The Trustees of the Twin City Bricklayers Fringe Benefit Funds v. Superior Waterproofing, Inc., a Minnesota Corporation Raymond Paschke, Third Party v. Bricklayers and Allied Craftworkers Local Union No. 1 of Minnesota, Third PartyThe Trustees of the Twin City Bricklayers Fringe Benefit Funds v. Superior Waterproofing, Inc., a Minnesota Corporation Raymond Paschke, Third Party v. Bricklayers and Allied Craftworkers Local Union No. 1 of Minnesota, Third Party
Brendan D. Cummins, argued, Minneapolis, MN (Richard A. Miller and Justin D. Cummins, on the brief), for appellee.
OPINION
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
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 independent agreement in 2001 which made him personally liable for Superior‘s оbligations 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),
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 the CBA. In their first party complaint, the Trustees allege that their demаnd 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 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 when particular jobs were union only so that he wоuld 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 other costs. The Union declined to proсess 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),
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
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., 364 F.3d 908, 909 (8th Cir. 2004).
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 statutory definition of an employer. Sincе this is a question of statutory interpretation, the plain language of the Act controls if it is unambiguous. United States v. Mickelson, 433 F.3d 1050, 1052 (8th Cir. 2006). The LMRA defines an “employer” to include “any person acting as an agent of an employer, directly or indirectly.”
A.
Textron was a case with no preemption issue. The question there was whether the federаl 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. The Supreme Court ruled that there was no subject matter jurisdiction under § 301, requiring dismissal of the case. Id. at 661-62. This result was consistent with the congressional purpose in enacting § 301 to provide jurisdiction over “suits for violation of contracts,”
Congress enacted § 301 to provide federal jurisdiction over “suits for violation of contracts between an employer and a labor organization,”
B.
The proper starting point for determining whether interpretatiоn 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., 943 F.2d 764, 768 (7th Cir. 1991). Here, Superior asserts claims under Minnesota law for fraudulent and negligent misrepresentation as well as fraudulent concealment. Minnesota requires that these claims be pled with particularity,
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, 299 N.W.2d 404, 411 (Minn. 1980) (fraudulent misrepresentation); Bonhiver v. Graff, 311 Minn. 111, 248 N.W.2d 291, 298 (Minn. 1976) (negligent misrepresentation). Whether a plaintiff‘s reliance was justifiable is determined in light of the specific information and experiencе it had. Perranoski, 299 N.W.2d at 412. One can only justifiably rely on a statement which conflicts with the provisions of a written agreement it has signed if the agreement is “couched in ambiguous legal language which a layman could reasonably believe supported the representation.” Id. (citing Weise v. Red Owl Stores, Inc., 286 Minn. 199, 175 N.W.2d 184, 187 (Minn. 1970)).
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 to be susceptible to an interprеtation 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, 2005 WL 1490334, at *3 (D.Minn.2005). We agree.
C.
To determine whether Superior justifiably relied on the oral assurances allegedly made by the Union, the trier оf 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, 299 N.W.2d at 412. This would require the trier of fact to examine the provisions in Article 23 requiring monthly fringe benefit contributions for every work hour by “all Employees covered by this Agreement” and submission on demand of all employment, payroll, and contribution records for all workers “performing work covered by this Agreement.” Moreover, those provisions would have to be considered together with the parties’ acknowledgment that the fringe benefit provisions apply to employees in “job classifications within the jurisdiction of the Union” regardless of union membership and Article 27‘s declaration that the CBA covers “the entire understanding” between the parties. Ambiguity might be found as to which employees or work would be covered by the CBA, for example. Since Superior has the burden under Minnesota law to establish justifiable reliance, Perranoski, 299 N.W.2d at 411, it would have to show that all of the cited provisions could plausibly be read together to be consistent with its аlleged understanding of its fringe benefit obligations. Adjudication of the dispute and resolution of the third party claims will necessarily involve interpretation of the CBA.
An analogous scenario faced the Seventh Circuit in Colgate-Palmolive, 943 F.2d at 764. In that case the plaintiff emplоyees alleged in federal court that they had been fraudulently induced to leave jobs at their employer‘s New Jersey plant by an oral promise of permanent employment in Indiana. The promise arguably conflicted with the terms of a New Jersey CBA covering the employees. Id. at 765-66. Indiana law requires that the injured party “have the right to rely” on a false statement, Captain & Co., Inc. v. Stenberg, 505 N.E.2d 88, 96 (Ind.App. 4th Dist. 1987), and the district court held that the language of the New Jersey CBA would need to be interpreted to determine whether the plaintiffs had such a right of reliance. For this reason their fraudulent inducement claims were preempted under § 301. Colgate-Palmolive, 943 F.2d at 768-69. The Seventh Circuit agreed, concluding that “the fact finder‘s evaluation of reasonableness will inevitably require it to interpret the terms” of the CBA, id. at 769, and the plaintiffs’ state law claims were therefore dismissed because they were preempted as “substantially dependent on analysis of a collective bargaining agreement.” Id. at 770 (quoting Hechler, 481 U.S. at 859 n. 3).
The primary circuit court decisions cited by Superior arе significantly different from these cases. Both Northwestern Ohio Adm‘rs, Inc. v. Walcher & Fox, Inc., 270 F.3d 1018 (6th Cir. 2001), and Operating Engineers Pension Trust v. Wilson, 915 F.2d 535 (9th Cir. 1990), dealt with short term project agreements which employers claimed they had been fraudulently induced into signing. The employer in Wilson alleged that he had been told that in order to continue working on a particular job he must sign the project agreement immediately even though he had never seen it before, 915 F.2d at 536; the Ninth Circuit concluded that the claim was not preempted because it could be resolved without interpretation of the agreement. Id. at 539. The project contracts in Walcher & Fox were not collective bargaining agreements but only incorporated terms from a CBA that the employer had not joined; the Sixth Circuit concluded that the claims “only tangentially involve(d) CBA provisions,” and were therefore not preempted. Id. at 1030-31. Those agreements were not like the statewide CBA which Superior joined in either scope or duration. See id. at 1022-23. Unlike Schuver and Colgate-Palmolive, neither Wilson nor Walcher & Fox implicate the policy interest in uniform interpretation of collective bargaining agreements which underlies § 301 preemption. See Livadas, 512 U.S. at 121-22; Lueck, 471 U.S. at 210-11.
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.” Livadas, 512 U.S. at 124. This action began by the Trustees suing Superior for violation of its fringe benefit obligations under Article 23 of the CBA. Superior defended by asserting in its answer that it had relied on allegedly fraudulent assurances from the Union which conflicted with the written agreement, and in its third party action Superior seeks to use state law to hold the Union liable for its own contractual obligations to the fringe benefit fund. These state law claims are inextricably intertwined with the terms of the CBA, Lueck, 471 U.S. at 213, and their resolution is “substantially dependent on analysis” of it. Colgate-Palmolive, 943 F.2d at 770. If state tort law could be used to determine the meaning and effect of CBAs to evade compliance with their terms under federal law, the uniform system envisioned by Congress for their interpretation and enforcement wоuld be disrupted. See, e.g., Lueck, 471 U.S. at 211. Superior‘s third party claims, including those asserted by Paschke as an individual, are therefore preempted under § 301 and the claims were properly dismissed. See Carlson, 445 F.3d at 1049 n. 2.
III.
Accordingly, the judgment of the district court is affirmed.