Nesse v. Green Nature-Cycle, LLC

• Decision Date: 05 August 2021
• Docket Number: No. 20-2365,20-2365
• Parties: John NESSE, AS TRUSTEES OF the MINNESOTA LABORERS HEALTH AND WELFARE FUND and as Trustees of the Minnesota Laborers Pension Fund; Tim Mackey, as Trustees of the Minnesota Laborers Health and Welfare Fund, as Trustees of the Minnesota Laborers Pension Fund, as Trustees of the Minnesota Laborers Vacation Fund, and as Trustees of the Construction Laborers’ Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; Tammy Braastad, as Trustees of the Minnesota Laborers Vacation Fund ; Fred Chase, as Trustees of the Construction Laborers’ Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; Mark Ryan, as Trustees of the Minnesota Laborers Employers Cooperation and Education Trust; Dave Borst, as Trustees of the Minnesota Laborers Employers Cooperation and Education Trust; the Minnesota Laborers Health and Welfare Fund ; the Minnesota Laborers Pension Fund; the Minnesota Laborers Vacation Fund ; the Construction Laborers’, Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; the Minnesota Laborers Employers Cooperation and Education Trust, Plaintiffs - Appellees v. GREEN NATURE-CYCLE, LLC, Defendant - Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

7 F.4th 769

John NESSE, AS TRUSTEES OF the MINNESOTA LABORERS HEALTH AND WELFARE FUND and as Trustees of the Minnesota Laborers Pension Fund; Tim Mackey, as Trustees of the Minnesota Laborers Health and Welfare Fund, as Trustees of the Minnesota Laborers Pension Fund, as Trustees of the Minnesota Laborers Vacation Fund, and as Trustees of the Construction Laborers’ Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; Tammy Braastad, as Trustees of the Minnesota Laborers Vacation Fund ; Fred Chase, as Trustees of the Construction Laborers’ Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; Mark Ryan, as Trustees of the Minnesota Laborers Employers Cooperation and Education Trust; Dave Borst, as Trustees of the Minnesota Laborers Employers Cooperation and Education Trust; the Minnesota Laborers Health and Welfare Fund ; the Minnesota Laborers Pension Fund; the Minnesota Laborers Vacation Fund ; the Construction Laborers’, Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; the Minnesota Laborers Employers Cooperation and Education Trust, Plaintiffs - Appellees

v.GREEN NATURE-CYCLE, LLC, Defendant - Appellant

No. 20-2365

United States Court of Appeals, Eighth Circuit.

Submitted: May 12, 2021

Filed: August 5, 2021

Amy Lu Court, Christy Elizabeth Lawrie, Carl S. Wosmek, McGrann & Shea, Minneapolis, MN, for Plaintiffs-Appellees.

Shannon L. Bjorklund, Forrest Kwahada Tahdooahnippah, Dorsey & Whitney, Minneapolis, MN, for Defendant-Appellant

Before SMITH, Chief Judge, SHEPHERD and GRASZ, Circuit Judges.

SHEPHERD, Circuit Judge.

The trustees of five multi-employer fringe benefit funds sued Green Nature-Cycle, LLC under § 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145 ; and § 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a). The Trustees alleged that Green Nature failed to contribute to the funds on behalf of its non-union employees and sought to collect from Green Nature the delinquent contributions, interest, costs, and attorney's fees. The parties filed cross-motions for summary judgment, and the district court¹ granted summary judgment in favor of the Trustees, which included ordering Green Nature to pay the Trustees’ attorney's fees. Green Nature appeals the grant of summary judgment in favor of the Trustees and the award of attorney's fees. Having jurisdiction under 28 U.S.C. § 1291, we affirm.

I.

Green Nature, a largely seasonal landscaping business, served as a subcontractor for Minnesota Department of Transportation (MnDOT) landscaping projects from April to June 2017. In order to work with unionized prime contractors, Green Nature signed a Collective Bargaining Agreement (CBA). The CBA required Green Nature "to contribute every month ... for each hour worked by all Employees covered by this Agreement" to five multi-employer fringe benefit funds (the Funds): Pension; Health and Welfare; Vacation; Education, Training and Apprenticeship; and the Minnesota Laborers-Employers Cooperation and Education Trust (LECET). R. Doc. 51-1, at 8.

The CBA was entered into by a multi-employer committee of landscaping contractors, which included Green Nature, and the Laborers’ District Council of Minnesota and North Dakota on behalf of its affiliated Local Unions. The CBA does not define the term "Employees." Article 2.4 of the CBA states that the CBA "applies to all Landscape Work conducted in the State of Minnesota." R. Doc. 51-1, at 2. The CBA contains a "recognition clause," wherein Green Nature "recognize[d] the Union as the exclusive representative of all Employees performing work within the jurisdiction of the Union for the purpose of collective bargaining with respect to ... fringe benefits, hours of employment and other conditions of employment." R. Doc. 51-1, at 3. The CBA also contains a "union shop" clause, requiring "each Employee covered by this Agreement" to become a union member within eight days of employment. R. Doc. 51-1, at 3. Additionally, Article 16 requires Green Nature "to contribute every month ... [fringe benefits] for each hour worked by all Employees covered by this Agreement." R. Doc. 51-1, at 8. Article 5.2 requires Green Nature "to pay the wage rates including benefits as listed herein for all Employees covered under this Agreement from the first day of employment, regardless of whether or not such Employees are members of the Union ." R. Doc. 51-1, at 4 (emphasis added). Article 16.5(i) states:

The parties to this Agreement acknowledge that the provisions of this Agreement establishing rates of pay, wages, all hours of employment and other terms and conditions of employment, including fringe benefits , apply to Employees employed in job classifications within the jurisdiction of the Union from the first date of employment, REGARDLESS OF WHETHER OR NOT SUCH EMPLOYEES ARE MEMBERS OF THE UNION.

R. Doc. 51-1, at 10 (italics added; capitalization in original). Article 16.4 provides in relevant part: "There shall be no requirement that Employees sent to work outside the scope of this Agreement be paid fringes, nor shall the Employer be required to duplicate fringe contributions." R. Doc. 51-1, at 9. Finally, Article 16.1 provides that "[t]he fringe benefit contributions are to be paid on one check and submitted to the agent of the Funds as designated by the Trustees."² R. Doc. 51-1, at 9.

In 2017, one of Green Nature's employees reported to Jacquelyn Klein, an MnDOT labor compliance investigator, that Green Nature was not paying him for work on MnDOT projects. Klein then audited Green Nature's compliance with Minnesota prevailing wage laws. During the audit, Klein reviewed employee timecards, check stubs, and fringe-related documents. Because Green Nature failed to cooperate with the audit, Green Nature employees provided the documents to Klein. It is undisputed that Klein never reviewed or even received the CBA during the audit and that this was consistent with her normal practice.

Klein ultimately determined that Green Nature had failed to pay both its union and non-union employees wages and fringe benefits as required by Minnesota prevailing wage laws. Because Green Nature still refused to pay its employees, Klein directed the general contractor to pay the employees their delinquent wages and fringe benefits. Klein directed the general contractor to send a check to the Funds for monies owed to union employees. By contrast, Klein directed the general contractor to send monies owed to non-union employees to her, and she then forwarded the monies directly to the non-union employees. Green Nature received a credit on its audit invoice for the payments made by the general contractor.

In addition to contacting MnDOT, Green Nature employees contacted their union business agent to report Green Nature's failure to pay for work on MnDOT projects. The Trustees commenced a CBA-authorized audit. The Trustees requested that Green Nature produce payroll and employment records, but Green Nature failed to produce such documents.

Following the attempted CBA audit, the Trustees sued Green Nature under § 515 of ERISA, 29 U.S.C. § 1145 ; and § 301 of the LMRA, 29 U.S.C. § 185(a). The Trustees alleged that Green Nature failed to contribute to the Funds on behalf of its non-union employees as required by the CBA. The Trustees sought to collect unpaid contributions, interest, costs, and attorney's fees. The parties filed cross-motions for summary judgment, and the district court granted summary judgment in favor of the Trustees. The district court concluded that the CBA required Green Nature to contribute to the Funds on behalf of non-union employees; that the MnDOT audit findings did not collaterally estop the Trustees from seeking the delinquent contributions; and that the Trustees’ recovery of delinquent fund contributions would not require Green Nature to "duplicate fringe contributions" in contravention of the CBA. The district court separately ordered Green Nature to pay approximately $66,000 for the Trustees’ attorney's fees, as well as "double interest" and costs. Green Nature appeals the grant of summary judgment in favor of the Trustees and the award of attorney's fees, but not the award of "double interest" and costs.³

II.

Green Nature argues that the district court erred in granting summary judgment in favor of the Trustees. Green Nature contends that the CBA did not require it to contribute fringe benefits for non-union employees, and even if it did, an award of delinquent contributions in this litigation would impermissibly require Green Nature to "duplicate fringe contributions" in view of the contributions already received from the MnDOT audit. Alternatively, Green Nature argues that the MnDOT audit collaterally estops the Trustees from "relitigating" the amount of fringe benefits owed for non-union employees. "We review a district court's grant of summary judgment de novo, viewing the evidence in the light most favorable to [Green Nature] as the nonmoving party and drawing all reasonable inferences in [its] favor." Roebuck v. USAble Life, 992 F.3d 732, 735 (8th Cir. 2021).

Section 515 of ERISA provides:

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.

29 U.S.C. § 1145. Section 515 was Congress's response "to the problem created when an employer defaults upon its obligation to fund a multiemployer defined-benefit pension plan .... Section 515 ‘evinces a strong congressional desire to minimize contribution losses and the resulting burden such losses impose upon other plan participants.’ " Flynn v. R.C. Tile, 353 F.3d 953, 958 (D.C. Cir. 2004) (citations omitted). ERISA authorizes a plan fiduciary, like the Trustees, to seek recovery of unpaid...