Short v. Central States, Southeast & Southwest Areas Pension Fund, s. 83-1949

Citation729 F.2d 567
Decision Date14 March 1984
Docket NumberNos. 83-1949,83-2584 and 83-2616,83-2129,s. 83-1949
Parties100 Lab.Cas. P 10,856, 5 Employee Benefits Ca 2552 Lyle SHORT, Executor of the Estate of Melvin A. Short, Appellee, v. CENTRAL STATES, SOUTHEAST & SOUTHWEST AREAS PENSION FUND, Appellant. Harold O. ZORN, Appellee, v. CENTRAL STATES, SOUTHEAST & SOUTHWEST AREAS PENSION FUND, Appellant. Harold O. ZORN, Appellee, v. CENTRAL STATES, etc., Appellant. Harold O. ZORN, Appellant, v. CENTRAL STATES, etc., Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Timothy G. Costello, Goldberg, Previant, Uelmen, Gratz, Miller & Brueggeman, S.C., Milwaukee, Wis., Paul A. Zoss, Myers, Knox & Hart, Des Moines, Iowa, for appellant.

Robert L. Ulstad, Ulstad Law Office, Fort Dodge, Iowa, for appellee.

Before LAY, Chief Judge, FLOYD R. GIBSON, Senior Circuit Judge, and BRIGHT, Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

The defendant in this case, The Central States, Southeast and Southwest Areas Pension Fund (Fund), appeals from judgments, entered by district courts 1 in two separate cases, which set aside decisions of the Fund's Benefits Claim Review Committee (Committee), denying applications for pension benefits. These cases were consolidated for the purposes of appeal. We affirm in part and reverse in part.

I. Issue

The main issue in both cases is whether these individual plaintiffs-appellees who both own and operate a tractor are "employees", under an employee pension benefit plan covered by the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1381 (1976), (ERISA). The employment benefit plan in both cases consists of a fund which is a trust regulated by section 302 of the Taft-Hartley Act, 29 U.S.C. Sec. 186(c)(5) (Supp. V 1981), and is an employee pension benefit plan (Pension Plan) as those terms are used and defined by ERISA, 29 U.S.C. Sec. 1002 (1976); 29 U.S.C. Sec. 1002 (Supp. V 1981). The district courts had jurisdiction over these cases pursuant to section 502 of ERISA, 29 U.S.C. Sec. 1132(e) (1976). The Taft-Hartley Act, 29 U.S.C. Sec. 186(c)(5) (Supp. V 1981), ERISA, 29 U.S.C. Sec. 1002(2)(A)(i) (Supp. V 1981), and the terms of the Pension Plan prohibit the payment of pension benefits to anyone except employees.

Under the terms of the Pension Plan, an applicant for benefits must have completed twenty years of continuous employment as an employee in the teamster industry, with ten or more years of contributions, in order to qualify for a twenty year service pension. "Continuous service in the industry" is defined as "accumulated years of employment ... calculated from the employee's last employment or re-employment date following the last break in service." A "break in service" occurs at the end of any sixty consecutive months, between February 1, 1955, through March 31, 1969, in which the applicant was not employed in the teamster industry. In computing an applicant's years of service, any time of employment in the teamster industry as an employer, as a member of a partnership, or as a self-employed individual is not counted in determining eligibility.

The Pension Plan provides that Illinois law shall govern issues of construction. Absent a statutory definition of the master-servant relationship, the common law is to be applied to determine whether an applicant was an employee within the meaning of the Pension Plan.

a. Short

From May of 1962 through April of 1965, Short operated as an interstate over-the-road truck driver for Aero Mayflower Moving & Storage Co., pursuant to an equipment and service lease agreement. From May of 1965 through June of 1967, Short worked in the same capacity pursuant to a similar agreement with B & B Transfer & Storage. During this period of time, B & B leased one of its trailers, Short's tractor and Short's services to Bekins Van Lines, Inc. Under these agreements, Short rented his tractor and driving services to the companies to deliver goods hauled in their trailers. In addition, Short was to drive exclusively for these companies; either party could terminate the agreement at will with thirty days written notice; and Short operated under the authority of the ICC permits held by Mayflower and B & B/Bekins.

Short paid for the basic Iowa Motor Vehicle licenses for his tractor, but Mayflower and B & B/Bekins paid for the necessary non-Iowa licenses and permits and also all licenses for the trailers. Both companies required that Short wear a uniform while driving for them but, unlike the companies' employees, Short had to buy his uniforms. If Short needed help in loading or unloading cargo, he was responsible for hiring and paying any helpers, and was not reimbursed for these expenses. Short could substitute only drivers who had been certified by the companies.

Both companies paid Short on a "percentage of the revenue" basis, not by the hour. With the exception of brief training periods required by both companies, neither company withheld F.I.C.A., state or federal income taxes from Short's salaries. However, Mayflower did withhold the cost of worker's compensation insurance premiums from Short's salary. Between 1962 and 1967, Short filed tax returns as a self-employed individual.

Throughout his relationship with the companies, Short decided when and for how long he would work; he could take vacation days without the approval of either company simply by notifying their dispatchers that he was out of service. Mayflower and B & B/Bekins instructed Short as to when and where to pick up a load, the contents of a load, and the time and place for delivery. However, Short was free to choose the route between points of loading and delivery.

Short bore the costs of insurance on his tractor, maintenance of his tractor, and fuel. The companies bore the costs of maintaining and insuring their trailers. The companies handled the paperwork associated with billing, and also prepared the bills of lading. Customer payments were made directly to the companies or, where a delivery was C.O.D., indirectly through Short. Short was paid by B & B only after B & B had been paid by Bekins. Short's tractor bore the name of either Mayflower or Bekins throughout the period in question.

In contrast to Short, B & B/Bekins: paid their local, short-haul drivers by the hour, required approval for employees' vacation days, supplied the drivers with tractors, uniforms and trailers, maintained all equipment, contributed to worker's compensation insurance on behalf of the drivers, paid all tolls, paid for overnight lodging expenses, and prescribed the hours drivers were to work. A manager for Mayflower testified that Short was considered by Mayflower to be an independent contractor, not an employee, who was paid on a commission basis. The owner and manager of B & B testified that Short was under the supervision of B & B, as well as Bekins, from May of 1965 through June of 1967.

b. Zorn

Between 1959 and 1967, Zorn operated as an over-the-road, interstate truck driver under an equipment and service agreement with Ellsworth Freight Lines. Under the agreement, Zorn rented his tractor and driving services to deliver goods hauled in Ellsworth's trailers. Zorn was under an exclusive contract to Ellsworth, and was to furnish his services at any and all times during the term of the agreement.

Ellsworth paid Zorn according to a percentage of the total shipping charges, and Zorn received his pay regardless of whether the customers paid Ellsworth. Zorn had to pay for maintenance on his tractor, fuel, traffic fines, fines relating to overweight restrictions, any extra help which might have been necessary for loading and unloading cargo, and all personal expenses.

Zorn operated under Ellsworth's licenses and permits, pulled only trailers supplied by Ellsworth, handled only loads arranged through Ellsworth's dispatcher, and displayed the company's name on both the tractor and trailer. Zorn was subject to discipline by Ellsworth for actions such as traffic offenses. Unlike Short, Zorn was not required to have substitute drivers approved by the company. Zorn was free to refuse to transport a load, but only when there was more than one load for him to haul. Finally, while working for Ellsworth Zorn's tax status was that of a self-employed individual; Ellsworth did not withhold F.I.C.A., state or federal income taxes from Zorn's salary.

The only issue on appeal is whether the Fund's Committee erred, as a matter of law, when it determined that Short and Zorn were ineligible for pension benefits because Short had been self-employed while working for Mayflower and B & B/Bekins, and because Zorn had been self-employed during the time he drove for Ellsworth. If Short and Zorn were employees, within the meaning of the Pension Plan and during the times in question, then they are entitled to the benefits for which they applied.

II. Analysis
a. Standard of Review

In reviewing the denial of pension benefits, under a plan covered by ERISA, the standard is whether the Trustees of the plan have acted arbitrarily, capriciously or in bad faith. In other words, a reviewing court must determine whether the Trustee's decision is supported by substantial evidence and, if so, whether they have made an erroneous decision on a question of law. Danti v. Lewis, 312 F.2d 345, 348 (D.C.Cir.1962); Hayes v. Morse, 347 F.Supp. 1081, 1086 (E.D.Mo.1972), aff'd, 474 F.2d 1265 (8th Cir.1973); see Richardson v. Central States, Southeast & Southwest Areas Pension Fund, 645 F.2d 660, 662 (8th Cir.1981).

Whether a given individual is an employee or independent contractor is a question of law, which must be decided by reviewing the particular facts in each case. Thus:

there is no shorthand formula or magic phrase that can be applied to find an answer, but all of the incidents of the relationship must be assessed and weighed with no one factor being decisive. What is important...

To continue reading

Request your trial
115 cases
  • Wit v. United Behavioral Health
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • November 3, 2020
    ...Trustees of United Mine Workers of Am., Health & Ret. Fund of 1974, 165 F.3d 209, 213 (3d Cir. 1998); Short v. Cent. States, Se. & Sw. Areas Pension Fund, 729 F.2d 567, 575 (8th Cir. 1984)). Plaintiffs also reject UBH's assertion that the Court does not have the authority to award interest ......
  • Community For Creative v. Reid
    • United States
    • United States Supreme Court
    • June 5, 1989
    ...supra, at 1105. 24 See, e.g., United Ins. Co., supra, 390 U.S., at 258, 88 S.Ct., at 990-91; Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d 567, 574 (CA8 1984). 25 See, e.g., Dumas, supra, at 1105; Darden, supra, at 705; Holt v. Winpisinger, 258 U.S.App.D.C. 343......
  • Salameh v. Provident Life & Acc. Ins. Co.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • September 24, 1998
    ...1096, 1101 (5th Cir.1990) (citing Holt v. Winpisinger, 811 F.2d 1532, 1536 (D.C.Cir.1987); Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d 567, 571 (8th Cir.1984)). "Reaching a legal conclusion as to whether [an individual] was an employee or an independent contr......
  • Coonley v. Fortis Benefit Ins. Co., C 95-3077-MWB.
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • January 21, 1997
    ...of law, which must be decided by reviewing the particular facts of each case,'" quoting Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d 567, 571 (8th Cir. 1984)); Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1326 (8th Cir.1995) (in an ERISA plan interpretation cas......
  • Request a trial to view additional results
1 books & journal articles
  • Nationwide v. Darden: restoring to the term "employee" its common-law meaning.
    • United States
    • Tax Executive Vol. 44 No. 3, May 1992
    • May 1, 1992
    ...898 F.2d 1096 (5th Cir. 1990); Wardel v. Central States Pension Fund, 627 F.2d 820 (7th Cir. 1980);, Short v. Central States Pension Fund, 729 F.2d 567 (8th Cir. 1984); Holt v. Winpisinger, 811 F.2d 152 (D.C. Cir. 1987). Although such a test has been applied at the district court level with......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT