ct. at 495. juris- § appellate 1331. This court exercises Rather, reality the Court noted economic the § pursuant to 28 diction U.S.C. 1291. many persons and entities have a direct viability multiemployer interest of a Our review of the district court’s or plan:' operators “If Benedict and coal other resolving summary der cross-motions for having damage claims the union for judgment plenary. is Stroehmann Bakeries its royalty payments, breaches curtail (3d 776, 1436, Cir.), v. Local 969 F.2d 1440 will the burden fall in the first upon instance denied, 1022, 113 660, 121 cert. 506 U.S. S.Ct. the and their families the across (1992). apply L.Ed.2d 585 thus the We same country.” Id. at 80 at S.Ct. 495. Fur- (1) by applied test the district court: are thermore, other employers required would be (2) dispute; there no facts in material and royalty payments to increase to main- party judgment one entitled to as a matter of planned tain the schedule of Id. benefits. 56(c); (citing law? Id. 1441 at Fed.R.Civ.P. principle Supreme Union, Court set forth International Mine United Workers i.e., by Benedict breach a Co., Trucking Am. v. Racho Coal— of (3d Cir.1990)). union does not relieve the of its obligations pension to make contributions to multiemployer welfare fund —was ratified III. by Congress through the enactment of sec dispute, as in others which ERISA, tion 515 of which reads as follows: payments welfare funds seek recover Every employer obligated who is to make are under the terms of collective contributions to multiemployer plan un unions, bargaining agreements with the Wel plan der the terms of the or under occupies position fare Fund of third- collectively terms of a bargained agree beneficiary beneficiary party of the —i.e. shall, ment to the extent not inconsistent union between the and McCor law, with make such contributions in accor See, Motel, Agathos mick. v. e.g., Starlite dance the terms and conditions Third- agreement. such such party generally beneficiaries are (here 1145; promisor 23,039 § Cong.Rec. the same defenses that 29 U.S.C. see 126 McCormick) (1980) (remarks (endors- by Rep. could by raise suit Thompson)

H03 agreed passing as written and both reasoning Benedict Coal ing the 515). employer. Congress the union and the section sought to minimize administrative costs enacting sec Congress’s purpose detecting collecting delinquencies and multiemployer welfare to allow tion 515 was ability plans “detract from to formu- rely upon of collective the terms funds funding adversely late or meet standards and written, agreements plans and as plans” through affect financial health of plans to “permit[ting] trustees оf recov thus efficaciously, passage Cong.Rec. of section 515. 126 delinquent contributions er (1980) (remarks 23,039 might Rep. Thompson). which arise regard without to issues law....” labor-management relations multiemployer under If welfare funds were re- (1980) (remarks 23,039 Cong.Rec. quired interpret in collective Thompson). Congress noted that em Rep. bargaining agreements upon based informa- delinquency from the ployer “detracted] they may regarding negotia- tion funding ability or meet plans to formulate underlying tions the collective adversely the finan affeet[ed] standards and agreements, preparing the chore of their ac- plans.” passage Id. cial health of With highly tuarial calculations would be burden- 515, Congress sought to ensure of section expensive, risky; as if some as well rely plans are able to on contri that benefit misinterpreted un- welfare fund the actual employers plans promises bution “because derlying intention of the and relied whether or not pay must out to beneficiaries upon misinterpretation arriving up obligations.” Ben employers live to their calculation, their actuarial all of the members Inc., Moving Storage, v. Brower’s & son fund would suffer ulti- (2d Cir.1990) (citing Central F.2d mately through higher the lower benefits and States, Areas Pen Southeast Southwest trying contributions which would result from Serv., Inc., Truck 870 sion Fund v. Gerber By enacting section to correct these errors. banc)). (7th Cir.1989) (en 1148, 1151 F.2d 515, Congress sought prob- to eliminate such explained has The Seventh Circuit lems, leaving employers and unions the 515, pension or welfare “[t]he under section plain simpler ensuring task of lan- in com is like a holder in due course fund guage bargaining agree- of their collective ... to enforce [and thus] mercial law entitled represents ments their intentions. understandings regard to writing the without the appeals The courts of which have had original par applicable to the or defenses 515, opportunity including to review section Truck, 1149. Mul 870 F.2d at ties.” Gerber court, regarded have all it as a limitation this participants tiemployer welfare funds are not employer to an on the defenses available agreement negotia bargaining in collective See, e.g., by fund. when sued welfare knowledge of the typically tions and have no (employer may Agathos, F.2d at 1505 original dealings the 977 nature of the between defense); Instead, they rely employer. fraud in the inducement as a union and the assert upon accuracy of the terms of the collec # 800 the Trustees Laborers Local Union bargaining agreements Pump of all of their tive Fund v. Health and Trust Welfare Cir.1987) (11th making House, Inc., 566, the actuarial calculations members 568 produce payout contribution and curiam) (same); (per Administra Southwest systems Rob for all of their members. See tors, 769, Rozay’s Transfer, 791 F.2d Inc. v. (7th 330, Lynch, F.2d 333 Cir. bins v. 836 (9th Cir.1986) denied, (same), 479 cert. 1988). L.Ed.2d 999 107 S.Ct. U.S. (em Truck, (1987); Gerber Indeed, if a welfare even ployer may not oral assert knowledge negotiating fund has some terms of collective bar union not to enforce history leading signing a collec- up to the defense); Bitumi gaining agreement as a from bargaining tive it is evident Association, Operators’ Inc. v. nous Coal Congress’s passing intent in section 515 and (D.C.Cir.1989) Connors, F.2d 632-36 rely fund still be able to it that the should mutual mistake of (employer not assert language of the collective entering fact the collective company The Murata case arose when a defense). agreement as a company-run pension terminated two plans. over-funded, pension plans Because the were the instant matter nearly plans million remained $7 after upon support argu- relies these cases to its purchased employees. annuities were for all paying ment that McCormick cannot avoid company Id. at 897. Both the and the union delinquent payments arguing its “mutual representing employees argued particu- mistake” or “scrivener’s error.” In excess, recoup were entitled to this lar, upon the Welfare Fund relies Bitumi- ultimately union compаny sued the to resolve There, multiemployer pension nous Coal. dispute. This court upon was called plan operator sued coal for con- company determine whether the itself or the Coal, tributions. Bituminous 867 F.2d at representing union was enti- operator 627-28. The coal defended remaining tled to the excess funds in the ground the suit on the that both pension plans following termination. Id. at bargaining agreement the collective in- employer’s tended that the contributions to stop plan the fund would once the became so time, place Under the laws in at the over-funded that its contributions could no company recoup could not the excess unless longer be deducted under federal tax income plan explicitly documents authorized it to Thus, operator presented laws. the de- argued do so. Id. at 895. The union fense of “unilateral” and “mutual mistake.” documents did not contain such that, Id. at 628. The D.C. Circuit ruled provision; company countered undеr section such a defense is not drafters had intended for the document to else, nothing allowed: “If it means section provision allowing company contain a that, 515 means at least when the Trustees recoup excess and that its absence was the implicated alleged [of fund] are not error,” result of a “scrivener’s i.e. the mis- misconduct, their suit cannot be thwarted of a drafting take scrivener in the document. apparent defenses not from the face of the initially allowing We noted that for refor- Bargaining] Agreement.” [Collective Id. at mation of the document based on a scriven- 634. The court found that the terms of the er’s error inis some tension with the statuto- bargaining agreement at issue obli- ry purposes of ERISA: gated to make contributions to statutory goal [O]ne of ERISA is to insure beyond point funding, the fund of full “every employee may, that examining requirement concluded that “[t]he of section plan documents, exactly determine employer] 515 that [the make its contribu- rights obligations what his are under ‘in tions accordance with the terms or condi- plan.” Indus., Inc., See Frank v. Colt agreement’ tions of such ... precludes thus Allowing any defense that would avoid that obli- apply doctrine of error scrivener’s in gation.” Id. at 636. ERISA cases would seem at odds with this statutory purpose. planA document con A. taining a scrivener’s error might mislead The district court considered the Welfare believing an into rights he had or arguments Fund’s upon and its reliance Bi- not, obligations fact, that he did in have. interpret- tuminous Coal and the other cases Id. at 907. concluded, ing however, section It that concluded, the facts of presented however, this case a “mutual We that under the that case,” mistake” could be asserted as particular a defense. facts of “this application of Opinion Memorandum at 16. The court ulti- appropri- the scrivener’s error doctrine was mately premised its conclusion that Specifically, McCor- ate. Id. we noted that pay mick delinquency need not its alleged on Inter- error related to what was “admitted- national ly Union v. Murata Erie North a ‘windfall’for either Murata or the [em- America, Inc., (3d Cir.1992). ployees],” 980 F.2d 889 employees’ and thus the “reason- We will discuss this case in some detail. able reliance on the ... Plan documents

HQ5 original knowledge to believe some of the intent of the not have led them probably any parties. excess funds remain- there would be continued, likely,” we ing.” “Nor is it Id. case, however, In the instant is not would have reading plan documents “that inquiry newly relevant to our whether the any if excess participants to believe that led upon Eligibility hired relied termination, after that excess funds remained any Neither the union nor individu- Clause. Thus, to them.” Id. would be distributed parties al are In- workers this lawsuit. statutory goal insuring that em- ERISA’s stead, whether, question is under section rely upon documents ployee’s Fund, allowing reformation was not undermined in third-party turn its beneficia- members — Having scrivener’s error. detеrmined parties ries who not were to the collective genuine was a issue of there material bargaining agreement be able —should regarding or not there was such fact whether reasonably rely upon language in the col- error, for further an we remanded the ease bargaining agreement lective as written. proceedings. Id. at 907-08. provides guidance Murata us no in this instant matter The district court area.2 upon in Murata to con- relied our decision language in the that reformation of the clude B. Eligibility Agreement of the 1988 Clause Having the true concluded that Murata is in- reflect ERISA,” us, purpose of apposite question “would not frustrate the we must before noting is no evidence that “[t]here assess whether under section 515 a mutual upon beneficiary relied plan participant or employer mistake made between the Clause agreeing union to collective his or her benefits under the to determine a can be a defense to Opinion at 17. plan.” Memorandum delinquency by multiemployer action wel specif fare fund. While this court has never upon find the district court’s reliance We ically endorsed the D.C. Circuit’s decision misplaced. Murata Murata did not involve Coal, Bituminous which held that mutual fund, by multiemployer nor did it a suit defense, mistake cannot be asserted as we contributions. involve claim for clearly the decisions of other endorsed Rather, it concerned efforts appeals concluding courts of tradition remaining funds the excess retain normally al contract defenses available pension plan. company’s own terminated party against third beneficiaries are Therefore, 515 and the concern that section Agat available funds. See welfare namely mul- Congress to enact led it— hos, (citing approv 977 F.2d at 1505-06 rely tiemployer plans must be able to on the Benson, 316; Rozay’s al to 907 F.2d at plain language bargaining agree- of collective Truck, 775; Transfer, 791 F.2d at Gerber plans to ensure that ments order 1154). fact, explicitly In F.2d we pay required out have sufficient funds only recognized Instead, there are three held we benefits —were not at issue. by may an em defenses which be asserted ensuring only were concerned that em- avoiding contributions ployer as a means of reasonably rely upon lan- ployees could the required un to an benefit as guage plan. of the It was these bargaining a der the terms of collective with whom the was made and who, union, agreement: through presumably had their ERISA’s our decision that the scrivener’s error does not thwart The dissent contends that statutory purpose ensuring plan partici- apply "gut[s]” ‍​‌​​‌​‌​​​​​‌​​​‌‌​​‌​​​‌​​​​​​​​‌‌‌​​‌​​‌​‌‌‌‌‌‍not to this Murata does matter pants rely upon language. supra, at holding. Dissenting Opinion, the See Murata's at 1110. can today, holding we de- 1104-1105. Our decision wherein The central of Murata's scrivener’s error employer may not a cide that under section 515 an discussion is that in circumstances where court plan participants scrivener’s error in a collective that no were like- assert can establish to a contribu- ly upon in as a defense to have relied the scrivener's error fund, by multiemployer determining rights welfare does question and obli- tion claim a in gut holding any way. plan, allowing in gations reformation of under the

(1) 515, namely pension ing contributions themselves ERISA section that “trust- (2) ...; illegal bargain- plans permitted] are [be ees of to recover delin- initio, ing agreement is void ab as where quent efficaciously, contributions and without execution, in there is fraud and not regard might to issues which arise under voidable, merely as in the case of fraudu- laws,” labor-management relations and that (3) ...; lent inducement plans funding obligations be able meet decertify ees have voted to the union as its by delinquent that are hindered funds. 126 bargaining representative, pro- [sic] thus (1980) (remarks 23,039 Cong.Rep. Rep. spectively voiding the union’s collective Thompson). If the Welfare Fund itself en- bargaining agreement. gaged cаusing in fraud misconduct incor- (citations omitted); Agathos, 977 F.2d at 1505 language injected rect to be into a collective Mining Corp., see also Connors v. Fawn bargaining agreement, might it be A F.3d “mutual mis- longer the defense it in because would no be employer take” between the union and the However, the role of holder in due course. drafting bargaining agree- their collective holding. we make no such defenses, recognized ment is not one of those allege McCormick does not that the Wel- recognize today. it and we do not as such engaged fare Fund committed fraud or however, argues, McCormick we merely sweeping misconduct. It makes should affirm the district court’s decision that statements in its brief before this court that may mutual mistake asserted be as defense disputed “it is not that it was the Welfare because the actions of the Welfare Fund mysterious Fund’s conduct which caused the implicated in itself were the mistake. eligibility modification of the terms” and that essence, urges that we carve out present delinquency “the action could have may a fourth defense which be asserted been avoided if the Fund had acted employers seeking to defend actions manner,” forthright Appellee’s Brief at 18. delinquent pay welfare funds collect appears place upon blame ments, namely that the welfare fund itself simply providing sug- Welfare Fund for responsible for a mistake in the collec gested language to the union lan- when this bargaining agreement. tive guage language was different from the of the appear It does that Bituminous Coal it- previous two collective agree- self, the holding D.C. Circuit decision suggests ments. It if a Welfare Fund mutual mistake not be asserted as a “contemplates changing pre- established and defense, leaves room for the defense of mutu- viously negotiated terms in a collective bar- al mistake cases where the welfare fund gaining agreement, the Welfare Fund has to engaged causing has misconduct the mis- notify modification,” Appel- take: lee’s Brief at and that its failure to do so pension plan When the trustees of creat- it, should be viewed as misconduct which as pursuant bargaining agree- ed to collective employer, point can to in defense of the ment sue an for contributions delinquency claim. required by plan, employer may ground not defend on the of union miscon- decline We to consider as misconduct the negotiating agreement. duct in If it part failure on of a wel- else, nothing means section 515 means notify employers fare fund to changes that, at least when the Trustees [of suggests for inclusion in the implicated alleged are not fund] health and welfare benefit clauses of their misconduct, their suit cannot be thwarted First, bargaining agreements. collective by apparent defenses not from the face of any provision absence of in ERISA mandat- Agreement. ing suggests Congress such notification Coal, (emphasis Bituminous 867 F.2d at 634 require did not intend to it. ERISA includes added). many provisions require which benefit funds notify participants Such defense also does not to be or their appear administrators Congress’s pass- particular inconsistent with concern in and beneficiaries of facts or

H07 interlocking, allega- in- there is no evidence and “ERISA’s there is no events.3 Given terrelated, interdependent and remedial tion that in the Welfare Fund the instant scheme, ‘compre- part in turn of a surreptitiously which is suggested matter included its statute,”’ as- “[t]he and reticulated language hensive in bargaining agree- the collective sumption inadvertent omission is rendered Rather, party. ment unbeknownst to either suspect.” Mut. especially Massachusetts suggested language it submitted its Russell, Ins. v. 473 U.S. Co. union, language appeared and when the un- Life (1985) 3085, 3092, 87 L.Ed.2d 96 105 S.Ct. changed bargaining in agree- the collective (citing Corp. v. Pension Nachman ultimately signed pre- Benefit ment that was —and 359, 361, Guaranty Corporation, 446 U.S. sumably approved by read and both the — (1980)). 1723, 1726, 64 L.Ed.2d 354 100 S.Ct. union, the Fund relied Congress If such notification nec- considered it, upon as it was entitled to do under sec- essary, think it would have included a we tion 515. provision requiring it. Second, requirement such a notification IV. impose on multiem- an undue burden urges this court to affirm funds, hindering ployer welfare their effec- opinion .the district court’s on various other Multiemployer funds operation. tive welfare grounds Although may as well. we affirm a required to review the collective would be correct decision of the district court on bargaining agreements of each of their mem- grounds upon by other than those relied individually sending prior to out new bers court, University Maryland district see v. keep up suggested language, as well as to Co., Peat Marwick Main & require- with all of their other notification (3d Cir.1991) Rizzo, (citing PAAC v. obligations. administrative This ments and (3d Cir.1974)), n. 1 we decline to do unduly seems an harsh burden when it is not so here for the reasons that follow. statute, impor- and more mandated ensuring tantly, purported when its aim— A. plan participants are aware rights obligations under the terms of urges first this court to bargaining agreements their collective theory —can affirm the district court on easily efficiently if be more met was the result of fraud employer simply language reads the in the execution and is void. As thus noted bargaining agreement prior collective above, recognized this court has that fraud in signing it. of a collective execution serve as one of the three

We thus conclude that a possible delinquency ac defenses engaged welfare fund has not mis- Mining, tion a welfare fund. See Fawn failing notify employers conduct when 490; Agathos, F.3d at 977 F.2d at 1505. language suggests for inclusion new when a agreements “‘[F]raud the execution’ arises collective differs employers’ past party executes an “with neither from used Indeed, bargaining agreements. knowledge opportunity nor reasonable to ob- See, denied); 1106(a)(1) 1024(b)(3) e.g., (requiring (requiring § § 29 U.S.C. fur- 29 U.S.C. summary report); participants rights nishment of annual 29 U.S.C. receive notification of their 1021(a) (requiring coverage); § summary 29 U.S.C. fumishment of continue health care 1022(a) 1055(c)(3) plan description); participant (requiring (requiring § § 29 U.S.C. that each sub- any summary ject annuity fumishment of modification in the to the survivor ‍​‌​​‌​‌​​​​​‌​​​‌‌​​‌​​​‌​​​​​​​​‌‌‌​​‌​​‌​‌‌‌‌‌‍rules receive a writ- 1054(h) rules); plan); (requiring explanation § 29 U.S.C. 29 U.S.C. notice of ten those accruals); 1021(d) any significant participant § (requiring reduction benefit that each 1025(c) (requiring beneficiary any employer plan partic- § U.S.C. ipant that each be advised if fails to separates during funding within who from service make a minimum sixty days contribution date); year describing U.S.C. receive a statement the nature the due 1021(e)(1) plan participants (requiring § and the amount and form of his or her deferred benefit); 1133(1) (requiring § of a transfer of vested 29 U.S.C. and beneficiaries be advised pension provided any participant benefit ac- that notice be or excess count). assets to health beneficiary whose claim for benefits has been 1108 knowledge dispute its or its and this

tain character essen- document entire could have ” Mining, F.3d at tial Fawn 30 490 been is thus terms.’ averted. There no evidence of Transfer, (quoting Rozay’s 791 F.2d at 774 any or fraud indication Webb executed (other quotation internal citations and marks Agreement knowledge “‘“with neither omitted)). opportunity nor reasonable to obtain knowl- edge its essential character its Mining In our recent decision Fawn we ’” Mining, at terms.” Fawn 30 F.3d 490 was found that fraud in execution avail- Transfer, (quoting Rozay’s 774 union affirma- able as defense because the 3-305(2)(c))) (other (quoting § U.C.C. cita- Mining tively led Fawn to believe that the omitted). Accordingly, tions McCormick bargaining agreement sign- it was may not assert fraud in the execution as a ing require not it to contribute to a defense. pension Mining op- fund Fawn had no and

portunity to determine otherwise: Mining’s equivalent

Fawn defense is to a B. ignorance claim “excusable the con- writing signed.” argues appeal McCormick tents further been If the executed document is void ab initio tract contract document before both sides exe cute tive flecting tiously ^[*] it, we think it a fraud in the execution of the and substitutes ^[*] agreements and the union reviews a document re ^[*] agreement clear that materially ^[*] reached reflected in ^[*] there has surrepti different collec ^[*] con precluded er. funds in bringing the instant action until 1993 be that the Welfare Fund cause it knew mick guage and that accordance We was under from the reject making accordingly, from with both in August doctrines of laches 1983 and recovering contributions to the fund contentions. eligibility inexcusably delayed 1989 that McCor 1985 Agreements, clause lan and Fund is waiv and unenforceable the union. The em ployer has never manifested an assent to contract, alleged the terms of the The doctrine of laches consists of purporting written document to evidence (1) delay two essential elements: inexcusable been has obtained fraud. suit; (2) instituting prejudice resulting Mining, (emphasis Fawn 30 F.3d at 492-93 delay. to the defendant from such Uni See added). Products, versity Pittsburgh Champion v. Mining Fawn makes clear that McCor- Inc., (3d Cir.), 1044 cert. mick fraud in cannot assert the execution as denied, U.S. S.Ct. undisputed a defense here because the facts (1982). L.Ed.2d 933 We сonclude that it opportunities had indicate Webb several does apply here. Within 19 months of its language review the revealing delinquency, audit the Fund prior Specifically, its execution. the rec- formally began its efforts to collect the delin opportunity ord reflects that Webb quency, it filed suit federal district to review the 22, 1993, April years court on less than two First, provided Clause twice. Greenawalt year after the audit and well within the three him suggested language during with the bringing type statute of limitations for Then, negotiations. negotia- following the Market, Inc., action. Vernau v. See Vic’s

tions but before the formal execution of the F.2d no There is evi agreement, supplied Greenawalt Webb delay dilatory. dence that this complete draft of the 1988 in- Furthermore, there is no structing get evidence Webb “review it back any way prejudiced by was in [him] with additions or corrections.” alleges delay. Had this reasonable Webb reviewed the he alleged would have has prejudicеd found the error been because the amount it

H09 eligibility owes would been smaller than now under the 1983/1985 claimed and that McCormick would not be Agreements, the Fund should not receive the liquidated damages, facing penalties at- delinquent However, funds. a welfare fund essence, torneys’ fees. McCormick asks unjustly is not simply enriched because it has that it this court to assume would have be- payments received benefit par- on behalf of differently actually paid haved the delin- employees claims, ticular who have not made quent amount if it had known that suit would they presumably because would have re- accepting no be filed. We have basis for coverage they ceived submitted claims. claim and we decline to do so. payment A benefit for coverage made such,

case claim is submitted. As a lack of Furthermore, actual claims is irrelevant. expected welfare fund to have those funds at McCormick further claims that the payout hand for of benеfits on behalf of other opportunity Welfare Fund has ‍​‌​​‌​‌​​​​​‌​​​‌‌​​‌​​​‌​​​​​​​​‌‌‌​​‌​​‌​‌‌‌‌‌‍waived its employees, including employees of other em- recovery seek funds be ployers who are members of the multiem- respond cause it failed to to McCormick’s ployer Welfare Fund.4 notification that it intended follow the eligibility

terms of the clause of the 1983 and D. Agreements instead of the clause in the Agreement. Finally, that, urges decide, explained do, This court has that waiver is the should we as we to reverse the relinquishment “intentional of a known order of the district court in favor of McCor right.” Corp. Paradise Hotel mick, v. Bank we not judgment reverse the in favor Scotia, Nova of Webb. We note that the district court did Supreme Court has held that order to specifically not address this issue. statutory right, find waiver of a “the waiver This court has held that there is no indica- Metropol- must be clear and unmistakable.” Congress tion corpo- intended to hold NLRB, 693, 708, itan Edison Co. v. 460 U.S. corporation’s rate officers liable for a failure (1983). 1467, 1477, 103 S.Ct. 75 L.Ed.2d 387 to contribute to benefit funds when there is any There is no evidence the record of piercing corporate no basis for veil. See waiver, let alone a “clear and unmistakable Klein, (3d Solomon v. one,” accordingly doctrine waiver Cir.1985). Appellants allegations made no apply does not here. complaint corporate veil should pierced, apparently sought judgment be but

C. against only posi- Webb on the basis of his corporate Accordingly, tion as a officer. we urges McCormick further that we will dismiss the claim Webb. ground affirm the district court on the unjustly the Welfare Fund would be enriched essence, prevail

if it were on its claim. In V. that, McCormick claims because no there is foregoing For provided coverage evidence that the Fund reasons we reverse the any employees granting new for whom decision of the district court sum- McCormick did pay 45-day mary judgment benefits until met the in favor of defendants and Clause, reality Eligibility undoubtedly paid 4. This flaw demonstrates the in the dis- companies sent’s in the ”[n]either conclusion that other employees out benefits to numerous over consortium nor the fund period. relevant time The Welfare Fund had cent, expend directly itself were forced to one $28,000 pay less in its from which to out coffers indirectly, on the basis of the 1988 contract ref- these benefits than it would have had if McCor- Dissenting Opinion, ormation.” the Welfare Fund did not make at 1112. While payments mick had made in accordance with the any payments Clause. behalf of of the new covered summary negotiated the Local a series of collective denying plaintiffs’ cross-motion for and agreements. Each of these summary judgment in favor judgment; issue agreements provision that McCor- included plaintiffs; dismiss the claim pay premiums Appellant mick would James Webb. providing purpose for the medical Fund benefits to the drivers and their families. ALDISERT, Judge, dissenting. Circuit agreements, employees Pursuant to these thе along, thought I that eligible came for benefits after Until this ease would become by specified period our careful and this court was bound worked of time McCor- 1983, holding equitable specified period that important opinion the mick. Prior to that days. to a time was 30 contract reformation due doctrine of pur- consistent with the scrivener’s error is 1983, spiraling premi- In due to the cost of International Union of ERISA. See poses many ums and the fact that McCormick em- America, v. Murata Erie North days ployees left after 30 calendar but before later, years Four the days, Local 60 calendar McCormick and the majority gut that decision. negotiated change eligibility in the clause days. from 30 to 45 The Health and Welfare majority argu- doing, In the embrace so language. approved the new Both Pennsylvania from the Teamsters ments Dray and the Local believed that McCormick Fund that torture the Health and Welfare eligibility controlling this clause was unless and assault the cardi- good canons of reason Indeed, negotiations. to further the rights nal axiom of ERISA agreement, 45-day repeated next obligations of health and welfare funds stand eligibility language, agree- as did the 1991 parties agree to in a collective or fall on what ment. bargaining agreement. expiration Several months before the us, argues the Fund form over Before however, agreement, the 1985 trumpets substance and has been began negotiate and the Local terms for prejudiced, though paid it has not out even agreement. eligibility clause with the erroneous penny one in accordance negotiations, was never discussed these us, language. the Fund as- written Before any change contemplat- nor was in the clause concepts of reliance serts theoretical parties. ed A contract was offer inhere prepared by McCormick and submitted to bargaining history when fact the collective Local, Thereafter, approved. which dur- unquestionably parties re- since 1983 ing preparation agree- the Local’s of the final parties agree- to the labor

veals that both the ment, 45-day eligibility language operated on ment and the Fund have replaced language providing for cover- formula, par- which basis of the intended age day first “as of the month immedi- claim ties have since restored. The Fund’s ately following employee’s] employment.” [an argument of reliance therefore amounts to an 202-03. JA described, aptly of the Immortal the words Bard, fury signi- as “full and sound and Notwithstanding change eligibil- fying nothing.”1 ity period, both assumed intact;

eligibility clause remained McCormick continued to make contributions I. newly to the Fund on behalf of hired simple 45-day eligibility The facts in this ease are and undis- ees under the conventional puted. Dray trucking com- requirement, pay- and the Fund made no represented pany employs union drivers ments in accordance with the erroneous lan- Dray guаge. by Teamsters Local 764. McCormick V., Macbeth, Shakespeare,

1. W. Act Scene lines 32-33.

HH August company party discovered ERISA a third beneficiary to a advised Local and the error and new bargaining agreement. sure, To be Principals hired thereafter. of Section 515 of requires ERISA surprised the Local were as as McCormick to contribute to a benefit eligibility period in accordance with the “terms and condi- indeed, 1993, days; was not 45 in the Local tions” set forth in the collective agreed in writing and McCormick that agreement. § 29 U.S.C. 1145. And there is parties’ 1988 did not reflect either that, dispute construed, no literally the terms up intent. When the 1988 came and conditions of the 1988 make 1991, 45-day eligibility for renewal in eligible any employee “as of day the first included, requirement again was and without immediately the month following his Thus, negotiation. the clause under consid- ment.” applying JA 202-03. Yet rules with original eration was contained labor unfailing accuracy technical aggre- is not 1983, 1991, and, agreements of 1985 and ac- gate responsibility. of our Judge Cudahy As cording to a written was “inad- eloquently States, stated in Central South- vertently agreement. misstated” in the 1988 east and Southwest Areas Pension Fund v. facts; than These are more historical this Service, Inc., Gerber Truck sequence large subsequent looms dis- (7th Cir.1989) J., (Cudahy, 1158 dissenting), by cussion reliance the Fund. “all equitable rules must admit of exception in appropriate modification cases lest the The Fund conducted an audit in 1991 and tyranny theory reality bring over about attempt recoup alleged did not defi- indeed, obnoxious results.” And we have ciency filing complaint until 1993. The of its recognized exceptions several to ERISA’s developments: followed the heels of two traditionally mandate that contract defenses withdrew from the Fund against party available third beneficiaries are premium jumped when the from $277 not available $400; welfare funds. See approximately month to and the Local Motel, Agathos v. Starlite F.2d requested action the Fund аs a method of (3d Cir.1992) (recognizing 1505-06 putting pressure on three ex- McCormick to resolve an rule). ceptions general dispute. unrelated labor philosophy This was undergirded that II. decision, Becker, Judge our Murata in which court, writing acknowledged for the that a error, Under the doctrine of scrivener’s exception scrivener’s error “would seem at drafting clerical mistake made in a document statutory purpose odds with [the in- of] parol be reformed on the basis of evi sur[ing] ‘every employee may, on exam- dence, provided that the evidence of the mis documents, ining exactly determine “clear, precise, convincing take is and of the rights obligations what his are under the satisfactory most character” and that Murata, plan.’” (citing 980 F.2d at 907 mistake does not reflect the intent of the Indus., Inc., Frank v. Colt Duncan, parties. ‍​‌​​‌​‌​​​​​‌​​​‌‌​​‌​​​‌​​​​​​​​‌‌‌​​‌​​‌​‌‌‌‌‌‍In re See Estate 426 Pa. (3d Cir.1990)). so, Even we decided to east (1967); 232 A.2d 717 also see Easton v. equitable exception. our die on the side of an Co., Washingtоn 28, 137 County Ins. 391 Pa. nothing jurisprudence Thus there is our (1957). Here, A.2d dispute there is no ERISA, governing labor relations or as ex- signatories between the that a mistake has Murata, pressed by Agathos and that en- occurred, majority’s “tyranny theory dorses the over agreement clearly par not does reflect the reality” bringing about results are ties’ intent. agreement. obnoxious to of a labor remains, then, precise inquiry The is inquire We must then importing whether equitable per- whether the facts in should doctrine of reformation this case of con- teachings tract due to a is suade us to eviscerate the central scrivener’s error available to here, brought in an action under Murata. Logicians III. on-the-error. refer to an ar- such gument fallacy as of irrelevant conclu- majority holding The the Murata dismiss sion, ignoratio elenchi. “did not involve suit because case fund, nor did it involve a claim IV. Opinion contributions.” 1103. Neither of these distinctions is tena- majority’s The additional reason for blе. following accepted Murata is that we doctrine of error scrivener’s that case disallowing The reason for the scrivener’s because what was at stake was a “windfall.” context, exception in a multiemployer error majority that, argue because the Fund say majority, “multiemployer brought by any will entertain claims McCor- plans rely must on plain be able to eligible mick who was for benefits bargaining agreements of clause, eligibility under the erroneous no plans or order to ensure that have argument “windfall” is at stake here. This pay required out sufficient funds to benefits.” reality. flies in face of basic economic Opinion at majority’s 1106. The reluctance multiemployer from plan’s concept stems any I reiterate the Fund has not made multiple with over a fiduciaries control com- payments in accordance the erroneous mon fund: to allow one to bind a language. Surely, with the benefit more pay to fund benefits outside strict terms years than six оf hindsight, the is now Fund pay of a all employers force to fully claims; potential aware can it reformation, employer’s for one and insofar effortlessly thus calculate com- whether the payments damage as such the actuarial pany’s additional contributions would exceed plan, they soundness of the burden the em- payouts Fund’s additional ployees many corporations other as well. Indeed, filing surely ees. of this action simple indicates that the math has com- been legitimacy Whatever be the of this puted. payouts no There been whatso- abstract, reasoning in it is not relevant to Therefore, when, ever. without reliance on undisputed facts here. Neither other the error in the seeks Fund companies multiemployer consortium to recover additional contributions from nor the expend Fund itself were forced McCormick, that’s a windfall. cent, directly indirectly, one on the basis Thus, of the 1988 contract reformation. theory conсept basis had no adverse V. in reality. The effect reason asserted for The never Fund relied the scrivener’s artificially engrafting an ex- error, nor does deserve windfall. More- ception teachings simply Murata over, in Murata we resolved the fundamental says not warranted here. The double maxim recognizing exception tension between ratione, lex, ipsa it all: cessante cessat satisfying purposes scrivener’s error leads;

rule follows its reason where where The presented ERISA. circumstances stops, stops the reason there the rule. provide no decimating here reason for a well- premiums Fund neither collected from reasoned decision this court. provided compensation nor Accordingly, I judgment would affirm the based on scrivener’s error now of the district court. I dissent. equitable Indeed, reformation. contributed consis- 45-day tent with eligibility, the conventional only corresponding Fund made out-

lays to employees. Thus the Fund here not possibly

could demonstrate reliance— jure reliance,

whether a kind of de actuarial we-paid-out-benefits-in-reliance-

or a defacto

Case Details

Case Name: Central Pennsylvania Teamsters Pension Fund v. McCormick Dray Line, Inc.

Court Name: Court of Appeals for the Third Circuit

Date Published: Jun 12, 1996

Citation: 85 F.3d 1098

Docket Number: 95-1740

Court Abbreviation: 3rd Cir.