Hawaii Carpenters Trust Funds v. H.E. Johnson Company, Inc.

Filing 30

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND PLAINTIFFS' REQUEST FOR SANCTIONS re 11 Motion for Summary Judgment Signed by JUDGE ALAN C. KAY on 05/08/2018 (eps, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
___________________________________
HAWAII CARPENTERS TRUST FUNDS,
)
Health & Welfare Fund by its
)
trustees Russell Young,
)
Glen Kaneshige, Eric Hashizume,
)
George Ehara, Ronald Taketa,
)
Kyle Chock, Shayne Chung,
) Civ. No. 18-00041 ACK-KSC
Conrad C. Verdugo, Jr., Ralph
)
Hoohuli, Travis Murakami and Alika )
Fujimoto; Apprenticeship &
)
Training Fund by its trustees
)
Claude Matsumoto, Thomas Toma,
)
Conrad Murashige, Dale Sakamoto
)
-Yoneda, Roy Morioka, Vince
) ORDER DENYING DEFENDANT’S
Nihipali, Sheri Mau, Kyle Chock,
) MOTION FOR SUMMARY JUDGMENT
Ronald Taketa, Mitchell Tynanes,
) AND PLAINTIFFS’ REQUEST FOR
Sean Newcamp, Ralph Hoohuli,
) SANCTIONS
Travis Murakami and Barbara Kono; )
Vacation & Holiday Fund by its
)
trustees James Watanabe, Paul
)
Silen, Paul Sasaki, Jay Kadowaki, )
Roy Morioka, Kyle Chock, Sean
)
Newcamp, Mitchell Tynanes, Ralph
)
Hoohuli, Travis Murakami,
)
Tom Broderick and Blake T. Inouye; )
Market Recovery Program Fund by
)
its trustees Thalia Choy, Alan
)
Shintani, Justin Izumi, Ken
)
Kawamoto, Bill Wilson, Lance
)
Wilhelm, Sean Newcamp, Kyle Chock, )
Mitchell Tynanes, Ralph Hoohuli,
)
Travis Murakami and Dale
)
Sakamoto-Yoneda; Financial
)
Security Fund by its trustees
)
Kenneth Spence, Conrad Murashige, )
Kenneth Sakurai, Alan Shintani,
)
Kyle Chock, Ronald Taketa, Shayne )
Chung, Sean Newcamp, Ralph
)
Hoohuli, Clyde Sugawa, Joyce
)
Furukawa, Travis Murakami and
)
Michael Inouye; Drywall Training
)
Fund by its trustees Vince
)
Nihipali, Sr., Lito Alcantra,
)
1

Bert Beaman, Mike Goodnight,
)
Kevin Respecki, Sean Newcamp,
)
Garrett Takara, Edmund Aczon,
)
David Samson and Ivan Lay; 401-K
)
Fund by its trustees Kenneth
)
Spence, Conrad Murashige, Kenneth )
Sakurai, Alan Shintani, Kyle Chock,)
Ronald Taketa, Shayne Chung, Sean )
Newcamp, Ralph Hoohuli, Clyde
)
Sugawa, Joyce Furukawa, Travis
)
Murakami and Michael Inouye
)
)
Plaintiffs,
)
)
v.
)
)
H.E. JOHNSON COMPANY, INC.; JOHN
)
DOES 1-100;JANE DOES 1-100; DOE
)
CORPORATIONS 1-100; DOE
)
PARTNERSHIPS 1-100; DOE ENTITIES
)
1-100; DOE GOVERNMENTAL UNITS
)
1-100,
)
)
Defendants.
)
___________________________________)
ORDER DENYING DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT AND PLAINTIFFS’ REQUEST FOR SANCTIONS
For the reasons discussed below, the Court DENIES
Defendant H.E. Johnson Company, Inc.’s Motion for Summary
Judgment and DENIES Plaintiff Hawaii Carpenters Trust Funds’
request for sanctions.
PROCEDURAL BACKGROUND
On January 31, 2018, Plaintiffs Hawaii Carpenters
Trust Funds and its trustees (“Plaintiffs” or the “Trust Funds”)
filed a Complaint against H.E. Johnson Company, Inc. (“HEJ”) and
numerous Doe Defendants.

The Complaint alleges that HEJ failed

2

to make certain employee benefit contributions to its covered
employees and their eligible dependents, in violation of: (1)
the Labor-Management Relations Act of 1947(“LMRA”), 29 U.S.C. §
141 et seq.; (2) the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1001 et seq.; and (3) the
Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29
U.S.C. §§ 1381-1461.

Compl. ¶ 2.

HEJ filed a pre-discovery Motion for Summary Judgment
on February 20, 2018 (“MSJ”).

ECF No. 11.

On April 6, 2018,

the Trust Funds filed a Memorandum in Opposition to Defendant
H.E. Johnson Company’s Motion for Summary Judgment (“Opp.”)
No. 19.

ECF

HEJ filed its Reply on April 16, 2018 (“Reply Br.”).

ECF No. 21.

HEJ’s Reply noted that the Trust Funds failed to

file a separate document containing a single concise statement
that admits or disputes the facts set forth in HEJ’s concise
statement of facts, as well as sets forth all material facts as
to which the Trust Funds contend there exists a genuine issue
necessary to be litigated.

Id. at 14 (citing Local Rule

56.1(b)).
On April 17, 2018, the Trust Funds filed a Responsive
Concise Statement of Facts and the Supplemental Declaration of
Jeffrey P. Miller. ECF Nos. 22, 23.

By minute order entered

April 19, 2018, the Court construed the Trust Funds’ filings
together as a motion for an extension of time to file a concise
3

statement of facts compliant with Local Rule 56.1(b) and granted
the motion.

ECF No. 24.

However, the Court permitted HEJ to

submit a response to the Trust Funds’ late-filed Responsive
Concise Statement of Facts, see id., which HEJ filed on April
24, 2018, ECF No. 25.
The Court held a hearing on HEJ’s MSJ at on April 30,
2018.

At the hearing, the Court gave the parties until May, 4,

2018, to submit supplemental briefing on the availability of
HEJ’s termination defense, which the parties had not addressed.
See ECF No. 26.

The parties submitted their supplemental briefs

on May 4, 2018.

See ECF Nos. 27 (“HEJ’s Suppl. Mem.”), 28 (“TF

Suppl. Mem.”).

Later that same day, HEJ filed an erratum to its

supplemental brief.

ECF No. 29.
FACTUAL BACKGROUND

I.

The Collective Bargaining Agreement
On or about October 25, 2012, HEJ entered into a

Collective Bargaining Agreement (“CBA”) with the United
Brotherhood of Carpenters & Joiners of America, Local 745, AFLCIO (the “Union”).

Compl. Exhibit (“Ex.”) A, ECF No. 1-1; see

also Compl. Ex. B (“Certification of Receipt and Acceptance” or
“CRA”), ECF No. 1-2.

The CBA was effective September 1, 2007 to

and including August 31, 2012, CBA at 11,1 but before the time of
1

Because the exhibits to the Complaint have inconsistent and conflicting
pagination, all citations to specific page numbers within the various
(continued . . . . )

4

HEJ’s execution, it had been amended to remain effective to and
including August 31, 2014, CRA at 75.
Among other topics, the CBA obligated HEJ to make
specified employee benefit contributions to the Trust Funds,
which the Trust Funds would in turn use toward paying certain
employee benefits to HEJ’s covered employees and their eligible
dependents.

CBA at 26-28 and ¶ 6.

To that end, the CBA

established the procedural and substantive requirements
governing HEJ’s contribution payments and provided for penalties
in the event HEJ became delinquent on these contribution
payments.

Id. at 28-29.
Significant here, the CBA also contained provisions

governing its duration and termination.

CBA Section 1, entitled

“Duration,” states:
1.1 This Agreement shall be binding upon the
respective parties effective September 1,
2007, to and including August 31, 2012, and
shall be considered as renewed from year to
year thereafter unless either party hereto
shall give written notice to the other of
its desire to modify, amend, or terminate
the same.
Id. at 17 (emphasis added); HEJ’s Memorandum in Support of
Motion (“Def.’s Mem.”) at 2-3.

With respect to written notice

(continued . . . .)
exhibits utilize the “Page ID #” designation assigned to each page filed
using this Courts electronic filing system (“ECF”).

5

of modification, amendment, or termination, a different
provision within CBA Section 1 further provides:
1.2 Any such notice must be given by the
parties desiring to modify, amend, or
terminate the Agreement, at least one
hundred eighty (180) calendar days prior to
the expiration date, but not more than two
hundred ten (210) calendar days prior to the
expiration date. In the event such notice is
given, and only in such event, negotiations
for a new agreement shall commence as soon
as possible. If such notice is not given,
the Agreement will be deemed to
automatically renew for the succeeding year.
Id. at 17 (emphasis added); Def.’s Mem. at 3.
II.

HEJ’s Purported March 3, 2016 Termination of the CBA
On March 3, 2016, HEJ contends that it hand delivered

a notice of termination to the Union.

HEJ’s Concise Statement

of Facts (“Def.’s CSF”) ¶ 1, ECF No. 12; Def.’s CSF, Decl. of
Brian Hall (“Hall Decl.”) ¶¶ 1-2, ECF No. 12-1.

The notice of

termination stated that HEJ desired to terminate the CBA and the
CRA pursuant to CBA Section 1.1. Def.’s CSF Ex. 1, ECF No. 12-3.
By purportedly hand delivering the notice of termination to the
Union on March 3, 2016, HEJ states that it provided 181 days’
notice that it desired to terminate the Agreement pursuant to
CBA Section 1.1—i.e., it desired to terminate the CBA before
renewal, effective August 31, 2016.
at 4-5.

6

Def.’s Mem. at 3; Reply Br.

The Trust Funds dispute that the Union ever received
HEJ’s March 3, 2016 notice of termination.

Opp. at 8-11; Trust

Funds’ Responsive Concise Statement of Facts (“Pls.’ CSF”) ¶ 1,
ECF No. 22; Declaration of Joy Nishino (“Nishino Decl.”) ¶ 3.
They support their contention with several declarations from
Union- or Trust Fund-affiliated individuals.

First, the Trust

Funds submit the Declaration of Joy Nishino, one of the
custodians of record for the Hawaii Regional Council of
Carpenters (“HRCC”) of the United Brotherhood of Carpenters and
Joiners of America.

Mrs. Nishino claims that she could not find

HEJ’s notice of termination in HRCC’s records after conducting a
thorough search.

Nishino Decl. ¶¶ 2-3.

Mrs. Nishino also

states that HRCC’s offices followed a standard protocol upon
receipt of all hand-delivered notices of termination—including
date stamping the notice and forwarding it for legal review—but
has no record of this protocol being followed in relation to
HEJ’s notice of termination.

Id. ¶¶ 5-6.

The notice of

termination HEJ submits is not date-stamped and contains no
indication that any HRCC official received it.

See Def.’s CSF,

Hall Decl. Ex. 1.
Second, the Trust Funds submit the Declaration of
Ronald I. Taketa (“Taketa Decl.”), who was HRCC’s Executive
Secretary and Treasurer on March 3, 2016.
No. 19-11.

Taketa Decl. ¶ 1, ECF

Mr. Taketa, whose responsibilities included
7

supervising the relationships between HRCC and its signatory
employers like HEJ, claims that he had no knowledge of HEJ’s
March 3, 2016 notice of termination or intention to terminate
the CBA until after the Trust Funds initiated this action.
¶¶ 2-3.

Id.

Further, Mr. Taketa declares that had he received HEJ’s

notice of termination, he would have conducted an inquiry with
legal counsel and sent any acceptance of the termination in
writing.

Id. ¶ 4.
Finally, the Trust Funds submit the Declaration of

Sarah M. Kobayashi (“Kobayashi Decl.”), who was at all relevant
times a Contribution Accounting Supervisor with Hawaii Benefit
Administrators, Incorporated (“HBAI”).
No 19-4.

Kobayashi Decl. ¶ 1, ECF

HBAI is a third-party benefit administrator for the

Trust Funds responsible for the collection and accounting of
employer contributions of fringe benefits under the CBA.
2.

Id. ¶

Ms. Kobayashi was one of the custodians of records for HBAI

tasked with documenting HEJ’s contracts and correspondence with
HBAI.

Id.

Ms. Kobayashi outlines the standard procedure she

and her staff would have followed if HRCC would have received
and forwarded HEJ’s March 3, 2016 notice of termination, but
declares that: (1) she could not locate HEJ’s notice of
termination in HBAI’s records despite an exhaustive search; and
(2) HBAI has no record that its normal procedure was completed

8

in relation to HEJ’s March 3, 2016 notice of termination.

Id.

¶¶ 4-5.
III.

This Action is Commenced
HEJ contends that it made no further contribution

payments under the CBA after August 2016, and the Trust Funds
did not audit HEJ after August 2016.
Decl. ¶ 4.

Def.’s CSF ¶ 2; id., Hall

The Trust Funds, in contrast, assert that they

consistently requested audit materials from HEJ after the period
HEJ now claims it terminated the CBA.

Kobayashi Decl. ¶ 6.

They claim that on February 6, 2017, they mailed HEJ a partial
pay stub audit for the period from June 2016 to December 2016.
Id. and Ex. 1; Pls.’ CSF ¶ 3.

The Trust Funds contend that HEJ

thereafter provided necessary audit materials on August 3, 2017
and November 6, 2017, which allowed the Trust Funds to return a
full audit to HEJ on November 21, 2017.

Kobayashi Decl. ¶ 7 and

Ex. 2; Pls.’ CSF ¶ 3.
On January 31, 2018, the Trust Funds filed the
Complaint, ECF No. 1, after HEJ failed to respond or remit
payment following the November 21, 2017 audit.

On February 13,

2018, HEJ’s counsel emailed the Trust Funds’ counsel stating
that HEJ stopped making payments under the CBA as of August 2016
pursuant to the March 3, 2016 notice of termination.
Declaration of Jeffrey P. Miller (“Miller Decl.”) Ex. A at 2,
ECF No. 19-8.

Later that day, HEJ’s counsel again emailed the
9

Trust Funds’ counsel, attaching the Declaration of Brian Hall in
which Mr. Hall stated that: (1) he hand delivered HEJ’s notice
of termination to the Union on March 3, 2016; (2) HEJ stopped
making contributions after August 2016 based on the notice of
termination; and (3) the Trust Funds did not perform an audit of
HEJ after August 2016.

Id. at 1, 3-6.

The Trust Funds’ counsel responded the next day, on
February 14, 2018, as follows:
Thank you for the Declaration. Due to
illnesses at the Trust Fund office it has
been difficult for me to get a full picture
of the history for this account and I don’t
want to pass on partial or incorrect
information. We do not intend to request a
default of H.E. Johnson while we work to
resolve this so please give me a few days
to get all of the information to fully
respond to your client’s position. Thanks.”
Id. at 1.

HEJ’s counsel replied:

“The answer is not due until

next week so let’s see if we can get this cleared up before
then.”

Id.
Around three hours later, still on February 14, 2018,

HEJ’s counsel emailed the Trust Funds’ counsel an unfiled Motion
for Sanctions based on the Declaration of Brian Hall.
Decl. Ex. B at 2-3, ECF No. 19-9.

Miller

HEJ’s counsel further noted

that HEJ would “incur the expense of answering the complaint on
Feb. 26, unless plaintiffs agree to extend the due date.”

10

Id.

On February 15, 2018, the Trust Funds’ counsel
responded that his client was still investigating, but that: (1)
neither the HRCC nor the Trust Funds’ administrative office had
any record of receiving HEJ’s March 3, 2016 notice of
termination; and (2) the Declaration of Brian Hall was
supposedly inaccurate because two audits had been conducted and
mailed to HEJ following the supposed termination.
Ex. B at 1-2.

Miller Decl.

The Trust Funds’ counsel also forwarded HEJ the

post-August 2016 audits and proposed to extend HEJ’s time to
answer or otherwise respond to the Complaint until March 12,
2018.

Id. at 2, 4-15.
HEJ’s counsel responded minutes later, stating: “It

does not matter whether the trustees ever received the [notice
of termination].

It is undisputed that [HEJ] delivered it to

the union . . . . [therefore] [y]ou and the trustees have 20
days left to withdraw the frivolous lawsuit.”

Id. at 1.

Just

five days later, on February 20, 2018, HEJ filed its Answer and
the MSJ.

ECF Nos. 9, 11.
STANDARD
Summary judgment is proper where 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(a).

Rule 56(a)

mandates summary judgment “against a party who fails to make a
showing sufficient to establish the existence of an element
11

essential to the party’s case, and on which that party will bear
the burden of proof at trial.”

Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at
Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).
“A party seeking summary judgment bears the initial
burden of informing the court of the basis for its motion and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.”

Soremekun v. Thrifty Payless, Inc., 509 F.3d

978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see
also Jespersen v. Harrah’s Operating Co., 392 F.3d 1076, 1079
(9th Cir. 2004).

“When the moving party has carried its burden

under Rule 56 [(a)] its opponent must do more than simply show
that there is some metaphysical doubt as to the material facts
[and] come forward with specific facts showing that there is a
genuine issue for trial.”

Matsushita Elec. Indus. Co. v. Zenith

Radio, 475 U.S. 574, 586-87 (1986) (citation and internal
quotation marks omitted); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (stating that a party cannot
“rest upon the mere allegations or denials of his pleading” in
opposing summary judgment).
“An issue is ‘genuine’ only if there is a sufficient
evidentiary basis on which a reasonable fact finder could find
for the nonmoving party, and a dispute is ‘material’ only if it
12

could affect the outcome of the suit under the governing law.”
In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248).

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., 475 U.S. at 587; see also Posey v. Lake Pend Oreille
Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating
that “the evidence of [the nonmovant] is to be believed, and all
justifiable inferences are to be drawn in his favor”).
DISCUSSION
I.

Whether there is no Genuine Dispute of Material Fact that
the CBA was Terminated
HEJ asserts that the Trust Funds “have no right to

claim contributions for hours worked after termination of the
agreement[.]”

Def.’s Mem. at 3.

The Trust Funds counter that

the CBA was never effectively terminated because the Union never
received HEJ’s notice of termination.

Opp. 8-11.

Resolution of

HEJ’s MSJ, therefore, turns on whether there is a genuine
dispute of material fact as to whether HEJ effectively
terminated the CBA.
A.

Availability of Contract Defenses
In an action to collect contributions, trust funds

stand in the position of third-party beneficiaries to a
collective bargaining agreement.

13

Carpenters Health & Welfare

Tr. Fund for California v. Bla-Delco Const., Inc., 8 F.3d 1365,
1369 (9th Cir. 1993) (“Bla-Delco”).

While the rights of third-

party beneficiaries are typically subject to any contract
defenses that the promisor could assert against the promisee,
Congress and courts have limited the availability of certain
contract defenses in the context of trust fund collection
actions because “millions of workers depend upon the employee
benefit trust funds for their retirement security.”

S.W.

Administrators, Inc. v. Rozay’s Transfer, 791 F.2d 769, 773 (9th
Cir. 1986).
In the Ninth Circuit, termination of a CBA is
generally not a legitimate defense in a trust fund collection
action.

Bla-Delco, 8 F.3d at 1369 (finding that the defendant’s

“purported termination of the CBA is not a legitimate defense to
the Trust Funds’ [collection] action.”); see also Trustees of
Eighth Dist. Elec. Pension Fund v. Gietzen Elec., Inc., 898 F.
Supp. 2d 1193, 1200 (D. Idaho 2012) (“In the Ninth Circuit, only
those defenses demonstrating illegality of the contributions or
striking at the heart of the underlying collective bargaining
agreement as void ab initio (as opposed to, merely, voidable),
are available when contesting delinquency actions such as
this.”); Carpenters Sw. Admin. Corp. v. T&R Painting & Drywall,
No. LACV166498VAPPLAX, 2017 WL 4769437, at *7 (C.D. Cal. Aug.
10, 2017) (“The Ninth Circuit has held that purported
14

termination is not a legitimate defense to an action to collect
contributions due under a CBA.”).
Courts have explained that the crucial inquiry in
deciding whether a particular contract defense is permissible in
a collection action is whether the defense would result in the
CBA at issue being void or merely voidable.
at 1369; see also TF Suppl. Mem. at 6.

Bla–Delco, 8 F.3d

A termination defense—a

contract defense that typically renders the contract at issue
“voidable”—is generally not a legitimate defense in an ERISA
collection action.

E.g., id.; Trustees of Plumbers &

Pipefitters Union Local 525 Health & Welfare Tr. & Plan v.
Sotelo, No. 213CV00657RFBNJK, 2017 WL 4288681, at *4-5 (D. Nev.
Sept. 27, 2017) (quoting Bla-Delco for the proposition that the
defendant’s “purported termination of the CBA is not a
legitimate defense to the Trust Funds’ action”); see also
Masonry Indus. Tr. Admin., Inc. v. Woodburn Masonry, Inc., 116
F.3d 484 (9th Cir. 1997)(unpublished decision) (“If the union
had disputed [the defendant]’s understanding of the CBA as
terminated, the agreement would have been only voidable and its
termination could not be a defense to this trust action.”).
The Trust Funds thus contend in their supplemental
memorandum that HEJ’s purported termination “is not a legitimate
defense” in this action.

TF Suppl. Mem. at 5, 7.

HEJ responds

that Bla-Delco and its progeny do not apply because, unlike the
15

employer in Bla-Delco, HEJ “was not entitled to take [its]
termination dispute to arbitration.”

HEJ’s Suppl. Mem. at 3.

Highlighting this distinction, HEJ asserts that the
CBA here—unlike the collective bargaining agreement at issue in
Bla-Delco—allows HEJ to grieve just two violations:

“(1) a

violation of Section 7 (No Strike Or Lockout) or (2) a refusal
to refer employees according to Section 26.3 (Referral and
Hiring Procedure).”

Id. (citing CBA at 26).

Accordingly, HEJ

claims that the CBA at issue in this matter leaves this Court as
the only authority able to decide HEJ’s termination dispute.
Id. at 3-4, 7; Cf. MacKillop v. Lowe’s Mkt., Inc., 58 F.3d 1441,
1446 (9th Cir. 1995) (“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.”).
The Court agrees and finds significant the differences
between the dispute resolution provisions in the collective
bargaining agreement at issue in Bla-Delco and the CBA in this
matter.

The Court finds support for its conclusion in the

narrow reading later cases have given Bla-Delco.
Suppl. Mem. at 4-5.

See HEJ’s

Indeed, the Ninth Circuit has explicitly

cautioned courts against applying Bla-Delco beyond its intended
scope.

See Laborers Health & Welfare Tr. Fund for N. California
16

v. Fisher Dev., Inc., 81 F.3d 168, 1996 WL 146689, at 5 (9th Cir.
1996) (unpublished opinion); see also Plumbers & Pipefitters
Local Union No. 572 Health & Welfare Fund v. A & H Mech.
Contractors, Inc., 100 F. App’x 396, 403 (6th Cir. 2004)
(observing that “[l]ater Ninth Circuit cases have given the
[Bla-Delco] decision a narrow reading.”).
In Fisher Development, for example, the Ninth Circuit
explained that “[t]his Court’s intention [in Bla-Delco] was not
to preclude evidence that there was no valid contract between
parties that would give rise to an obligation for an employer to
pay into the trust funds as required by a master agreement.”
Id. at *5 (emphasis in original).

The court stated that where

an employer asserts “that there may not be any contract at all
to obligate an employer to pay,” Bla-Delco does not bar the
employer from raising a termination defense.

Id.

Other decisions of the Ninth Circuit lend support to
the Court’s conclusion that Bla-Delco established a limited rule
that should not be extended beyond the factual circumstances of
that case.

See, e.g., Laborers Health & Welfare Tr. Fund for N.

California v. Leslie G. Delbon Co., 199 F.3d 1109, 1110 (9th
Cir. 2000) (“Bla-Delco dealt with a dispute regarding
termination that neither party had shown an intention to
abandon. In this case, however, the Union threatened to file
suit within ten days but instead did nothing for over ten
17

years.”); Laborers Health and Welfare Trust Fund v. Westlake
Dev. Co., 53 F.3d 979 (9th Cir. 1995) (permitting an exception
to the general rule against unilateral termination of a CBA
where there were “unique circumstances of a single-employee
bargaining unit”); Sheet Metal Workers’ Int’l Ass’n, Local 206
of Sheet Metal Workers’ Int’l Ass’n, AFL-CIO v. W. Coast Sheet
Metal Co., 954 F.2d 1506, 1509 (9th Cir. 1992) (“A contract to
contribute to a trust fund of a Union . . . . [has] no legal
effect when the Union is no longer the certified representative
of [the defendant]’s employees.”).

Although this matter’s facts

distinguish it from these post-Bla-Delco decisions, see TF
Suppl. Mem. at 7-9, such cases serve as useful guideposts in
applying Bla-Delco.
Additionally, District courts within the Ninth Circuit
have limited Bla-Delco’s reach.

In Alaska Trowel Trades Pension

Fund v. Lopshire, for example, the court stated that “to read
Bla–Delco [to block an employer from raising a termination
defense] would vitiate an employer’s legal right to terminate a
collective bargaining agreement or pre-hire agreement.”

855 F.

Supp. 1077, 1082 (D. Alaska 1994), aff’d in part, rev’d in part
on other grounds, 103 F.3d 881 (9th Cir. 1996).

The Lopshire

court reasoned that such a reading “would call for a conclusion

18

that Bla–Delco overruled West Coast [Sheet Metal]2 sub silentio.”
855 F. Supp. at 1082 (D. Alaska 1994).

In addition, the court

explained that “unlike the incomplete termination in Bla-Delco,
the defendant in the instant case gave notice of his intent to
terminate the [CBA] which, if actually given, would render [the
CBA], including defendant’s agreement to make contributions,
void not voidable.”

Id.

The Court finds Lopshire’s reasoning

persuasive under the analogous facts of this case.
In light of the post-Bla-Delco case law narrowly
interpreting that case’s holding, the Court will consider HEJ’s
termination defense.

As explained in Section I.B, supra,

however, the Court nevertheless finds that HEJ is not entitled
to summary judgment.
B.

Receipt of the Notice of Termination
Summary judgment is inappropriate where there is a

genuine dispute of material fact.
324.

Celotex Corp., 477 U.S. at

In this case, whether the Union ever received HEJ’s March

3, 2016 notice of termination is a question of fact material to

2

In West Coast Sheet Metal, the Ninth Circuit held that decertification of a
union prospectively voided an employer’s obligation to make contributions
under a collective bargaining agreement. 954 F.2d at 1509-10. The court
opined that: “[a] contract to contribute to a trust fund of a union with
which [the defendant] has no ongoing collective bargaining relationship makes
no sense.” Id. at 1509. The court rejected the argument that the only
defenses to a trust funds’ collection action are illegality or that the
collective bargaining agreement was void ab initio because “legal obligations
have their source either in authority acting within its proper jurisdiction
or in contract properly executed and currently effective.” Id.

19

HEJ’s obligation to contribute under the CBA.

The Court must

therefore decide whether a genuine dispute exists as to the
Union’s receipt of HEJ’s notice of termination.
HEJ’s two-page memorandum in support of its MSJ quotes
the CBA’s duration provisions and states the following:
Defendant terminated the agreement effective
August 31, 2016 by giving its written notice
of termination to the union 181 days before
that date, on March 3, 2016. . . .
Plaintiffs have no right to claim
contributions for hours worked after the
termination of the agreement in this Court.
Def.’s Mem. at 2-3 (citations omitted).

HEJ additionally

submits the Declaration of Brian Hall, which attaches HEJ’s
March 3, 2016 notice of termination which Mr. Hall testifies to
hand delivering the Union.

Def.’s CSF, Hall Decl. ¶¶ 1-4 and

Ex. 1.
The March 3, 2016 notice of termination that HEJ
submits, however, conspicuously lacks a date-stamp, a signature
of receipt from a Union representative, or any other indication
that the Union ever received it.3

3

See id.

And, as even the

In its April 24, 2018 Response to Plaintiffs’ Late-Filed [22] Responsive
Concise Statement of Facts, ECF No. 25, HEJ contends that “there is no
dispute of fact that Defendant delivered a notice of contract termination to
Carpenters Union Local 745 . . . . [and that the Trust Funds] only dispute[]
[that they, as opposed to the Union,] never received” the termination letter.
Id. at 3 (emphasis omitted). HEJ is apparently attempting to distinguish
between delivery to the Union (which it claims) and delivery to the Trust
Funds (which it does not claim). While the Trust Funds’ late-filed CSF does
state that “Plaintiffs never received” HEJ’s notice of termination, ECF No.
22 at 3 (emphasis added), the evidence to which the Trust Funds cite
specifically disputes whether the Union—not just the Trust Funds—received
(continued . . . . )

20

cases HEJ cites explain, “[w]here the giving of written notice
is required by statute or contract . . . . the notice is
effective when received.”

NLRB v. Vapor Recovery Sys. Co., 311

F.2d 782, 785 (9th Cir. 1962) (cited in Reply Br. at 5).

HEJ

has not offered any other evidence that the Union received the
March 3, 2016 notice of termination, such as testimony from a
Union representative or other records of receipt.

E.g., Alaska

Trowel Trades Pension Fund, 855 F. Supp. at 1083 (“Defendant
presents evidence from a person authorized to receive mail for
the trust funds that she received the letter . . . . That the
April 2, 1986, letter cannot be found by the union . . . does
not place into controversy the fact that Local 867’s
receptionist acknowledged receipt of the letter.”).

Simply put,

HEJ has not shown that there is no genuine dispute as to whether
it hand delivered the notice of termination to the Union.
The Trust Funds, for their part, contest the
effectiveness of HEJ’s termination.

They submit declarations

from Union- or Trust Fund-affiliated individuals, which provide
evidence that the Union: (1) has no record of receiving HEJ’s
notice of termination; (2) followed a standard protocol that
would have been, but never was, completed following HEJ’s
supposed hand-delivery of the notice of termination; (3) never
(continued . . . .)
HEJ’s notice of termination.
3.

E.g., Nishino Decl. ¶¶ 2, 3; Taketa Decl. ¶¶ 2,

21

performed a legal review or other analysis of its contractual
relationship with HEJ; (4) never sent HEJ a written acceptance
or refusal of HEJ’s termination; and (5) received partial audit
materials from HEJ after HEJ purportedly terminated the CBA.4
See generally Nishino Decl.; Taketa Decl.; Kobayashi Decl.
4

HEJ argues in its reply brief that the Trust Funds’ declarations improperly
rely on inadmissible evidence. See ECF No. 21 at 6-12; see also HEJ’s Suppl.
Mem. at 9-10. At the summary judgment stage, parties must set out facts they
will be able to prove at trial. Fed. R. Civ. P. 56(c)(4). Courts “do not
focus on the admissibility of the evidence’s form . . . . [but] instead focus
on the admissibility of its contents.” Fraser v. Goodale, 342 F.3d 1032,
1036 (9th Cir. 2003) (citation omitted). “While the evidence presented at
the summary judgment stage is not required to be in a form that would be
admissible at trial, the proponent must set out facts that it will be able to
prove through admissible evidence.” Norse v. City of Santa Cruz, 629 F.3d
966, 973 (9th Cir. 2010) (citations omitted). Thus, “[t]o
survive summary judgment, a party does not necessarily have to produce
evidence in a form that would be admissible at trial, as long as the party
satisfies the requirements of Federal Rules of Civil Procedure 56.” Block v.
City of L.A., 253 F.3d 410, 418-19 (9th Cir. 2001).
HEJ’s motion and reply brief do not address Federal Rule of Evidence 803(7)
(HEJ instead took the opportunity to improperly address the Rule in its
supplemental memorandum, which should have been limited to the applicability
of the Bla-Delco decision, see HEJ’s Suppl. Mem. at 9-10). The Court notes
that Rule 803(7), entitled “Absence of a Record of a Regularly Conducted
Activity,” directs that “[e]vidence that a matter is not included” in a
record of regularly conducted activity is admissible if: “(A) the evidence is
admitted to prove that the matter did not occur or exist; (B) a record was
regularly kept for a matter of that kind; and (C) the opponent does not show
that the possible source of the information or other circumstances indicate a
lack of trustworthiness.” Fed. R. Evid. 803(7)(A)-(C).
As HEJ correctly points out, in order for “[e]vidence that a matter is not
included” in a record of regularly conducted activity to be admissible under
Rule 803(7), there must first be evidence of that record of regularly
conducted activity under Rule 803(6). See HEJ’s Suppl. Mem. at 9-10. The
declarations the Trust Funds submit—some of which offer testimony from HBAI
and HRCC’s custodians of records regarding records maintained in the ordinary
course of business—seem to set forth sufficient facts that the Trust Funds
could present in admissible form at trial to satisfy Rules 803(6) and 803(7).
Compare Nishino Decl. ¶ 2 (“I am one of the custodians of records for HRCC’s
records documenting [HEJ’s] contracts and correspondence with HRCC. Those
records are maintained in the ordinary course of HRCC’s business. Entries
into those records are made at or near the time of any event . . . .”) and
id. ¶ 3 (“I conducted a thorough search of HRCC’s records to determine
whether the March 3, 2016 letter was received by HRCC. No such letter was
found in HRCC’s records.”) with Fed. R. Evid. 803(6)-(7).
(continued . . . . )

22

The Trust Funds’ evidence also shows that it continued
to request audit materials from HEJ after the purported
termination, and mailed a pay stub audit to HEJ on February 2,
2017 identifying it as a partial audit.
1-2.

Miller Decl. Ex. B at

HEJ then provided the Trust Funds with partial audit

materials on August 3, 2017 and November 6, 2017, after which
the Trust Funds mailed a full audit to HEJ covering the period
between January 2015 and February 2017.

Id.

At the very least,

this conduct shows that the Trust Funds did not sit on their
hands after the purported termination, and HEJ could not have
justifiably assumed that its contribution obligations had come
to an end based on the Trust Funds’ conduct.

See Laborers

Health & Welfare Tr. Fund for N. California, 199 F.3d at 1111.
Viewing the evidence in the light most favorable to
the Trust Funds, Scott v. Harris, 550 U.S. 372, 378 (2007),
there is at least a genuine issue of material fact as to whether
HEJ effectively terminated the CBA.

Without the benefit of

discovery and a developed factual record on this issue, the

(continued . . . .)
Further, the declarants in the Trust Funds’ declarations also testify that
they “have personal knowledge of the matters set forth” in their declarations
“and if required, could and would competently testify thereto.” E.g.,
Nishino Decl. ¶ 1; Kobayashi Decl. ¶ 1. The practical question presented by
a motion for summary judgment is whether the case presents a genuine issue of
fact for trial rather than whether the parties have put their evidence in
final form. Accordingly, the Court will not forgo consideration of the Trust
Funds’ declarations at this stage.

23

Court cannot find as a matter of law that HEJ effectively
terminated the CBA.5
II.

The Trust Funds’ Request for Sanctions Against HEJ
The Trust Funds level the serious charge that HEJ

filed declarations “that knowingly misrepresent facts to this
Court.”

Opp. at 13-14.

Based on this charge, the Trust Funds

request that this Court impose sanctions on HEJ pursuant to
Federal Rule of Civil Procedure 56(h).

Rule 56(h) provides:

If satisfied that an affidavit or
declaration under this rule is submitted in
bad faith or solely for delay, the court—
after notice and a reasonable time to
respond—may order the submitting party to
pay the other party the reasonable expenses,
including attorney’s fees, it incurred as a
result. An offending party or attorney may
also be held in contempt or subjected to
other appropriate sanctions.
Fed. R. Civ. P. 56(h).

Courts in the Ninth Circuit have

explained that a declaration is submitted in bad faith—the
apparent basis for the Trust Fund’s request for sanctions here—
where it “knowingly contains perjurious or intentionally false
assertions or knowingly seeks to mislead by omitting facts
central to a pending issue.”

Coble v. Renfroe, No. C11-0498-

RSM, 2012 WL 4971997, at *2 (W.D. Wash. Oct. 17, 2012) (citation
5

The parties dedicate considerable time and paper to the issue of whether the
Trust Funds are seeking payment for hours worked before December 2016. E.g.,
Def.’s CSF ¶ 3; Def.’s CSF, Harris Decl. ¶ 2; Opp. at 11-12; Pls.’ CSF ¶ 3.
Because the Court finds that there is at least a genuine issue of material
fact as to whether HEJ effectively terminated the CBA effective August 2016,
the Court need not decide whether the Trust Funds seek payment for hours
worked before or after that date.

24

omitted); Raher v. Fed. Bureau of Prisons, No. 03:09-CV-00526ST, 2011 WL 4832574, at *8 (D. Or. Oct. 12, 2011) (“Bad faith in
the context of Rule 56(h) requires a deliberate or knowing act
for an improper purpose.”).
The Trust Funds claim that the Declaration of Brian
Hall misrepresented that the Trust Funds did not audit HEJ after
August 2016.

Opp. at 13-14.

They assert that HEJ knew this

statement was false before filing its MSJ because they emailed
HEJ copies of post-August 2016 audits on February 15, 2018.

Id.

Further, email correspondence the Trust Funds submit with their
opposition show that, after reviewing the unfiled Declaration of
Brian Hall, the Trust Funds’ counsel advised HEJ’s counsel:
[T]he Declaration of Brian Hall is
inaccurate. While he correctly testified
that H.E. Johnson stopped making
contributions after August 2016, he
incorrectly testified that the trust Funds
did not audit H.E. Johnson after that date.
To the contrary, the Trust Funds repeatedly
requested H.E. Johnson [sic] to provide
audit materials so it could confirm that the
hours reported were accurate and complete.
The Trust Funds was [sic] able to conduct a
pay stub audit based on certified payroll
for the period of June 2016 through
December, 2017, and mailed the pay stub
audit to H.E. Johnson on February 2, 2017
identifying it as a partial audit. Attached
is a copy for your review. Ultimately, on
August 3, 2017, Ken Johnson of H.E. Johnson
dropped off incomplete audit documents to
the Trust Funds administrative office, and
on November 6, 2017, H.E. Johnson provided
the remaining documents so that a full audit
could be completed. A full audit for the
25

period of January 2015 through February 2017
was completed and sent to H.E. Johnson on
November 21, 2017. Attached is a copy for
your review.
Miller Decl. Ex. B at 1-2.

Despite the Trust Funds’ above

notice, HEJ filed the Declaration of Brian Hall with its MSJ
(and with the statement at issue unchanged).6
Under these circumstances, however, the Court finds it
inappropriate to award the Trust Funds attorneys’ fees or other
sanctions.

Even if the Court determined that any of HEJ’s

declarations were made in bad faith, no award under Rule 56 is
warranted where a bad-faith declaration has no effect on the
outcome—e.g., where, as here, summary judgment is denied despite
the moving party’s knowing reliance on a (potentially) false
declaration.

E.g., Faberge, Inc. v. Saxony Products, Inc., 605

F.2d 426, 429 (9th Cir. 1979) (per curiam) (holding that
sanctions under Rule 56 were not warranted, even if affidavit in
question was submitted in bad faith, because the outcome of the
summary judgment motion did not turn on the affidavit); Coble,
6

The Trust Funds also assert that the Declaration of Jeffrey S. Harris
misrepresents that the Trust Funds “claim no contributions due for hours
worked before December 2016.” Opp. at 14-15. They claim that Mr. Harris’s
testimony relies upon only a November 2017 full audit from the Trust Funds
(which shows no contributions owing before December 2016), but knowingly
omits reference to a February 2017 partial pay stub audit showing
contributions owing between August and December 2016. Id. The Court notes
that the full audit was sent to H.E. Johnson on November 21, 2017, and
purported to cover the period of January 2015 through February 2017. It was
thus at least reasonable to believe that the full audit—which covers the
period of the partial audit and was filed around nine months later—
represented the contributions on which the Trust Funds’ claims were based.
Accordingly, it is not at all clear that Mr. Harris made a knowingly false
statement, let alone submitted his declaration in bad faith.

26

2012 WL 4971997, at *3 (“Even assuming that the affidavit in
question was submitted in bad faith, Plaintiff is not entitled
to the award it seeks under Rule 56 because [the affiant’s]
allegedly erroneous statement had no material effect on the
Court’s decision to grant the summary judgment motion.”); Raher,
2011 WL 4832574, at *7 (“[C]ourts have not awarded sanctions
under Rule 56 . . . where a litigant’s actions, even though
wrongful, did not affect the disposition of the summary judgment
motion.” (citation and internal quotation marks omitted)).
Because the Court denies HEJ’s motion for summary
judgment herein, HEJ’s declarations (even assuming they were
submitted in bad faith) had no effect on the outcome of HEJ’s
motion.

Accordingly, the Trust Funds’ request for Rule 56(h)

sanctions is also denied.
CONCLUSION
For the foregoing reasons, the Court DENIES
Defendant’s Motion for Summary Judgment and DENIES Plaintiffs
Hawaii Carpenters Trust Funds’ request for sanctions.

27

IT IS SO ORDERDED.
DATED:

Honolulu, Hawaii, May 8, 2018.

________________________________
Alan C. Kay
Sr. United States District Judge

Hawaii Carpenters Trust Funds et al. v. H.E. Johnson Company, Inc. et al.,
Civ. No. 18-00041 ACK-KSC, Order Denying Defendant’s Motion for Summary
Judgment and Plaintiffs’ Request for Sanctions

28