Central States SE & SW Areas Pen. Fund v. Kraftco

• Citation: 589 F. Supp. 1061
• Decision Date: 09 May 1984
• Docket Number: No. 78-3135,79-3064.,78-3135
• Parties: CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND and Daniel J. Shannon v. KRAFTCO, INC., d/b/a Sealtest Foods Division. KRAFT, INC. v. LOCAL UNION 327, TEAMSTERS, CHAUFFEURS, HELPERS AND TAXICAB DRIVERS.
• Court: United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee

589 F. Supp. 1061

CENTRAL STATES SOUTHEAST AND SOUTHWEST AREAS PENSION FUND and Daniel J. Shannon v. KRAFTCO, INC., d/b/a Sealtest Foods Division.

KRAFT, INC. v. LOCAL UNION 327, TEAMSTERS, CHAUFFEURS, HELPERS AND TAXICAB DRIVERS.

Nos. 78-3135, 79-3064.

United States District Court, M.D. Tennessee, Nashville Division.

May 9, 1984.

COPYRIGHT MATERIAL OMITTED

Cecil Branstetter, Nashville, Tenn., for plaintiff.

Terry Brooks, Nashville, Tenn., for defendant.

MEMORANDUM

JOHN T. NIXON, District Judge.

The above-styled actions raise issues of federal labor law. Civil Action No. 78-3135 was filed April 20, 1978 by Central States Southeast and Southwest Areas Pension Fund and its trustees (Fund) on behalf of the Fund's participants and beneficiaries seeking the payment of allegedly delinquent pension contributions from an employer, Kraftco, Inc., d/b/a Sealtest Foods Division (Kraftco). Civil Action No. 79-3064 was filed on February 6, 1979 by Kraftco against Local Union 327, Teamsters, Chauffeurs, Helpers and Taxicab Drivers (Union) under the declaratory judgment provisions of 28 U.S.C. §§ 2201 and 2202 seeking a declaration of its rights and responsibilities for pension contributions under the terms of the collective bargaining agreements with the Union. Subsequently both actions were consolidated. Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332, for enforcement of trust agreements creating the Fund and to which Kraftco is a party; the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1132, for enforcement of rights conferred by 29 U.S.C. § 1145; and the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, for enforcement of collective bargaining agreements entered into between Kraftco and the Union.

Previously, the parties filed cross-motions for summary judgment. The Court concluded that the provisions of ERISA did not apply to the Fund's claims against Kraftco arising prior to January 1, 1975, and that the Fund's claims under the LMRA arising prior to April 20, 1972 were time-barred by TENN.CODE ANN. § 28-3-109(3). The cross-motions did not raise claims under diversity of citizenship. The motions in case No. 78-3135 were denied and the Union's motion for summary judgment in case No. 79-3064 was granted and the action dismissed. Central States v. Kraftco, 527 F.Supp. 420 (M.D.Tenn.1981).

Kraftco appealed the dismissal. That appel was pending on March 15, 1982 when Civil Action No. 78-3135 came on for trial without benefit of a jury. During the trial, the Court reserved both motions for dismissal under FED.R.CIV.P. 41(b) as well as a motion in limine made on behalf of Kraftco.

On June 23, 1982, subsequent to the bench trial, the Court of Appeals reversed the judgment of this Court dismissing the Union from Civil Action No. 79-3064 and remanded the matter for further proceedings not inconsistent with its opinion. Kraftco, Inc. v. Local Union 327, Teamsters, 683 F.2d 131 (6th Cir.1982). Thereafter, Kraftco and the Union stipulated that another hearing would adduce no further evidence relating to issues in Case No. 79-3064 and that the issues therein could be submitted for disposition on the basis of the record made on March 15, 1982. Having considered all of the evidence presented, and briefs and argument of counsel, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a), Federal Rules of Civil Procedure.

FINDINGS OF FACT

Plaintiff Fund is a common law trust established as an employee benefit plan as a result of negotiations between various employers, employer groups and certain Teamster local unions and conferences. It has been in existence since approximately 1957. The Fund is an employee benefit plan within the meaning of ERISA, 29 U.S.C. §§ 1001 et seq. and the LMRA, 29 U.S.C. §§ 141 et seq.

Defendant Kraftco is an employer operating a dairy production facility in Nashville, Tennessee. Defendant Union is a labor organization that has been engaged in collective bargaining with Kraftco for many years prior to this controversy. Neither Kraftco nor the Union is a signatory to the trust agreements creating the Fund. However, through collective bargaining agreements between Kraftco and the Union dating from 1966, Kraftco and the Union have agreed to participate in the Fund. The trust agreements require Kraftco to pay the Fund a specified sum per week on behalf of certain employees at an ice cream plant and a milk plant operated by Kraftco in Nashville, Tennessee.

Each collective bargaining agreement in effect between the Union and Kraftco from 1966 through 1980 contains the following paragraph relating to pension participation:

The Employer recognizes the authority of the acting trustees and their successors, appointed by the Employer and the Union, to administer the above named Pension funds in accordance with the Trust Agreement under which such trustees have been appointed and are acting and the rules and regulations adopted by them; but Employer's obligation shall be and hereby is limited to the foregoing weekly contributions.

Prior to 1971, Kraftco and the Union negotiated contracts for three separate bargaining units: milk plant employees, ice cream production employees, and ice cream route sales employees. In 1971 the milk plant and ice cream production employees were combined into one bargaining unit. There was a higher turnover of employees in the milk plant and ice cream production operations than among the route salesmen. This resulted in a significant difference in the pension provisions of the collective bargaining agreements.

The collective bargaining agreements in effect between 1965 and November of 1968 for milk plant employees and ice cream production employees required weekly payments to the Fund from Kraftco on behalf of all employees with thirty-six months of service. The collective agreement covering the ice cream route salesmen required weekly payments to the Fund on behalf of all salesmen with ninety days of service. Thus, workers in the operation where a high rate of turnover existed, were not covered by the pension benefits until they were on the payroll for three years, whereas route salesmen, whose employment was more stable, were covered after being on the job ninety days. The 1966 collective bargaining agreements were the first for milk plant and ice cream production employees that specifically provided that pension contributions would not be paid by Kraftco on behalf of employees having less than thirty-six months seniority in the bargaining unit.

In December, 1968, Kraftco and the Union entered into a successive collective bargaining agreement for ice cream route salesmen that expired in 1971. This collective bargaining agreement carried forward the provision that weekly payments be made to the Fund by Kraftco for all salesmen with ninety days of service. During 1969, Kraftco and the Union entered into successive collective bargaining agreements for ice cream plant production employees and milk plant employees.

The by-laws of Local 327 provide that whenever a collective bargaining agreement is about to be negotiated, the president calls a meeting to determine and authorize the bargaining demands. These demands are then submitted to the employer. After the contract is executed, the agreement is submitted to the members at another meeting of the Union for vote.

Negotiations for the milk plant employees began first. Kraftco was represented by T.N. Rose, its general manager, and by Donald H. Spencer, its personnel manager. The Union was represented by Don Vestal, its president and business manager, and members of the Union negotiating committee. A representative of the Teamsters International Union was present at and participated in one session of the negotiations, even though local collective bargaining agreements do not need the International Union's approval to become effective. Due to the insistence of the International Union's representative, the thirty-six month provision was deleted from the new contract. At the bargaining table both sides agreed to the deletion of the thirty-six month provision. The new contract that was executed by both parties provided that Kraftco would make pension contributions on behalf of employees with thirty or ninety days of service, depending upon job classification. In that the contract had to be ratified by the membership of the Union, the contract was not binding at this point. The contract was executed and duly ratified on June 27, 1969.

On June 26, 1969, Rose and Spencer for Kraftco, and Vestal for the Union, met to discuss circumventing the language of the new contract that had been insisted upon by the International Union's representative. No member of the Union negotiating committee was present. The following "side letter" agreement resulted from that meeting:

SEALTEST FOODS DIVISION OF NATIONAL DAIRY PRODUCTS CORPORATION P.O. BOX 1179, 1401 CHURCH STREET, NASHVILLE, TENNESSEE, AL 5-6431 June 26, 1969 Mr. Don Vestal President & Business Manager Local Union 327 Teamster, Chauffeurs, Helpers & Taxi Cab Drivers 1006 Russell Street Nashville, Tennessee

Dear Mr. Vestal:

As per our conversation of June 26, 1969, and our agreement of such time, Sealtest Foods will continue to commence regular pension payments on our employees when such employees have been in our employ for a period of thirty-six (36) months. Said pension payments shall then continue as stipulated in our present labor agreement.

If you concur in this agreement, please sign one copy and return to us.

We realize this may require some possible discussion and adjustment for some specific individuals during the life of our labor agreement.

Sincerely yours SEALTEST FOODS /s/ T. H. Rose T. H. Rose /s/ Don Vestal Don Vestal, Pres. & Business Mgr. June 27, 1969 Date /s/ D. H. Spencer

Although the contract executed on June 27, 1969 became effective after Union ratification, the side letter...