Hawaii Annuity Trust Fund for Operating Engineers v. Kauai Veterans Express Company, Ltd.
ORDER GRANTING PLAINTIFFS TRUSTEES OF THE HAWAII ANNUITY TRUST FUND FOR OPERATING ENGINEERS' RENEWED MOTION FOR PARTIAL SUMMARY JUDGMENT, ECF NO. 37 , AND DENYING DEFENDANT KAUAI VETERANS EXPRESS COMPANY, LTD.'S MOTIONS FOR PARTIAL SUMMA RY JUDGMENT, ECF NOS. 39 , 48 . Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 12/1/2017. (afc) WRITTEN ORDER follows hearing held November 28, 2017. Minutes of hearing: ECF no. 72 Order further DENIES AS MOOT Plaintiffs 039; Motion, ECF 63 : "MOTION to Strike Defendant's Reply Brief 61 , Concise Statement of Facts, Declaration and Exhibits 60 " CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
HAWAII ANNUITY TRUST FUND
FOR OPERATING ENGINEERS, BY
ITS TRUSTEES, LANCE WILHELM,
KATHLEEN THURSTON, MARNIE
KOGA HURSTY, CHAD
DEMPSEY, RUSSELL E. BURNS,
PANE MEATOGA, JR., DAN
REDING, STEVE INGERSOLL AND
KAUAI VETERANS EXPRESS
COMPANY, LTD., A HAWAII
CIV. NO. 16-00615 JMS-KSC
ORDER GRANTING PLAINTIFFS
TRUSTEES OF THE HAWAII
ANNUITY TRUST FUND FOR
RENEWED MOTION FOR
JUDGMENT, ECF NO. 37, AND
DENYING DEFENDANT KAUAI
COMPANY, LTD.’S MOTIONS
FOR PARTIAL SUMMARY
JUDGMENT, ECF NOS. 39, 48
ORDER GRANTING PLAINTIFFS TRUSTEES OF THE HAWAII
ANNUITY TRUST FUND FOR OPERATING ENGINEERS’ RENEWED
MOTION FOR PARTIAL SUMMARY JUDGMENT, ECF NO. 37, AND
DENYING DEFENDANT KAUAI VETERANS EXPRESS COMPANY,
LTD.’S MOTIONS FOR PARTIAL SUMMARY JUDGMENT, ECF NOS.
Plaintiffs (“Trustees”) are trustees of the Hawaii Annuity Trust Fund
for Operating Engineers (“the Trust”), a multiemployer employee benefit plan
established pursuant to a trust agreement incorporated in a collective bargaining
agreement (“CBA”) between Defendant Kauai Veterans Express Company,
Ltd. (“Kauai Veterans”) and the Operating Engineers Local Union No. 3 of the
International Union of Operating Engineers, AFL-CIO (“the Union”). See
Compl. ¶¶ 1-5, ECF No. 1. Trustees seek summary judgment on their asserted
right to audit Kauai Veterans’ payroll records to determine whether funds are
due to the Trust. Mot. at 1, ECF No. 37. And they seek a judgment finding
invalid Kauai Veterans’ defense based on the Union’s alleged breach of the
CBA’s Favored Nations clause. Id.
Also before the court, are Kauai Veterans’ motion for partial summary
judgment regarding its “Favored Nations” defense and its amended motion for
partial summary judgment regarding the alleged end-date of its obligation to
make payments to the Trust. ECF Nos. 39, 48. For the reasons stated below,
the Trustees’ motion is granted, and Kauai Veterans’ motions are denied.
Kauai Veterans and the Union entered into a CBA entitled “Kauai
Trucking Agreement 2011-2014” (“the 2011 Agreement”). ECF No. 1-1. It
incorporated the trust agreements applicable to the “Operating Engineers
Pension/Annuity Trust” which is a multiemployer benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1001 et seq. Id. § 14.02.00; Compl. ¶ 3. Among other things, the
CBA required Kauai Veterans to make certain regular payments to the Trust.
2011 Agreement §§ 14.02.00-14.03.02. It also required Kauai Veterans to
“provide the appropriate Trustees or their authorized representative(s) with
information and records necessary to carry out the [Trust’s] purposes” and
“permit an audit of [its] payroll records . . . to ascertain whether all
contributions due have been paid.” Id. § 14.03.02. By its terms, the 2011
Agreement was in effect until at least June 30, 2014, and it remained in effect
thereafter unless Kauai Veterans provided the Union with written notice of
termination consistent with “Section 8(d) of the National Labor Relations Act,
as amended.” Id. § 01.01.00.
In approximately July or August 2014, Kauai Veterans and the Union
entered into another agreement (“the 2014 Agreement”), which states, “It is
understood that unless modified by this Memorandum of Agreement, the terms
and conditions of the existing collective bargaining Agreement shall be
unchanged.” ECF No. 1-2 at 1. The 2014 Agreement provides that it is
effective from July 1, 2014 through at least June 30, 2019. Id.
Kauai Veterans underwent audits for 2014 and 2015 that were
performed by Hawaii Benefit Administrators, Inc. (“HBA”). Noelle Tagaban
Decl. ¶¶ 4-5, ECF No. 28-3. The initial auditor for those periods, who is
apparently no longer with HBA, raised no issues or concerns during his review,
but the current auditor states that as a result of “further review of said audit
results, our office came to the conclusion that further audit was necessary given
clear discrepancies in the self-reported data provided by [Kauai Veterans].” Id.
¶ 6. Kauai Veterans refused to submit to further audits. Compl. ¶ 12.
On November 11, 2016, Trustees filed their complaint requesting
Kauai Veterans be ordered to submit reports and payments in accordance with
the CBA and Trust agreement and to permit Trustees to audit its “payroll books
and records for the period of January 1, 2015 to the present,” and earlier if
necessary. Compl. at 9. Trustees also requested damages based on any sums
due following the audit. Id.
On February 1, 2017, Kauai Veterans sent an email to counsel for the
Union and Trustees purporting to withdraw recognition of the Union effective
July 1, 2017. ECF No. 49-8 ¶ 3; ECF No. 49-10 at 1. Attached to the email
was a letter addressed to Kauai Veterans’ counsel Jeffrey Harris that contained
the following paragraphs:
On January 26, 2017 a meeting between Shop Steward
James K. Kanei 3rd, other employee (sic) was conducted
in which they decided that they no longer desired to be
part of the Operating Engineers Local Union #3.
They decided to withdraw their membership from the
union immediately upon your approval of the proper
correspondence to facilitate their request to the union so
they can stop further financial contributions to the
Operating Engineers Local Union #3.
ECF No. 49-10. at 2. The letter included a chart listing the names and
signatures of nine employees 1; checkmarks appeared next to each employee’s
name in a column marked “Leave.” Id. Below that chart, however, was the
following statement: “My initial and signature above indicates my . . .
individual desire to participate as a member of Operating Engineers Local
Union #3. This choice was made of my own free will and desire and was not
coerced in making my decision.” 2 Id.
In February and August, 2017, the Union filed charges of unfair labor
practices against Kauai Veterans with the National Labor Relations Board
(“NLRB”), encompassing actions bearing on the Union’s alleged loss of
There appears to be no dispute that these nine employees constituted a majority of
the applicable bargaining unit.
The parties disagree about whether this apparent expression of a desire to
participate in the Union was the result of a simple typographical error. See Mot. at 5; Opp’n
at 10, ECF No. 55.
Trustees have asked the court to take judicial notice of the NLRB proceedings and
of documents accessible through the NLRB website. ECF No. 54. The “court may take
judicial notice of matters of public record,” Lee v. City of Los Angeles, 250 F.3d 668, 689
(9th Cir. 2001) (internal quotation marks and citation omitted), and Kauai Veterans has not
opposed the Trustees’ request. Therefore, the court takes judicial notice of the NLRB
proceedings to the extent necessary for resolution of these motions.
Trustees filed their motion for partial summary judgment on August 8,
2017. ECF No. 37.4 Kauai Veterans filed its motion for partial summary
judgment on its Favored Nations defense the same day. ECF No. 39. It filed
an opposition to Trustees’ motion on November 7, 2017. ECF No. 58. And
Trustees replied on November 14, 2017.5 ECF No. 59.
Kauai Veterans filed its motion for summary judgment regarding the
end-date of its contribution obligation on August 29, 2017. ECF No. 48.
Trustees opposed the motion on November 7, 2017. ECF No. 55. And Kauai
Veterans replied on November 14, 2017.6 ECF No. 61.
A hearing was held on November 28, 2017.
III. STANDARD OF REVIEW
Summary judgment is proper when there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(c). The burden initially lies with the moving party to show
With leave of court, ECF No. 62, Trustees supplemented their concise statement of
fact in support of the motion, ECF No. 38, on November 16, 2017. ECF No. 65.
Trustees did not file an opposition to Kauai Veterans’ motion regarding its Favored
Nations defense. On November 27, 2017, Trustees filed a motion to extend the deadline for
them to do so. ECF No. 70. Finding no excusable neglect, the court denied that motion,
ECF No. 72, but it has considered the arguments in Trustees’ motion regarding the Favored
Nations defense, ECF No. 37, in determining the substantive issue presented.
Trustees filed a motion to strike Kauai Veteran’s reply and concise statement in
support of the reply on November 16, 2017. ECF No. 63. Given this ruling on the
underlying motion, the motion to strike is DENIED as moot.
that there is no genuine issue of material fact. T.W. Elec. Serv., Inc. v. Pac.
Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). Nevertheless,
“summary judgment is mandated if the non-moving party ‘fails to make a
showing sufficient to establish the existence of an element essential to that
party’s case.’” Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258
(9th Cir. 1999) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
An issue of fact is genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). An issue is material if the resolution of the factual
dispute affects the outcome of the claim or defense under substantive law
governing the case. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d
912, 919 (9th Cir. 2001). When considering the evidence on a motion for
summary judgment, the court must draw all reasonable inferences on behalf of
the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986).
“One of the principal purposes of the summary judgment rule is to
isolate and dispose of factually unsupported claims or defenses[.]” Celotex,
477 U.S. at 323-24. “There is no genuine issue of fact if the party opposing the
motion ‘fails to make an adequate showing sufficient to establish the existence
of an element essential to that party’s case, and on which that party will bear
the burden of proof at trial.’” Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.
1989) (quoting Celotex, 477 U.S. at 322). Moreover, there is no genuine issue
of material fact if, taking the record as a whole, a rational trier of fact could not
find in favor of the non-moving party. Matsushita, 475 U.S. at 586; Taylor,
880 F.2d at 1045.
Favored Nations Defense
The parties have both moved for summary judgment regarding the
viability of Kauai Veterans’ so-called “Favored Nations” defense, which is
based on the following CBA provision.
If the Union grants to any Employer in the Trucking
Industry on the island of Kauai any terms or conditions
better than those of this Agreement, then such better
terms or conditions and application shall be made
automatically available to all other Employers in the
Trucking Industry on the island of Kauai under this
Agreement with the Union, and the Union shall
immediately notify the Employers of such concessions.
§ 25.01.01. ECF No.1-1. Kauai Veterans contends that because the Union has
not enforced auditing and contribution obligations with other trucking industry
employers on Kauai, this clause “automatically entitle[s] Kauai Veterans not to
comply with the audit and contribution terms and conditions of the agreement.”
Opp’n at 5, ECF No. 58. Trustees contend that “an alleged breach of a [favored
nations clause] is not a valid defense to a trust fund action to enforce
contributions.” Reply at 7, ECF No. 59. Both parties rely principally on Lewis
v. Benedict Coal Corp., 361 U.S. 459 (1960), but they draw differing
conclusions as to its effect on this case.
Benedict Coal considered whether a CBA may “be construed as
making performance of union promises a condition precedent to [the
employer’s] promise to pay” into an employee welfare fund. 361 U.S. at 465.
Reasoning that a CBA “is not a typical third-party beneficiary contract” and
basing its decision largely on “national labor policy” the Court held that the
CBA could not be so construed unless the parties to the CBA expressed their
intention unequivocally: “parties must have expressed such an intention within
the [CBA] in unequivocal words before they can be said to have agreed that the
union’s breaches of its promises should give rise to a defense against the duty
assumed by an employer to contribute.” Id. at 468, 470. Finding no such
unequivocal language, the Supreme Court precluded the employer from raising
the union’s strike as a defense to the collection action. Id. at 468-71.
Kauai Veterans contends that the Favored Nations clause here
unequivocally entitles it to better terms when those terms are given to another
Kauai trucking entity. And it contends that the Union’s failure to enforce audit
and contribution requirements against other trucking entities constitutes the
“better terms” to which it is entitled. Opp’n at 5-10.
But even assuming that Kauai Veterans produced evidence that the
Union absolved other entities of audit and contribution responsibilities, which it
has not,7 and even assuming that the Union’s alleged action or inaction could
constitute the granting of more favorable terms, the language on which Kauai
Veterans relies is not the unequivocal expression required by Benedict Coal.
The Favored Nations clause does not address contributions and audits
specifically, and such a clause is simply too general to qualify as an
“unequivocal” expression that Kauai Veterans may stop contributing to the
Trust or submitting to audits, either by operation of the clause or by the Union’s
breach of it. Other courts agree. See Contractors, Laborers, Teamsters &
Eng’rs Pension Plan v. G & G Trenching, Inc., 2009 WL 2487726, at *2-3 (D.
Neb. Aug. 10, 2009) (finding breach of “most favored nations” clause did not
abrogate employer’s contribution obligation); Greenes v. Vijax Fuel Corp., 326
F. Supp. 2d 464, 468 (S.D.N.Y. 2004) (“Under the case law of this Circuit and
the language of ERISA, defendants’ claimed damages offsets from the ‘most
favored nations’ clause do not provide a defense against plaintiffs’ ERISA
Kauai Veterans has merely pointed to the unsubstantiated statement in its Answer
that “Local Union No. 3 . . . allowed Kauai trucking employers other than Defendant to
. . . terms of their collective bargaining agreements” with the Union. Answer ¶
10, ECF No. 7. But a party opposing a motion for summary judgment may not rest on mere
denials in its pleading; it must “go beyond the pleadings and by her own affidavits, or by the
‘depositions, answers to interrogatories, and admissions on file’ designate ‘specific facts
showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at 324.
claims.”). Kauai Veterans’ attempts to distinguish G & G Trenching and
Greenes are unavailing. It quibbles with G & G Trenching’s description of the
holding in Benedict Coal, Opp’n at 8, but that description does not indicate that
the court misapplied Benedict Coal. And the factual differences it points out
between this case and the facts of Greenes are not material.
Accordingly, Trustee’s motion for partial summary judgment with
respect to Kauai Veterans’ Favored Nations defense is GRANTED, and Kauai
Veterans’ motion for partial summary judgment is DENIED.
Right to Audit
Trustees also seek a judgment allowing further auditing of Kauai
Veterans’ payroll books and records from January 1, 2015 to the present.
Compl. at 9; Mot. at 2. Kauai Veterans responds variously that (1) the 2014
Agreement imposed no auditing obligations, (2) even if the 2014 Agreement
gave Trustees a right to audit, it only gave them the right to a single audit either
for the life of the CBA or for any particular time period, and (3) “any audit
obligation . . . ended no later than July 1, 2017 (for calendar year 2016 forward)
because Kauai Veterans clearly and unequivocally withdrew recognition from
the Union effective July 1, 2017.” Opp’n at 1-3, 10-13.
Generally, interpretation of a contract is a matter of law for the court.
Int’l Bhd. of Elec. Workers, Local 532 v. Brink Constr. Co., 825 F.2d 207, 214
(9th Cir. 1987). Although collective bargaining agreements are “not always
subject to . . . [t]raditional rules for contractual interpretation,” such rules “may
nonetheless be relevant, so long as their application is consistent with federal
law ‘fashioned from the policy of our national labor laws.’” Lalau v. Haw.
Stevedores, Inc., 2008 WL 1968320, at *3 (D. Haw. May 6, 2008) (quoting
Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456 (1957))); see M & G
Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015); SW Adm’rs, Inc. v.
Rozay’s Transfer, 791 F.2d 769, 773 (9th Cir. 1986). Absent evidence that the
parties intended otherwise, “[t]erms in a collective bargaining agreement are to
be given their ordinary meaning.” Dobbs, Inc. v. Local No. 614, Int’l Bhd of
Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 813 F.2d 85, 88 (6th
Cir. 1987); see Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d
982, 985 (9th Cir. 1997). But “[t]he court should also interpret each provision
in question as part of the integrated whole. If possible, each provision should
be construed consistently with the entire document and the relative positions
and purposes of the parties.” Int’l Union, United Auto., Aerospace & Agric.
Implement Workers of Am. v. Yard-Man, Inc. 716 F.2d 1476, 1479-80 (6th Cir.
1983) (internal citations omitted), abrogated on other grounds by M & G
Polymers USA, LLC, 135 S. Ct. at 935.
Kauai Veterans’ first contention borders on the frivolous. It argues
that the 2011 Agreement “did not exist after June 30, 2014,” that “there is no
evidence the 2011 Agreement is the ‘existing collective bargaining agreement’
referenced in the 2014 Agreement,” and that therefore, “[t]here was no meeting
of the minds imposing the audit or contribution obligations [Trustees] seek to
enforce.” Opp’n at 2-3. But in claiming the 2011 Agreement expired on June
30, 2014, Kauai Veterans ignores the balance of § 01.01.00 of the CBA, which
states that the 2011 Agreement would remain in effect “indefinitely” unless
“written notice provided by Section 8(d) of the National Labor Relations Act,
as amended is . . . given by either the Union or the Employer.” ECF No. 1-1.
And there is no contention, nor evidence in the record, that such notice was
given before the 2014 Agreement was executed.
Nor does Kauai Veterans attempt to explain the alleged ambiguity in
the phrase “existing collective bargaining agreement.” It relies on Orange Belt
District Council of Painters No. 48 v. W.E. Stubblefield & Sons, 437 F.2d 754
(9th Cir. 1971). But that case is easily distinguishable. The collective
bargaining agreement there referred to work “performed pursuant to an
executed current agreement,” but no other agreement existed between the
parties. Id. at 755-56. The union there took the position that the “executed
current agreement” was an agreement between it and a trade association of
which the employer was not a member, and it argued that the phrase obligated
the employer to become a signatory to that agreement. Id. Here, there was an
“existing collective bargaining agreement” between the parties — the 2011
Agreement — and nothing in the record suggests the phrase could have referred
to any unrelated agreements. See Kennewick Irrigation Dist. v. United States,
880 F.2d 1018, 1032 (9th Cir. 1989) (“A contract is ambiguous if reasonable
people could find its terms susceptible to more than one interpretation.”).
There is no ambiguity.
Next, Kauai Veterans contends that it cannot be required to submit to
more than one audit “for the lifespan of the CBA” or at least for any given
period of time; therefore, it contends, Trustees’ request to re-audit records from
2014-2015 should be denied. Opp’n at 10. Kauai Veterans bases its argument
on the fact that the CBA refers to “an audit” in the singular. But interpreting
this language to mean one and only one audit — either for the lifetime of the
CBA or even for a shorter specific time period — would be inconsistent with
the purposes of the agreement and would ignore the practicality that
information giving rise to the need for an audit might not come to light all at
once. See N.L.R.B. v. Universal Servs., Inc. & Assocs., 467 F.2d 579, 584 n. 6
(9th Cir. 1972) (“In governing the interpretation and enforcement of collective
bargaining agreements ‘special heed should be given to the context in which
collective bargaining agreements are negotiated and the purpose which they are
intended to serve.’” (quoting United Steelworkers v. Am. Mfg. Co., 363 U.S.
564, 567 (1960))).
Moreover, the trust agreement, which is incorporated in the CBA,
provides without limitation that Trustees may require an employer “to submit to
it any information, data, report or documents reasonably relevant to and
suitable for the purposes of [Trust] administration,” and it grants the “absolute
right” after written notice for an accountant selected by Trustees to enter an
employer’s premises and “examine and copy such books, records, papers or
reports of such Employer as may be necessary to determine whether such
Employer is making full and prompt payment of all sums required to be paid by
him or it to the Fund.” ECF No. 38-6 at 9-10 (emphasis added). Given this
language, Trustees are not prohibited from conducting multiple audits. See Trs.
of the Sheet Metal Workers’ Nat. Pension Fund v. Steel & Duct Fabrication,
Inc., 124 F. Supp. 3d 187, 199 (E.D.N.Y. 2015) (finding use of the word
“audit” in the singular did not limit trustees to a single audit during the lifetime
of the CBA or to a single audit for specified time periods).
Finally, Kauai Veterans contends that its alleged withdrawal of Union
recognition as of July 1, 2017, somehow absolved it of any obligation to submit
to audits “for the calendar year 2016 and forward.” Opp’n at 13. It gives no
explanation for this purported retroactive cancellation of obligations. Id. at 1315. Moreover, its argument depends on its contention that the CBA ceased to
exist when it gave notice of loss of majority support for the Union. Id. at 14.
As explained below, that contention is incorrect.
Accordingly, summary judgment is GRANTED in favor of Trustees
on its audit request.
Contribution End Date
Kauai Veterans contends that its obligation to contribute to the Trust
ended on July 1, 2017, “when it withdrew recognition from the Union.” Mot.
at 2; ECF No. 48. In response, Trustees contend that an alleged loss of
majority status is an invalid defense to this action, that whether the Union has
lost majority status is a question of fact within the primary jurisdiction of the
NLRB, and that the Trust agreement nonetheless requires continued
contributions. Opp’n at 1, 5, 8, 12; ECF No. 55.
Section 515 of ERISA states that employers who are “obligated to
make contributions to a multiemployer plan under the terms of the plan or
under the terms of a [CBA] shall, to the extent not inconsistent with law, make
such contributions in accordance with the terms and conditions of such plan or
such agreement.” 29 U.S.C. § 1145. The Ninth Circuit has “recognized that
section 515 limit[s] the availability of contract defenses in collection actions
brought on behalf of ERISA benefit plans.” MacKillop v. Lowe’s Market, Inc.,
58 F.3d 1441, 1145-46 (9th Cir. 1995) (citing SW Adm’rs., Inc., 791 F.2d at
773)). And it joined the Second, Third, Seventh, and Eighth Circuits in holding
that “an employer’s assertion that the CBA is invalid due to lack of majority
status is not a defense in an action brought by an ERISA plan or its trustees to
collect employer contributions. Indeed, [it] conclude[d] that Congress intended
to abolish this very defense with the passage of section 515.” Id. at 1444.
In explaining this holding, and addressing the question of “when a
binding collective bargaining agreement ceases to exist,” it reconciled its
decision in MacKillop with three earlier cases: Sheet Metal Workers’
International Association, Local 206 of Sheet Metal Workers’ International
Association, AFL-CIO v. West Coast Sheet Metal Co., 954 F.2d 1506, 1509
(9th Cir. 1992); Laborers Health & Welfare Trust Fund, v. Westlake
Development, 53 F.3d 979 (9th Cir. 1995); and Carpenters Health and Welfare
Trust Fund for California. v. Bla-Delco Construction, Inc., 8 F.3d 1365, 1369
(9th Cir. 1993):
Sheet Metal Workers’ holds that the voluntary
decertification of a union by its employees ends the
collective bargaining agreement, and employer
obligations to the ERISA plans cease upon that event.
Westlake holds that, in the unique circumstances of a
section 8(f) pre-hire collective bargaining agreement, an
employer’s unilateral repudiation of such agreement
under the one-employee unit rule renders the agreement
void, and the obligation to the ERISA benefit plan also
ceases upon repudiation. As a general proposition,
however, unilateral action of an employer will not render
a CBA void and unenforceable, nor will the mere
assertion by the employer that the union lacks majority
status. Sheet Metal Workers’, for example, distinguished
an employer’s after-the-fact attempt to extricate itself
through unilateral action from trust fund obligations that
it knowingly accepted, and noted that at the time the
1986 CBA was imposed, the employer had no way of
being certain that the union would lose its majority
status. Where there are grievance and arbitration
procedures under the CBA, as in Bla-Delco, the
obligation to make contributions to the ERISA plans
continues until those procedures are followed and the
CBA is ruled to be terminated by the appropriate
authority. Similarly, in our case, where an NLRB action
had been initiated to determine whether the CBA was
invalid for lack of majority status, the employer’s
obligations to the Plans continued until the NLRB ruled
that the CBA had no force and effect.
MacKillop, 58 F.3d at 1446 (internal quotation marks, brackets, and citations
omitted). And it affirmed the district court’s ruling granting summary
judgment for unpaid contributions to the trustees of the relevant plans up until
the date of the administrative law judge’s decision in the NLRB proceeding.
Id. at 1443.
At least one other district court has found “crucial” MacKillop’s
determination that the employer’s contribution obligations continued until the
NLRB determination. Cal. Serv. Emps. Heath & Welfare Tr. Fund v.
Command Sec. Corp., 2012 WL 2838863, at *7 (N.D. Cal. July 10, 2012). The
court concluded that, based on MacKillop, “where there are ongoing disputes as
to the CBA’s validity, the employer’s obligations to the Trust Funds continue
unabated until the issue is adjudicated.” Id. This court agrees. Here, NLRB
proceedings regarding the validity of the CBA are ongoing, see Gening Liao
Decl., ECF No. 56-1; ECF Nos. 56-5 through 8, 73-74. Indeed, those
proceedings include some of the very issues before the court on these motions.
See ECF No. 56-1 through 8.
In its motion, Kauai Veterans relies on Westlake for its contention that
its contribution obligation ended when it withdrew Union recognition. Mot. at
2-3. But the circumstances of this case are not the “unique circumstances” of a
pre-hire CBA covering a single-employee bargaining unit. See Westlake, 53
F.3d at 984.
Kauai Veterans also contends that under Pace v. Honolulu Disposal
Service, Inc., 227 F.3d 1150 (9th Cir. 2000), this court, rather than the NLRB,
is the “appropriate authority” to determine whether the union had in fact lost
majority support. Reply at 9, ECF No. 61. Pace, however, is inapposite.
In Pace, employees brought an action to recover wages and benefits
that they claimed they were entitled to “under a series of written CBAs from
1979-1996.” 227 F.3d at 1153. The defendants, which included the employer,
the union, and the relevant trust funds, claimed that the CBAs did not cover the
employees because the employer and the union had “orally agreed to limit the
scope of the bargaining unit to a couple of employees not including [the
plaintiffs].” Id. The defendants contended that the employees’ claims “raise[d]
representational issues that must be decided in the first instance by the NLRB
under the doctrine of primary jurisdiction.” Id. at 1155-56.
The Ninth Circuit disagreed. It noted that Section 301 of the Labor
Management Relations Act, 29 U.S.C. § 1985(a), is “an exception to the
primary jurisdiction doctrine . . . designed to afford the courts jurisdiction to
resolve labor disputes that focus on the interpretation of the terms of the
collective bargaining agreement.” Id. at 1156 (internal quotation marks and
citations omitted). It acknowledged, however, that “[a]lthough § 301 confers
concurrent jurisdiction upon the NLRB and federal courts, . . . district courts
must tread lightly in areas of the NLRB’s primary jurisdiction, and must
continue to defer when, on close examination, section 301 cases fall within the
NLRB’s primary jurisdiction.” Id. (internal quotation marks and citation
omitted). And it repeated its warning that “end run[s ] around Section 9 of the
National Labor Relations Act . . . under the guise of contract interpretation . . .
cannot be countenanced.” Id. (quoting Local No. 3-193 Int’l Woodworkers of
Am. v. Ketchikan Pulp Co., 611 F. 2d 1295, 1299-1300 (9th Cir. 1980)
(alterations in Pace)).
Pace found that the issue in that case was “primarily contractual” —
turning “on a question of contract interpretation” and “whether the proffered
oral agreement trump[ed] the written contract.” Id. at 1157. In explaining its
reasoning, the court also stated, “In addition, the doctrine of primary
jurisdiction does not apply in determining a union’s past representational
status.” Id. at 1157 (internal quotation marks and citation omitted).
Kauai Veterans seizes on this language and the outcome in Pace,
arguing that the issues here involve past representational status and that that
they are “primarily contractual.” Reply at 10-11. But its first argument is
circular, depending on the very finding it asks this court to make — that the
CBA “ceased to exist” on July 1, 2017. Its second argument conflates the
question of whether the Union lacked majority support with the issues of
contractual interpretation the court has already addressed above. Whether the
Union enjoys majority support does not depend on the interpretation of any
terms in the CBA or the Trust agreements. And the fact that this court has
“concurrent” jurisdiction with the NLRB does not divest the NLRB of its
jurisdiction over representational issues. Pace, 227 F.3d at 1156-57.
“It would contravene the policy to simplify and expedite trust fund
collection actions” to require trust funds to litigate termination disputes
between unions and employers. MacKillop, 58 F.3d at 1445. Indeed, here the
Union is not even a party. MacKillop is controlling, and it prevents a finding at
this time that Kauai Veterans’ contribution obligations ended on July 1, 2017.
Accordingly, the court DENIES the motion for summary judgment.
For the foregoing reasons, Trustees’ motion for partial summary
judgment, ECF No. 37, is GRANTED, and Kauai Veterans is ORDERED to
submit to Trustees’ audit request. Kauai Veterans’ motions for partial
summary judgment, ECF Nos. 39 and 48, are DENIED.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, December 1, 2017.
/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge
Haw. Annuity Tr. Fund for Operating Eng’rs, v. Kauai Veterans Express Co., Civ. No. 16-00615; Order
Granting Plaintiffs Trustees of the Hawaii Annuity Trust Fund for Operating Engineers’ Renewed Motion for
Partial Summary Judgment, ECF No. 37, and Denying Defendant Kauai Veterans Express Company, Ltd.’s
Motions for Partial Summary Judgment, ECF Nos. 39, 48
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