James Russ, et al v. South Water Market, Incorporat, et al
Filing
Filed opinion of the court by Judge Easterbrook. REVERSED and REMANDED. Frank H. Easterbrook, Circuit Judge; Ann Claire Williams, Circuit Judge and Diane S. Sykes, Circuit Judge. [6613034-1] [6613034] [13-3613]
Case: 13-3613
Document: 29
Filed: 10/15/2014
Pages: 5
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-‐‑3613
JAMES RUSS, et al.,
Plaintiffs-‐‑Appellants,
v.
SOUTH WATER MARKET, INC., and WILLIAM STEINBARTH,
Defendants-‐‑Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 10 C 6337 — Ronald A. Guzmán, Judge.
____________________
ARGUED SEPTEMBER 29, 2014 — DECIDED OCTOBER 15, 2014
____________________
Before EASTERBROOK, WILLIAMS, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. South Water Market and Lo-‐‑
cal 703 of the Teamsters Union had a collective bargaining
agreement that ran from 2004 through April 30, 2007. From
April to September 2007 they negotiated to reach a new deal.
On September 12, 2007, they shook hands on an agreement.
Michael Abramson, South Water Market’s bargaining repre-‐‑
sentative, was supposed to write up the agreed terms and
send them to the Union.
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Nothing happened. Howard Murdoch, the Union’s pres-‐‑
ident, began sending Abramson emails asking for the text.
Abramson promised to provide one but didn’t. By February
2008 Murdoch was worried that the pension and welfare
funds covering South Water Market’s employees represent-‐‑
ed by the Teamsters would cut off participation (since the
only written contract had expired) or sue. On March 21,
2008, Abramson begged off, stating: “I’m having trouble
with my notes.”
On April 3 Murdoch sent Abramson a document with the
terms that Murdoch’s notes said had been agreed. Abramson
did not reply, one way or the other—but South Water Mar-‐‑
ket did begin paying the wages, and making the pension and
welfare contributions, specified in Murdoch’s text. Murdoch
also sent the document to the pension and welfare funds,
telling them that South Water Market had agreed to its
terms. The funds (all of them multi-‐‑employer plans) submit-‐‑
ted bills calculated according to those terms. South Water
Market paid them—until August 2009.
At the end of July 2009 Juventino Castillo retired. He had
been one of two workers in the “Warehouse/Driver” classifi-‐‑
cation; he received higher wages, and larger fringe-‐‑benefit
contributions, than workers in the “Grocery Workers” classi-‐‑
fication. The parties have referred to workers in the “Ware-‐‑
house/Driver” classification as “full boat” employees, mean-‐‑
ing that they enjoy maximum wages and fringe benefits. For
simplicity we refer to “driver” and “grocery” as the two cat-‐‑
egories. The document that Murdoch sent Abramson (and
the funds) in April 2008 provided that South Water Market
would employ at least two drivers. After Castillo retired, it
refused to provide more than one of its workers with the
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wages and fringe benefits of the driver classification. The
pension and welfare funds contend in this suit under §515 of
the Employee Retirement Income Security Act (ERISA), 29
U.S.C. §1145, that South Water Market must make delin-‐‑
quent contributions for a second driver position.
South Water Market’s defense is that it never agreed to
the terms that Murdoch drafted in April 2008. After a bench
trial, the district judge agreed with South Water Market. Our
narration comes from the district judge’s findings of fact,
which largely rest on the parties’ stipulations. The basis of
the district judge’s ruling boils down to the observation that
Abramson never signed Murdoch’s draft and did not convey
assent in any other way, such as by return email. All South
Water Market did was comply with Murdoch’s terms until
August 2009, and performing according to someone else’s
proposal is not enough, the district judge ruled, to require an
employer to continue doing so indefinitely.
The fundamental problem with the district court’s ap-‐‑
proach is that the Labor Management Relations Act makes a
written agreement essential to participation in a pension or
welfare plan, 29 U.S.C. §186(c)(5)(B), and ERISA provides
that multi-‐‑employer pension and welfare funds can enforce
these agreements as written. South Water Market does not
contend that it wants to drop out of the pension and welfare
plans, or that it did withdraw in September 2007. But if the
April 2008 document is not the indispensible written agree-‐‑
ment, then what is? At oral argument, South Water Market’s
lawyer replied: “the 2004 collective bargaining agreement.”
That won’t do. The 2004 agreement expired by its own terms
in 2007; what’s more, the parties formally terminated it.
Nothing remains except the April 2008 document. If South
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No. 13-‐‑3613
Water Market is to participate at all, those are the only avail-‐‑
able terms.
More than that: performance under a proposal is one
means of giving assent to be bound. Bricklayers Local 21 of Il-‐‑
linois Apprenticeship and Training Program v. Banner Restora-‐‑
tion, Inc., 385 F.3d 761, 766 (7th Cir. 2004); Robbins v. Lynch,
836 F.2d 330, 332 (7th Cir. 1988); Restatement (Second) of Con-‐‑
tracts §30. Murdoch reduced the terms to writing; South Wa-‐‑
ter Market performed for more than a year, paying wages
and making contributions at rates higher than those speci-‐‑
fied in the 2004 agreement. It now maintains that its pay-‐‑
ments to the funds did not really show assent to the two-‐‑
drivers clause, because until August 2009 it had two drivers.
Making fringe benefit contributions for two was only to be
expected; until some difference developed between what
South Water Market wanted and what the April 2008 docu-‐‑
ment required, its performance was ambiguous. Yet South
Water Market put all other terms of the April 2008 document
into effect, and it is hard to see why an employer would do
that if it thought the document merely a union’s proposal. If
it wanted to accept some clauses and reject others, it should
have said so in April 2008. Yet its first protest came in re-‐‑
sponse to the funds’ August 2009 bills.
Pension and welfare funds are entitled to rely on the
writings they receive. Central States Pension Fund v. Gerber
Truck Service, Inc., 870 F.2d 1148 (7th Cir. 1989) (en banc),
analogizes them to holders in due course, not to simple
third-‐‑party beneficiaries whose rights can be cut off at the
contracting parties’ whim. Usually they are not privy to ne-‐‑
gotiations between unions and employers; they cannot tell
when one or the other (or both) had mental reservations.
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Pension and welfare funds set both benefit levels and contri-‐‑
bution rates based on actuarial calculations, and those calcu-‐‑
lations depend on the terms of the written agreements that
control coverage and eligibility. That’s why funds can en-‐‑
force the writings they receive. Gerber Truck Service held that
a multi-‐‑employer pension fund can enforce a contract as
written even though the union and the employer have a side
agreement that certain parts of the contract will be ignored.
See also, e.g., Central States Pension Fund v. Schilli Corp., 420
F.3d 663 (7th Cir. 2005); Central States Pension Fund v. Joe
McClelland, Inc., 23 F.3d 136 (7th Cir. 1994). Whatever reser-‐‑
vations Abramson had were not conveyed to the funds until
August 2009, much too late.
The judgment in favor of South Water Market is re-‐‑
versed. The case is remanded for calculation of how much it
owes under the April 2008 document and entry of a judg-‐‑
ment in that amount.
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