Cent. States, Southeast & Southwest Areas Pension Fund v. Waste Mgmt. of Michigan, Inc.

• Decision Date: 29 February 2012
• Docket Number: No. 10–3286.,10–3286.
• Citation: 192 L.R.R.M. (BNA) 3092,52 Employee Benefits Cas. 2109,674 F.3d 630
• Parties: CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Arthur H. Bunte, Jr., as Trustee, Plaintiffs–Appellees, v. WASTE MANAGEMENT OF MICHIGAN, INC., a Michigan corporation, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

192 L.R.R.M. (BNA) 3092

52 Employee Benefits Cas. 2109

674 F.3d 630

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Arthur H. Bunte, Jr., as Trustee, Plaintiffs–Appellees,

v.WASTE MANAGEMENT OF MICHIGAN, INC., a Michigan corporation, Defendant–Appellant.

No. 10–3286.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 29, 2011.Decided Feb. 29, 2012.

Edward H. Bogle (argued), Attorney, Central States Funds, Law Department, Rosemont, IL, for Plaintiffs–Appellees.

Susan K. Hoffman (argued), Attorney, Littler Mendelson, Philadelphia, PA, Jeffrey C. Kauffman, Attorney, Littler Mendelson, Chicago, IL, for Defendant–Appellant.

Before POSNER and KANNE, Circuit Judges, and PRATT, District Judge. ^*KANNE, Circuit Judge.

Waste Management of Michigan, Inc., sought an early withdrawal from its obligation to make pension contributions to Central States, Southeast and Southwest Areas Pension Fund (the “Fund”), a multiemployer pension fund. But Waste Management's agreements with the Fund did not provide for an early withdrawal; in fact, clear language prevented it from taking such action. Waste Management was thus left in the unenviable position of arguing that the clear language in its agreements perhaps was not so clear. Undoubtedly, that is true in some cases. But this is not one of those cases.

Waste Management entered into a collective bargaining agreement (“CBA”) with Teamsters Local Union No. 247, requiring Waste Management to make contributions on behalf of covered employees to the Fund. As part of its agreements with the Fund, Waste Management was obligated to make contributions through the stated term of the CBA. But as time went on and the stated term of the CBA neared its expiration, Waste Management decided it no longer wanted to participate in the Fund's plan and instead sought an alternate arrangement with Local 247. Waste Management also decided that financially, it would be more beneficial to withdraw from the Fund's plan immediately, rather than continue making contributions through the stated term of the CBA. Seizing upon any language in its agreements that might plausibly permit this course of action, Waste Management entered into a new CBA with Local 247 that immediately abrogated the obligation to make pension contributions to the Fund—six weeks prior to the expiration of the old CBA.

The Fund brought suit in district court, seeking damages for the unpaid pension contributions. The district court granted the Fund's motion for summary judgment, finding that the terms of the plan documents unambiguously prohibited Waste Management's actions. We affirm.

I. Background

In 2005, Waste Management entered into a CBA with Local 247 covering the period of February 1, 2005, through January 31, 2009. As part of this agreement, Waste Management agreed to make pension contributions to the Fund for the duration of the CBA. A number of other documents set forth the terms under which Waste Management participated in the pension fund, although not all of them are relevant for purposes of this appeal.

A Trust Agreement executed by the parties required Waste Management “to contribute to the Fund for the entire term of any [CBA] accepted by the Fund on the terms stated in that [CBA].” Moreover, the Trust Agreement created a Board of Trustees empowered to consider “[a]ll questions or controversies, of whatsoever character, arising in any manner between any parties or persons in connection with the Fund or the operation thereof.” It also vested the Trustees with “discretionary and final authority in construing plan documents of the Pension Fund” and provided that “any construction adopted by the Trustees in good faith shall be binding upon the Union, Employees and Employers.”

The parties also entered into a Participation Agreement. This agreement required any change in the CBA agreed to between Waste Management and Local 247 to be submitted to the Fund, and provided that any agreement “which affects [Waste Management's] contribution obligation which has not been submitted ... shall not be binding on the Trustees.” Importantly—and as we will discuss below in greater detail—the Participation Agreement expressly barred modifications to the CBA purporting to reduce or eliminate Waste Management's obligation to contribute to the Fund. The Participation Agreement also stated that the “Participation Agreement shall control” in the event of a conflict with any provisions contained in the CBA.

In 2008, Waste Management and Local 247 entered into early negotiations for a new CBA to replace the 2005 CBA, which was set to expire on January 31, 2009. On December 14, 2008, they agreed to a new CBA that no longer obligated Waste Management to make contributions to the Fund. Likely seeking to minimize its withdrawal liability from the pension fund, the new CBA purported to abrogate Waste Management's obligation to make contributions as of December 14, 2008—six weeks prior to the expiration of the 2005 CBA. The Fund, however, maintained that Waste Management was required to continue making pension contributions through January 31, 2009, and that any agreement purporting to eliminate this duty was invalid under the terms of the Participation and Trust Agreements.

The dispute was then brought to the Trustees, in accordance with the dispute resolution process contained in the Trust Agreement. Largely agreeing with the position taken by the Fund, the Trustees found the terms of the Participation Agreement and the Trust Agreement expressly barred the actions taken by Waste Management, and that Waste Management was required to continue making pension contributions through the stated term of the 2005 CBA.

On August 25, 2009, the Fund filed suit in district court pursuant to section 515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1145, claiming Waste Management breached its agreement to make pension contributions to the Fund. On January 14, 2010, the Fund filed a motion for summary judgment, contending there was no need for discovery because the case turned solely on the application of unambiguous contractual terms. The Fund also argued that the district court could only review the Trustees' decision for an abuse of discretion. Waste Management disagreed and filed a Rule 56(f) ¹ motion for discovery, arguing that discovery was needed to ascertain possible conflicts of interest influencing the Trustees' decision, as well as the Fund's past practice in dealing with other contractually bound employers. Waste Management also contended that de novo review of the Trustees' decision was appropriate.

On May 19, 2010, the district court largely denied Waste Management's motion for discovery, permitting only limited discovery into whether the Fund took steps to address any possible conflicts of interest by the Trustees. The district court also agreed with the Fund that the Trustees' decision could only be reviewed for an abuse of discretion. On September 2, 2010, the court granted the Fund's motion for summary judgment, finding that the terms of the plan documents unambiguously barred Waste Management from ceasing or reducing contributions to the Fund prior to January 31, 2009. Waste Management then filed this timely appeal, arguing that the district court erred in both denying its motion for discovery and granting summary judgment in favor of the Fund.

II. Analysis

In interpreting the language of an ERISA-governed plan, we apply the federal common law rules of contract interpretation. Kamler v. H/N Telecomm. Servs., Inc., 305 F.3d 672, 680 (7th Cir.2002). Our first task is to determine whether the contract at issue is ambiguous or unambiguous. Neuma, Inc. v. AMP, Inc., 259 F.3d 864, 873 (7th Cir.2001). “Contract language is ambiguous if it is susceptible to more than one reasonable interpretation.” Id. Where the terms of a plan document are unambiguous, we “will not look beyond its ‘four corners' in interpreting its meaning.” Trs. of S. Ill. Carpenters Welfare Fund v. RFMS, Inc., 401 F.3d 847, 849 (7th Cir.2005). Contract interpretation lends itself to resolution by summary judgment because “the determination of whether a contract is ambiguous is a matter of law.” Barnett v. Ameren Corp., 436 F.3d 830, 833 (7th Cir.2006). We review the district court's grant of summary judgment de novo, construing all facts and drawing all reasonable inferences in favor of the nonmoving party. Moore v. Vital Prods., Inc., 641 F.3d 253, 256 (7th Cir.2011).

Waste Management argues that the plan documents are ambiguous because they are subject to more than one reasonable interpretation. The crux of its argument lies in the purported ambiguity of the term “prospectively,” contained in the Participation Agreement. In relevant part, the Participation Agreement states:

The following agreements shall not be valid: a) an agreement that purports to retroactively eliminate or reduce the Employer's contracted or statutory duty to contribute to the Fund(s); b) an agreement that purports to prospectively reduce the contribution rate payable to the Pension Fund[;] or c) an agreement that purports to prospectively eliminate the duty to contribute to the Pension Fund during the stated term of a collective bargaining agreement that has been accepted by the Pension Fund.

Although Waste Management concedes that it could not “prospectively” (or retroactively) eliminate the duty to contribute to the Fund under the terms of the Participation Agreement, it contends that the new CBA signed in 2008 did not eliminate this duty prospectively—it did so immediately. Thus, Waste Management asserts that the term “prospectively” is ambiguous because it could reasonably be interpreted to allow for immediate action. Defying common sense and logic, Waste Management posits that an agreement to stop paying contributions tomorrow or even one hour in the future would be barred by the Participation Agreement, but an agreement to do so...