Ny Teamsters Pension & Retirement v. U.P.S.

• Decision Date: 30 August 2004
• Docket Number: No. 04-1366.,No. 03-7349.,03-7349.,04-1366.
• Citation: 382 F.3d 272
• Parties: NEW YORK STATE TEAMSTERS CONFERENCE PENSION & RETIREMENT FUND, New York State Teamsters Council Health & Hospital Fund, J. Dawson Cunningham, Frank Posato, Thomas Goodwin, Brian Masterson, John Bulgaro, Anthony Simoes, Daniel Schmidt and Don Little, Plaintiffs-Appellees, v. UNITED PARCEL SERVICE, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

382 F.3d 272

NEW YORK STATE TEAMSTERS CONFERENCE PENSION & RETIREMENT FUND, New York State Teamsters Council Health & Hospital Fund, J. Dawson Cunningham, Frank Posato, Thomas Goodwin, Brian Masterson, John Bulgaro, Anthony Simoes, Daniel Schmidt and Don Little, Plaintiffs-Appellees, v. UNITED PARCEL SERVICE, INC., Defendant-Appellant.

No. 03-7349.

No. 04-1366.

United States Court of Appeals, Second Circuit.

Argued: May 3, 2004.

Decided: August 30, 2004.

Appeal from the United States District Court for the Northern District of New York, 198 F.Supp.2d 188, Frederick J. Scullin, C.J Howard Shapiro, Shook, Hardy & Bacon, New Orleans, LA (Edward P. Lynch and Glenn E. Butash, Pitney, Hardin, Kippp & Szuch LLP, Morristown, NJ, on the brief) for Defendant-Appellant United Parcel Service, Inc.

Brian T. Ortelere, Morgan, Lewis & Bockius, LLP, Philadelphia, PA (Michael J. Sciotti, Hancock, Estabrook, Syracuse, NY, on the brief) for Plaintiffs-Appellees New York State Teamsters Conference Pension and Retirement Fund, New York State Teamsters Council Health and Hospital Fund, J. Dawson Cunningham, Frank Posato, Thomas Goodwin, Brian Masterson, John Bulgaro, Anthony Simoes, Daniel Schmidt and Don Little.

Before: CARDAMONE, JACOBS, Circuit Judges, and KORMAN, District Judge.^*

JACOBS, Circuit Judge.

At issue is whether Section 515 ("Section 515") of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1145, requires Defendant-Appellant United Parcel Service, Inc. ("UPS") to make certain disputed contributions to the New York State Teamsters Conference Pension and Retirement Fund (the "Pension Fund") and the New York State Teamsters Council Health and Hospital Fund (the "Health Fund," together the "Funds"). Section 515 mandates that an employer make contributions to its multiemployer benefit plans in accordance with the terms of the plans or the terms of any relevant collective bargaining agreements. UPS contends that its collective bargaining agreement ("CBA") with the International Brotherhood of Teamsters ("the Teamsters") limits contributions in respect of overtime pay; the Funds contend that UPS is bound by the Funds' Participation Agreements, which contain no such limitation.

This consolidated appeal¹ is taken from a judgment entered March 26, 2003 after a five-day bench trial in the United States District Court for the Northern District of New York (Scullin, C.J.). The district court ruled (i) that Section 515 required UPS to make contributions on the basis of the Participation Agreements irrespective of the terms of its CBA with the Teamsters, (ii) that the Funds' rules and regulations and their auditors' interpretation of those rules and regulations were valid as a matter of law, and (iii) that UPS's counterclaim against the Funds for reimbursement for a variety of past contributions was invalid. UPS challenges all of these rulings on appeal, and adds a fourth claim—that the district court erred in excluding the testimony of a witness who attempted to rebut the estimates of the Funds' auditors.

Our precedent holds that the rulemaking authority of a multiemployer benefit plan is limited by the terms of its creation documents. Since the Funds' creation documents require the Funds to act in a manner consistent with the plain text of the CBAs entered into by participating employers, we agree with UPS that the Funds cannot enforce rules and regulations that contradict written provisions of the CBA executed by UPS and the Teamsters. However, based on the findings of the district court, we conclude that no written term of the CBA contradicted the Participation Agreements on the contributions issue in dispute between the parties at the relevant times in this appeal. Further, we hold (consistent with other Circuits) that under Section 515 any unwritten understanding that allegedly limits an employer's contributions to a multiemployer benefit plan cannot supersede otherwise valid rules and regulations promulgated by the plan. We therefore affirm the district court's ruling that UPS was bound to make contributions in accordance with the rules and regulations of the Funds as memorialized in the Funds' Participation Agreements regardless of a contrary unwritten understanding between UPS and the Teamsters.

We also conclude that the Funds' auditors' estimates of the contributions owed to the Funds by UPS were reasonable, and that UPS's counterclaim for reimbursement is consequently meritless.

Background

Approximately 5,000 of UPS's employees at its New York distribution hubs in Syracuse and Buffalo are members of local chapters of the Teamsters. The Funds were created by the Teamsters using New York trust agreements executed by the Teamsters and the New York companies that employ members of the Teamsters. The Funds are "multiemployer plans" as defined in ERISA, 29 U.S.C. § 1002(37), i.e., they are plans

(i) to which more than one employer is required to contribute,

(ii) which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and

(iii) which satisfies such other requirements as the Secretary [of Labor] may prescribe by regulation.

The Funds are managed by a Board of Trustees (half appointed by the Teamsters, half by participating employers) and provide pension, hospital, medical, dental, death, and disability benefits. The Funds are authorized by their creation agreements to "demand, collect, receive and hold employer contributions" and to take whatever steps are necessary "to effectuate the collection of such employer contributions." The trust agreement that created the Pension Fund states that the Pension Fund will "provide for the payment by such Employers to the [Pension Fund], periodically, a sum of money more nearly described in such collective bargaining agreements between [employers] and [the Teamsters]." The Health Fund agreement authorizes the Health Fund "to determine whether said employers are making ... payments to the Trustees of the amounts required by the aforementioned collective bargaining agreement."

A. The Collective Bargaining Agreement

The relationship between UPS and the Teamsters is generally governed by the CBA, which has had different incarnations over time: 1979-1982, 1982-1985 (apparently extended to 1987), 1987-1990, 1990-1993, 1993-1997, and 1997-2002. The parties may execute amendments to change terms of the CBA, effective either (i) retroactively to the beginning of the CBA or (ii) effective August 1 of the following contract year. Every version of the CBA requires UPS to make contributions to the Funds in all geographic areas where UPS has Teamster employees.

B. The Participation Agreements

The Funds use auditors to ensure that employer contributions comply with the Funds' rules and regulations as memorialized in one-page, boilerplate Participation Agreements. Each version of the UPS/Teamsters CBA has required UPS to sign these Participation Agreements, which the CBAs describe as "stipulation[s]... setting forth the provisions relating to the [Funds] and certifying that [UPS] has entered into a written agreement containing such provisions." The Participation Agreements recite that they are to "be signed and submitted for each subsequent Collective Bargaining Agreement" and are "effective as of the date of execution thereof," after which they "shall continue in full force and effect for the same term as the [CBA]." The Participation Agreements provide that "as a condition of participation" in the Funds, the employer is "bound by all the rules and regulations of the Fund[s]," and that "in the event there is any agreement between [the] employer and [the] Union that is contrary or inconsistent with the terms of the [Participation Agreement] or the rules of the [Funds], such inconsistent provisions shall be null and void and superseded by the terms of [the Participation Agreement]."

C. The Eight-Hour-a-Day "Cap" on Pension Contributions

According to UPS, the CBA was not "completely overhauled" each period and most CBA renewals were not "full-blown negotiations"; instead the renewals were negotiated under the presumption that only the CBA provisions that the parties wanted to change were renegotiated. According to UPS, "[a]ll other CBA provisions that were not changed in the negotiations automatically carried over and remained effective in the next CBA." Appellant's Brief at 10.

The 1979-1982 CBA included the following provision related to contributions to the Pension Fund by UPS:

Effective 5/1/79, the Employer agrees to contribute the sum of $1.025 per hour paid to any and all of his employees covered by this Agreement but not to exceed a maximum of eight (8) hours per day or forty (40) hours per week, $41.00.

Effective 5/1/80, the contribution shall be $1.15 per hour, not to exceed a maximum of eight (8) hours per day or forty (40) hours, $46.00 per week.

Effective 5/1/81, the contribution shall be $1.275 per hour, not to exceed a maximum of eight (8) hours per day or forty (40) hours, $51.00 per week (emphases added).

The negotiator for UPS testified that there were no negotiations related to the deletion of the eight-hour-a-day cap. Nevertheless, this eight-hour-a-day cap language was omitted in the text of the subsequent CBA version for 1982-1985 (which was apparently extended to 1987). The only limit on contributions in the 1982-1985 CBA was the following:

Effective April 1, 1982, the Employer agrees to contribute the sum of seventy-seven and one half cents ($.77½) per hour paid to any and all of its employees covered by this Agreement, but not to exceed thirty-one dollars ($31.00) per week . . . . Employer also agrees to contribute the sum of ninety cents ($.90) per hour paid to any and all of its employees covered by this Agreement, but not to exceed thirty-six dollars ($36.00) per week . . . . These payments may be made in a combined total of sixty seven...