Central States, Southeast and Southwest Areas Pension Fund v. Joe McClelland, Inc.

• Decision Date: 06 June 1994
• Docket Number: No. 93-2743,93-2743
• Citation: 23 F.3d 1256
• Parties: 128 Lab.Cas. P 11,085 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND and Howard McDougall, Trustee, Plaintiffs-Appellees, v. JOE McCLELLAND, INC., doing business as OK Coal and Concrete Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1256

23 F.3d 1256

128 Lab.Cas. P 11,085

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND and Howard McDougall, Trustee, Plaintiffs-Appellees, v. JOE McCLELLAND, INC., doing business as OK Coal and Concrete Company, Defendant-Appellant.

No. 93-2743.

United States Court of Appeals Seventh Circuit.

Argued Jan. 19, 1994.

Decided May 11, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied June 6, 1994.

Albert M. Madden (argued), Margaret M. Fahrenbach, Robert A. Coco, Central States, Southeast & Southwest Area Pension Fund, Law Dept., Rosemont, IL, for plaintiffs-appellees.

Robert P. Casey, Murphy, Smith & Polk, Chicago, IL, James E. Davidson (argued), Roger L. Sabo, Schottenstein, Zox & Dunn, Columbus, OH, for defendant-appellant.

Before CUMMINGS, COFFEY, and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

OK Coal and Concrete Company signed with the Teamsters Union a series of collective bargaining agreements promising to make pension contributions for "each employee covered by this Agreement who is and has been on the payroll thirty (30) days or more." Each of the agreements recognized the Teamsters as the exclusive bargaining agent for "all drivers, helpers, batch plant operators, warehousemen, and all other employees who come under the jurisdiction of the Teamsters, but excluding office personnel and Management." OK Coal also signed agreements promising the Central States Pension Fund, a multi-employer plan, that it would make the contributions required by the collective bargaining agreements. For years OK Coal remitted pension contributions only for drivers who belonged to the Teamsters. An audit by the Fund revealed that OK Coal employed many drivers for whom no contributions had been made. This collection suit ensued. 29 U.S.C. Sec. 1132. After a jury concluded that OK Coal need not make any additional contributions, the judge decided in the Fund's favor as a matter of law, ruling that private understandings between OK Coal and the local union could not diminish the force of the agreement as written. 1993 U.S.Dist. LEXIS 7748 (N.D.Ill.), reconsideration denied, 1993 U.S.Dist. LEXIS 9488.

OK Coal operates a ready-mix concrete business and employs drivers for the trucks that carry the slurry to building sites. Other drivers operate dump trucks, block trucks, and tractor trailers carrying construction materials. OK Coal insists that it had an understanding with the local union that, despite its broad language, the collective bargaining agreement would be applied only to the ready-mix drivers. The district court correctly held that Central States Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir.1989) (en banc), precludes such an argument. No matter what an employer and local union agree orally, the collective bargaining and contribution agreements establish the employer's obligation to the pension fund, which is not party to local understandings and limitations. The jury may have decided that as a matter of fact OK Coal and the local had such an understanding, but as a matter of law the understanding is irrelevant.

In a variation of this contention, OK Coal insists that the collective bargaining agreements actually covered only members of the local union. This is even less successful. It not only asserts that private understandings control over the text but also invokes an "understanding" that is patently illegal. Employers may not distinguish between members of a bargaining unit who belong to the union and those who do not. 29 U.S.C. Sec. 158(a)(3). Terms that are lawful as written may not be given an illegal spin as part of an effort to curtail the obligation they create. Walsh v. Schlecht, 429 U.S. 401, 408, 97 S.Ct. 679, 685, 50 L.Ed.2d 641 (1977) ("[A]mbiguously worded contracts should not be interpreted to render them illegal and unenforceable where the wording lends itself to a logically acceptable construction that renders them legal and enforceable."); D.E.W., Inc. v. Laborers' Union, 957 F.2d 196, 201-02 (5th Cir.1992) (applying this principle to pension plans said to be limited to union members); Byrnes v. DeBolt Transfer, Inc., 741 F.2d 620, 622-23 (3d Cir.1984) (same).

All of this supposes, however, that the collective bargaining agreements have a plain meaning that may be enforced independent of the parties' negotiations and practices. The phrase "all drivers, helpers, batch plant operators, warehousemen, and all other employees who come under the jurisdiction of the Teamsters, but excluding office personnel and Management" does not necessarily mean "all drivers." It readily bears this meaning: "all drivers ... and all other employees who come under the jurisdiction of the Teamsters". But it might mean: "all drivers ... who come under the jurisdiction of the Teamsters". If it has this latter scope, the "jurisdiction of the Teamsters" could mean either the members of the bargaining unit for which the Teamsters Union is the exclusive representative, or all employees performing tasks of a kind that the union sometimes organizes. Gerber Truck Service does not require or forbid any of these readings. It holds that pension promises in collective bargaining agreements may not be varied by oral understandings or defeated by defenses that would prevent enforcement between the employer and local union. The rule of Gerber Truck Service depends on Sec. 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1145, which curtails employers' ability to evade their pension promises. 870 F.2d at 1149, 1152-53. Nothing in Sec. 515 or the gloss placed on that statute in Gerber supersedes the ordinary...