Trustees For Alaska Laborers-Construction Industry Health and Sec. Fund v. Ferrell

• Decision Date: 05 January 1987
• Docket Number: AFL-CI,LOCAL,No. 85-4417,LABORERS-CONSTRUCTION,85-4417
• Citation: 812 F.2d 512
• Parties: TRUSTEES FOR ALASKAINDUSTRY HEALTH AND SECURITY FUND; Alaska Laborers-Employers' Retirement Fund; Alaska Laborers-Construction Industry Training Fund; Alaska Laborers-Construction Industry Legal Services Fund, Plaintiffs-Appellees, v. Charles FERRELL and Costella Ferrell, d/b/a Chuck's Backhoe Service, Defendants-Appellants. Charles FERRELL and Costella Ferrell, d/b/a Chuck's Backhoe Service, Counter- Claimants, v. GENERAL LABORERS' UNIONUNION 341; Trustees For Alaska Laborers-Construction Industry Health and Security Fund; Alaska Laborers- Employers' Retirement Fund; Alaska Laborers-Construction Industry Training Fund; Alaska Laborers-Construction Industry Legal Services Funds, Counter- Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 512

812 F.2d 512

TRUSTEES FOR ALASKA LABORERS-CONSTRUCTION INDUSTRY HEALTH

AND SECURITY FUND; Alaska Laborers-Employers' Retirement

Fund; Alaska Laborers-Construction Industry Training Fund;

Alaska Laborers-Construction Industry Legal Services Fund, Plaintiffs-Appellees, v. Charles FERRELL and Costella Ferrell, d/b/a Chuck's Backhoe

Service, Defendants-Appellants.

Charles FERRELL and Costella Ferrell, d/b/a Chuck's Backhoe

Service, Counter- Claimants, v. GENERAL LABORERS' UNION AFL-CIO, LOCAL UNION 341; Trustees

For Alaska Laborers-Construction Industry Health and

Security Fund; Alaska Laborers- Employers' Retirement Fund;

Alaska Laborers-Construction Industry Training Fund;

Alaska Laborers-Construction Industry Legal Services Funds,

Counter- Defendants.

No. 85-4417.

United States Court of Appeals Ninth Circuit.

Submitted Jan. 5, 1987 ^*.

Decided March 10, 1987.

Erin B. Marston, Anchorage, Alaska, for defendants-appellants.

Bradley D. Owens, Anchorage, Alaska, for plaintiffs-appellees.

Appeal from the United States District Court for the District of Alaska.

Before WRIGHT, FARRIS and BEEZER, Circuit Judges.

BEEZER, Circuit Judge:

The Trustees for Alaska Laborer Fund (Trustees) seek to recover unpaid contributions allegedly required under a compliance agreement signed by the appellant, Ferrell, while he was a partner in a joint venture agreement. Jurisdiction is predicated on section 502 of the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1132.

Ferrell signed the compliance agreement in 1972 while he was a partner in a joint venture known as Chuck's Backhoe Service (CBS). In 1974 the joint venture was terminated. Ferrell continued to do business under the name Chuck's Backhoe Service as a sole proprietor. When Ferrell left the joint venture, he ceased filing monthly remittance forms and contributing to the plan. However, he never notified the Trustees that he intended to terminate the agreement, as was required under the compliance agreement.

The Trustees filed suit in 1982, seeking unpaid contributions for 1978 through 1982. The district court concluded that Ferrell was a successor employer to the joint venture and as such was bound by the agreement. The district court further ruled that the Trustees' cause of action was timely. On November 21, 1985, the court entered judgment in favor of the Trustees in the amount of $63,243.64. The judgment in favor of the Trustees is appealable pursuant to Fed.R.Civ.P. 54(b). We affirm.

I FACTS

Ferrell has operated under the name Chuck's Backhoe Service since 1970. In In 1972, Ferrell and Kelly signed the compliance agreement on behalf of CBS. The agreement required the joint venture to make contributions to the Trust for hours worked by covered union and nonunion employees.

1971, he formed a joint venture with Colin Kelly. Kelly owned 80 percent of CBS while Ferrell owned 20 percent. The joint venture engaged in the construction of multi-family homes, high schools and other public buildings. During the existence of the joint venture Ferrell rented office space from Kelly for $1,000 per month.

In 1974, after the termination of the joint venture, Ferrell resumed operations as a sole proprietor. His work force was composed primarily of former joint venture employees. Ferrell retained possession of the equipment that he had brought into the joint venture. Additionally, he purchased two backhoes from Kelly which the joint venture had acquired. After he left the joint venture Ferrell leased new office space. Since 1974 he has engaged exclusively in excavation operations.

While operating as a sole proprietor, Ferrell employed one union worker for a brief time in 1978. Ferrell made contributions to the Trust on behalf of this employee. Between 1974 and 1982, this was the only occasion on which Ferrell contributed to the plan.

II ANALYSIS

Ferrell contends he is not a successor employer to the joint venture and, accordingly, not bound by the compliance agreement. Alternatively, Ferrell claims that if he is viewed as a successor employer, the Trustees' cause of action is time-barred by the relevant statute of limitations or laches.

The district court's grant of summary judgment is reviewed de novo. We must determine if, viewing the evidence in the light most favorable to Ferrell, there are any genuine issues of material fact and if the district court applied the relevant substantive law correctly. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986).

A. Successor Employer

In Kallmann v. NLRB, 640 F.2d 1094 (9th Cir.1981), we devised a two-part test for determining if an employer is a successor. Under the analysis articulated in Kallmann a company is deemed a successor if it hires most of its employees from the predecessor employer's work force and if it conducts essentially the same business as the predecessor. Kallmann, 640 F.2d at 1100. A successor employer may be bound by agreements entered into by the predecessor, including agreements to contribute to pension funds. Audit Services, Inc. v. Rolfson, 641 F.2d 757, 763-64 (9th Cir.1981). The successor employer is contractually obligated because a mere change in ownership, without an essential change in working conditions, should not operate to deprive employees of benefits achieved through collective action. NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 463 (9th Cir.1985); see also Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 259 n. 5, 94 S.Ct. 2236, 2242 n. 5, 41 L.Ed.2d 46 (1974).

In NLRB v. Jeffries Lithograph Co., 752 F.2d 459 (9th Cir.1985), we elaborated extensively on the successorship doctrine of Kallmann. To determine if an employer is engaged in essentially the same business as a predecessor, Jeffries Lithograph instructs us to consider various factors, including whether:

[a] there has been a substantial continuity of the same business operations; [b] the new employer uses the same plant; [c] the same or substantially the same work force is employed; [d] the same jobs exist under the same working conditions; [e] the same supervisors are employed; [f] the same machinery, equipment, and methods of production are used; and [g] the same product is manufactured or the same service [is] offered.

NLRB v. Jeffries Lithograph Co., 752 F.2d at 463 (quoting Premium Foods, Inc., 260 N.L.R.B. 708, 714 (1982), enforced, 709 F.2d 623 (9th Cir.1983)). Employing the analysis articulated in Jeffries Lithograph, we conclude that Ferrell is a successor employer. In support of our conclusion we note that during the joint venture Ferrell provided backhoe service for projects in which his partner, Kelly, was the general contractor. After terminating his agreement with Kelly, Ferrell continued to provide backhoe services under the name Chuck's Backhoe Service. When Ferrell left the joint venture, he maintained in his employ many of the same employees he brought with him into the joint venture. ¹ Ferrell's new company retained possession of the equipment he brought into the joint venture. Ferrell also purchased equipment from Kelly that was acquired by the joint venture. These factors all weigh in favor of finding that the sole proprietorship was engaged in essentially the same business as the joint venture. Ferrell notes that he established new offices after leaving the joint venture. He also contends that the joint venture engaged in large-scale construction projects while his sole proprietorship is engaged in smaller excavation operations. These factors are relevant under Jeffries Lithograph. Nevertheless, on balance, the evidence indicates that Ferrell is a successor. In Audit Services, Inc. v. Rolfson, 641 F.2d 757 (9th Cir.1981), we held that "[t]he single most important factor here is that Rolfson Construction employed substantially the same work force as Rolfson Company. Continuity of work force is a major consideration in successorship cases." Rolfson, 641 F.2d 763. We agree that continuity of work force is a major consideration. Here, Ferrell admits that the vast majority of his employees came from the joint venture. This factor, in conjunction with the other factors mentioned above, is sufficient to support the district court's finding that Ferrell is a successor employer.

B. Statute of Limitations

The Trustees brought this action pursuant to 29 U.S.C. Sec. 1132. This provision contains no statute of limitations. Ferrell requests that we employ the six-month statute of limitations adopted by the Supreme Court in Del Costello v. Int'l Bhd. of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). The Trustees argue for the application of Alaska's six-year statute of limitations for actions sounding in contract. The district court relied on a limitations provision contained in a section of ERISA governing multi-employer pension plans. We address Ferrell's argument first.

In Del Costello v. Int'l Bhd. of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), the Supreme Court held that "hybrid" claims brought by an employee against an employer and a union are governed by the six-month statute of limitations for unfair labor practice claims in 29 U.S.C. Sec. 160(b). A hybrid claim contains an allegation that the employer breached a provision of a collective bargaining agreement and an allegation that the union breached its duty of fair representation by mishandling grievance proceedings. In Del Costello the Court applied the six-month statute of limitations for unfair labor practice claims after concluding that the hybrid claim "has no close analogy in ordinary state law." Del Costello, 462 U.S. at 165, 103 S.Ct. at 2291.

The Del Costello Court expressly approved its earlier holding in Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966) ("Hoosier "). According to the Court, Hoosier, unlike Del Costello, involved a straightforward claim for breach of a collective bargaining agreement under section 301 of LMRA. Del Costello, 462...