Carriers Container Council, Inc. v. Mobile S.S. Assoc. Inc.-Intern. Longshoreman's Assoc., AFL-CIO Pension Plan and Trust

Decision Date22 March 1990
Docket NumberAFL-CIO,AFL-CI,PMTA-ILA,Nos. 89-7279,MSSA-ILA,I,89-7451 and 89-7505,s. 89-7279
Parties, 12 Employee Benefits Ca 1353 CARRIERS CONTAINER COUNCIL, INC., Plaintiff-Appellant, Cross Appellee, v. MOBILE STEAMSHIP ASSOC. INC.--INTERNATIONAL LONGSHOREMAN'S ASSOC.,PENSION PLAN AND TRUST, and its trustees F.D. Alspaugh, Arthur W. Stratton, Hartwell Ludlow, Ned Mattingly, Felix Cleveland, Henry L. Clarke, Albert Walton, Jr., Seymour Irby, Defendants-Appellees, Cross Appellants. CARRIERS CONTAINER COUNCIL, INC., Plaintiff-Appellee, v. MOBILE STEAMSHIP ASSOCIATION, INC., International Longshoreman's Assoc.Pension Plan and Trust and its trustees, F.D. Alspaugh, Arthur W. Stratton, Hartwell Ludlow, Ned Mattingly, Felix Cleveland, et al., Defendants-Appellants. MOBILE STEAMSHIP ASSOCIATION,Pension Plan & Welfare Plans,Local 1985 Maintenance Employees' Pension Plan,Pension Fund,Welfare Fund, Supplemental Unemployment Compensation Benefit Plan, et al., Plaintiffs-Appellees, v. CARRIER'S CONTAINER COUNCIL, INC., Defendant-Appellant, International Longshoreman's Association,ntervenor-Defendant.
CourtU.S. Court of Appeals — Eleventh Circuit

Wesley Pipes, Lyons, Pipes & Cook, P.C., Mobile, Ala., Peter C. Lambos, Constantine P. Lambos, Conato Caruso, Lambos & Giardino, New York City, for Carriers Container Council, Inc.

William B. Harvey, Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Edward A Dean, Mobile, Ala., Michael A. Figures, Figures, Jackson & Harris, Mobile, Ala., Paul D. Mysick, Frank McRight, McRight, Jackson, Myrick & Moore, Mobile, Ala., for Mobile S.S. Ass'n, et al.

Gardner, Middlebrooks & Fleming, P.C., J. Cecil Gardner, Mobile, Ala., for ILA Local 1985, et al.

Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, William B. Harvey, Edward A. Dean, Mobile, Ala., for MSSA-ILA Pension Plan, et al.

Scanlan & Scanlan, P.C., Francis A. Scanlan, Philadelphia, Pa., Freedman & Lorry, P.C., Stanley B. Gruber, Philadelphia, Pa., for trustees of the PMTA-ILA Pension Fund, et al.

Ernest L. Mathews, New York City, for ILA, AFL-CIO, amicus curiae.

Appeals from the United States District Court for the Southern District of Alabama.

Before KRAVITCH and JOHNSON, Circuit Judges, and TUTTLE, Senior Circuit Judge.

JOHNSON, Circuit Judge:

These cases are consolidated for appeal after the district court's denial of summary judgment to Carriers Container Council ("CCC") and grant of summary judgment to the Mobile Steamship Association, Inc. ("MSA"), the Philadelphia Marine Trade Association ("PMTA"), and other plaintiffs in No. 89-7505, after the district court's denial of summary judgment to CCC and grant of summary judgment to MSA in No. 89-7279, and after the district court's disposal of the parties' post-judgment motions in No. 89-7279. 1

I. FACTS
A. Background

Both of these cases concern the relationship between CCC and Mobile Steamship Association/International Longshoremen's Association ("MSA-ILA") employee benefit plans. The first case, No. 89-7505, concerns the disposition of surplus monies held by an East-Coast-wide fund that was designed to cover shortfalls in contributions to local longshoremen's pension plans such as the MSA-ILA Pension and Welfare Plans ("Mobile Plans") and the PMTA-ILA Pension, Welfare and Supplemental Unemployment Compensation Benefit Plans ("Philadelphia Plans"), which are involved here. The fund is called the Job Security Program ("JSP Program") and is administered by CCC.

The JSP Program grew out of a 1977 labor dispute between the International Longshoremen's Association, AFL-CIO ("ILA") and vessel carriers, stevedoring companies, and their employer associations. Up to that time, contributions to local port pension plans were based on the number of man-hours worked by ILA labor. The advent of containers, however, had begun to transform the shipping industry. Carriers began concentrating their calls in large mechanized ports such as New York, where the containers were transferred to trucks or railroads for distribution. As a result, there were fewer calls in smaller ports such as Mobile, fewer man-hours worked by ILA members in those ports, and fewer dollars contributed to the pension funds in those ports. The ILA demanded some form of protection for local pension funds from the problem of declining contributions.

CCC and its predecessor, the Job Security Program Agency, Inc. ("JSPA") 2, are associations of the shipping companies ("carriers") that signed contracts with the ILA and local port unions in order to form the JSP Program. CCC was formed by the carriers to carry out the terms of the JSP agreement (i.e., to assess amounts due to the JSP shortfall fund from individual carriers, and to pay local plans like the Mobile and Philadelphia plans for shortfalls in contributions). CCC is empowered to negotiate for its members on JSP matters.

The JSP Program agreements provided that the carriers would pay a royalty assessment on each ton of cargo loaded or unloaded by ILA labor in ports from Maine to Texas. CCC would hold the assessments in a fund for use in paying shortfalls in local pension plan contributions. The carriers and the ILA (and its regional subdivisions) signed the first JSP agreement on November 13, 1977. A successor JSP agreement, also signed by the carriers and the ILA, was executed on May 27, 1980, covering a term from October 1, 1980 to September 30, 1983. In 1983, the parties did not sign a separate JSP agreement. The 1983 Maine to Texas "master contract" 3 between the ILA and employer associations did provide, however, that the JSP Program would be updated and extended by the carriers.

On September 5, 1986, the ILA and many of the employer associations, including CCC, signed a new master agreement, providing that the JSP Program would end, except for the purposes of meeting any existing obligations of the fund. This agreement further provided that "[a]ny surplus ... shall be discussed with the ILA." The Mobile and Philadelphia Plans, MSA, and PMTA (the Philadelphia employer group), did not participate in these negotiations and did not sign the 1986 master agreement. 4

In 1988, CCC, the ILA, and a number of local port plans, employer associations, and local unions entered into a settlement agreement ("the 1988 Settlement Agreement") concerning outstanding shortfall claims against CCC. Neither the Mobile nor the Philadelphia plans agreed to sign the 1988 Settlement Agreement. Under the 1988 Settlement Agreement, CCC paid $21,850,000 to settle $63,228,000 in outstanding shortfall claims. 5 As a result of the 1988 Settlement Agreement, CCC had a surplus of $57 million ("surplus").

The first case before this Court, No. 89-7505 [hereinafter "the surplus case"], concerns the disposition of this surplus. The Mobile and Philadelphia Plans contend that the JSP fund was given to the local port plans in exchange for ILA work completed and that, therefore, CCC is obligated to pay all monies remaining in the JSP fund to the local plans. CCC contends that the member carriers of CCC were obligated to contribute only those amounts necessary to cover shortfalls in contributions during the terms of the JSP agreements and that, therefore, any surplus can be retained by CCC or returned to the member carriers.

The second case before this Court, Nos. 89-7279 and 89-7451 [hereinafter "the withdrawal case"], concerns the withdrawal liability of CCC to the Mobile Plan under ERISA Section 4201, 29 U.S.C.A. Sec. 1381. CCC contends that it is not an "employer" within the meaning of section 1381 and that it therefore has no withdrawal liability. MSA contends that CCC is a "contributing obligor" to the Mobile Plan and is, therefore, an employer subject to withdrawal liability under section 1381.

B. Proceedings in the District Courts
1. The Surplus Case

In the surplus case, the district court granted summary judgment to MSA and PMTA. The court concluded that the JSP agreement was the product of "interrelated collective bargaining agreements" involving the ILA, the carriers, the employer associations (including MSA and PMTA), and the ILA local unions, and that parties to the master agreements and the local agreements were also parties to the JSP agreement. Based on this conclusion, the court found that MSA and PMTA had standing to bring an action based on the JSP agreements.

Because the JSP agreements and master agreements did not mention the possibility of a surplus, the district court concluded that the agreements were ambiguous and that parol evidence should be admitted to determine the intent of the parties. It considered as parol evidence the parties' characterizations of the JSP Program as a "trust fund," an " 'insurance' program to protect local port plans," an "escrow or feeder fund," employer "contributions" to the local port plans, and a negotiated benefit intended as "compensation" for ILA labor. In addition, the court considered language from the JSP agreement indicating that money collected under the JSP Program could be used only to benefit the local port plans.

The district court also determined that the interpretation of the JSP agreement was governed by section 301 of the Labor Management Relations Act (the "LMRA"), 29 U.S.C.A. Sec. 185(a), and the federal common law developed under that section. The court found that ERISA and the policies behind ERISA were one source of this federal common law. Further, the court found that the policies reflected in section 403 of ERISA, 29 U.S.C.A. Sec. 1103(c), which prohibits the use of assets in an employee benefit plan to benefit an employer, apply to the JSP funds. 6 After considering the language of the contract, the parol evidence, and the federal common law, the court found that the contract restricted the JSP funds to uses benefitting the local port plans. The court,...

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