CPC Logistics, Inc. et al v. International Paper Company

Filing 81

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant's Motion for Summary Judgment (ECF No. 61 ) is DENIED. IT IS FURTHER ORDERED that Plaintiffs' Motion for Summary Judgment (ECF No. 65 ) is DENIED. Signed by District Judge Jean C. Hamilton on 8/30/12. (TRC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

CPC LOGISTICS, INC., et al.,
Plaintiff(s),
vs.
INTERNATIONAL PAPER COMPANY,
Defendant(s).

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Case No. 4:11CV774 JCH

MEMORANDUM AND ORDER
This matter is before the Court on Defendant’s Motion for Summary Judgment, and Plaintiffs’
Motion for Summary Judgment, both filed July 3, 2012. (ECF Nos. 61, 65). The motions are fully
briefed and ready for disposition.
BACKGROUND
On or about December 17, 2000, Plaintiff CPC Logistics, Inc. (formerly known as
Consolidated Personnel Corp.) (“CPC Logistics”) entered into a Driver Lease Agreement with
Defendant International Paper Company. (First Amended Complaint (“Compl.”), ¶¶ 6, 7). Pursuant
to the terms of the Driver Lease Agreement, CPC Logistics agreed to provide Defendant with the
services of duly trained, professional truck drivers for purposes of supporting Defendant’s
transportation operations, and in return, Defendant agreed to pay CPC Logistics for such services in
accordance with the specific payment schedules attached to and incorporated by reference into the
Driver Lease Agreement. (Id., ¶ 9). Per the terms of the payment schedules allegedly covering
drivers provided to Defendant’s Mason, Ohio, and Fond du Lac, Wisconsin, transportation
operations, Defendant agreed to pay CPC Logistics certain Wage Rates, Applicable Taxes and
Workers’ Compensation Rates, and “Direct Charges,” defined as follows:

Direct charges are [CPC Logistics’] rates for wages and fringe benefits (initial
rates listed below), as well as payments [CPC Logistics] makes under the
Agreement to or for the benefit of workers covered by this Schedule “A” or
in connection with the services provided to customer. Direct charges also
include without limitation, amounts paid pursuant to any applicable collective
bargaining agreement, any law or regulation, or any judgment or other
resolution of a dispute, as well as costs incurred for road expenses (tolls, scale
fees and the like), uniforms, and cash advances paid to workers.
(Compl., ¶ 11, and att. Exhs. B, C). According to CPC Logistics, effective January 1, 2006, CPC
Logistics assigned certain of its operational functions under the Driver Lease Agreement to Plaintiffs
CPC Services, Inc., a wholly owned subsidiary of CPC Logistics, and CPC Paper & Packaging, LLC,
a wholly owned subsidiary of CPC Services, Inc. (Id., ¶ 12).1
During the period of time that CPC provided services to Defendant under the Driver Lease
Agreement, certain of CPC’s employees assigned to Defendant’s operations were covered by
collective bargaining agreements with Teamsters Local Union No. 100 (representing employees
assigned to Defendant’s facility in Mason, Ohio), and Teamsters Local Union No. 200 (representing
employees assigned to Defendant’s facility in Fond du Lac, Wisconsin). (Compl., ¶ 16). Pursuant
to those collective bargaining agreements, CPC was required to make specified pension contributions
into the Central States, Southeast and Southwest Areas Pension Fund (“Central States Pension
Fund”), a multiemployer pension plan within the meaning of Sections 3(37) and 4001(a)(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1002(37)
and 1301(a)(3), for those employees assigned to Defendant’s Mason, Ohio, and Fond du Lac,
Wisconsin, locations. (Id., ¶¶ 1, 17). During the period that CPC provided services to Defendant
at those locations under the Driver Lease Agreement, CPC made the contractually required
contributions, and Defendant reimbursed CPC for the pension contributions. (Id., ¶ 18).

1

For convenience, the Court refers to Plaintiffs collectively as “CPC.”
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On or about April 9, 2007, Defendant terminated CPC’s services at its Mason, Ohio facility,
and CPC thereafter ceased making further pension contributions to the Central States Pension Fund
on behalf of those employees who had been providing services to Defendant at this location.
(Compl., ¶ 19). On or about September 30, 2009, CPC ceased providing services to Defendant at
its Fond du Lac, Wisconsin facility, and CPC thereafter ceased making further pension contributions
to the Central States Pension Fund on behalf of those employees who had been providing services
to Defendant at this location. (Id., ¶ 20). On or about December 1, 2009, CPC’s obligation to
contribute to the Central States Pension Fund in respect of any collective bargaining agreement
permanently ceased, thereby effecting a “complete withdrawal” from the fund, as defined in Section
4203(a) of ERISA, 29 U.S.C. § 1383(a). (Id., ¶ 21). As a result of this complete withdrawal, CPC
and members of its controlled group of companies were assessed withdrawal liability pursuant to
Section 4201(b) of ERISA, 29 U.S.C. § 1381(b), in the principal amount of $9,770,183.71. (Id., ¶
22). CPC received a notice and demand for payment of the 2009 withdrawal liability from the Central
States Pension Fund on or about April 22, 2010. (Id., ¶ 23).2
From May, 2010, through March, 2011, CPC made monthly interim withdrawal liability
payments to the Central States Pension Fund. (Compl., ¶ 26).3 On or about March 18, 2011, CPC
entered into a settlement agreement with the Central States Pension Fund, which required CPC to

2

On or about October 19, 2010, CPC and its controlled group members received a revised
letter of notification, assessing an adjusted 2009 withdrawal liability in the amount of
$9,746,204.23. (Compl., ¶ 24).
3

On or about September 28, 2010, CPC began invoicing Defendant for the amount of
interim withdrawal liability payments it paid that CPC claims were directly attributable to pension
contributions made on behalf of employees provided to Defendant’s union locations. (Compl., ¶
27). Defendant acknowledges receiving certain invoices that purported to be for “Interim Central
States Withdrawal Liability,” but denies any liability for those invoices. (Defendant’s Answer to
First Amended Complaint, ¶ 27).
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make a lump sum payment to the fund. (Id., ¶ 28). CPC made the required payment on or about
March 23, 2011. (Id.).
According to Plaintiffs, CPC has paid a total of $2,486,742.60 in withdrawal liability to the
Central States Pension Fund that is directly attributable to pension contributions made on behalf of
the employees CPC provided to Defendant’s union locations pursuant to the Driver Lease
Agreement.4 (Compl., ¶ 29). On April 12, 2011, CPC submitted a final invoice to Defendant in the
amount of $2,486,742.60, which Defendant has failed and refused to pay. (Id., ¶ 30).
CPC filed its original Complaint in this matter on May 2, 2011. (ECF No. 1). In its First
Amended Complaint, CPC alleges Defendant breached the terms of the Driver Lease Agreement and
payment schedules thereto, by refusing to reimburse CPC for the amount of withdrawal liability
incurred by CPC that was directly attributable to pension contributions made on behalf of employees
CPC provided to Defendant’s union locations pursuant to the Driver Lease Agreement. (Compl., ¶¶
33, 35, 40, 42). CPC claims the amounts constitute reimbursable Direct Charges, as they were,
“required to be made pursuant to one or more collective bargaining agreements; [were] required to
be made pursuant to law or government regulation, namely ERISA and MEPPA (sic); and/or [were]
payments that [were] made to or for the benefit of workers covered by the Driver Lease Agreement
and in connection with the services provided to Defendant.” (Id., ¶¶ 33, 40).
As stated above, the parties filed competing Motions for Summary Judgment on July 3, 2012.
(ECF Nos. 61, 65). Both Plaintiff and Defendant contend there exist no genuine issues of material
fact, and the Court should determine this dispute as a matter of law.
SUMMARY JUDGMENT STANDARD

4

This amount consisted of $443,123.02 in “interim” payments, and $2,043.619.58 in a
lump sum payment. (Compl., ¶ 29).
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The Court may grant a motion for summary judgment if, “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive
law determines which facts are critical and which are irrelevant. Only disputes over facts that might
affect the outcome will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). Summary judgment is not proper if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party. Id.
A moving party always bears the burden of informing the Court of the basis of its motion.
Celotex, 477 U.S. at 323. Once the moving party discharges this burden, the nonmoving party must
set forth specific facts demonstrating that there is a dispute as to a genuine issue of material fact, not
the “mere existence of some alleged factual dispute.” Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at
247. The nonmoving party may not rest upon mere allegations or denials of its pleadings. Anderson,
477 U.S. at 256.
In passing on a motion for summary judgment, the Court must view the facts in the light most
favorable to the nonmoving party, and all justifiable inferences are to be drawn in its favor. Anderson,
477 U.S. at 255. The Court’s function is not to weigh the evidence, but to determine whether there
is a genuine issue for trial. Id. at 249.
DISCUSSION
As stated above, both CPC and Defendant have moved for summary judgment in their favor
on CPC’s claim for breach of contract. CPC asserts that under the terms of the Driver Lease
Agreement and payment schedules thereto, Defendant is required to reimburse CPC for a portion of
the withdrawal liability payments CPC made to the Central States Pension Fund. Defendant

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conversely maintains that under the clear terms of the agreements, it is not required to make any
further payments.
“[T]he meaning of an unambiguous contract presents a question of law appropriate for
summary judgment.” McCormack v. Citibank, N.A., 100 F.3d 532, 538 (8th Cir. 1996) (citation
omitted). “‘Conversely, the interpretation of an ambiguous contract presents a question of fact,
thereby precluding summary judgment.’” Id. (quoting Michalski v. Bank of Am. Ariz., 66 F.3d 993,
996 (8th Cir. 1995)). Whether the contract is ambiguous is a question of law, and a contract is not
ambiguous simply because the parties disagree as to its meaning. Sligo, Inc. v. Nevois, 84 F.3d 1014,
1019 (8th Cir. 1996).
“The primary rule in interpretation of contracts is to ascertain the intent of the parties and give
effect to that intent.” Farm Bureau Town & Country Ins. of Missouri v. Hilderbrand, 926 S.W.2d
944, 947 (Mo. App. 1996) (citation omitted). “Intent is to be determined from the contract alone and
not based on extrinsic or parol evidence unless the contract is ambiguous.” Care Center of Kansas
City v. Horton, 173 S.W.3d 353, 355 (Mo. App. 2005). “An ambiguity arises where there is
duplicity, indistinctness or uncertainty in the meaning of the words used in the contract[,]” Farm
Bureau, 926 S.W.2d at 947 (citation omitted), or when the “terms are reasonably open to more than
one meaning ....” Care Center of Kansas City, 173 S.W.3d at 355.
Upon consideration, the Court finds the contracts before it are rife with ambiguity. For
example, while the payment schedules for the Mason, Ohio, and Fond du Lac, Wisconsin, locations
state they are a part of, and subject to, the “Driver Service Agreement” between the parties, the
underlying contract presented to the Court is entitled “Driver Lease Agreement.” See Rosemann v.
Sigillito, 2012 WL 2420131 at *3 (E.D. Mo. Jun. 26, 2012) (internal quotation marks and citations
omitted) (“The parties to a contract may incorporate contractual terms by reference to a separate,

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noncontemporaneous document,....However, a document can only be incorporated by reference, and
thereby become part of the agreement, if the underlying contract makes clear reference to the
document [to be incorporated] and describes it in such terms that its identity may be ascertained
beyond doubt.”). Second, within the payment schedules themselves, the parties refer to the
“Agreement”, a term that is defined nowhere in the payment schedules. Finally5, the Court finds the
parties’ own position statements demonstrate the ambiguity inherent within a crucial provision, the
payment schedules’ definition of “Direct Charges.” As noted above, the provision provides as
follows:
Direct charges are [CPC Logistics’] rates for wages and fringe benefits (initial
rates listed below), as well as payments [CPC Logistics] makes under the
Agreement to or for the benefit of workers covered by this Schedule “A” or
in connection with the services provided to customer. Direct charges also
include without limitation, amounts paid pursuant to any applicable collective
bargaining agreement, any law or regulation, or any judgment or other
resolution of a dispute, as well as costs incurred for road expenses (tolls, scale
fees and the like), uniforms, and cash advances paid to workers.
(Compl., ¶ 11, and att. Exhs. B, C). While a literal reading of the second sentence would require
Defendant to reimburse CPC for any amounts paid “pursuant to...any law or regulation,” without
regard to whether the payment was related to workers assigned to Defendant’s facilities, neither party
advocates for this absurd interpretation.6 Under these circumstances, the Court is unable to ascertain

5

The above examples are enumerated without limitation, and the parties remain free to
present evidence on all perceived ambiguities within the contracts at trial.
6

Defendant naturally argues against this literal interpretation. (See, e.g., Defendant’s
Response in Opposition to Plaintiffs’ Motion for Summary Judgment, PP. 13-15). For its part, in
its Motion for Summary Judgment CPC originally asserts as follows: “This unambiguous
language [i.e., “amounts paid pursuant to....any law or regulation] that uses the word ‘any’ admits
of no exception.” (Memorandum in Support of Plaintiffs’ Motion for Summary Judgment, P. 23).
CPC tempers its position in its reply brief, however, as follows:
[Defendant] also misconstrues CPC’s argument on this point, stating that
because CPC argues that “any” literally allows no exception, CPC claims it
is entitled to reimbursement of payments pursuant to any law or regulation
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the intent of the parties from the four corners of the contracts. Farm Bureau, 926 S.W.2d at 947.
The Court thus must examine extrinsic evidence to determine the parties’ intent, and so the parties’
Motions for Summary Judgment will be denied. See Monsanto Co. v. Garst Seed Co., 241 S.W.3d
401, 407 (Mo. App. 2007) (citations omitted) (“Where an ambiguity exists...summary judgment is
improper because a question of fact exists regarding the intent of the parties. If the contract is
ambiguous, the parties’ intent must be ascertained at trial using parol or extrinsic evidence.”).
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion for Summary Judgment (ECF No. 61)
is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Summary Judgment (ECF No. 65)
is DENIED.
Dated this

30th

day of August, 2012.

/s/Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

“regardless of whether the payment has any connection to the actions.”
This is clearly not CPC’s position. Rather, CPC maintains that
“reimbursable costs...[must] have a nexus to the employment of drivers on
behalf of [Defendant].” This required nexus negates [Defendant’s]
“slippery slope” or “parade of horribles” argument that if withdrawal
liability is covered by “any law or regulation” then [Defendant] could be
liable for all manner of legal liabilities incurred by CPC “regardless of
whether these payments have any direct relationship to the CPC drivers
assigned to [Defendant’s] facilities.”
(Plaintiffs’ Reply to Defendant’s Response in Opposition to Plaintiffs’ Motion for Summary
Judgment, PP. 6-7 (footnotes omitted)). Thus, neither side advocates for an “unambiguous”
interpretation of the contract language; instead, each places its own desired limitations on the
provision, limitations found nowhere in the payment schedules themselves.
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