Arizona Laborers, Teamsters and Cement Masons Local 395 Health and Welfare Trust Fund v. Hatco, Inc.

• Decision Date: 07 June 1984
• Docket Number: No. 1,CA-CIV,1
• Citation: 690 P.2d 83,142 Ariz. 364
• Parties: ARIZONA LABORERS, TEAMSTERS AND CEMENT MASONS LOCAL 395 HEALTH AND WELFARE TRUST FUND, a Trust; and Arizona Laborers, Teamsters and Cement Masons Local 395 Pension Trust Fund, a Trust; Laborers Joint Training Fund, a Trust; and Teamsters Joint Training Fund, a Trust, Plaintiffs-Appellees, v. HATCO, INC., an Arizona corporation, Defendant-Appellant. 6101.
• Court: Arizona Court of Appeals

Page 83

690 P.2d 83

142 Ariz. 364

ARIZONA LABORERS, TEAMSTERS AND CEMENT MASONS LOCAL 395 HEALTH AND WELFARE TRUST FUND, a Trust; and Arizona Laborers, Teamsters and Cement Masons Local 395 Pension Trust Fund, a Trust; Laborers Joint Training Fund, a Trust; and Teamsters Joint Training Fund, a Trust, Plaintiffs-Appellees, v. HATCO, INC., an Arizona corporation, Defendant-Appellant.

No. 1 CA-CIV 6101.

Court of Appeals of Arizona Division 1, Department B.

June 7, 1984.

Reconsideration Denied July 11, 1984.

Review Denied Oct. 30, 1984.

Joseph T. Rich, Jr. and Ward & Keenan, Ltd. by Gerald Barrett, Phoenix, for plaintiffs-appellees

R. Douglas Zirkle, Tucson, for defendant-appellant.

OPINION

CORCORAN, Judge.

Three questions are presented in this appeal:

1. Does the mere fact of agreement between signatories to the Master Labor Agreement (MLA) that "owner-operators" are employees for the purposes of determining the employer's contributions to the various union trust funds (Trust Funds) suffice to make the owner-operators employees notwithstanding § 2(3) of the National Labor Relations Act (NLRA), 29 U.S.C. § 152(3)?

2. Did the trial court err in finding that because the owner-operators were employees in fact the employer was required to make contributions to the Trust Funds for hours they worked?

3. Did the trial court err in finding that certain employees were performing covered work requiring employer contributions to the Trust Funds?

After a trial to the court, the trial court found the employer liable for contributions required under the MLA. Judgment was entered accordingly. We believe that each of the questions presented must be answered "No," and therefore affirm the judgment.

FACTS

Appellant, Hatco, Inc. (Hatco) engages in the business of hauling rock and other materials from one construction site to another. Hatco primarily uses its own employees and trucks, but also uses "owner-operators," who own their own trucks and lease their trucks and services to Hatco in accordance with the rules and regulations of the Arizona Corporation Commission.

Hatco was a signatory to a labor contract entitled Master Labor Agreement (MLA) entered into by several Arizona construction unions and Arizona contractors. There are two MLAs relevant to this appeal, one covering July 9, 1976 to May 31, 1979, and the other June 1, 1979 to May 31 1982. The MLAs are substantively similar as they relate to the issues in this case.

The various Trust Funds conducted an audit of Hatco covering January 1977 through December 1980. The auditor determined that Hatco owed $42,294.15 to the Trust Funds. Upon Hatco's refusal to pay this sum, the Trust Funds filed a complaint to enforce the MLA. After trial, the court awarded the Trust Funds $39,426.15, plus interest until paid. Each party was required to bear its own attorneys' fees and costs. Hatco timely filed its notice of appeal from the judgment. On appeal Hatco does not dispute that any of the hours claimed were worked by the persons cited in the audit, but rather questions whether Hatco is obligated to make contributions to the Trust Funds on behalf of those persons.

The Trust Funds filed their complaint in state court in accordance with § 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (LMRA). See Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962); Bates v. Foremost-McKesson, Inc., 392 So.2d 389 (La.1980). An employer's failure to pay required contributions to a union pension fund is a violation of the bargaining agreement. E.g., International Union (UAW) v. Cardwell Mfg. Co., Inc., 416 F.Supp. 1267 (D.Kan.1976); Maddux & Sons, Inc. v. Trustees of Arizona Laborers, 125 Ariz. 475, 610 P.2d 477 (App.1980). While state courts have concurrent jurisdiction in such matters, substantive federal law must govern the interpretation and application of terms of the MLA. Spain v. Houston Oilers, Inc., 593 S.W.2d 746 (Tex.Civ.App.1979).

I

The first issue is whether the signatories to the MLA may, by the terms of that agreement, treat owner-operators as employees (versus independent contractors) thereby requiring the employers to make contributions to the Trust Funds for those owner-operators irrespective either of any factual basis for such treatment or the provisions of the NLRA. The Court of Appeals for the Ninth Circuit recently affirmed a federal district court's holding that an MLA was controlled by the NLRA requirements that contributions be made only for actual "employees" as defined in § 2(3) of the NLRA. Joint Council of Teamsters v. Associated Gen. Contractors, 520 F.Supp. 3 (C.D.Cal.1980), aff'd per curiam, 662 F.2d 531 (9th Cir.1981), cert. denied, 455 U.S. 1021, 102 S.Ct. 1718, 72 L.Ed.2d 139 (1982). Thus, the terms of the MLA which define "employees" must comport with the requirements of the NLRA. We must, therefore, resolve the remaining two issues which require that we interpret the MLA to determine both what it says in its relevant provisions and whether those provisions satisfy or violate the requirements of the NLRA.

II

The first of the two remaining interpretive issues requires us to determine whether the MLA requires that Hatco make contributions for hours worked by owner-operators and, if so, is the specification in the MLA that owner-operators are employees consistent with the NLRA.

The threshold question here is whether the employer may be held to an agreement to contribute for owner-operators where it has agreed with the union that it shall do so. A pension plan reached as the result of collective bargaining and embodied in an agreement is a contract and enforceable according to its terms. 60 Am.Jur.2d Pensions and Retirement Funds § 74 at 951 (1972). Words in a collective bargaining agreement should be given their reasonable meaning. Penn Packing Co., Inc. v. Amalgamated Meat Cutters, 497 F.2d 888 (3rd Cir.1974). The rule of contract construction that language should not be interpreted so as to render it illusory or meaningless is equally applicable to labor agreements. See Retail Clerks Int'l v. NLRB, 510 F.2d 802 (D.C.Cir.1975). Paragraph A-201.12 of the MLA included in the Special Craft Working Rules specifically applicable to Teamsters states:

When a piece of equipment is operated by its owner and is used on work covered by this Agreement, said owner shall be an employee of the Contractor or subcontractor, and shall be covered by all terms and conditions of this Agreement.

Article 20 of the MLA requires the contractors to pay specified amounts for each hour "worked by employees covered hereunder." Thus, it appears that the contract clearly requires contributions for hours worked by the owner-operators.

Hatco, however, contends that the owner-operators are in fact independent contractors, not employees, and therefore may not legally be covered by the MLA. Hatco asserts that controlling federal law, see Local 24 v. Oliver, 358 U.S. 283, 79 S.Ct. 297, 3 L.Ed.2d 312 (1959), provides that an independent contractor cannot be an employee. Hatco relies on § 2(3) of the NLRA, which states in part:

The term "employee" ... shall not include ... any individual having the status of an independent contractor.

Hatco argues that any contractual provision to the contrary is unenforceable, even if the employer and the union agree that he shall be so treated.

We agree with Hatco that these owner-operators must in fact be employees of Hatco consistent with the NLRA before Hatco may be required, by the terms of the MLA, to make contributions to the Trust Funds based upon the hours the owner-operators worked. The issue then is whether these owner-operators are employees or independent contractors.

We will defer to the judgment of the trial court if there are at least two fairly conflicting views. Associated Gen. Contractors v. NLRB, 564 F.2d 271, 279 (9th Cir.1977). Where, as here, the trial court was not requested to and did not make findings of fact or conclusions of law, the reviewing court must view the evidence and reasonable inferences therefrom in the light most favorable to the party in whose favor the judgment was rendered, and if there is any evidence to support the judgment of the trial court, it must be affirmed. Appeal in Juvenile Action J-75482, 111 Ariz. 588, 536 P.2d 197 (1975); Jerger v. Rubin, 106 Ariz. 114, 471 P.2d 726 (1970). The reviewing court also must assume from any judgment the findings necessary to sustain it, if such additional findings do not conflict with express findings and are reasonably supported by the evidence. Wippman v. Rowe, 24 Ariz.App. 522, 540 P.2d 141 (1975). But, the conclusion that the owner-operators are employees is a finding of law. Industrial Commission v. Meddock, 65 Ariz. 324, 327, 180 P.2d 580, 583 (1947); Dibble v. Garcia, 98 N.M. 21, 644 P.2d 535 (App.1982). Therefore, a reviewing court must make an independent determination of the legal issue. Cantlay & Tanzola, Inc. v. Senner, 92 Ariz. 63, 373 P.2d 370 (1962); Tovrea Land & Cattle Co. v. Linsenmeyer, 100 Ariz. 107, 412 P.2d 47 (1966); Dunlop v. Haybuster Mfg. Co., 524 F.2d 222 (8th Cir.1975); Grassetti v. Weinberger, 408 F.Supp. 142 (N.D.Cal.1976). On the record before us we conclude that there is reasonable evidence which would sustain the mixed factual finding and conclusion of law that the owner-operators are employees of Hatco. Our review also convinces us that the legal conclusion was proper.

Hatco relies primarily upon Associated Gen. Contractors v. NLRB, 564 F.2d 271 (9th Cir.1977). There the owner-operators opposed the employers and the unions, and sought to overturn the NLRB's ruling that the owner-operators were employees. The Court of Appeals applying substantive federal law found that the owner-operators were independent contractors in fact. Hatco attempts to apply the holding of Associated Gen. Contractors too broadly by simply stating that the Court of Appeals held that owner-operators were independent...