Rozay's Transfer v. Local Freight Drivers, Local 208, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America

• Decision Date: 24 June 1988
• Docket Number: No. 86-6544,86-6544
• Citation: 850 F.2d 1321
• Parties: 128 L.R.R.M. (BNA) 2955, 57 USLW 2083, 109 Lab.Cas. P 10,630 ROZAY'S TRANSFER, Plaintiff-Appellee, v. LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN and HELPERS of AMERICA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1321

850 F.2d 1321

128 L.R.R.M. (BNA) 2955, 57 USLW 2083,

109 Lab.Cas. P 10,630

ROZAY'S TRANSFER, Plaintiff-Appellee, v. LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN and HELPERS of AMERICA, Defendant-Appellant.

No. 86-6544.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 5, 1988.

Decided June 24, 1988.

Robert D. Vogel, Wohlner, Kaplon, Phillips, Vogel, Shelley & Young, Los Angeles, Cal., for defendant-appellant.

Stephen P. Pepe, O'Melveny & Myers, Los Angeles, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before WALLACE, TANG and NORRIS, Circuit Judges.

WALLACE, Circuit Judge:

Rozay's Transfer, an employer, brought this action against Teamsters Local 208 (union) for fraudulently inducing Rozay's Transfer to execute a collective bargaining agreement. Following a bench trial, the district court found for Rozay's Transfer and granted its prayer for rescission of the collective bargaining agreement (agreement) and for indemnification for retroactive pension fund contributions under the agreement for which Rozay's Transfer was adjudged liable in a previous collection action brought by the pension trust fund. On appeal, the union contests not only the merits of the district court's finding of fraud, but also the district court's jurisdiction over this action and its authority simultaneously to award rescission and indemnification as a remedy. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we affirm.

I

The circumstances giving rise to this lawsuit were previously detailed in our decision in Southwest Administrators, Inc. v. Rozay's Transfer, Inc., 791 F.2d 769 (9th Cir.1986) (Southwest Administrators ), cert. denied, 107 S.Ct. 951, 93 L.Ed.2d 999 (1987), an action brought by the trust fund to collect retroactive pension fund contributions that Rozay's Transfer was obligated to make under its collective bargaining agreement with the union.

Prior to September 30, 1981, Rozay's Transfer, an employer in the trucking industry, and Teamsters Local 208 were parties to a collective bargaining agreement. Pursuant to the agreement, Rozay's Transfer made monthly contributions on behalf of its employees to the Western Conference of Teamsters Pension Fund. This trust fund is a multiemployer pension plan as defined by subsections 3(2) and (37)(A) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1002(2), (37)(A).

After the agreement had expired, and while negotiations were continuing over the terms of a successor agreement, Rozay's Transfer continued to make contributions to the trust fund pursuant to the terms of the 1978-81 bargaining agreement. In July, 1982, when no successor agreement had yet been adopted, Rozay's Transfer informed the union that it had ceased making contributions to the pension fund.

In September, 1982, Local 208 filed an unfair labor practice claim with the National Labor Relations Board (NLRB) charging Rozay's Transfer under 29 U.S.C. Sec. 158(a)(5) with refusal to execute a collective bargaining agreement that had allegedly been negotiated. The NLRB charge was subsequently amended to include the charge that Rozay's Transfer had unilaterally altered benefits and conditions of employment, including cessation of payments to the pension fund. Local 208 also filed a grievance alleging the cessation of contributions to the trust fund violated the collective bargaining agreement.

While the NLRB charge and the grievance were pending, William S. Rozay, the owner of Rozay's Transfer, and Archie Murrietta, president of Local 208, eventually reached a settlement. Under this settlement, employee wages would be reduced by $1.00 and Rozay's Transfer would resume payments to the trust fund on behalf of each employee at the approximate rate of $.99 per hour.

In light of the company's precarious financial position, Rozay expressed serious concerns about being required to make retroactive pension fund contributions for the period between May, 1982 and February, 1983. Murrietta, and Maurice E. Anderson, the director of the Western Conference of Teamsters, agreed to contact the trust fund and request a waiver of the obligation to make contributions for this period. Murrietta and Anderson assured Rozay that the delinquent payments would be forgiven, noting that the trust fund had waived the unpaid pension contributions of other employees under similar circumstances.

Murrietta wrote to the trust fund on behalf of Rozay's Transfer requesting relief from payment of contributions for this interim period. However, on February 16, 1983, the trustees of the Western Conference of Teamsters Pension Fund, voted to deny the request to forgive the unpaid contributions.

When the new collective bargaining agreement was executed on March 8, 1983, Murrietta had been informed of the trust fund's decision to deny a waiver of the delinquent contributions. He did not advise Rozay of this action. Rozay, assuming that unpaid contributions would be forgiven, signed the agreement, which covered the period from September 1, 1981 to September 30, 1984. The parties also executed a settlement agreement resolving the NLRB unfair practice complaint and the breach of agreement grievance. Local 208 thereafter withdrew the NLRB unfair labor practice charge and the grievance.

Subsequently, Southwest Administrators, Inc., the assignee of the Western Conference of Teamsters Pension Fund, filed this action against Rozay's Transfer under sections 502(a) and 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1132(a), 1145, to collect delinquent contributions for the period between May, 1982 and February, 1983.

Rozay's Transfer contended that its obligation to make pension fund contributions dated only from March 8, 1983, when the collective bargaining agreement was signed. Rozay's Transfer also filed a counterclaim seeking the return of $57,235.28 in contributions made to the trust between October, 1981 and April, 1982, the period between expiration of the old bargaining agreement and the date Rozay's Transfer ceased making payments.

791 F.2d at 771-72 (footnote omitted).

Following a bench trial, the district court in Southwest Administrators found that Rozay's Transfer had been "fraudulently induced" by Murrietta into signing the agreement and that there had been no "meeting of the minds" on the retroactive pension fund contributions. Id. at 772. Nonetheless, the district court concluded that the union's oral misrepresentation was not a defense to the trust fund's right to collect the contributions required by the express terms of the agreement. Id. Consequently the district court entered judgment for Southwest Administrators for $76,133.29 in retroactive pension fund contributions, $15,226.25 in liquidated damages, $25,039.09 in interest, and $6,390.00 in attorneys' fees. Id.

On appeal, we affirmed. Relying on Southern California Retail Clerks Union and Food Employers Joint Pension Trust Fund v. Bjorklund, 728 F.2d 1262 (9th Cir.1984), we held that while a union's misrepresentation that amounted to fraud in the execution could constitute a defense to a trust fund's subsequent collection action, a misrepresentation that amounted only to fraud in the inducement could not. Id. at 774. Concluding that the misrepresentation by the union went only to induce Rozay's Transfer to enter into the agreement, we held that the agreement was not "void," but merely "voidable" as against the trust fund. Id. at 775. Hence, we concluded that, regardless of the union's fraudulent inducement, Rozay's Transfer was still obligated to make the contributions to the pension trust fund required by the express terms of the agreement. Id.

Subsequent to the entry of judgment by the district court in the collection action brought by the trust fund, but prior to our decision in Southwest Administrators, Rozay's Transfer initiated a separate action against the union under section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. Sec. 185(a), for fraudulent inducement. After a bench trial, the district court concluded that the union was guilty of fraudulent misrepresentation in procuring the apparent assent of Rozay's Transfer to the March 8, 1983, agreement, and entered judgment in favor of Rozay's Transfer. In fashioning a "make whole" remedy, the district court (1) rescinded the March 8, 1983, agreement, (2) awarded Rozay's Transfer indemnification from the union for contributions owed to the trust fund as a result of the union's fraudulent misrepresentation, and (3) awarded Rozay's Transfer indemnification from the union for attorneys' fees and costs incurred by Rozay's Transfer in defending the Southwest Administrators litigation both at trial and on appeal. The union timely appealed.

On appeal, the union challenges virtually all the factual findings and legal conclusions underlying the district court's determination that the union is liable for fraudulent misrepresentation. Regarding the remedy awarded, the union challenges the district court's award of rescission and indemnification for contributions owed to the trust fund on both statutory and equitable grounds, and contests the propriety of awarding indemnification for the attorneys' fees and costs that Rozay's Transfer incurred in defending the Southwest Administrators lawsuit. We granted leave to the Southern California District Council of Laborers and International Union of Operating Engineers, Local Union No. 12, AFL-CIO (union's amicus) to file an amicus brief on behalf of the union and to the Merchants and Manufacturers Association and the California Trucking Association (Rozay's Transfer's amicus) to file an amicus brief on behalf of Rozay's Transfer. In its amicus brief, the union's amicus objects to the district court's jurisdiction to hear this case.

II

Rozay's Transfer brought...