Carpenters Local Union No. 345 Health and Welfare Fund v. W.D. George Const. Co., 85-5205

• Citation: 792 F.2d 64
• Decision Date: 05 June 1986
• Docket Number: No. 85-5205,85-5205
• Parties: 105 Lab.Cas. P 12,152 CARPENTERS LOCAL UNION NO. 345 HEALTH AND WELFARE FUND, et al., Plaintiffs-Appellants, v. W.D. GEORGE CONSTRUCTION CO., et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 64

792 F.2d 64

105 Lab.Cas. P 12,152

CARPENTERS LOCAL UNION NO. 345 HEALTH AND WELFARE FUND, et al., Plaintiffs-Appellants, v. W.D. GEORGE CONSTRUCTION CO., et al., Defendants-Appellees.

No. 85-5205.

United States Court of Appeals Sixth Circuit.

Argued April 4, 1986.

Decided June 5, 1986.

Edward J. McKenney, Jr., argued, Hanover, Walsh, Jalenak & Blair, Memphis, Tenn., for plaintiffs-appellants.

W. Lee Whitman, argued, Memphis, Tenn., for defendants-appellees.

Before: MARTIN and GUY, Circuit Judges; and REED, District Judge. ^*

GUY, Circuit Judge.

Plaintiffs appeal from a judgment in favor of defendants in this action brought pursuant to Sec. 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, and Sec. 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1132. For the reasons stated below, we reverse.

I.

Plaintiffs are joint labor management trust funds established pursuant to 29 U.S.C. Sec. 186. Defendant William D. George (George) is an employer engaged in the construction business formerly doing business as W.D. George Construction Company and presently incorporated and doing business as W.D. George Company, Inc. Plaintiffs filed suit to collect alleged unpaid employer contributions which they claimed defendants were required to pay to plaintiffs to provide benefits to employees represented by Carpenters Local Union No. 345, pursuant to the provisions of applicable collective bargaining agreements and trust agreements. Additionally, plaintiffs sought to collect interest, liquidated damages, and attorneys' fees, pursuant to the provisions of 29 U.S.C. Sec. 1132(g).

The pertinent facts of the dispute are as follows. On November 1, 1974, defendant George signed a "short form" or "compliance agreement" with Local No. 345. That agreement reads in pertinent part:

1. The Employer agrees to adopt, abide by and be bound by all of the provisions of the collective bargaining agreement heretofore entered into between Local Union No. 345, United Brotherhood of Carpenters and Joiners of America, and the West Tennessee Construction Industry Collective Bargaining Group, Inc., and any modifications, extensions or renewals thereof, with the same force and effect as though the aforesaid collective bargaining agreement was set forth here in full.

2. The Employer agrees to become a party to and be bound by all the terms and provisions of:

(a) The Agreement and Declaration of Trust effective March 1, 1966 of the Carpenters, Memphis, Tennessee Apprenticeship Fund;

(b) The Agreement and Declaration of Trust effective June 1, 1970 of the Carpenters Health and Welfare Trust Fund;

(c) The Agreement and Declaration of Trust pertaining to the establishment of the Pension Fund which will become effective September 1, 1972 when the same is adopted by the Trustees and the Employer bargaining agent;

with the same force and effect as though the Agreement and Declaration of Trust referred to above were set forth here at length and the Employer originally signed the said Agreement and Declaration of Trust; and the Employer agrees to make payments covering all of its employees represented by Local Union No. 345 to the said Plans as required by the collective bargaining agreement and said modifications or amendments hereto, and the Agreement and Declaration of Trusts of the aforesaid Plans. The Employer Trustees named in the aforesaid Agreements and Declaration of Trusts and their successors to act for and on his behalf.

(App., Vol. II, 133.) Pertinent also is the definition of "collective bargaining agreement" given in each of the three trust agreements. That definition is as follows:

SECTION 4--COLLECTIVE BARGAINING AGREEMENT

The term "Collective Bargaining Agreement" as used herein shall mean any Collective Bargaining Agreement existing between the Employer and the Union which provides for contributions into this Trust Fund as well as any extension or extensions, renewal or renewals of any such Collective Bargaining Agreement or any new Collective Bargaining Agreement which provides for contributions into this Trust Fund.

(App., Vol. II, 176, 216, 257.) The parties refer to a collective bargaining agreement as a master labor agreement (MLA).

On April 30, 1975, the MLA in effect at the time George signed the short form agreement expired. Sixty days prior to that date, Local No. 345 had, pursuant to 29 U.S.C. Sec. 158(d) ¹ and the MLA, sent notice to the West Tennessee Bargaining Group, and to all employers who had signed short form agreements, of the union's desire to modify the contract. The part of the MLA referenced in that notice reads as follows:

This Agreement shall remain in full force and effect from June 17, 1974 to April 30, 1975, and shall continue in full force and effect from year to year thereafter unless written notice of a desire to negotiate a change is given by one party to the other not less than sixty (60) days prior to the expiration date of this Agreement or the expiration date of any annual renewal period.

(App., Vol. II, 295.) The dates in this clause were changed in subsequent contracts but the rest of the clause remained the same.

Negotiations between the union and the bargaining group then ensued. A new contract was signed at the end of negotiations which modified the prior MLA primarily by providing for increased wages and benefits. The agreement was signed by the union and the bargaining group, and copies were made available to all signatory employers. In the spring of 1976, this sequence was repeated, as it was again in the spring of 1978. At that time, an agreement was signed which was to be effective from May 1, 1978 to April 30, 1981. From November 1, 1974 to April 30, 1981, defendants substantially complied with the provisions of the MLA and the trust agreements. On occasion, defendants became delinquent in their contributions to the funds, and plaintiffs had to file one lawsuit to collect unpaid contributions. However, defendants always ultimately paid and never attempted to terminate the short form agreement or to claim that they were not bound by the provisions of that agreement, the trust agreements, or any MLA.

On February 16, 1981, as in the past, Local No. 345 sent a notice to the bargaining group and to all signatory employers that it sought to modify the 1978 MLA. That letter reads in pertinent part:

This letter is to notify you in accordance with the provision of the National Labor Relations Act and our existing Collective Bargaining Agreement, that Carpenters Local Union No. 345 wishes to modify this Agreement effective May 1, 1981, the date established in our Collective Bargaining Agreement.

We are willing to meet with you for the purpose of negotiating a new contract at your earliest convenience.

(App., Vol. II, 330.) George denies having received that notice. At trial, he did acknowledge that, at the time, he was aware that the MLA was expiring and that negotiations were underway. Defendants gave no notice to the union or to plaintiffs of a desire to negotiate separately or that they did not intend to be bound by any MLA negotiated. They also gave no notice to the union or plaintiffs that they intended to terminate the short form agreement.

In May of 1981, the union went on strike, but the carpenters working for defendant corporation did not participate in the strike. George testified that his only knowledge of the strike came from reading the newspaper. At the end of the strike, negotiations between the union and the bargaining groups resulted in a new MLA, with the primary changes being increases in wages and benefits, as in the past. On June 3, 1981, as in prior years, the union sent a notice to all signatory employers, including defendants, setting forth the agreed upon new MLA. The hourly wage rate was raised to $11.83.

On June 4, 1981, defendant corporation increased the hourly rate of pay of its carpenters to $11.83, but defendants stopped making contribution reports or payments to the trust funds. Defendants continued to employ carpenters until May 1, 1982.

During the course of this litigation below, defendants laid off all carpenters and began to subcontract their carpentry work. On February 18, 1983, George sent notice to the union of his intent not to be bound by any agreement after April 30, 1983. That date was the expiration of the 1981 MLA. On May 1, 1983, defendants began employing carpenters again.

On October 5, 1981, plaintiffs filed this action, alleging that defendants had refused to pay contributions since April 1, 1981, thereby breaching the short form agreement of 1974 and the MLAs and the trust agreements incorporated therein between the union and West Tennessee Bargaining Group. On March 28, 1984, the bench trial in this case began. On April 5, 1984, the district judge made oral findings, but indicated that he would wait to file a written opinion until a transcript had been made. On February 6, 1985, the district judge substituted a written ruling for his oral findings. In this written ruling he first dismissed George in his individual capacity, a holding plaintiffs are not appealing. Second, he found defendant corporation was successor to defendant construction company, and that defendant company and corporation had, by their actions, ratified the 1974, 1976, and 1978 MLAs. Third, he rejected defendants' argument that the employees performing carpentry work for defendant corporation were exempt superintendents. Fourth, although George testified that he did not receive the union's notice in 1981, the court found that when the union sent the notice to the bargaining group of its intent to modify the 1978 agreement and wage increases were negotiated, the 1978 MLA was changed and therefore terminated as of April 30, 1981. Fifth, he found that on May 1, 1981, defendant corporation ceased making contributions and expressed the desire not to be bound by the MLA except when it subcontracted work to...