Robbins v. Prosser's Moving and Storage Co.
| Decision Date | 16 February 1983 |
| Docket Number | Nos. 80-2116,80-2117,s. 80-2116 |
| Citation | 700 F.2d 433 |
| Parties | 112 L.R.R.M. (BNA) 2813, 96 Lab.Cas. P 14,085, 4 Employee Benefits Ca 1081 Loran W. ROBBINS, Marion M. Winstead, Harold J. Yates, Robert J. Baker, Howard McDougall, Thomas F. O'Malley, and R.V. Pulliam, Trustees of the Central States, Southeast and Southwest Areas Pension Fund, Appellants, v. PROSSER'S MOVING AND STORAGE COMPANY, a Missouri corporation, Appellee. Loran W. ROBBINS, Marion M. Winstead, Harold J. Yates, Robert J. Baker, Howard McDougall, Thomas F. O'Malley, and R.V. Pulliam, Trustees of the Central States, Southeast and Southwest Areas Health and Welfare and Pension Funds, Appellants, v. SCHNEIDER MOVING AND STORAGE COMPANY, a Missouri corporation, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Russell N. Luplow, Diana L.S. Peters, Bloomfield Hills, Mich., Donald J. Weyerich, Clayton, Mo., for appellants.
Charles W. Bobinette, Bruce M. Wurmser, Uthoff, Wurmser & Graeber, St. Louis, Mo., for appellee Prosser's Moving & Storage Co.
David F. Yates, St. Louis, Mo., for appellee Schneider Moving & Storage Co.; Suelthaus, Krueger, Cunningham, Yates & Kaplan, P.C., St. Louis, Mo., of counsel.
Before LAY, Chief Judge, HEANEY, BRIGHT, and ROSS, Circuit Judges, HENLEY, Senior Circuit Judge, and McMILLIAN, ARNOLD, and JOHN R. GIBSON, Circuit Judges, en banc.
These cases present important questions of labor law touching on the rights and obligations of trustees of Taft-Hartley Act pension and welfare funds in disputes with employers over their contributions to the funds. The trustees in these cases filed suits as third-party beneficiaries of the collective-bargaining agreements between the employers and the union. The District Court, relying largely on Central States, Southeast & Southwest Areas Pension Fund v. Howard Martin, Inc., 625 F.2d 171 (7th Cir.1980), held in both cases that the trustees were obligated by the collective-bargaining agreements to submit their differences to arbitration. A divided panel of this Court reversed, holding that the trustees could sue in the District Court without resort to arbitration. Robbins v. Prosser's Moving & Storage Co. & Schneider Moving & Storage Co., Nos. 80-2116, 80-2117 (8th Cir. March 24, 1982) (per curiam). Because that decision appeared to conflict with prior decisions of this Court, we granted rehearing en banc. We now reverse the District Court and overrule those prior decisions to the extent of any inconsistency with this opinion. Our conclusion is that the national pension policy embodied in the Labor Management Relations Act (LMRA), the Employee Retirement Income Security Act (ERISA), and the Multiemployer Pension Plan Amendments Act (MPPAA), together with the terms of the collective-bargaining agreement and accompanying trust instruments, dictate that these trustees not be bound by the arbitration procedure, which they have no right to initiate.
The facts of these two cases differ somewhat. The plaintiffs are trustees of the Central States, Southeast and Southwest Areas Pension Fund and Central States, Southeast and Southwest Areas Health and Welfare Fund, both of which were established pursuant to Sec. 302(c)(5) of the Labor Management Relations Act of 1947 (), 29 U.S.C. Sec. 186(c)(5). The complaints, which were filed against Prosser's Moving & Storage Company and Schneider Moving & Storage Company, are based on collective-bargaining agreements between the defendants and Local 610 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
The complaint in No. 80-2117 alleged that Schneider had been a party to successive collective-bargaining agreements with Local 610 from March 1, 1970, through February 28, 1979, which required Schneider to make certain contributions to the Pension Fund and the Health and Welfare Fund for each employee covered by the agreement. 1 According to the complaint, the agreement required contributions to be made by the fifteenth day of each month and obligated Schneider to furnish the trustees with a monthly contribution report containing the names of and hours worked by each employee and the contributions required on behalf of each. The plaintiffs further claimed authorization under the collective- bargaining agreements and the trust agreements to audit the employer's records to determine if all required contributions had been made. Schneider was alleged to have violated the agreement by refusing to allow the trustees to audit its payroll records, by failing to furnish the required monthly report, and by repeatedly failing to submit the monthly reports and payments on their respective due dates. Designated Record (D.R.) 3-5. The trustees prayed for an accounting and for all sums determined to be due, together with costs and attorneys' fees as provided in the agreements. D.R. 6-7. The complaint in No. 80-2116 against Prosser was almost identical.
The cases seem to differ in two respects: In February of 1979, a decertification election was held at the Schneider Company, and the Union was decertified as the representative of Schneider's employees. Second, as to the defendant Prosser the real controversy seems to revolve around the trustees' right to conduct an audit of the company's records. Schneider has already submitted to an audit. Schneider has sought to emphasize that its dispute with the plaintiffs is a question of coverage of some employees under the agreement, not the right of the plaintiffs to conduct the audit.
The defendants moved to dismiss both actions on the ground that the controversy should have been submitted to arbitration under the terms of the collective-bargaining agreements. The District Court, relying on Central States v. Howard Martin, supra, agreed with the defendants and dismissed both complaints without prejudice pending the outcome of arbitration. The Court's opinion accepted Howard Martin's dichotomy of such suits into "simple collection matters," for which arbitration is not a prerequisite to suit, and more complex actions requiring interpretation of the collective-bargaining contract, in which arbitration is required. Both suits were found by the District Court to involve questions of coverage of certain employees under the agreement and therefore held to present questions of contract interpretation.
Defendants' argument for compulsory arbitration is based on provisions in the collective bargaining contract, on the national labor policy favoring arbitration embodied in the Steelworkers Trilogy, 2 and on precedent. Close examination reveals that none of these supports will bear the weight of the defendants' position. Moreover, other important considerations, which we will discuss presently, militate against requiring arbitration.
First, Prosser and Schneider contend that since the plaintiffs sue as third-party beneficiaries of the union contract, they should be bound by the grievance-arbitration procedures contained in the contract. The argument is based on traditional notions of third-party-beneficiary contract law: The third party seeking to enforce the agreement is bound by the terms of the contract and subject to the same defenses as the original promisee would be. Defendants are correct as a general proposition that "[t]he promisor may ... usually assert against the beneficiary any defense which he could assert against the promisee if the promisee were suing on the contract." Calamari & Perillo, Contracts 623 (2d ed. 1977). This rule is, however, not without exception, and the Supreme Court has held collective-bargaining agreements to be such an exception. Lewis v. Benedict Coal Corp., 361 U.S. 459, 80 S.Ct. 489, 4 L.Ed.2d 442 (1960), was a suit by pension-fund trustees seeking to compel an employer to contribute to the fund. The issue before the Supreme Court was "whether the agreement is to be construed as making performance by the union [which had been made a third-party defendant] of its promises a condition precedent to Benedict's promise to pay royalty to the trustees." Id. at 465, 80 S.Ct. at 493. The Court held that collective-bargaining agreements are not typical third-party-beneficiary contracts and rejected Benedict's assertion, noting that "[i]f Benedict and other coal operators having damage claims against the union for its breaches may curtail royalty payments, the burden will fall in the first instance upon the employees and their families across the country." Id. at 469, 80 S.Ct. at 495. 3
While Lewis is arguably distinguishable from the instant case in that it dealt with a proffered substantive defense to the suit rather than the procedural defense of arbitration, the case is recognized as establishing an exception to the general rule that defenses good against the promisee are good against donee beneficiaries such as the Funds. Calamari & Perillo, supra, at 624 n. 26. See also Todd v. Casemakers, 425 F.Supp. 1375 (N.D.Ill.1977); Wishnick v. One Stop Food & Liquor Store, 359 F.Supp. 239 (N.D.Ill.1973). And while Lewis alone may not be dispositive of Schneider's and Prosser's cases, it does refute their argument that the trustees, as third-party beneficiaries, are subject to the same defenses as could be asserted against a suit by the union.
Second, defendants argue that the well-established national policy favoring arbitration as a means of resolving labor disputes compels the conclusion that arbitration is required in disputes such as these. The Steelworkers Trilogy, supra, is cited as favoring arbitration of all industrial labor disputes. The defendants, however, overlook certain limitations inherent in the Court's decisions in those cases. First, as Justice Douglas pointed out, "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Steelworkers...
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