MacKillop v. Lowe's Market, Inc.
| Decision Date | 11 July 1995 |
| Docket Number | 94-35102,Nos. 93-35541,s. 93-35541 |
| Citation | 58 F.3d 1441 |
| Parties | 149 L.R.R.M. (BNA) 2833, 64 USLW 2115, 19 Employee Benefits Cas. 1745, 95 Cal. Daily Op. Serv. 5331, 95 Daily Journal D.A.R. 9121, Pens. Plan Guide P 23911D Ken MacKILLOP; Kathy Morris; Ken Gabriel; Carl Wojciechowski; Harold Carlson, as Trustees for the Oregon Federation of Butchers Pension Trust; et al., Plaintiffs-Appellees, v. LOWE'S MARKET, INC., d/b/a St. Helens Shop N' Kart, Defendant-Appellant. Ken MacKILLOP; Kathy Morris; Darrel Coffey; Carl Wojciechowski; Arthur Dulemba; Robert Hewett, as Trustees for the Oregon Federation of Butchers Pension Trust, Plaintiffs-Appellees, v. LOWE'S MARKET, INC., an Oregon corporation, d/b/a St. Helens Shop N' Kart, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Frank S. Wesson, Portland, OR, for defendant-appellant.
Davis S. Barlow, Donaldson, Kiel & McKenzie, Seattle, WA, Stephen H. Buckley, Carney, Buckley, Kasameyer & Hays, Portland, OR, for plaintiffs-appellees.
Appeal from the United States District Court for the District of Oregon.
Before: BROWNING, REAVLEY, * and NORRIS, Circuit Judges.
Lowe's Markets, Inc. (Lowe's) appeals a summary judgment in which the district court held it liable for pension and health care contributions to certain multiemployer benefit plans. We affirm.
Lowe's operates an Oregon grocery store. Union representatives for the United Food and Commercial Workers Local 555 began picketing the store in 1991. This had a negative effect on business, and Lowe's eventually signed two collective bargaining agreements (CBAs) in August of 1991. One CBA, a retail meatcutter agreement, required Lowe's to make contributions on behalf of its employees to the Oregon Federation of Butchers Pension Trust. The second CBA, a grocery, produce and deli agreement, required Lowe's to make contributions to the Oregon Retail Employees Pension Trust Fund. Both agreements also required Lowe's to make contributions to a multiemployer health plan, the Portland Area UFCW Local 555-Employers' Health Trust. These three fringe benefit plans (the Plans), are multiemployer benefit plans covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1461.
In November of 1991, a Lowe's employee brought an unfair labor practices complaint before the National Labor Relations Board (NLRB). The complaint was against the union and Lowe's. Some of the employees had never wanted to join the union and claimed that they had been coerced by Lowe's and the union into approving union representation. They did not like having to pay dues and claimed that the union had told them they would not have jobs unless they paid dues and joined the union. After the complaint was filed, Lowe's stopped making payments to the Plans. It obtained its own health insurance to provide its employees with health benefits.
In February of 1993 an NLRB administrative law judge (ALJ) concluded that the CBAs were invalid because the union was selected as the exclusive representative of the employees at a time when it did not represent an uncoerced majority of the employees, in violation of various provisions of section 8 of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158. The ALJ recognized that "a union must represent an uncoerced majority in the appropriate unit and when the employer renders unlawful assistance in establishing the union's majority, recognition and acceptance thereof violates [the NLRA]." The ALJ concluded that Lowe's had improperly coerced the employees to join the union, and ordered Lowe's and the union "to cease and desist from giving effect to, or in any manner enforcing the [CBAs]." However, the order stated that "nothing shall require Respondent Lowe's to vary or alter any substantive feature or term of its relations with the unit employees which have been established by performance under the agreements, or prejudice any rights the employees may have acquired under the agreements." The order further required the posting of a notice to employees with similar language.
In August of 1993 the NLRB affirmed the ALJ's decision on administrative appeal, noting in a footnote that "[f]or purposes of the [National Labor Relations] Act, we view the collective-bargaining agreements as never having had legal effect." Lowe's places great emphasis on this language, as discussed below.
Beginning in June of 1992, the trustees of the Plans sued Lowe's for unpaid employer contributions to the Plans. The district court denied a motion to stay pending the NLRB proceeding, and eventually granted the trustees' motion for summary judgment, entering money judgments for the amount of unpaid employer contributions to the Plans up to the date of the ALJ's ruling, together with interest and attorney's fees.
Lowe's argues that it has no obligation to the Plans by virtue of invalid collective bargaining agreements. The trustees argue that under ERISA Lowe's obligations remain even if the CBAs are invalid for not meeting the uncoerced majority requirement of the labor laws. The district court has awarded to the Plans those contributions due from Lowe's up to the date of the ALJ's ruling on February 24, 1993. We do not have before us any question of contributions due thereafter.
The key statute here is ERISA section 515, 29 U.S.C. Sec. 1145, which was added to ERISA in 1980 and states:
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.
Several circuits including our own have analyzed this provision and its legislative history. They have concluded that in circumstances such as those presented here, section 515 mandates that employers are responsible for ERISA plan contributions regardless of defenses challenging the validity of the underlying CBA.
In Southwest Administrators, Inc. v. Rozay's Transfer, 791 F.2d 769 (9th Cir.1986), cert. denied, 479 U.S. 1065, 107 S.Ct. 951, 93 L.Ed.2d 999 (1987), we explained:
For reasons of public policy, traditional contract law does not apply with full force in actions brought under [ERISA] to collect delinquent trust fund contributions. In recognition of the fact that millions of workers depend upon employee benefit trust funds for their retirement security, Congress and the courts have acted to simplify trust fund collection actions by restricting the availability of contract defenses, which make collection actions unnecessarily cumbersome and costly.
Id. at 773 (citation omitted). We held that the defense of fraudulent inducement was not available in ERISA trust fund collection actions against employers. We drew a distinction between defenses which make an agreement voidable and those that render it void ab initio, and held that only the latter defenses, such as fraud in the execution, are available in such actions. Id. at 773-775.
In Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310 (2d Cir.1990), cert. denied, 498 U.S. 982, 111 S.Ct. 511, 112 L.Ed.2d 524 (1990), the Second Circuit affirmed a summary judgment in favor of the trustees of multiemployer pension plans suing an employer for unpaid contributions. The employer argued that it had no liability to the plans because no valid CBA existed. Specifically, the employer raised the defenses of lack of majority representation and abandonment of the CBA. The court rejected these defenses, concluding that the purpose of section 515 was "to insulate benefit plans from exactly these defenses." Id. at 313. The court reasoned that this section of ERISA severely limits defenses the employer might raise to the underlying CBA when benefit plans sue to recover employer contributions. It relied on congressional intent that Id. at 314 (citation omitted). The court noted that the only valid defenses by an employer it could find were in cases where (1) the pension contributions themselves are illegal, or (2) the CBA is void rather than voidable. The example given of the latter exception is fraud in the execution, as where the employer was not even aware it was signing a CBA. Id. The court further found "unmistakably clear legislative intent" that one purpose of section 515 was to abolish the employer defense of lack of majority status. Id. at 316. It cited legislative history that section 515 was specifically aimed at overruling two "pre-hire agreement" cases. Id. In these cases, 1 an employer had signed a pre-hire agreement promising to abide by the terms of a CBA as soon as he hired his employees. The employers in these cases later escaped liability to benefit plans by arguing that the pre-hire agreements were invalid because the unions had failed to attain majority status.
The Eighth Circuit reached the same result in Berry v. Garza, 919 F.2d 87 (8th Cir.1990). It held that because the employer "knowingly entered into a facially valid collective bargaining agreement with the Union, he is now estopped from raising the defense of lack of majority status to avoid his obligation to the [ERISA] Fund." Id. at 90.
The Third Circuit followed a similar approach in Agathos v. Starlite Motel, 977 F.2d 1500 (3d Cir.1992). Plan trustees sued an employer for unpaid contributions. The employer argued that "the collective bargaining agreement was invalid because it was induced by a threat to picket and because...
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