Illinois Conference of Teamsters and Employers Welfare Fund v. Mrowicki

• Citation: 44 F.3d 451
• Decision Date: 22 February 1995
• Docket Number: No. 93-1952,93-1952
• Parties: 148 L.R.R.M. (BNA) 2076, 18 Employee Benefits Cas. 2649 ILLINOIS CONFERENCE OF TEAMSTERS AND EMPLOYERS WELFARE FUND, and John T. Petry, Frank Purdy, Leroy Tinsley, Gerald Reilly, Beryle Redding, Charles Gauwitz, Trustees, Plaintiffs-Appellees, v. Mike MROWICKI, individually, d/b/a Double M Trucking, Inc., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 451

44 F.3d 451

148 L.R.R.M. (BNA) 2076, 18 Employee Benefits

Cas. 2649

ILLINOIS CONFERENCE OF TEAMSTERS AND EMPLOYERS WELFARE FUND,

and John T. Petry, Frank Purdy, Leroy Tinsley,

Gerald Reilly, Beryle Redding, Charles

Gauwitz, Trustees, Plaintiffs-Appellees, v. Mike MROWICKI, individually, d/b/a Double M Trucking, Inc.,

Defendant-Appellant.

No. 93-1952.

United States Court of Appeals,

Seventh Circuit.

Argued Dec. 6, 1993.

Decided Dec. 29, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied Feb. 22, 1995.

James I. Singer (argued), Thomas J. Grady, Schuchat, Cook & Werner, St. Louis, MO, for plaintiffs-appellees.

Jeffrey A. Ryva (argued), Gerard Andrew McInnis, Husch & Eppenberger, Peoria, IL, for defendant-appellant.

Before KANNE and ROVNER, Circuit Judges, and CURTIN, District Judge. ^*

CURTIN, District Judge.

The Illinois Conference of Teamsters and Employers Welfare Fund and its trustees (the "Fund") brings this action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq., and the Labor Management Relations Act ("LMRA"), 29 U.S.C. Sec. 185 et seq., against Mike Mrowicki, a sole proprietor doing business as Double M Trucking ("Double M"). The Fund seeks to recover health and welfare benefit contributions allegedly due, under the provisions of collective bargaining and participation agreements entered into by Double M, on the basis of hours worked by certain "owner-operators" engaged by the company to perform work covered by the collective bargaining agreements. The Fund maintains that the owner-operators were company employees, for whom contributions were required under the terms of the agreements. Mrowicki maintains that they were independent contractors, for whom no contributions were required pursuant to the agreements, and for whom, he contends, contributions would have been illegal under ERISA and the LMRA. He also claims that Double M should be excused from any owner-driver obligations that it might have, because of the actions and representations of three of the Fund's trustees. The district court granted summary judgment to the Fund. We affirm.

I. Background

At all times relevant to this litigation, Mike Mrowicki was in the construction hauling business under the name of Double M Trucking. ¹ In the course of its business, Double M engaged "company drivers," who drove company-owned trucks, and "owner-operators," who drove their own vehicles. Owner-operators' trucks were leased to the company under "equipment leases" mandated by the Illinois Commerce Commission pursuant to the Illinois Motor Vehicle Code, Chapter 95 1/2, Sec. 18-201(8). In other respects, Double M's relationship with its owner-operators seems to have been similar, though not identical, to its relationship with its company drivers.

On April 30, 1986, Double M entered into a collective bargaining agreement ("CBA") with Teamsters Local 722, covering the period May 1, 1986 through April 30, 1989. ² At the same time, it entered into a Participation Agreement with the Fund. Under the terms of Article 11 of the CBA, and of a second CBA covering the period May 1, 1989 through April 30, 1992, Double M was required to make contributions to the Fund for each hour worked by each employee covered by the CBAs, in accordance with the Agreement and Declaration of Trust governing the Fund. ³ It is undisputed that Double M was obligated to make payments to the Fund on behalf of company drivers, and that the company was delinquent in its contributions for three such employees. It is also undisputed that the company made contributions on behalf of three owner-operators. At issue is whether payments were required on the basis of hours worked by some three or four dozen other owner-operators engaged by Double M between May 1986 and April 1992. ⁴ The Fund maintains that all of Double M's owner-operators were "employees" for purposes of the CBAs, and that the company was required to make contributions on their behalf pursuant to Article 11. Mrowicki contends that, with the exception of the three individuals for whom Double M did, in fact, make contributions, the company's owner-operators were independent contractors for whom no payments were necessary.

The CBAs contained no definition of the term "employee." The Fund maintains, however, that Article 25 of the CBAs, which dealt with the employment status of "owner-drivers," established Double M's owner-operators as employees. Article 25, p 1 defined an owner-driver as "an individual, who, in addition to being employed to perform services covered by this Agreement is also the owner of the equipment he uses." Article 25, pp 1 & 2 established further that all owner-drivers, except those used as subcontractors pursuant to Article 8 of the CBAs, ⁵ were to be carried on the payroll and treated by employers as employees. Article 25, p 4 provided that employers reserved "the right to control the manner, time, means and details of, and by which the Owner-Driver perform[ed] his services." ⁶ The Fund maintains that Double M's owner-operators were "owner-drivers" under Article 25, that they were not used by the company as subcontractors pursuant to Article 8, and that they were therefore "employees" for purposes of defining the company's obligation to make contributions to the Fund. Mrowicki contends that, to the contrary, Double M's owner-operators were in fact independent contractors under the common law master-servent "right-to-control" test. He maintains that the language of Article 25 should not be read to include them because the term "owner-driver" refers only to individuals "employed " to perform services covered by the CBAs, and Double M's owner-operators, being independent contractors, were not "employed" by the company. Further, he argues that even if Article 25 were interpreted as defining Double M's owner-operators as employees for purposes of the CBAs, the company would be precluded, under the LMRA and ERISA, from making contributions to the Fund on behalf of any owner-operators who were, under the common law test, independent contractors rather than employees.

For about two years after entering into its first CBA with Local 722, Double M made no contributions to the Fund on the basis of hours worked by any of its owner-operators. Between May and December 1988, however, it made contributions based on hours worked by one, Russell Schmidt. ⁷ Contributions based on hours allegedly worked by a second, Roger Bacidore, began in June 1988, and by a third, Dan Hook, in May 1989. ⁸ The contributions for Bacidore and Hook continued through at least May 1991. Although it is Mrowicki's position that the CBAs did not require Double M to make contributions to the Fund for its owner-operators as a whole, he testified on deposition that he had made payments on behalf of Schmidt because Schmidt was "getting sick," and for Bacidore and Hook because they were "getting ready to retire" and wanted benefits. He claimed that the contributions were made at the urging of plaintiff-appellee Gerald Reilly, President and Business Agent of Local 722 and, since March 1989, one of the union-appointed trustees of the Fund. In a later affidavit, he made the broad assertion that his understanding from statements made to him by Reilly was that he "would not have to pay any contributions on behalf of any of [his] owner-operators if [he] signed a labor agreement." On deposition, Reilly denied that he had ever told Mrowicki that he should make contributions for some owner-operators but not others.

On March 10, 1989, almost three months before Double M entered into its second CBA with Local 722, Reilly filed a grievance, on behalf of the local, with the Illinois Conference of Teamsters/Associated General Contractors of Illinois Joint Grievance Committee ("JGC"), claiming that Double M had "failed to pay proper Health & Welfare and Pension contributions on behalf of it's [sic] employees including owner/drivers." The JGC, a body established under Article 20 of the CBAs to settle disputes between employers and local unions, and consisting of three union and three employer representatives, heard the grievance at a meeting held on January 10, 1990.

Some time after Local 722's grievance was filed, but before the January 10, 1990 JGC meeting, the Illinois Conference of Teamsters ("Conference") and the Associated General Contractors of Illinois ("Association") issued a "Memorandum of Understanding," which was to be considered part of the CBA covering the period May 1, 1989 through April 30, 1992. The memorandum is undated, but was apparently issued in the summer of 1989. It stated, in pertinent part, that:

The parties ... agree that the Conference shall provide the Association and all signatory contractors with written assurances in behalf of all Local Unions waiving any right to institute legal action under the Subcontractor (Article 8) and the Owner-Driver (Article 25 and Article 26) ⁹ provisions of the Master Agreement pertaining to owner-drivers (owner-operators) for all past (completed) work....

....

The parties further agree that with respect to use of owner-operators on all work bid after July 26, 1989 the Contractor shall be bound to the Subcontractor and Owner-Driver clauses pursuant to the workable guidelines developed by a special Joint Committee ...

The parties further agree to establish a special Joint Committee to develop workable guidelines for determining who is an owner-operator/independent (sub)contractor versus an owner-operator/employee. The Committee shall base its guidelines on common law rules.

Among the signatories to the memorandum were plaintiff-appellees Charles Gauwitz and Beryle Redding, then President and Vice-President, respectively, of the Conference, who were also trustees of the Fund and union representatives on the JGC. There is nothing in the record to indicate whether a special Joint Committee was ever established as contemplated by the...