THE TRUSTEES OF THE TWIN CITY BRICKLAYERS FRINGE BENEFIT FUNDS, Plаintiff-Appellee,
v.
SUPERIOR WATERPROOFING, INC., a Minnesota Corporation; Raymond Paschke, Defendants Third Party Plaintiffs-Appellants,
v.
Bricklayers and Allied Craftworkers Local Union No. 1 of Minnesota, Third Party Defendant-Appellee.
No. 05-3112.
United States Court of Appeals, Eighth Circuit.
Submitted: March 13, 2006.
Filed: June 7, 2006.
COPYRIGHT MATERIAL OMITTED Gregg J. Cavanugh, argued, Maple Grove, MN, for appellant.
Brendan D. Cummins, argued, Minneapolis, MN (Richard A. Miller and Justin D. Cummins, on the brief), for appellee.
Before MURPHY, BOWMAN, and BENTON, Circuit Judges.
MURPHY, Circuit Judge.
The Trustees of the Twin City Bricklayers Fringe Benefit Funds brought this action against Superior Waterproofing, Inc. and its sole owner Raymond Paschke (collectively Superior) for violation of a statewide collective bargaining agreement (and a related interim independent agreement) with the Bricklayers and Allied Craft Workers Union Local No. 1 of Minnesota (the Union). Subsequently Superior filed a third party complaint against the Union for fraudulent inducement. The Union moved to dismiss Superior's complaint, and the district court1 granted the motion after concluding that the third party claims were preempted under § 301 of the Labor Management Relations Act. Superior appeals, and we affirm.
I.
Superior is a Minnesota corporation formed in 1980 by Paschke, its president and sole shareholder. It specializes in caulking and waterproofing, and a number of its craft employees are members of the Union. Since 1981 Superior has been a party to a statewide collective bargaining agreement (CBA) with the Union, along with many other independent employers and several large trade organizations. Paschke also signed a separate interim indeрendent agreement in 2001 which made him personally liable for Superior's obligations under the CBA.
Under Article 23 of the CBA, Superior is required to contribute to a multiemployer fringe benefit plan, defined under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1002(37). The plan to which Superior agreed to contribute under the CBA provides pension, health, welfare, and other benefits to covered employees, and it is administered by the Trustees. Article 23 of the CBA requires employers to make monthly fringe benefit contributions "for each hour worked by all Employees covered by this Agreement," to submit monthly fringe benefit contribution Reporting Forms, and to "furnish . . . on demand, all necessary employment and payroll records relating to its Employees and persons performing work covered by this Agreement ... that may be required in connection with the administration of the Trust Funds." It also contains the parties' acknowledgment that provisions "establishing rates of pay, wages ... and other terms and conditions of employment, including fringe benefits, apply to Employees employed in job classifications within the jurisdiction of the Union, regardless of whether or not such Employees are members of the Union." In addition, Article 27 of the CBA provides that "(t)his Agreement covers the entire understanding between the parties hereto."
In April 2004, the Trustees informed Superior that they intended to conduct a fringe benefit compliance audit and they demanded relevant employment, payroll, and fringe benefit contribution records pursuant to Article 23 of thе CBA. In their first party complaint, the Trustees allege that their demand for records was prompted by Superior's breach of the CBA and interim independent agreement by its failure to submit the required monthly contribution Reporting Forms and the required contributions for many of its covered employees. The complaint also alleges that Superior has failed to cooperate with the compliance audit. Because of this failure the Trustees subsequently demanded payment of over $50,000 in delinquent fringe benefit contributions. When Superior refused, the Trustees brought this action to recover the delinquent contributions together with liquidated damages, reasonable attorney fees, and audit costs.
Superior asserts in its answer to the Trustees' complaint that it had an understanding that it did not have to make contributions and submit Reporting Forms for all of its eligible employees and that any such obligations were procured through fraud. In an affidavit Paschke claims that shortly after he formed Superior, he told the Union business manаger George Heppelmann that he wanted to sign on to the statewide CBA to be eligible for union only jobs, but that he could not afford to make union fringe benefit contributions for all of his craft employees. Heppelmann allegedly told him that it would be sufficient to place "two or three" employees in the Union and make contributions only on their behalf. Paschke claims that this was consistent with his own past experience working as a tuck-pointer and caulker for a signatory to the statewide CBA who had not paid union wages or made fringe benefit contributions for him, allegedly with Heppelmann's approval. Paschke claims it was because of this experience that he agreed to sign on to the statewide CBA.
Superior has repeatedly renewed its participation in the CBA over the last twenty five years, but it contends that the Union has always known that contributions were being made for at most "about half" of its craft employees and that the Union assisted this arrangement by informing Paschke whеn particular jobs were union only so that he would know which employees could staff them. It asserts that it has established a separate fringe benefit plan for its non union employees to which it has contributed more than $25,000.
After the Trustees filed their first party complaint against Superior for breach of the CBA and the interim independent agreement, Superior filed a grievance with the Union. The grievance asked that the Union intercede on Superior's behalf and indemnify it for the delinquent contributions and оther costs. The Union declined to process the grievance for the reason that disputes about fringe benefit payments are not covered by the grievance provisions of the CBA.
Superior then submitted an unfair labor practice charge to the National Labor Relations Board (NLRB), alleging that the Union had failed to engage in good faith negotiations in violation of the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., by fraudulently inducing the company to enter into the CBA. Cf. NLRB v. Wooster Div. of Borg-Warner Corp.,
Superior next sought leave from the district court to file a third party complaint, alleging that the Union had fraudulently and negligently misrepresented the nature of Superior's obligations under the CBA and fraudulently concealed relevant facts in violation of Minnesota law. The district court granted leave, and the third party complaint was filed in March 2005. In it Superior seeks rescission of the CBA and the interim independent agreement, indemnification and contribution for any delinquent fringe benefit contributions, and other damages and costs which it would be forced to pay the Trustees.
The Union moved to dismiss the third party complaint for failure to state a cause of action. It asserted that Superior's state tort claims were preempted under § 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185. In § 301 Congress provided a federal cause of action for violation of contracts between emрloyers and labor organizations, a remedy distinct from the grievance procedures established under the NLRA. The Union argued that Superior's state law claims could not be resolved without interpreting Article 23 of the CBA and were therefore preempted, citing Lingle v. Norge Div. of Magic Chef, Inc.,
II.
Superior appeals from the judgment of the district court dismissing its third party complaint.4 We review the grant of a motion to dismiss de novo, using the same standard as the district court, and we accept the factual allegations in the third party complaint as true. MM & S Financial, Inc., v. Nat'l Ass'n of Securities Dealers, Inc.,
As a preliminary matter, Superior contends that Paschke's individual claims relating to the interim independent agreement cannot be preempted because he is not an employer within the meaning of the LMRA. The Union counters that Paschke fits the statutоry definition of an employer. Since this is a question of statutory interpretation, the plain language of the Act controls if it is unambiguous. United States v. Mickelson,
On its appeal Superior maintains that the district court erred in concluding that its third party action is preempted under § 301 of the LMRA because it does not allege any violation of the CBA or the interim independent agreement, citing Textron Lycoming Reciprocating Engine Div., Avco Corp. v. UAW,
A.
Textron was a case with no preemption issue. The question therе was whether the federal district court had subject matter jurisdiction under § 301 of the LMRA over a claim of fraudulent inducement when no party had alleged any violation of a collective bargaining agreement. Id. at 655-57,
Congress enacted § 301 to provide federal jurisdiction over "suits for violation of contracts between an employer and a labor organization," 29 U.S.C. § 185, in order to fashion a body of federal common law for the purpose of resolving labor disputes in a uniform manner across the country. Lueck,
In its cases on § 301 preemption, the Supreme Court has distinguished those which require interpretation or construction of the CBA from those which only require reference to it. An otherwise independent claim will not be preempted if the CBA need only be consulted during its adjudication. See Livadas v. Bradshaw,
B.
The proрer starting point for determining whether interpretation of a CBA is required in order to resolve a particular state law claim is an examination of the claim itself. See Smith v. Colgate-Palmolive Co.,
The main focus of Superior's argument on appeal deals with its claims for fraudulent and negligent misrepresentation. Under Minnesota law both require proof that the plaintiff justifiably relied on the defendant's misleading statements. Midland Nat'l Bank of Minneapolis v. Perranoski,
Superior suggests that we ought to except it from the rule regarding justifiable reliance because of the course of dealing it had with the Union. It argues that the long collective bargaining relationship between the parties created a level of trust justifying reliance regardless of the contract language, but this argument is not supported under the law. The rule in Minnesota is that express contractual language deserves greater weight than course of dealing. See Anoka Hennepin Ed. Ass'n v. Anoka Hennepin Indep. Sch. Dist. No. 1,
Whether Superior could justifiably rely on the Union's assurances about the extent of its fringe benefit obligations depends on the nature of the relevant provisions of the CBA and whether they are sufficiently ambiguous tо be susceptible to an interpretation which could lend support to its asserted belief that contributions were not necessary for all of its craft employees. The district court concluded that to make such a determination, a fact finder would have to interpret the CBA and that the third party claims were therefore preempted under § 301. See Trustees of the Twin City Bricklayers Fringe Benefit Funds v. Superior Waterproofing, Inc., No. 04-3009,
C.
To determine whether Superior justifiably relied on the oral assuranсes allegedly made by the Union, the trier of fact would have to determine whether the contractual language in the CBA was ambiguous enough for a layman reasonably to believe that it was not contrary to the representations on which Superior claims it relied. Perranoski,
We were confronted with a similar situation in Schuver v. MidAmerican Energy Co.,
An analogous scenario faced the Seventh Circuit in Colgate-Palmolive,
The primary cirсuit court decisions cited by Superior are significantly different from these cases. Both Northwestern Ohio Adm'rs, Inc. v. Walcher & Fox, Inc.,
The case now before the court does implicate the policy interest behind § 301 preemption. As the Supreme Court explained in Lueck, "(i)f the policies that animate § 301 are to be given their proper range ... the pre-emptive effect of § 301 must extend beyond suits alleging contract violations." Id. at 210,
Although Superior's third party complaint does not itself allege a violation of the CBA, this case is not one where "the meaning of contract terms (was) not the subject of dispute." Lividas,
III.
Accordingly, the judgment of the district court is affirmed.
Notes:
Notes
The Honorable Michael J. Davis, United States District Judge for the District of Minnesota
A prehire agreement is different from an ordinary collective bargaining agreement in that the union signatory is permitted to represent company emрloyees without having been elected or recognized by the NLRB to have majority support. Such agreements are permitted under § 8(f) of the NLRA for the construction industry because of its unique characteristicsSee Building & Construction Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc.,
The Union thus asserts preemption as a defense, raising the question of whether Superior's claim can be litigated in this action. This form of preemption is distinct from the jurisdictional doctrine of complete preemption used to remove state claims to federal courtCaterpillar v. Williams,
When it beсame apparent at oral argument that judgment had not been entered in the third party action and that there had been no Fed.R.Civ.P. 54(b) certification, we issued a limited remand order for the district court to address whether an immediate appeal would serve the interests of justice. It then certified that there was "no just cause for delay."
The Union argues in the alternative that Superior's claims are also preempted under theGarmon doctrine. Garmon preemption is unrelated to § 301 of the LMRA, for it arises under the NLRA. See Carlson,
