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Title Sheet Metal Workers Local 19 v. Keystone Heating and Air Conditioning

Date 1991

By Alito

Subject Misc

Contents

Page 1

229 of 238 DOCUMENTS

SHEET METAL WORKERS LOCAL 19 and SHEET METAL WORKERS WELFARE, PENSION, VACATION, APPRENTICE, ANNUITY & INDUSTRY FUNDS OF LOCAL UNION NO. 19, Appellees v. KEYSTONE HEATING AND AIR CONDITIONING, Appellant

No. 90-1484

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

934 F.2d 35; 1991 U.S. App. LEXIS 10829; 119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d

(Callaghan) 878; 13 Employee Benefits Cas. (BNA) 2233

November 29, 1990, Argued

May 30, 1991, Filed

PRIOR HISTORY: **1 On Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. Civil No. 89-01004.

CASE SUMMARY:

PROCEDURAL POSTURE: Appellant company sought review of a judgment from the United States District Court for the Eastern District of Pennsylvania, which found that appellant owed union dues and fund con- tributions under a collective bargaining agreement with appellees union and funds.

OVERVIEW: Appellees, union and fund, filed a com- plaint against appellant company, alleging that they were parties to a collective bargaining agreement that re- quired appellant to make contributions to employee bene- fit funds and to submit to periodic audits to verify the pay- roll figures upon which those contributions were based. Appellant answered and demanded a jury trial. Appellees subsequently moved to strike appellant's jury trial de- mand, contending that appellant was not entitled to a jury trial on these claims because § 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. §

1001 et seq., authorizes only equitable relief. The lower court ruled that appellant was entitled to a jury trial only on the claims for dues and the cost of the audit. The lower court ruled that as a matter of law that appellant was a party to and was bound by the collective bargaining agreement. The court held that the lower court erred in partially striking appellant's jury demand. The court de- termined that there was a right to a jury trial for claims implicating § 502(g)(2), 29 U.S.C.S. § 1132(g)(2).

OUTCOME: The court affirmed the portion of the judg- ment requiring appellant company to pay delinquent dues

and the cost of the audit. The court reversed the with regards to appellant's demand for a jury trial.

LexisNexis(R) Headnotes

Labor & Employment Law > Employee Retirement Income Security Act (ERISA) > Civil Claims & Remedies

HN1 See 29 U.S.C.S. § 1132(g)(2).

Labor & Employment Law > Employee Retirement Income Security Act (ERISA) > Fiduciary Responsibilities

HN2 Under § 515 of Employment Retirement Income Security Act, 29 U.S.C.S. § 1145, provides that employers must comply with their obligations to make fund contri- butions required by collective bargaining agreements or multiemployer plans.

Civil Procedure > Pleading & Practice > Pleadings > Interpretation

HN3 Fed. R. Civ. P. 8(a)(3) does not require that the demand for judgment be pled with great specificity.

COUNSEL:

George P. Wood, Esq., Thomas C. Branca, Esq.

(Argued), Stewart, Wood & Branca, Norristown, Pennsylvania, Attorneys for Appellant.

Margaret M. Browning, Esq. (Argued), Dennis P. Walsh, Esq., Spear, Wilderman, Borish, Endy, Browning and Spear, Philadelphia, Pennsylvania, Attorneys for Appellees.

JUDGES:

Becker, Nygaard and Samuel A. Alito, Jr., Circuit

Judges.

934 F.2d 35, *; 1991 U.S. App. LEXIS 10829, **1;

119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d (Callaghan) 878

Page 2

OPINIONBY:

ALITO, JR.

OPINION:

*36 OPINION OF THE COURT ALITO, JR., Circuit Judge:

Keystone Heating & Air Conditioning ("Keystone") appeals from a final judgment *37 in favor of the Sheet Metal Workers Local 19 ("the Union") and the Sheet Metal Workers Welfare, Pension, Vacation, Apprentice, Annuity and Industry Funds of Local 19 ("the Funds") for, among other things, "work assessment fees" (union dues) and fund contributions that Keystone was found to owe under a collective bargaining agreement. Although we conclude that many of Keystone's arguments lack merit, we hold that the district court erred in denying Keystone's request for a jury trial on the Funds' claims for delinquent contributions under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.

**2 We therefore reverse in part and affirm in part. I.

The Funds and the Union filed a complaint against Keystone in the United States District Court for the Eastern District of Pennsylvania, invoking federal ju- risdiction under Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185; Sections 502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145; and 28

U.S.C. § 1337. The complaint alleged that Keystone and the Union were parties to a collective bargaining agree- ment that required the company to make contributions to employee benefit funds and to submit to periodic audits to verify the payroll figures upon which those contribu- tions were based. The complaint also asserted that the company had refused to permit an audit. The complaint sought (1) "an accounting of all amounts due to the vari- ous benefit funds, based upon examination of Keystone's payroll records," (2) counsel fees, interest, and costs, (3)

"injunctive relief ordering Keystone to remit employer reports and contributions in a timely fashion," (4) "statu- tory penalties as provided by Section 502 of ERISA,"

29 U.S.C. § 1132, and (4) "other relief as the Court deems just and proper."

Keystone answered and **3 demanded a jury trial. The Union and the Funds subsequently moved to strike Keystone's jury trial demand. Asserting that they were basing their claims for an accounting, counsel fees, inter- est, costs, and statutory penalties solely on Section 502 of ERISA, 29 U.S.C. § 1132, and not Section 301 of the LMRA, the Fund and the Union contended that Keystone was not entitled to a jury trial on these claims because

Section 502 authorizes only equitable relief. By contrast, the Union and the Funds did not challenge Keystone's demand for a jury trial on the claims for dues and the cost of an audit under Section 301 of the LMRA, 29 U.S.C. §

185.

Shortly before trial began, an audit based on records supplied to the plaintiffs in discovery was completed. A few days later, the Union and the Funds moved for leave to file a motion for partial summary judgment less than ten days before the scheduled pretrial hearing (see Fed. R. Civ. P. 56(c)), contending that Keystone's failure to pro- vide timely discovery had precluded an earlier motion. Relying on the deposition of Keystone's chief executive officer, David A. Peppelman, the text of the collective bar- gaining agreement, and other related documents, **4 the Funds and the Union contended that there were no genuine issues of fact regarding the existence of a col- lective bargaining agreement or Keystone's obligations under the agreement.

On the day the trial began, the district court addressed the issues presented by the plaintiffs' submissions. The court ruled that Keystone was entitled to a jury trial only on the plaintiffs' claims under Section 301 of the LMRA,

29 U.S.C. § 185, for dues and the cost of the audit. The court also ruled as a matter of law that Keystone was a party to and was bound by the collective bargaining agreement. In addition, the court ruled as a matter of law that Keystone's failure to make contributions consti- tuted a breach of contract and that the only remaining factual issues were (1) whether the employees for whom the plaintiffs were seeking contributions had performed work covered by the collective bargaining agreement and

(2) whether the plaintiffs were entitled to the cost of the audit.

The court impaneled a jury but structured the trial so that the jury considered *38 the disputed factual is- sues only with respect to the plaintiffs' LMRA claims for dues and the cost of the audit. At the conclusion of the

**5 evidence, the court instructed the jury to answer the following three special interrogatories: (1) whether the plaintiffs had proven that Keystone employed persons

(other than three employees for whom contributions had been made) n1 who performed work covered by the col- lective bargaining agreement; (2) whether the plaintiffs had proven that the audit of Keystone's payroll records ac- curately reflected the number of covered employees and the hours they had worked; and (3) whether the plaintiffs had proven that this audit was reasonably necessary. The jury answered "yes" to all three interrogatories, and the court then ruled that the Union was entitled to $56,382.38 in dues and that the Funds were entitled to $747 for the cost of the audit.

934 F.2d 35, *38; 1991 U.S. App. LEXIS 10829, **5;

119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d (Callaghan) 878

Page 3

n1 Keystone made contributions for three indi- viduals who became union members before form- ing the company: James W. Fischer, Keystone's president; David A. Peppelman, the chief execu- tive officer; and William Fulton.

Acting as finder of fact with regard to the ERISA claims, the court **6 found that the Funds had proven that they were entitled to a total of $1,350,121.93 for delinquent contributions, interest, and 20% liquidated damages. The court subsequently awarded plaintiffs at- torneys' fees. Keystone appealed.

II.

Keystone contends -- and we agree -- that it was enti- tled to a jury trial on plaintiffs' claims for fund contribu- tions, interest, and statutory penalties. In analyzing this issue, we will address two subsidiary questions. First, upon which provision or provisions of ERISA did the plaintiffs rely in seeking this relief? Second, is there a right to a jury trial under the provision or provisions in question?

On appeal, plaintiffs appear to argue that they sought the unpaid fund contributions and related relief solely un- der Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). Br. for Appellees at 31. They then correctly note that there is no right to a jury trial on claims based on that provision. See Cox v. Keystone Carbon Co., 861 F.2d 390, 393 (3d Cir. 1988), after remand, 894 F.2d 647, 649-50 (3d Cir.

1990); Turner v. CF&I Steel Co., 770 F.2d 43, 46 (3d Cir.

1985), cert. denied, 474 U.S. 1058, 88 L. Ed. 2d 776, 106

S. Ct. 800 (1986). **7

The district court record reveals, however, that the plaintiffs repeatedly invoked and obtained relief under Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2). n2

In their pretrial memorandum, the plaintiffs' request for relief included the following (emphasis added): **8

b. Liquidated damages in an amount equal to 20 percent of the unpaid contribu- tions, as authorized by the Trust Agreements and by Section 502 of ERISA, 29 U.S.C. Section 1132(g)(2)(C);

c. Counsel fees and costs of this action, including costs of the audit of defendant's payroll records, pursuant to provisions of the collective bargaining *39 and trust agree- ments between defendant and plaintiff, and pursuant to Section 502 of ERISA, 29 U.S.C. Section 1132(g)(2)(D);

n2 HN1 Section 502(g)(2) of ERISA, 29

U.S.C. § 1132(g)(2) provides:

(g) Attorney's fees and costs; awards in actions involving delinquent contri- butions

. . .

(2) In any action under this sub- chapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded the court shall award the plan -

(A) the unpaid contributions,

(B) interest on the unpaid contri- butions,

(i) interest on the unpaid contribu- tions, or

(ii) liquidated damages provided for under the plan in an amount not in excess 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount de- termined by the court under subpara- graph (A).

(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and

(E) such other legal or equitable relief as the court deems appropriate. For purposes of this paragraph, in- terest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title

26.

Similarly, in their attorneys' fees petition, the plain- tiffs asserted (emphasis added):

1. Plaintiffs in this action brought suit pursuant to § 502 of the Employee Retirement Income Security Act, 29 U.S.C.

934 F.2d 35, *39; 1991 U.S. App. LEXIS 10829, **8;

119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d (Callaghan) 878

Page 4

**9

§ 1132, to enforce an employer's obligation to make contributions to employee benefit plans pursuant to § 515 of ERISA, 29 U.S.C.

§ 1145, and judgment was entered in favor of the plaintiffs for unpaid contributions, in- terest on the unpaid contributions, and liq- uidated damages pursuant to § 502(g)(2) of ERISA.

2. Pursuant to the aforementioned sec- tion of ERISA, 29 U.S.C. § 113(g)(2)(D), this court is required to award the plaintiffs "rea- sonable attorney's fees and costs of the ac- tion, to be paid by the defendant."

thorizes, among other things, "such other legal or eq- uitable relief as the court deems appropriate" (emphasis added). This choice of terminology reveals that Congress intended to grant the right to a jury trial. In Lorillard v. Pons, supra, in which the Supreme Court held that Congress intended to provide for a right to a jury trial in private civil actions for lost wages under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Court noted (434 U.S. at 583) that Section 7(b) and (c) of that Act, 29 U.S.C. § 626(b) and (c), autho- rize both "legal" and "equitable" relief. The Court then observed (434 U.S. at 583): "The word 'legal' is a term of art" connoting a right to a jury trial. The court contin- ued (434 U.S. at 583): **11 "We can infer . . . that by providing specifically for 'legal' relief, Congress knew the significance of the term 'legal,' and intended that there

As authorized by Section 502(g)(2), 29 U.S.C. §

1132(g)(2), the district court awarded liquidated damages of 20%, interest, and attorneys' fees. Thus, it is perfectly clear that plaintiffs expressly and successfully relied upon Section 502(g)(2) in the trial court.

Moreover, Section 502(g)(2) applies by its terms to any ERISA action in which a fiduciary seeks delinquent fund contributions. HN2 Section 515 of ERISA, 29

U.S.C. § 1145, provides that employers must comply with their obligations to make fund contributions required by collective bargaining agreements or multiemployer plans. Section 502(g)(2), which specifies the relief available for a violation of Section 515, states in pertinent part (em- phasis added):

In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan the unpaid contributions and other specified relief .

Accordingly, Section 502(g)(2) expressly applies to any action in which a fiduciary seeks delinquent contributions under ERISA.

We hold that there is a right to a jury trial for claims implicating Section 502(g)(2), **10 29 U.S.C.

§ 1132(g)(2). Because we conclude that Congress in- tended to confer such a right, we need not address the question whether the right is guaranteed by the Seventh Amendment. See Tull v. United States, 481 U.S. 412, 417 n.3, 95 L. Ed. 2d 365, 107 S. Ct. 1831 (1987); Lorillard v. Pons, 434 U.S. 575, 577, 55 L. Ed. 2d 40, 98 S. Ct. 866

(1978).

Section 502(g)(2)(E), 29 U.S.C. § 1132(g)(2)(E), au-

would be a jury trial on demand."

In our prior cases concerning the right to a jury trial in ERISA suits, we have relied heavily upon analogous terminology employed by Congress in the particular pro- vision at issue. In Cox v. Keystone Carbon Co., 861 F.2d

390, 393 (3d Cir. 1988), in which we held that there is no right to a jury trial under Section 502(a)(3) of ERISA, 29

U.S.C. § 1132(a)(3), we reasoned as follows (861 F.2d at

393):

*40 Subsection (a)(3) provides that a civil action may be brought "to enjoin any act or practice . . . or to obtain other equitable relief." 29 U.S.C. § 1132(a)(3) (emphasis added). In using the words "equitable relief", we can infer that Congress knew the signifi- cance of the term equitable and intended that no jury be available on demand.

See also Pane v. R.C.A. Corp., 868 F.2d 631, 638 (1989). Just as the wording of Section 502(a)(3) evinces a con- gressional intent not to confer a right to a jury trial, the dif- ferent terminology employed in Section 502(g)(2) **12 evinces a congressional intent to confer such a right. Cf. Bugher v. Feightner, 722 F.2d 1356 (7th Cir. 1983), cert. denied, 469 U.S. 822, 83 L. Ed. 2d 43, 105 S. Ct. 98 (1984)

(right to jury trial on claim for delinquent contributions under Section 301 of the LMRA). Thus we hold that the district court erred in partially striking Keystone's jury demand. n3

n3 The error was not harmless under Fed. R. Civ. P. 61. Error in striking a jury trial demand is harmless if a directed verdict would have been warranted. Laskaris v. Thornburgh, 733 F.2d 260,

934 F.2d 35, *40; 1991 U.S. App. LEXIS 10829, **12;

119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d (Callaghan) 878

Page 5

264 (3d Cir.), cert. denied, 469 U.S. 886, 83 L. Ed.

2d 196, 105 S. Ct. 260 (1984); Amoco Oil Co. v. Torcomian, 722 F.2d 1099, 1105 (3d Cir. 1983). In this case, the plaintiffs do not maintain that a directed verdict should have been entered on their ERISA claims.

III.

Keystone contends that the trial court committed nu- merous errors in pretrial and trial rulings. We have re- viewed the alleged errors that relate to the portion of the

**13 judgment based on the LMRA, n4 and we find that Keystone's arguments lack merit.

n4 Because they relate solely to the ERISA claims, we have not considered Keystone's argu- ments concerning the residential rate, the so-called

"most favored nation" clause, and the vacation fund.

Keystone argues that the plaintiffs could not recover delinquent contributions because the complaint sought only an audit of the company's payroll records. We dis- agree.

HN3 Rule 8(a)(3) of the Federal Rules of Civil Procedure does not require that the demand for judg- ment be pled with great specificity. See 5 C. Wright & A. Miller, Federal Practice and Procedure § 1255 (1990). In the present case, the district court soundly exercised its discretion n5 in concluding that the complaint was broad enough to permit the plaintiffs to recover delinquent con- tributions. The complaint sought, not merely an audit, but

"an accounting of all amounts due to the various benefit funds," and it is well established that a court-ordered ac- counting means "a **14 rendition of a judgment for the balance ascertained to be due." Black's Law Dictionary

18 (5th ed. 1979). See also 1 Am. Jr. 2d Accounts and

Accounting § 44 at 418 (1962); 1A C.J.S. Accounting

§ 11 (1985). Moreover, paragraph one of the complaint asserted that the plaintiffs were "due and owing the sum sought from the Defendant as set forth below." The com- plaint also requested interest, thus clearly implying that a past due principal was sought, as well as other "just and proper" relief. Thus, the complaint should have alerted Keystone that the plaintiffs were seeking an award of past due contributions.

n5 See, e.g., Morgan v. Weinberger, 848 F.2d

909, 911 (8th Cir. 1988), cert. denied, 488 U.S.

1013, 102 L. Ed. 2d 793, 109 S. Ct. 802 (1989).

Keystone contends that the district court committed reversible error by ruling before trial as a matter of law that the company was a party to the collective bargaining agreement. We reject this argument.

Federal substantive law governs the meaning **15 of collective bargaining agreements. Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 456, 1 L. Ed. 2d 972,

77 S. Ct. 912 (1957). Although a collective bargaining agreement differs from an ordinary contract ( Griesmann v. Chemical Leaman Tank Lines, Inc., 776 F.2d 66, 72

(3d Cir. 1985)), the meaning of a collective bargaining agreement may be determined by applying general rules of contract law as long as federal labor law does not provide *41 a conflicting rule. See Textile Workers v. Lincoln Mills, 353 U.S. at 457; United Paperworkers International Union v. Champion Int'l Corp., 908 F.2d

1252, 1256 (5th Cir. 1990); International Union, UAW v. Yard-Man, 716 F.2d 1476, 1479 (6th Cir. 1983), cert. denied, 465 U.S. 1007, 79 L. Ed. 2d 234, 104 S. Ct. 1002

(1984).

Under general rules of contract law, which may ap- propriately be applied in the present case, the question whether Keystone entered into the collective bargaining agreement is a question of contract interpretation. See, e.g., Restatement (Second) of Contracts § 200 comment a (1981); 3 A., Corbin Contracts § 534 at 10 (1960); S. Williston, A Treatise on the Law of **16 Contracts §

600A at 288-89 (1961 Jaeger ed.). Interpretation of a writ- ten contract is a function for the court when the terms and surrounding circumstances are unambiguous. Griesmann v. Chemical Leaman Tank Lines, Inc., 776 F.2d at 72 & n.9; Mellon Bank, N.A. v. Aetna Business Credit, 619

F.2d 1001, 1011 (3d Cir. 1980); Restatement (Second) of Contracts § 213 (1981); 3 A Corbin, supra § 542; S. Williston, supra § 616. We have held that questions of contract interpretation should generally be reviewed for clear error. Cooper Laboratories v. International Surplus Lines, 802 F.2d 667, 671 (3d Cir. 1986); Ram Construction Co., Inc. v. American States Insurance Co.,

749 F.2d 1049, 1052 (3d Cir. 1984).

In the present case, there was no ambiguity regard- ing Keystone's status as a party to the collective bargain- ing agreement. The cover of the collective bargaining agreement states that it is "between Sheet Metal Workers' International Association Local Union No. 19 . . . and Keystone Heating & A.C." The agreement is signed on the line for the "Employer" by "James W. Fischer." Keystone's chief executive **17 officer, David A. Peppelman, stated in his deposition that the agreement was signed by Keystone's president, James W. Fischer, and that Fischer was authorized to sign contracts for the company.

934 F.2d 35, *41; 1991 U.S. App. LEXIS 10829, **17;

119 Lab. Cas. (CCH) P10,767; 19 Fed. R. Serv. 3d (Callaghan) 878

Page 6

Keystone does not deny these facts but contends prin- cipally that Keystone's failure to comply with the agree- ment over a period of years shows that Keystone was not a party to the agreement. This evidence of sustained breach, however, is not alone sufficient to create ambigu- ity regarding Keystone's status as a party to the collective bargaining agreement. n6

n6 Keystone also contends that the district court erred in admitting certain items of evidence and

making certain statements in the jury's presence. We find that these arguments lack merit.

IV.

We will affirm the portion of the district court judg- ment requiring Keystone to pay delinquent dues and the cost of the audit. We will reverse the remainder of the judgment and remand for further proceedings.

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