Langone v. Southeastern Metal Fabricators, Inc.
| Decision Date | 28 July 2009 |
| Docket Number | Civil Action No. 08-10337-RCL. |
| Citation | 638 F.Supp.2d 89 |
| Parties | Charles LANGONE, Fund Manager of the New England Teamsters and Trucking Industry Pension Fund, Plaintiff v. SOUTHEASTERN METAL FABRICATORS, INC., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Catherine M. Campbell, Feinberg, Campbell & Zack, P.C., Boston, MA, for Plaintiff.
James F. Grosso, O'Reilly, Grosso & Gross PC, Framingham, MA, for Defendants.
Plaintiff Charles Langone ("Langone"), Fund Manager of the New England Teamsters and Trucking Industry Pension Fund ("Fund"), filed suit against Southeastern Metal Fabricators, Inc. ("Southeastern"), under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145, to recover an alleged $7,218.05 deficiency in Southeastern's contributions to the Fund for the calendar years of 2002 to 2005. The Fund claims that a 2006 audit revealed that Southeastern failed to make contributions required by the Rules and Regulations of the New England Teamsters and Trucking Industry Pension Plan ("Collective Bargaining Agreement")1 that Southeastern entered into with the General Teamsters, Chauffeurs, Warehouseman & Helpers of Brockton & Vicinity, Local Union No. 653 ("the Teamsters").
The Fund now moves for summary judgment. For the reasons discussed below, the Court DENIES the Fund's motion.
Article 17 of the Collective Bargaining Agreement specifies the manner in which Southeastern is obligated to contribute to the Fund. Although the amount of the hourly contribution (signified by "X" below) changed over time, the language and formula prescribing the parameters of contributions remained consistent throughout the relevant time period. Article 17(b) provides:
[F]or each hour or portion thereof, figured to the nearest quarter hour for which an employee receives pay or for which pay is due, [Southeastern] shall make a contribution of [$X] to the ... Fund but not more than [$40X] per week for any one employee from the first hour of employment of such week.
....
For purposes of this section, each hour for which wages are paid or due, or any portion thereof figured to the nearest quarter hour, as well as hours of paid vacation, paid holidays and other hours for which pay is due or received by the employee, shall be counted as hours for which contributions are payable. In computing the maximum amount due any week, there shall be no daily limit on the number of hours for any one day in such week, whether such hours are performed on straight time or overtime rates, but payments shall be made at the amount set forth above.
On July 27, 2006, Coleen Barret-Holland ("Barret-Holland"), the Fund's auditor, conducted an audit of Southeastern's contributions to the Fund for the calendars years 2002 to 2005. (Fund's Statement of Undisputed Material Facts ("PSOF") ¶ 12, Doc. No. 13.) Barret-Holland determined that Southeastern Metal failed to contribute $7,218.05 during that period for "hours paid at termination, paid vacation hours, paid holidays, clerical mistakes, and interest...." (Id. ¶ 13.)
Three payroll concepts are critical to understanding how Barret-Holland arrived at her calculation. The first is what the Court will call "work-hours," which are the number of hours an employee actually worked and for which he or she was paid. The second is "non-work-hours," which is the number of hours for which an employee was paid but did not work, including paid vacation, paid holidays, vacation pay taken in lieu of time off2, and hours paid at termination3. The final concept is "contribution-hours," that is the number of hours for which Southeastern was obligated to contribute to the Fund.
In conducting the audit, Barret-Holland engaged in a number of accounting practices that the parties agree were clearly in accordance with the Collective Bargaining Agreement. First, she never permitted the number of contribution-hours for a given week to exceed 40. (Id. ¶ 15.) As a result, the most Southeastern could be obligated to contribute to the Fund was 2,080 contribution-hours per employee per year (52 weeks multiplied by 40 hours).4 (Id.) Second, where an employee had actually worked more than 40 hours in a week, and thus had more than 40 work-hours, Barret-Holland concluded that the employee forfeited the fringe benefit of Fund contributions for the excess hours. (See Fund's Reply at 2, Doc. No. 19.) In other words, if an employee worked 50 hours in a week (50 work-hours), Southeastern was not obligated to contribute to the Fund for the 10 hours in excess of its 40 contribution-hour limit. Third, where the sum of work-hours and non-work-hours in a given week was less than or equal to 40, Barret-Holland concluded that Southeastern was obligated to contribute to the Fund for all of those hours. (Id.) For example, if an employee worked 16 hours and took 24 hours of paid vacation, the Fund had an obligation for 40 contribution-hours.
The parties disagree, however, over how Barret-Holland accounted for non-work-hours in weeks where the sum of work-hours and non-work-hours exceeded 40. This dispute is most easily understood through the use of an example. Imagine that an employee had 2,000 work-hours and 80 non-work-hours in a given year. Imagine also that the employee, for whatever reason, received payment for all 80 non-work-hours during weeks in which the employee also had 40 work-hours.5 In conducting her audit, Barret-Holland calculated that Southeastern owed contributions for all 2,080 hours, even though the employee, by necessity, was paid in excess of 40 hours in at least one pay period. (Id.) To reach this conclusion, Barret-Holland and the Fund interpreted the Collective Bargaining Agreement as mandating that Southeastern contribute to the Fund for all non-work-hours, even if they were accrued in weeks where the sum of work-hours and non-work-hours exceeded 40, as long as the Southeastern's annual contribution-hours were capped at 2,080. (Id.) Barret-Holland essentially reallocated the non-work-hours in excess of 40 in a week to other weeks in which the sum of work-hours and non-work-hours was less than 40. The only justification provided by the Fund for this interpretation of the Collective Bargaining Agreement is that it has been "the consistent policy of the ... Fund to require contributions for paid vacation, paid holidays and other hours for which pay is due or received by the employee up to a 2,080-hour-per-year limit based on a 40-hour-per-week limit." (PSOF ¶ 11.)
Langone filed suit against Southeastern on behalf of the Fund on February 28, 2008. (Complaint, Doc. No. 1.) The Fund moved for summary judgment on October 1, 2008. (Doc. No. 13.) The parties agreed that the Court would decide the motion on the papers.
Summary judgment is appropriate when the facts properly supported by the record and taken in the light most favorable to the non-moving party "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). The moving party "bears the initial burden of demonstrating that there are no genuine issues of material fact for trial." Hinchey v. NYNEX Corp., 144 F.3d 134, 140 (1st Cir.1998). That burden "`may be discharged by showing— that is, pointing out to the district court— that there is an absence of evidence to support the nonmoving party's case.'" Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Calvi v. Knox County, 470 F.3d 422, 426 (1st Cir.2006) (citations and quotations marks omitted).
"An ERISA fund's decision that contributions are due [is] `reviewed under a deferential arbitrary and capricious standard where ... the language of the underlying plan reserves discretion to the' trustee to interpret the language of the plan and resolve disputes." Langone v. USCO Distribution Services, Inc., 389 F.Supp.2d 91, 97 (D.Mass.2005) (Saris, J.) (ellipses in original) (quoting Pari-Fasano v. ITT Hartford Life & Accident, 230 F.3d 415, 418 (1st Cir.2000)); see also Diaz v. Seafarers Int'l Union, 13 F.3d 454, 456 (1st Cir.1994) (). Here, the parties agree that various provisions of the Trust Agreement (under which Southeastern agreed to join the Collective Bargaining Agreement), grant the Fund the discretion to construe the terms of the Collective Bargaining Agreement. (See Trust Agreement, Arts. IV, X, Ex. B attach. to Langone Aff.) Thus, the arbitrary and capricious standard applies.
Under the arbitrary and capricious standard, this Court must uphold the Fund's decision if it was "reasoned and supported by substantial evidence." Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 87 (1st Cir.2008) (citation and quotation marks omitted). "Where the trustees of a plan impose a standard not required by the plan's provisions, or interpret the plan in a manner inconsistent with its plain words, or by their interpretation render some provisions of the plan superfluous, their actions may...
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