Teamster's Local 348 Health & Welfare Fund v. Kohn Beverage Co.

• Citation: 749 F.2d 315
• Decision Date: 26 November 1984
• Docket Number: 83-3672,Nos. 83-3663,s. 83-3663
• Parties: 117 L.R.R.M. (BNA) 3233, 102 Lab.Cas. P 11,305, 5 Employee Benefits Ca 2532 TEAMSTER'S LOCAL 348 HEALTH AND WELFARE FUND, et al., Plaintiffs-Appellants, v. KOHN BEVERAGE COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 315

749 F.2d 315

117 L.R.R.M. (BNA) 3233, 102 Lab.Cas. P 11,305,

5 Employee Benefits Ca 2532

TEAMSTER'S LOCAL 348 HEALTH AND WELFARE FUND, et al Plaintiffs-Appellants, v. KOHN BEVERAGE COMPANY, Defendant-Appellee.

Nos. 83-3663, 83-3672.

United States Court of Appeals Sixth Circuit.

Argued Sept. 20, 1984.

Decided Nov. 26, 1984.

Alan M. Levy (argued), Chicago, Ill., Bernard S. Goldfarb, Mark V. Webber, Goldfarb & Reznick, Cleveland, Ohio, for plaintiffs-appellants in No. 83-3672.

Harry A. Tipping, Akron, Ohio, for defendant-appellee in Nos. 83-3672 and 83-3663.

William B. Gore (argued), Claybourne, Smith, Gore & Shapiro, Akron, Ohio, for plaintiffs-appellants in No. 83-3663.

Before MARTIN and CONTIE, Circuit Judges, and PECK, Senior Circuit Judge.

CONTIE, Circuit Judge.

Plaintiffs Teamster's Local 348 Health and Welfare Fund and Central States Southeast and Southwest Areas Pension Fund appeal a district court order granting judgment for defendant, Kohn Beverage Co., in this action brought pursuant to the Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001-1381, and 29 U.S.C. Sec. 185(a). We reverse.

I.

On February 20, 1981, Kohn and Teamster's Local 348 executed a collective bargaining agreement which provided that Kohn must contribute for each employee to the Teamster's Local 348 Health and Welfare Fund and Central States Southeast and Southwest Areas Pension Fund. On September 1, 1981, twenty-nine Kohn employees staged a work stoppage, and, on September 3, twenty-seven employees were terminated and subsequently replaced by non-union employees. Three discharged employees were reinstated after arbitration. When the non-union employees attempted to join the union pursuant to the union shop clause in the collective bargaining agreement, they were denied membership by Local 348 Secretary-Treasurer Dan Darrow. Darrow, who was trustee and administrator of the Health and Welfare Fund, told the employees that they would not be eligible for benefits from the Health and Welfare or Pension Funds. Kohn subsequently provided alternative health and pension benefits to the non-union employees.

On October 26, 1982, the Health and Welfare Fund filed a complaint pursuant to 29 U.S.C. Secs. 185(a), 1132(a), 1145 alleging violation of the collective bargaining agreement and failure by Kohn to contribute to the employee benefit plans. ¹ The plaintiffs sought to enjoin violations of the collective bargaining agreement and benefit plans and to recover unpaid contributions, interest, costs and attorney fees. After trial on March 10, 1983, the district court filed findings of fact and conclusions of law granting judgment for Kohn. The district court held that Kohn was not required to contribute to the funds for non-union employees, and that, even if Kohn were required to contribute, plaintiffs were estopped by Darrow's statements to the new employees from recovering the delinquent contributions. Additionally, the district court held that Kohn was entitled to a credit for payments made to the Health and Welfare Fund in late August 1981 for the employees terminated September 3. Plaintiffs appeal. ²

II.

Plaintiffs contend that the district court erred in construing the collective bargaining agreement and benefit plans to require Kohn to contribute to the plans for union members only. The construction of collective bargaining agreements and employee benefit plans is a question of law fully reviewable by this court. Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 698 F.2d 802, 805 (6th Cir.1983), cert. granted, --- U.S. ----, 104 S.Ct. 3531, 82 L.Ed.2d 837 (1984); Mackey v. National Football League, 543 F.2d 606, 612 (8th Cir.1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977).

The collective bargaining agreement required Kohn to contribute to the Health and Welfare Fund "for each employee covered by this Agreement," Article XIV, and to the Pension Fund "for each regular employee covered by this Agreement," Article XVII. Article II of the agreement provided that "[t]he term 'Employees', as used in this Agreement shall include Driver-Salesmen, Special Drivers, Swing Drivers, Over-the-Road Drivers, Helpers and Warehousemen, Garage Mechanics and Garage Maintenance employees." The agreement included a recognition clause and a union shop clause. ³

Several factors guide a determination of the scope of coverage of a collective bargaining agreement. This court has construed a definition of employees by job classification to require coverage by the collective bargaining agreement of all employees within those classifications, regardless of union membership. Central States v. Central Transport, 698 F.2d at 804-05. The presence in the agreement of a recognition clause designating the union as the exclusive bargaining agent for all employees indicates that fringe benefit contributions are required for both union and non-union members. Audit Services, Inc. v. Rolfson, 641 F.2d 757, 761 (9th Cir.1981); Manning v. Wiscombe, 498 F.2d 1311, 1313 (10th Cir.1974). The absence of language distinguishing union and non-union employees indicates that the agreement covers all employees. Carpenters and Millwrights Health Benefit Trust Fund v. Gardineer Dry Walling Co., 573 F.2d 1172, 1177 (10th Cir.1978). See Cincinnati Bengals, Inc. v. Thompson, 553 F.Supp. 1011, 1014 (S.D.Ohio 1983).

The district court based its interpretation of the agreement on the presence of the union shop clause. However, union shop clauses have been construed to require only payment of union dues and not union membership. NLRB v. Hershey Foods Corp., 513 F.2d 1083, 1085-86 (9th Cir.1975); Markt v. Ro-Mart, Inc., 471 F.Supp. 1292, 1296 (N.D.Cal.1979). See NLRB v. Gold Standard Enterprises, Inc., 679 F.2d 673, 677 (7th Cir.1982). See also Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665, 102 S.Ct. 2071, 2082, 72 L.Ed.2d 398 (1982). Further, to construe the term "employees" to mean union members would render the language of the union shop clause surplusage. The union shop clause required "that all employees covered by this agreement ... become and remain members in good standing in the Union...." This language suggests that "employees covered by this agreement" may exist prior to and apart from union-member employees. The district court interpreted the term "employees" to mean "union-member employees." This construction effectively interprets the union shop clause to require union members to become union members, and renders the clause meaningless. "A contract will not be construed so as to reject any words as surplusage if they reasonably can be given meaning." Union Investment Company v. Fidelity & Deposit Company of Maryland, 549 F.2d 1107, 1110 (6th Cir.1977).

The district court erred in interpreting the agreement as applying only to union members. The agreement recognized the union as the bargaining agent for all employees and defined the term "employees" by job classification and not union membership. ⁴ The agreement required contributions "for each employee covered by this agreement." The union shop clause indicates that the class of employees "covered by this agreement" is not necessarily coincident with the class of union-member employees. Further, the district court found that union and non-union members were treated identically in regard to wages, hours and conditions of employment. Accordingly, the district court erred in holding that the presence of the union shop clause alone limited Kohn's obligation to make contributions on behalf of union members.

III.

The district court held, alternatively, that plaintiffs were estopped from seeking payment of the delinquent contributions by Dan Darrow's refusal to allow the newly hired Kohn employees to join the union. Whether facts proven are legally sufficient to constitute an estoppel is a question of law fully reviewable by this court. Prize Steak Products, Inc. v. Bally's Tom Foolery, Inc., 717 F.2d 367, 370 (7th Cir.1983). However, because determinations concerning the specific elements of estoppel are questions of fact, Shamrock Development Co. v. City of Concord, 656 F.2d 1380, 1386 (9th Cir.1981), the district court's factual findings must be upheld unless clearly erroneous.

Without deciding that estoppel is an available defense against employee benefit funds, it is clear that Kohn did not establish the elements of estoppel. ⁵ Estoppel requires a representation, to a party without knowledge of the facts and without the means to ascertain them, upon which the party asserting the estoppel justifiably relies in good faith to his detriment. See Johnson v. Williford, 682 F.2d 868, 872 (9th Cir.1982); Junker v. Crory, 650 F.2d 1349, 1357 (5th Cir.1981); NLRB v. J.D. Industrial Insulation Company, Inc., 615 F.2d 1289, 1294 (10th Cir.1980); Gibson v. International Harvester Co., 557 F.Supp. 1000, 1003 (W.D.Tenn.1983); Minnesota Mining and Manufacturing Company v. Blume, 533 F.Supp. 493, 517 (S.D.Ohio 1978), aff'd, 684 F.2d 1166 (6th Cir.1982), cert. denied, 460 U.S. 1047, 103 S.Ct. 1449, 75 L.Ed.2d 803 (1983).

The estoppel defense fails because Kohn had knowledge about the plans and its obligations thereunder, and did not reasonably rely on Darrow's representations. The reliance of a party seeking to assert estoppel must be reasonable. Chambless v. Masters, Mates & Pilots Pension Plan, 571 F.Supp. 1430, 1452 (S.D.N.Y.1983). While it may be reasonable for an employee and union member to believe that a union representative has authority to act on behalf of the fund, Scheuer v. Central States Pension Fund, 394 F.Supp. 193, 196 (E.D.Wis.1975), aff'd, 570 F.2d 347 (7th Cir.1977), reliance by an employer, with knowledge of the plan, on the statements of a union representative is unreasonable. Audit Services, Inc. v. Rolfson, 641 F.2d at 762 (funds not estopped from seeking delinquent contributions where employer was not ignorant of his...