Auto. Mechanics Local 701 v. Vanguard Car Rental

• Decision Date: 18 September 2007
• Docket Number: No. 06-4362.,06-4362.
• Citation: 502 F.3d 740
• Parties: AUTOMOBILE MECHANICS LOCAL 701 WELFARE AND PENSION FUNDS, Plaintiff-Appellant, v. VANGUARD CAR RENTAL USA, INC. d/b/a National Car Rental & Alamo, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

502 F.3d 740

AUTOMOBILE MECHANICS LOCAL 701 WELFARE AND PENSION FUNDS, Plaintiff-Appellant, v. VANGUARD CAR RENTAL USA, INC. d/b/a National Car Rental & Alamo, Defendant-Appellee.

No. 06-4362.

United States Court of Appeals, Seventh Circuit.

Argued May 21, 2007.

Decided September 18, 2007.

Steven F. McDowell (argued), Donald D. Schwartz, Arnold & Kadjan, Chicago, IL, for Plaintiff-Appellant.

Eric J. Pelton (argued), Kienbaum, Opperwall, Hardy & Pelton, Birmingham, MI, for Defendant-Appellee.

Before RIPPLE, WOOD, and EVANS, Circuit Judges.

WOOD, Circuit Judge.

The Automobile Mechanics Local 701 Welfare and Pension Funds ("the Funds") administer welfare and pension benefits for the members of Local 701. As part of its collective bargaining agreement ("CBA") with the union, Vanguard Car Rental USA d/b/a National Car Rental and Alamo ("Vanguard"), through its predecessor in interest, agreed to make weekly payments to the Funds for the benefit of each regular employee covered by the CBA. Vanguard does not deny this obligation, and it has not refused to make payments during the period in which this dispute has occurred. It is the contribution rate instead that is the bone of contention here. The Funds take the position that Vanguard was required to pay the increased contribution rate authorized by the Funds' Board of Trustees and made effective on August 1, 2005; Vanguard says that it owes only the last rate authorized in the CBA. To recoup the monies allegedly due, the Funds filed suit in federal court under § 502 of the Employee Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132, on March 29, 2006, arguing that certain agreements signed between Vanguard and the Funds gave the Board of Trustees the authority to raise the contribution rates. The parties filed cross-motions for summary judgment. Rather than addressing those motions, however, the district court dismissed the suit sua sponte, because it concluded that the dispute had to be arbitrated.

We agree with both parties that this dismissal by the district court was improper. Enforcement of a forum selection clause (including an arbitration clause) is not jurisdictional; it is a waivable defense that Vanguard, in fact, waived. Although the district court did not address the summary judgment motions, they are properly before this court. Because the dispositive issue is one of contract interpretation, our review is de novo, and nothing prevents us from addressing this lone question, we hold that Vanguard is entitled to summary judgment. The agreements do not give the Funds the authority to raise the contribution rates until a "renewed term" has been ushered in by the signing of a new CBA.

I

The facts underlying this case are not in dispute. On June 23, 2003, Vanguard's predecessor in interest entered into a CBA with Local 701. That CBA expired on April 25, 2004. It obligated Vanguard to pay money into the Local's pension and welfare funds on behalf of its employees. Article 7 of the CBA, which deals with welfare benefits, provided:

The Employer shall pay the sum of $124 per week for each regular employee covered by this Agreement who performs any work in such week into the Automobile Mechanics Union Local 701 Union & Industry Welfare Fund for the payment of health and welfare benefits as determined by the Board of Trustees. . . . The Fund shall in all respects be administered in accordance with the Trust Agreement drawn.

Referring to welfare benefits, Article 7(D) adds that "[t]he obligation to make the above contribution shall continue during periods when the collective bargaining agreement is being negotiated . . . ." Article 8, the provision for the Pension Fund, is similar: "The Employer shall be obligated to contribute the sum of $48.00 per week for each employee covered by this [A]greement to the Pension Fund of the Automobile Mechanics Union Local 701. . . . The Fund shall in all respects be administered in accordance with the Trust Agreement drawn." Both Article 7(D) and Article 8(D) obligate Vanguard to make the contribution "during periods when the collective bargaining agreement is being negotiated . . . ."

Following the expiration of the CBA on April 2, 2004, the parties entered into extension agreements that prolonged the CBA through January 2, 2005. While the parties have not extended the term of the CBA further since that date, they have continued to operate under its terms during this "status quo" period as provided by Articles 7(D) and 8(D).

On June 23, 2004, the same date that Vanguard signed the CBA with the Union, it also entered into participation agreements with the Pension Fund and the Welfare Fund. Two sections of these agreements are relevant here. (A separate agreement was signed with each fund, but they conform in almost every respect. We quote from the agreement with the Welfare Fund.) Paragraph 5 deals with the automatic renewal of the participation agreement:

This Agreement shall remain in full force and effect for the full term of the current Collective Bargaining Agreement between the Employer or area wide Employers and the Union and shall be automatically renewed from time to time for terms coterminous with those of the aforementioned Collective Bargaining Agreements. The rate at which contributions are to be made during any renewed term shall be that set by the Board of Trustees.

Paragraph 8 addresses the termination of the agreement by the Employer:

An Employer desiring to terminate this Agreement must notify the Fund Office sixty (60) days' [sic] prior to the termination date of the existing Collective Bargaining Agreement. If the Employer fails to give timely notice to the Trustees the Employer shall be bound to the provisions of this Agreement for the period of the next Collective Bargaining Agreement and thereafter until proper notice is given but in no event less than three years unless terminated by the Trustees. The rate at which contributions are to be made during any renewed term shall be that set by the Board of Trustees.

On August 1, 2005, the Board of Trustees of the Funds informed Vanguard that the contribution rates had been increased to $155 for the Welfare Fund and to $59 for the Pension Fund. Although Vanguard has continued to pay the $124 and $48 per week rates that it paid prior to August 1, it has refused to contribute at the increased rate. As a result, the Funds filed this suit, alleging a violation of ERISA, seeking an accounting, and requesting a judgment and an injunction requiring Vanguard to pay the increased contribution rates.

Vanguard filed a motion for summary judgment on June 28, 2006, and the Funds did the same on August 11, 2006. Rather than addressing those motions, however, the district court seized upon the arbitration clause in Article 18 of the CBA signed between the union (which is not a party to this case) and the Funds. Noting the national policy in favor of arbitration and finding the dispute to be within the terms of Article 18A of the CBA, the district court dismissed the suit, citing FED. R. CIV. P. 12(b)(3) (improper venue). The Funds brought this timely appeal.

II

A. Right of Action

Vanguard argues that we lack subject-matter jurisdiction over the Funds' suit. That cannot be right, unless the suit is so frivolous that it does not engage the power of the court. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998), citing Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 90 L.Ed. 939 (1946). It is possible, however, that these parties might not have a right of action under the statute; if so, their suit is barred at the threshold. Two provisions of ERISA, §§ 502 and 515, 29 U.S.C. §§ 1132 and 1145, are relevant here. Section 1145 supplies the substantive right that the Funds seek to enforce:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

Section 1132(e) complements § 1145 by authorizing certain parties to enforce the substantive right. It empowers various parties to bring actions under ERISA, including the Secretary of Labor or a participant, beneficiary, or fiduciary of a plan. The plaintiff Funds are employee benefit plans, to which § 1132(d)(1) gives the right to "sue or be sued under [ERISA] as an entity." We have found that such employee benefit plans may bring suit in federal court under § 1332(e). See Peoria Union Stock Yards Co. Retirement Plan v. Penn Mutual Life Ins. Co., 698 F.2d 320, 326 (7th Cir.1983); see also Laborers' Pension Fund v. Blackmore Sewer Construction, Inc., 298 F.3d 600 (7th Cir.2002) (affirming result in suit brought by fund for unpaid monies under § 1145 where claim was alleged under § 1132); Central States Southeast and Southwest Areas Pension Fund v. Kroger Co., 226 F.3d 903 (7th Cir.2000) (same).

Notwithstanding this apparent source of authority to sue, Vanguard submits that the Funds' action has been foreclosed by Laborers Health & Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., Inc., 484 U.S. 539, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988). There, an employees' trust fund wanted to bring an action under § 515 of ERISA to recover contributions to employee benefit plans that the employer refused to pay after the expiration of the CBA that governed the contributions. The duty to continue making post-contract contributions during a status quo period that the trust fund sought to enforce derives from the duty to bargain in good faith under § 8(a)(5) of the National Labor Relations Act: "The duty to bargain and to refrain from instituting unilateral changes in wages and working conditions under section 8(a)(5) normally outlives the parties' CBA. An employer is required to ...