Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., 95-1936

• Decision Date: 01 March 1996
• Docket Number: No. 95-1936,95-1936
• Citation: 73 F.3d 727
• Parties: Pens. Plan Guide P 23916Z CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Howard McDougall, trustee, Plaintiffs-Appellants, v. The KROGER CO., an Ohio corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 727

73 F.3d 727

Pens. Plan Guide P 23916Z

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND and Howard McDougall, trustee, Plaintiffs-Appellants, v. The KROGER CO., an Ohio corporation, Defendant-Appellee.

No. 95-1936.

United States Court of Appeals Seventh Circuit.

Argued Sept. 28, 1995.

Decided Jan. 10, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied March 1, 1996.

Albert M. Madden (argued), Robert A. Coco, Patrick J. Connor, Central States, Southeast & Southwest Area Pension Fund, Rosemont, IL, for Plaintiffs-Appellants.

Kirk D. Messmer, Jeffrey L. Madoff (argued), Beth E. Koch, Matkov, Salzman, Madoff & Gunn, Chicago, IL, for Defendant-Appellee.

Before WOOD, Jr., COFFEY and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Central States, Southeast and Southwest Areas Pension Fund ("the Fund" or "Central States") brought this action under Sec. 515 of ERISA, 29 U.S.C. Sec. 1145, against the Kroger Company ("Kroger"). The Fund claims that Kroger has not met its obligation to contribute to the Fund on behalf of certain Kroger employees. Kroger's obligation to make pension contributions is defined by the terms of the Collective Bargaining Agreement ("CBA") negotiated between Kroger and International Brotherhood of Teamsters Local 528. The district court examined the CBA and determined that, under its terms, Kroger was not obligated to make the pension contributions the Fund claimed were due. The district court, therefore, granted Kroger's motion for summary judgment. Central States appeals that judgment. For the reasons set forth in the following opinion, we reverse the judgment of the district court, and remand the case for proceedings consistent with this opinion.

I BACKGROUND

A. Facts

Kroger is a national grocery store chain. It operates a distribution and warehouse center in Atlanta. The warehouse employees and truck drivers who work at the Atlanta facility are represented by the Local 528 chapter of the International Brotherhood of Teamsters. Their employment relationship with Kroger is governed by a collective bargaining agreement. The CBA consists of two parts: first, a Master Agreement, which was negotiated by Kroger and the Teamsters and covers several facilities nationwide in addition to the Atlanta facility; second, a Local Supplement, which applies to the Atlanta facility alone.

The Master Agreement of the CBA describes, in addition to regular employees, two other types of employees: "probationary" and "casual." Probationary employees are defined as new employees who work on a trial basis for thirty to sixty days and may be discharged at the employer's discretion. After the trial period ends, however, probationary employees become regular employees and "shall be placed on the regular seniority list." CBA Sec. 2.2. Casual employees, in contrast, are "hired on a short-term basis." CBA Sec. 2.3. They are permitted only at locations with a past practice of hiring casuals, and the total number of casuals is limited to ten percent of the work force. Most importantly, the CBA provides that casuals do not receive fringe benefits or accrue seniority. CBA Sec. 2.3. Under the terms of the Master Agreement, Kroger was obligated to make pension contributions on behalf of all employees who had worked for thirty days or more and who had been placed on the regular seniority list. CBA Sec. 31.1. The effect of this provision is that Kroger is required to make contribution to the Fund on behalf of all probationary employees who had completed their trial period, but not on behalf of casual employees.

The Local Supplement uses different terminology to describe the workers--a situation which the district court described as creating "confusion." Instead of the distinction between regular, probationary, and casual employees found in the Master Agreement, the Local Supplement refers to "full-time" and "part-time" employees. Neither of these terms is defined. However, two characteristics of part-time employment emerge from the Local Supplement. Part-time employees are permitted a limited form of seniority: They may accrue seniority "only among other part-time employees." CBA II.D.2. They also must follow certain job-bidding procedures. When a permanent job becomes available, the most senior part-timer must bid on the position. Failure to bid or to bid successfully results in termination from Kroger.

Prior to 1977, all newly hired warehouse employees were designated as probationary. In 1977, Kroger changed that designation and classified all newly hired warehouse employees as casuals. Many of the employees hired as casuals remained with Kroger for a lengthy period of time and eventually became regular employees; once an employee became a regular employee and was placed on the regular seniority list, Kroger made pension contributions on behalf of the employee to Central States. However, as long as the employee was designated as a casual--often a period of several months ¹--no contribution was made.

In 1991, Central States audited the employment records at the Atlanta facility and concluded that those warehouse employees designated as casuals by Kroger were, despite their label, probationary employees. The Fund claimed that, for those warehouse employees (the "Atlanta employees"), Kroger should have made contribution after their thirtieth day of employment. Central States then brought this action against Kroger under 29 U.S.C. Secs. 1132 and 1145, alleging that Kroger owed over $200,000 to the Fund for contributions that should have been made between December 28, 1986 and December 30, 1989. Both parties moved for summary judgment before the district court.

B. The Decision of the District Court

The dispute before the district court was a straightforward one. Kroger took the position that it did not have to pay pension contributions on behalf of its Atlanta warehouse employees because they were casual employees. It equated the term "part-time" in the Local Supplement with the term "casual" in the Master Agreement. The district court therefore had to determine whether the Atlanta employees, termed casuals by Kroger, were in fact casuals, or were probationary employees who had been employed for more than thirty days and for whom pension contributions were required under the contract.

In its consideration of the parties' motions for summary judgment, the district court turned first to the Master Agreement. The court noted that the Agreement required Kroger to make contributions for regular employees, even part-time regular employees. The Agreement also made clear that only probationary employees, not casuals, could become regular employees at the end of their thirty-day probationary period. Although casual employees were to be hired on a "short-term basis," the Agreement did not specifically limit the duration of a casual employee's service.

In deciding the question before it, the court acknowledged at the outset that, in ordinary parlance, the terms "full-time" and "part-time" have a fixed meaning: Regular employees work the regular forty-hour work week; part-time employees work less. Nevertheless, the court determined that it ought not ascribe this usual meaning to the terms. Rather, the court determined that the term "part-time," as employed in the Local Supplement, unambiguously described the same employees as those described as casual in the Master Agreement.

The court acknowledged that, by interpreting the Local Supplement's use of part-time to mean casual, a conflict arose with the use of the term "part-time" in the Master Agreement. Although the court recognized that this conflict would create an ambiguity if the CBA were treated as one document, the court justified this conflict--part-time having two different meanings--on the ground that the CBA was a combination of two agreements and each agreement's use of the term was internally consistent. No ambiguity, therefore, resulted. Mem.Op. at 11, n. 4.

Because the district court found that those employees designated as casuals by Kroger were treated as true casual employees (as defined by the CBA), the court granted summary judgment on behalf of Kroger.

II DISCUSSION

This matter comes before us following the district court's grant of summary judgment on behalf of Kroger. Given this procedural posture, we review the district court's decision de novo. We shall affirm the summary judgment in Kroger's favor only if there is no genuine issue of material fact and Kroger is entitled to judgment as a matter of law. Krawczyk v. Harnischfeger Corp., 41 F.3d 276, 278 (7th Cir.1994).

We begin our review with the statutory basis of the Fund's claim. Central States asserts its claim against Kroger under Sec. 515 of ERISA. That statute provides:

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.

29 U.S.C. Sec. 1145. In our previous examinations of this statute, we have emphasized the centrality of the collective bargaining agreement in a Sec. 515 claim. It is the "collective bargaining and contribution agreements [which] establish the employer's obligation to the pension fund." Central States, Southeast & Southwest Areas Pension Fund v. McClelland, Inc., 23 F.3d 1256, 1258 (7th Cir.1994). Section 515 gives pension funds, such as Central States, the right to "enforce the writings according to their terms." Central States, Southeast & Southwest Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148, 1149 (7th Cir.1989) (en banc). A pension fund's reliance upon the terms of the CBA may not be thwarted by oral understandings between the employer and the union, McClelland, 23 F.3d at 1257-58, or by defenses that may defeat enforcement of the CBA between the employer and the...