Flynn, John v. Dick CorpFlynn, John v. Dick Corp
Opinion for the court filed by Circuit Judge HENDERSON.
The appellants, John Flynn (Flynn) et al., trustees of the Bricklayers & Trowel Trades International Pension Fund (IPF or the Fund), sued Dick Corporation (Company) under the Employee Retirement Income Security Act (ERISA),
I.
The factual history of this contract dispute is cumbersome but essential to a proper understanding of the issues raised on appeal. In 2002, Dick Corporation, a Pennsylvania-based construction company, became the general contractor on two construction projects in Florida. The Company decided to subcontract the craft-work involved in the Florida projects. Its chosen subcontractors, like all of the subcontractors submitting bids on the two projects, did not employ members of the International Union of Bricklayers and Allied Craftworkers (BAC). In the past, however, the Company had used its own employees to perform the type of work it subcontracted on the two projects. Its employees were members of local bricklayer unions, including BAC Local 1 of Northern New England, with which the Company had a CBA. Under the CBA, it paid employee benefit contributions into the Fund, thereby entitling its employees to benefits under the Fund. See Second Decl. of David F. Stupar, Exs. 3 & 4, reprinted in Joint Appendix (JA) at 540, 542.
In December 1989 the Company signed an Independent Agreement (1989 IA) with the local BAC affiliates in eastern Massachusetts, agreeing “to be bound by all the terms and conditions of the effective Collective Bargaining Agreement and any ... successor agreements.” Independent Agreement Between Dick Corp. and Dist. Council of E. Mass. Bricklayers & Allied Craftsmen Local Unions (Dec. 1, 1989) ¶ 1,
reprinted in
JA at 11. The CBA referenced in the 1989 IA was executed in August 1989 (1989 CBA).
1
Similarly, in
Both successor CBAs — the August 2002 CBA and the September 2002 CBA — contain a “traveling contractor’s clause,” which requires that a signatory employer with “any work [covered by the CBA] to be performed outside of the geographic area” of the CBA and “within the geographic area covered by an Agreement with another affiliate of [the BAC] ... abide by the full terms and conditions of the Agreement in effect in the job site area.” JA 195, § 10;
see also
JA 410, art. I-D. Pursuant to both clauses, the IPF sued the Company for failure to make employee contributions consistent with the terms of a Florida CBA between the local BAC in the area of Dick Corporation’s Florida projects and the local employers of BAC members in that area.
See Flynn v. Dick Corp.,
Following discovery, the district court granted the Company’s motion for summary judgment.
See Dick Corp.,
In addition, the district court found that the LMRA precluded the contributions the Fund sought.
See id.
at 200-02. First, the skeletal nature of the agreement submitted by the Fund failed to provide the “detailed basis” required for lawful contributions from an employer to a trust fund under section 302(c)(5)(B) of the LMRA.
See id.
at 200-01;
The IPF moved for reconsideration, challenging the district court’s conclusion that there was no valid CBA in effect in Florida and, in any event, not one that provided a “detailed basis” for Fund contributions at the time of the Company’s Florida projects. See Pis.’ Mot. for Recons. The district court ultimately agreed with the IPF that it had misconstrued affidavits submitted by the Florida BAC and that the affidavits — and the rate tables from CBA appendices the Fund submitted with them — had in fact contained the required “detailed basis” for Fund contributions along with evidence of an enforceable Florida CBA. See Mem. Order on Mot. for Recons., reprinted in JA at 664-65. The district court “vacate[d]” its grant of summary judgment to Dick Corporation to the extent it was based on the absence of either an enforceable CBA or a detailed basis for benefit contributions under the LMRA. See id. at 665. It nonetheless again granted summary judgment to the Company because the requested contributions were not for the “sole and exclusive benefit” of Dick Corporation’s employees as pequired by the LMRA. See id. at 665-66. The IPF now appeals.
II.
We review the district court’s grant of summary judgment
de novo, see Nat’l Ass’n of Home Builders v. Norton,
The Fund’s claim to benefit contributions is based on section 515 of ERISA, which provides:
Every employer who is obligated to make contributions to a multiemployer plan ... under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.
An agreement obligating an employer to contribute to a pension fund is not valid to the extent that such contribution is “inconsistent with law.”
See
A. Effect of Florida CBA
In general, an employer’s obligation to make benefit contributions under section 515 of ERISA arises from a collective bargaining agreement in the geographic area in which the employer’s work is performed. Dick Corporation signed no CBA in Florida, where the two relevant construction projects were to be undertaken. The Company instead signed two independent agreements — and, by their operation, two CBAs — in Massachusetts.
See
JA 10-13, 71-74;
Dick Corp.,
The Fund reads the traveling contractor’s clause in the August 2002 CBA to require the Company to contribute to the Fund in accordance with the Florida CBA. See Appellants’ Reply Br. at 13. 5 The clause provides:
When the Employer has any work specified in ... this Agreement to be performed outside of the geographic area covered by this Agreement and within the geographic area covered by an Agreement with another affiliate of [the BAC], the Employer agrees to abide by the full terms and conditions of the Agreement in effect in the job site area.
JA 195 (emphasis added). Two different district courts have given conflicting interpretations to the “unambiguous” meaning of identical traveling contractor’s clauses.
Compare Flynn v. Beeler Barney
Assocs.
Masonry Contractors, Inc.,
No. 02-1411,
We believe the clause is ambiguous. Indeed, as the Sixth Circuit noted in construing a virtually identical clause, “the first sentence of the BAC Traveling Contractor clause is susceptible to more than one interpretation” because the “phrase “within the area covered by an agreement with another affiliate of the [BAC]’ could refer to an agreement between [the employer] and the BAC affiliate, or it could refer to an agreement between
any
employer and the BAC affiliate.”
Trs. of the B.A.C. Local 32 Ins. Fund v. Ohio Ceiling & Partition Co.,
Unlike the statements of the union president in
Driscoll Masonry
— accepting a narrow interpretation of the clause — and those of the company president in
Ohio Ceiling
— with a similar narrow understanding of the clause,
see Ohio Ceiling,
Moreover, “it would make little sense to interpret the ... clause as only applying when the employer works in a jurisdiction where
that same employer
has signed a separate CBA with another BAC affiliate because, if the employer was signatory to an agreement in the jobsite area, there would be no need for a traveling contractors clause.”
Beeler,
B. Effect of Section 302 of LMRA
The Florida CBA at issue requires an employer to contribute pension and retirement benefit payments into the Fund for union work performed within the territorial jurisdiction of the CBA. JA 603. While the LMRA prohibits employer contributions to a labor organization, section 302 provides an exception “with respect to the payment ... of any money ... in satisfaction of a judgment of any court or a decision or award of an arbitrator.”
The Employer agrees that neither he nor any of his subcontractors on the jobsite, will contract or subcontract work coming under the trade or territorial jurisdiction of [the BAC], to be done at the site of construction ... except to a person, firm or corporation bound to this agreement.
Pis.’ Mot. for Summ. J. at 13. Dick Corporation admitted that it employed non-union subcontractors on its Florida projects.
See
Decl. of Raymond Crothers at JA 152.
8
In
Washington Post v. Washington-Baltimore Newspaper Guild, Local 35,
Dick Corporation, however, argues that
Washington Post
and section 302(c)(2) of the LMRA are inapplicable because the IPF has no underlying court judgment or arbitration award establishing the Company’s breach of the Florida CBA,
see
Appellee’s Br. at 27-29, relying on
Jackson Purchase Rural Elec. Coop. Ass’n v. Local Union 816, Int’l Bhd. of Elec. Workers,
Section 302(c)(2) requires no more than “vigorous and genuine litigation” and the court’s (or arbitrator’s) determination of the merits of the alleged contractual breach.
Id.
at 607 (“The Post will pay this money on the order of the arbitrator, after vigorous and genuine litigation.”). From a practical standpoint, Dick Corporation’s claim that an underlying judgment is necessary to invoke section 302(c)(2) would be cumbersome and duplicative, requiring two separate sets of litigation: an initial determination of breach and a second enforcement proceeding. Instead, once the court finds a valid contractual provision breached, the “satisfaction of a judgment” language of section 302(c)(2) is met and the same court may award damages for the violation.
See Trs. of Int’l Bhd. of Teamsters Local 531 Sick & Welfare Fund v. Marangi Bros., Inc.,
C. Effect of Arbitration Clause of Florida CBA
Next, Dick Corporation argues that the IPF may not bring suit without first complying with the compulsory arbitration provision contained in the Florida CBA.
See
Appellee’s Br. at 41. As the Supreme Court has recognized, however, the “presumption of arbitrability is not a proper rule of construction in determining whether arbitration agreements between the union and the employer apply to disputes between trustees and employers.”
Schneider Moving & Storage Co. v. Robbins,
As both third-party beneficiaries of the Florida CBA’s trust fund provisions and trustees of an employee-benefit fund, the IPF is entitled to file suit for delinquent contributions free from the CBA’s arbitration requirements.
See, e.g., Schneider,
D. Existence of Enforceable Florida CBA
Finally, Dick Corporation challenges the district court’s determination that there is a genuine issue of material fact — precluding summary judgment — whether an enforceable Florida CBA existed at the time of its Florida construction projects. The Company asserts that the district court erred in relying on proffered evidence related to the Florida CBA in light of the Fund’s alleged discovery violations.
See
Appellee’s Br. at 14-26. Indeed, when the Company requested a copy of the Florida CBA, including the CBA’s specific wage and contribution rates, during discovery,
see
JA 267, the Fund produced only a standard Florida CBA form (with blanks not filled in), JA 267-68; 129-50, and Dick Corporation claims that the Fund failed to provide the specific information needed to establish the existence of an enforceable CBA until the Company moved for summary judgment,
see
Appellee’s Br. at 16. Because of the Fund’s failure to produce, the Company argues, the district court should have excluded any rate information under
In response, the Fund claims that it provided the “substantial justification” for non-disclosure necessary to avoid
In general, the district court enjoys wide discretion in managing discovery, and, accordingly, “[w]e review the district court’s discovery ruling[s] for abuse of discretion” only.
See Diamond Ventures,
Both Dick Corporation and the Fund presented arguments to the district court regarding discovery sanctions. Nevertheless, the district court did not expressly decide the discovery dispute. Instead, it simply used the challenged evidence in deciding on reconsideration “that the Court erred when it found that evidence of the detailed wage scales and contribution rates necessary to complete the contract had not been submitted into the record.” JA 665 (citing Decl. of Robert Blanco at JA 474-82). The district court therefore found that the existence of an enforceable CBA in effect at the time of Dick Corporation’s Florida projects “presented a genuine issue of disputed material fact sufficient to withstand summary judgment.” Id. 12
Moreover, the district court did not “deliberate[ly]” reject the proffered evidence in its initial summary judgment ruling as a discovery sanction but simply overlooked the evidence “[a]wash in [the] sea of unsigned and unlabeled agreements and contracts” in the case.
Id.
at 665 n. 4. While we owe deference to the district court’s discovery decisions, we cannot defer to a decision that has not been made and we therefore remand for the district court to exercise its discretion in deciding the
To sum up, we reverse the district court’s holding that the benefit contributions sought by the Fund are prohibited under the LMRA because Dick Corporation’s breach of the Florida CBA — to which the Company is bound by operation of the August 2002 CBA’s traveling contractor’s clause — brings the requested benefit contributions within the exception of section 302(c)(2) of the Labor Management Relations Act,
So ordered.
Notes
. As a Pennsylvania corporation, the Company was not a member of the Building Trades Employers' Association of Boston and Eastern Massachusetts, Inc. or the Mason Contractors
. Before the district court, the Company maintained that it was not a party to the successor CBAs.
See Flynn v. Dick Corp.,
. With the parties' consent, the district court had referred the case to a magistrate judge,
see
Appellants' Br. at 2 n. 1, who authored the order in this case,
see Dick Corp.,
. The district court rejected the Company's assertion that the IPF was procedurally barred from filing suit based on the Florida CBA for failure to exhaust the CBA’s required arbitration provision.
See Dick Corp.,
.
In contrast, the district court looked to the traveling contractor’s clause in the
September
2002 CBA to bind Dick Corporation.
See Dick Corp.,
. The district court in
Driscoll Masonry
also noted that the local union’s president agreed with the court’s narrow interpretation of the clause.
See Driscoll,
. Although the interpretation of ambiguous contract language, particularly if it requires consideration of extrinsic evidence, is a question of fact,
cf. Am. First Inv. Corp. v. Goland,
. If, contrary to the Company's position, we conclude that it
is
subject to the Florida CBA by virtue of the traveling contractor’s clause, the Company does not contest that its conduct breached the Florida CBA.
See
Appellee’s Br. at 27-31 (challenging applicability of section
. Although the district court did not rule on the applicability of section 302(c)(2), the IPF raised the issue of Dick Corporation's breach before the district court. See Pis.' Mot. for Summ. J. at 13-14. Because contractual breach is a legal question that was raised below and also on appeal, see Appellants' Br. at 11-16, we may, exercising de novo review, reach the merits of the breach claim.
.
. Absent an enforceable agreement, no contractual breach exists to trigger section 302(c)(2)’s exception.
. Despite the wage scale and contribution evidence, the district court on reconsideration remained "unable to find on the basis of the existing evidence that the Florida agreement was in fact 'in effect’ in the local jobsites.” Mem. Order on Mot. for Recons, at JA 665. In its summary judgment order, the district court had "relied both on the lack of any signed agreement in the record and on the apparent lack of any evidence that the necessary ... wage scales [and] contribution rates ... had been agreed to and incorporated into the template CBA for any Florida jurisdiction.”
Id.
at 664 (footnote omitted). Because its Rule 59(e) ruling was based on the record evidence regarding wage scales and contribution rates, the only remaining basis for its summary judgment grant was the lack of the parties’ signatures. While the document provided by the Florida BAC affiliate did not contain signatures, it referenced the Union Contractors and Subcontractors Association as the employer party to the agreement.
See
JA 512, 514 (citing "[t]he attached 'Industrial Agreement' between BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL # 1, FLORIDA, UNION CONTRACTORS, AND SUBCONTRACTORS ASSOCIATION, INC.”). Further, Robert Blanco, the President of the Florida BAC, stated that the wage and contribution rates in the submitted material represented the "Memoranda of Agreement” between the local BAC and employer groups when Dick Corporation's Florida projects were in progress.
See
Decl. of Robert Blanco at JA 476-79. Thus, the material the Fund submitted as well as Blanco’s declaration identified the parties to the contested Florida CBA.
Cf. Henke v. U.S. Dep’t of Commerce,