United States District Court, D. Alaska
ALASKA TROWEL TRADES PENSION TRUST, ALASKA TROWEL TRADES APPRENTICESHIP & TRAINING FUNDS, and the ALASKA LABORERS-CONSTRUCTION INDUSTRY HEALTH & SECURITY FUND Plaintiffs,
v.
RADY CONCRETE CONSTRUCTION, LLC, and RONALD WILLIAM RADY, JR., Defendants.
ORDER RE CROSS MOTIONS FOR SUMMARY JUDGMENT
SHARON
L. GLEASON UNITED STATES DISTRICT JUDGE.
Order
Before the Court are Plaintiffs' and Defendants'
Cross-Motions for Summary Judgment, at Dockets 20 and 34,
respectively. The motions are fully briefed, [1] and oral argument
was held on August 11, 2016.[2]
BACKGROUND
Plaintiffs
Alaska Trowel Trades Pension Trust, Alaska Trowel Trades
Apprenticeship & Training Funds, and Alaska
Laborers-Construction Industry Health & Security Fund
(collectively, the “Trust”) have brought this
suit against Rady Concrete Construction, LLC (“Rady
Concrete”) and its owner, Ronald Rady. Rady Concrete
entered an agreement with a labor union. Pursuant to that
agreement, Rady Concrete was obligated to make certain
contributions to the Trust on behalf of its employees. The
Trust brought this action against Rady Concrete under the
Employee Retirement Income Security Act (ERISA) to recover
required contributions that the Trust alleges were wrongfully
withheld.[3]
Many of
the key facts in this case are not in dispute, but some are
insufficiently developed at this juncture. Rady Concrete has
done construction work primarily in the Fairbanks, Alaska
region.[4] It is undisputed that in 2009, Rady
Concrete entered into a “Compliance Agreement”
with Operative Plasterers & Cement Masons International
Association and its Affiliated Local Unions.[5] Pursuant to this
agreement, Rady Concrete agreed to abide by a Collective
Bargaining Agreement (CBA) that was incorporated by
reference. Also not in dispute is that on the Compliance
Agreement are handwritten the words “Single job
agreement AHFC Fairbanks Site
Improvements.”[6] The parties do dispute, however, the legal
import of this handwriting.
The
parties agree that subsequent to the completion of the AHFC
Fairbanks Site Improvements project, Rady Concrete continued
to make some payments for fringe benefits as contemplated by
the CBA, but ceased making those payments after December
2014.[7] And although it is undisputed that Mr.
Rady himself, acting as CEO of Rady Concrete, signed some of
the many remittance reports that accompanied these payments,
it is also undisputed that he did not sign them
all.[8]
But the parties again dispute the legal consequences of these
undisputed facts.
Also
uncontested is that, as a result of these payments, the Trust
has provided certain benefits to Rady Concrete's
employees, including to Mr. Rady himself.[9]
DISCUSSION
I.
Jurisdiction
The
Court has jurisdiction pursuant to 28 U.S.C. § 1331
because Plaintiffs' claims arise under ERISA, 29 U.S.C.
§§ 1132, 1145.
II.
Standard for Summary Judgment
Federal
Rule of Civil Procedure 56(a) directs a court to “grant
summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” The burden of showing the
absence of a genuine dispute of material fact lies with the
moving party.[10] If the moving party meets this burden,
the non-moving party must present specific factual evidence
demonstrating the existence of a genuine issue of
fact.[11] The non-moving party may not rely on
mere allegations or denials.[12] Rather, that party must
demonstrate that enough evidence supports the alleged factual
dispute to require a finder of fact to make a determination
at trial between the parties' differing versions of the
truth.[13]
When
considering a motion for summary judgment, a court views the
facts in the light most favorable to the non-moving party and
draws “all justifiable inferences” in the
non-moving party's favor.[14] When faced with cross-motions
for summary judgment, a court “review[s] each
separately, giving the non-movant for each motion the benefit
of all reasonable inferences.”[15] To reach the level of a
genuine dispute, the evidence must be such “that a
reasonable jury could return a verdict for the non-moving
party.”[16] If the evidence provided by the
non-moving party is “merely colorable” or
“not significantly probative, ” summary judgment
is appropriate.[17]
III.
Liability
The
Trust maintains that Rady Concrete's liability is
premised on either the original June 2009 Compliance
Agreement, Rady Concrete's subsequent conduct, or on the
remittance forms that accompanied subsequent payments to the
Trust. Defendants respond that the Compliance Agreement is
limited to a single job, and that, accordingly, Rady Concrete
is entitled to recover all of the subsequent payments it made
to the Trust that were not pursuant to that particular
agreement. The Court will address each contention in turn.
A.
Compliance Agreement
Plaintiffs
argue in their motion for summary judgment that the June 1,
2009 Compliance Agreement was binding on Rady Concrete as to
all future jobs, and that under that agreement Rady Concrete
is obligated to make payments to the Trust for all subsequent
projects. Rady Concrete counters that this was a
“single-job agreement, ” limited to the single
project completed in 2009, which cannot form the basis of
liability for payments beyond that project. In their reply
brief, Plaintiffs respond that there is a material dispute as
to the scope of that agreement and therefore acknowledge that
they are not entitled to summary judgment on these
grounds.[18] However, the Court finds for the reasons
below that as a matter of law the June 2009 Compliance
Agreement was limited to a single job and cannot form the
basis of liability for subsequent payments.
“When
reviewing an ERISA policy, ” courts are to “apply
contract principles derived from state law . . . guided by
the policies expressed in ERISA and other federal labor
laws.”[19] Accordingly, the Court must “look
to the agreement's language in context and construe each
provision in a manner consistent with the whole such that
none is rendered nugatory.”[20] The Court “will not
artificially create ambiguity where none
exists.”[21] And where there is no ambiguity in the
text of the contract, there is no reason to consider
extrinsic evidence, such as subsequent conduct.[22]
According
to Plaintiffs, the Compliance Agreement binds Rady Concrete
in perpetuity because it states it “shall remain in
full force and effect for the period of three
years'” and shall, absent objection,
“continue from year to year”
thereafter.[23] And, Plaintiffs assert, Rady Concrete
never took any action to terminate the contract. But the
disputed issue is not the length of the agreement but rather
its scope. As Defendants point out, the agreement specifies,
in handwriting, that it is for a “Single job agreement
AHFC FAIRBANKS SITE IMPROVEMENTS.” Thus, whatever the
length of the agreement, Defendants assert, it was never
intended to apply beyond work on that one specified project.
Plaintiffs
attempt to undermine this writing by referring to it as only
a “hand written notation, ” which they note was
“made in the space which is allocated in the Compliance
Agreement solely for NAME of the contractor, ” and was
“not made in the CBA to which Rady Concrete agreed to
be bound.”[24] But in the Court's view, this misses
the mark. First, any handwritten terms supersede typed
terms.[25] And second, while the CBA details the
employment terms to which Rady Concrete was bound, the
Compliance Agreement expresses the conditions under which the
CBA applies. If Defendants are correct in their
interpretation of the Compliance Agreement, then Rady
Concrete “agreed to be bound” by the CBA only
with respect to the one project identified in the Compliance
Agreement. Plaintiffs similarly argue that the written
notation should have been added to Section 8 of the
Compliance Agreement. But Section 8, as explained above,
refers only to the length of the agreement, and not to the
number of projects which it will govern.
Although
the “single job agreement” notation is not a
model of clarity, neither is it ambiguous such that it cannot
be enforced. It can have only one meaning: the obligations to
which Rady Concrete was acceding were limited to the
“single job” of the AHFC Fairbanks Site
Improvements.[26] Plaintiffs essentially ask the Court to
disregard this provision, but the Court must interpret the
contract so that no provision “is rendered
nugatory.”[27] That Rady Concrete never took any action
to “terminate” the agreement is a red herring:
the agreement which he never terminated only ever applied to
the single job; it continued only for as long as that job
continued.
Plaintiffs
no longer seek summary judgment on the basis of the
Compliance Agreement; Plaintiffs now assert that
“whether the contract was originally limited to one
job” is “contested on the
facts.”[28] Defendants maintain that they are
entitled to summary judgment as to their non-liability under
the Compliance Agreement.[29] Neither party disputes the
text of the Compliance Agreement itself, and because this
text unambiguously limits the agreement to a single job,
summary judgment for Defendants on this issue is appropriate.
Accordingly, the Court will deny Plaintiffs' motion for
summary judgment with regard to the Compliance Agreement, and
will grant Defendants' motion for summary judgment with
regard to the Compliance Agreement. The Compliance Agreement
cannot form the basis of any liability beyond the single
“AHFC Fairbanks Site Improvements” job, as noted
in that agreement.
B.
Acceptance by Conduct
Plaintiffs
contend that Rady Concrete's liability also arises from
its course of conduct after completion of the AHFC Fairbanks
project. The Ninth Circuit recognized the validity of such an
argument in 1987, noting in a footnote that “an
employer may be held to have [adopted a CBA] by embarking on
a course of conduct evincing an intention to be
bound.”[30] Whether a party's conduct
“evinc[es] an intention to be bound” is
necessarily a fact-intensive inquiry. The Ninth Circuit has
discussed the type of conduct that satisfies this test in
labor agreements in several cases. None is precisely on
point, [31] but the pattern that emerges from these
cases and cases from other circuits is enough to delineate
some basic principles.
In one
case, the Ninth Circuit reversed a grant of summary judgment
for the employer, concluding that where the employer had
“voluntarily implemented the new terms” of the
CBA, including implementing a wage increase, “a trier
of fact could conclude” that the employer had adopted
the agreement, even though it had not signed
it.[32] In another case, the Ninth Circuit
affirmed a grant of summary judgment for the employer,
concluding that there was no intent to be bound when the
employer had unequivocally repudiated a prior agreement, even
though the employer continued to comply with that agreement
while “retain[ing] the right to make changes that it
deemed appropriate.”[33] In a third case, the Court of
Appeals rejected an argument that a successor employer had
adopted the arbitration terms in an expired CBA when the
employer continued to “maint[ain]” the
“terms and conditions of employment, including the
settling of employee grievances short of
arbitration.”[34] And in a fourth case, the Ninth Circuit
held that summary judgment for the union was inappropriate
because, although a successor employer had paid union wages,
contributed to the trust and filed remittance reports, and
requested employees from the union hall, the successor
employer had also presented evidence that it contributed to
the trust not pursuant to the CBA but pursuant to an
independent legal obligation.[35]
In
Brown v. C. Volante Corp., the Second Circuit found
an employer had evinced an intent to be bound by two unsigned
CBAs. There, the underlying agreement had expired and the
employer had not signed a renewal. But the employer continued
to submit signed remittance reports and payments, cooperated
with an audit, paid union wages to employees, and, in a
letter to the trust after the dispute arose, acknowledged
“responsibility to the funds.” The Second Circuit
held that this was “sufficient, absent contrary
evidence, to establish as a matter of law appellant's
intent to adopt the two unsigned CBAs.”[36]
In
Robbins v. Lynch, the Seventh Circuit found that
there was no genuine dispute of fact as to the employer's
intent to be bound by an indisputably unsigned CBA when the
employer had “paid the wages called for by [the CBA],
made pension and welfare contributions per the agreement,
negotiated and settled grievances under the terms of the
agreement, and rendered to the local union the dues withheld
from the pay of its members.” The employer had also
sent a letter formally terminating the (unsigned) agreement,
implicitly acknowledging its continued
vitality.[37] The Seventh Circuit has continued to
apply these factors in subsequent cases.[38]
The
Eleventh Circuit has looked to similar factors, finding an
“intent to abide” by an industrywide CBA when the
employer had “secured virtually all of its labor from
the union hiring hall, ” paid its employees at the
union scale, filed remittance reports and made payments to
the trust, and cooperated in two audits by the
trust.[39] And, more recently, the Fourth Circuit
held that an employer was bound by a CBA when it had signed a
separate “letter of assent” agreeing to make
payments “as provided for by the [CBA] now existing and
as hereafter” and then fully complied with the original
CBA and the successor CBAs for thirteen years.[40]
The
Fifth Circuit reached a different conclusion in
Firesheets v. A.G. Bldg. Specialists, Inc., where it
found the employer had not evinced an intent to be bound and
accordingly affirmed the grant of summary judgment for the
employer. There, the employer had “continued to make
contributions to the Trust Funds after the expiration date of
the Agreement” and had “continued to file monthly
contribution reports which included language stating that it
was bound by provisions of the
agreements.”[41] While these would support an inference
of an intent to be bound, the Court found that other conduct
undermined that inference: the employer had hired nonunion
employees, set its own wages, did not give holiday pay to
employees, and had “made Trust Fund contributions only
for those employees who asked for
contributions.”[42] This conduct was inconsistent with an
intent to be bound, the Court concluded.[43]
With
these cases in mind, the Court turns to the facts at hand.
Here, both sides agree that Rady Concrete did not fully
adhere to the CBA: Rady Concrete made contributions only for
certain jobs and only for some hours.[44] But the
evidence also indicates that Rady Concrete adjusted these
payments to conform to the current version of the
CBA.[45] And the Trust performed an audit of Rady
Concrete in May 2013.[46] Plaintiffs have ...