Trustees of the Screen Actors v. Nyca, Inc., a California Corporation

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TRUSTEES OF THE SCREEN ACTORS 

GUILD-PRODUCERS PENSION AND

HEALTH PLANS,

Plaintiff-Appellant, No. 08-55409

v.

 D.C. No.

CV-01912-GPS-JC

NYCA, INC., a California

corporation; TAYLORMADE-ADIDAS OPINION

GOLF COMPANY INC., a Delaware

corporation,

Defendants-Appellees.



Appeal from the United States District Court

for the Central District of California

George P. Schiavelli, District Judge, Presiding

Argued and Submitted

May 5, 2009—Pasadena, California

Filed July 15, 2009

Before: Alfred T. Goodwin, Diarmuid F. O’Scannlain, and

Susan P. Graber, Circuit Judges.

Opinion by Judge O’Scannlain

8929

8932 TRUSTEES v. NYCA, INC.

COUNSEL

Peter S. Dickinson, Bush Gottlieb Singer Lopez Kohanski

Adelstein & Dickinson, Glendale, California, argued the

cause for the plaintiffs-appellants and filed the briefs. Robert

A. Bush and Ira L. Gottlieb, Glendale, California, were on the

briefs.

Robert S. Gerber, Sheppard, Mullin, Richter & Hampton

LLP, San Diego, California, argued the cause for the

defendants-appellees and filed the brief. Matthew W. Holder,

San Diego, California, was on the brief.

TRUSTEES v. NYCA, INC. 8933

OPINION

O’SCANNLAIN, Circuit Judge:

We consider whether the Employee Retirement Income

Security Act of 1974 allows employee benefit plans to

recover unpaid contributions from an employer who is not a

party to the applicable collective bargaining agreement.

I

NYCA, Inc., is an advertising agency based in southern

California. Along with other advertising agencies, NYCA is

party to a collective bargaining agreement (the “Commercials

Contract”) with the Screen Actors Guild, a union that repre-

sents actors. The Commercials Contract requires signatory

advertising agencies, referred to as “producers,” to contribute

to employee health and pension plans. The producers must

pay an amount equal to 14.30 percent of the “gross compensa-

tion” paid to “principal performers” for acting in commer-

cials. That is to say, when a performer performs, the

agreement requires producers to contribute to the plans.

TaylorMade-Adidas Golf Company, Inc. (“TaylorMade”),

manufacturers golf-related products. In 2003, TaylorMade

recruited Fred Couples, a famous professional golfer, to

endorse its products. Under this lucrative deal, Couples

receives a hefty sum for promoting TaylorMade’s golf prod-

ucts in television commercials and during personal appear-

ances.1 The endorsement agreement ensures that, in the event

payments under a collective bargaining agreement are neces-

sary, TaylorMade will make the required contributions. Sig-

nificantly, TaylorMade is not a signatory to the Commercials

Contract.

1

Dunlop Slazenger Group Americas originally signed the endorsement

with Couples in 2001. In 2003, TaylorMade acquired Dunlop’s golf-

related assets and liabilities and assumed the agreement. Dunlop is not a

party to this appeal.

8934 TRUSTEES v. NYCA, INC.

NYCA and TaylorMade also have their own contractual

relationship, which began before TaylorMade signed the

endorsement deal with Couples. Under this arrangement,

NYCA acts as TaylorMade’s exclusive advertising agent for

golf-related products and equipment. Under one provision of

this agreement, “[TaylorMade] recognize[s] that [NYCA is]

signatory to collective bargaining agreements with the Screen

Actors Guild and other talent-related union agreements, and

that the hiring and use of talent by [NYCA] on [Taylor-

Made’s] behalf will be subject to the terms of such agree-

ments.”

As TaylorMade’s advertising agent, NYCA works with

Couples to produce golf advertisements. Both TaylorMade

and NYCA, however, split the considerable bill for Couples’

services. NYCA paid Couples $102,181.50, while Taylor-

Made paid Couples significantly more. NYCA, however, cal-

culated its contribution obligations under the Commercials

Contract with reference only to its own payments to Couples,

instead of the combined payments made by NYCA and Tay-

lorMade. This resulted in a significantly lower obligation than

NYCA would otherwise have owed.

Not everyone was happy with NYCA’s arithmetic. The

trustees of employee benefit plans covered by the Commer-

cials Contract sued both NYCA and TaylorMade. They

claimed that the Employee Retirement Income Security Act of

1974 (“ERISA”) entitles them to contributions based upon

Couples’ total compensation, not merely the portion paid by

NYCA. The district court dismissed the case for failure to

state a claim under Federal Rule of Civil Procedure 12(b)(6).

The trustees timely appealed.

II

The trustees contend that TaylorMade, which has not

signed the Commercials Contract, is nonetheless liable for

unpaid contributions as a “joint employer” of Couples.

TRUSTEES v. NYCA, INC. 8935

According to the trustees, “NYCA and TaylorMade jointly

exercised sufficient control over Fred Couples’ employment

such that NYCA and TaylorMade are ‘joint employers’ for

purposes of federal labor law.” In support of this theory, the

trustees identify analogous cases holding companies liable as

“joint employers” under the Fair Labor Standards Act of 1938

(“FLSA”).

This argument presents us with a straightforward issue of

statutory interpretation. We begin, as we must, with the text

of the statute. ERISA requires employers to contribute to

employee benefit plans in accordance with the terms of col-

lectively bargained agreements. 29 U.S.C. § 1145. Specifi-

cally:

Every employer who is obligated to make contri-

butions to a multiemployer plan under the terms of

the plan or under the terms of a collectively bar-

gained agreement shall, to the extent not inconsistent

with law, make such contributions in accordance

with the terms and conditions of such plan or such

agreement.

Id. (emphasis added).2 Thus, we must decide whether an

alleged “joint employer” who is not a signatory to a collective

bargaining agreement may nevertheless qualify as an “em-

ployer who is obligated to make contributions” within the

meaning of § 1145.

A

Before reaching that question, however, we pause to satisfy

ourselves that we have subject-matter jurisdiction over this

2

An “employer” is defined as “any person acting directly as an

employer, or indirectly in the interest of an employer, in relation to an

employee benefit plan; and includes a group or association of employers

acting for an employer in such capacity.” 29 U.S.C. § 1002(5).

8936 TRUSTEES v. NYCA, INC.

appeal. At the outset, TaylorMade challenges our jurisdiction,

asserting that we may not hear this case because TaylorMade

is not an “employer who is obligated to make contributions”

with the meaning of § 1145. According to TaylorMade, the

district court should have dismissed the trustees’ action for

lack of subject-matter jurisdiction under Federal Rule of Civil

Procedure 12(b)(1) rather than for failure to state a claim

under Rule 12(b)(6). The two concepts, of course, are distinct:

“the former determines whether the plaintiff has a right to be

in the particular court and the latter is an adjudication as to

whether a cognizable legal claim has been stated.” 5B Wright

& Miller, Federal Practice and Procedure § 1350 (3d ed.

2004).

[1] We disagree with TaylorMade, and take this opportu-

nity to clear up a persistent procedural confusion that has

bedeviled the courts of appeals.3 It is a cardinal principle of

federal “arising under” jurisdiction that “[a]ny non-frivolous

assertion of a federal claim suffices to establish federal ques-

tion jurisdiction, even if that claim is later dismissed on the

merits.” Cement Masons Health & Welfare Trust Fund for N.

Cal. v. Stone, 197 F.3d 1003, 1008 (9th Cir. 1999); see also

Bell v. Hood, 327 U.S. 678, 682 (1946) (“If the court . . . exer-

cise[s] its jurisdiction to determine that the allegations in the

complaint do not state a ground for relief, then dismissal of

3

See Bleiler v. Cristwood Constr., Inc., 72 F.3d 13, 15 n.1 (2d Cir.

1995); Xaros v. U.S. Fid. & Guar. Co., 820 F.2d 1176, 1180 (11th Cir.

1987). Our own court also has not been immune from this confusion. We

have sometimes implied, though never expressly held, that § 1145 is a

jurisdictional provision. See Crotty v. Cook, 121 F.3d 541, 544 (9th Cir.

1997); Carpenters S. Cal. Admin. Corp. v. Majestic Hous., 743 F.2d 1341,

1345-46 (9th Cir. 1984). But we have also, on occasion, seemed to treat

§ 1145 as substantive; see, e.g., Local 159, 342, 343 & 344 v. Nor-Cal

Plumbing, Inc., 185 F.3d 978, 983 n.4 (9th Cir. 1999) (“Section [1145],

however, merely creates a cause of action under ERISA for proceeding

against an employer who is delinquent in making contributions to a plan.

It does not create a separate basis for jurisdiction . . . .”); Pension Trust

Fund for Operating Eng’rs v. Triple A Mach. Shop, 942 F.2d 1457 (9th

Cir. 1991).

TRUSTEES v. NYCA, INC. 8937

the case would be on the merits, not for want of jurisdic-

tion.”).

[2] Guided by this principle, we clarify today that whether

a defendant is an “employer who is obligated to make contri-

butions” within the meaning of 29 U.S.C. § 1145 is a question

on the merits of the claim, not an issue of subject-matter juris-

diction. No one suggests that the trustees are attempting to

sneak through the courthouse doors on the back of a frivolous

federal claim. To the contrary: we are satisfied that the trust-

ees have made out a colorable federal claim that properly

belongs in federal court. Whether the trustees will ultimately

prevail, of course, remains to be seen. At this stage, however,

the district court correctly analyzed this case under Rule

12(b)(6) rather than under Rule 12(b)(1).

B

[3] Persuaded that we may decide this case, we return to the

merits of the trustees’ claims against TaylorMade. We need

look no further than the plain language of § 1145 to reach our

conclusion. In our view, § 1145 imposes no independent obli-

gation upon employers; it merely provides a federal cause of

action to enforce pre-existing obligations created by collective

bargaining agreements. Indeed, § 1145, though clumsily

phrased in the passive voice, nonetheless expressly locates the

source of the duties imposed on employers in “the terms of a

collectively bargained agreement,” not in any independent

provision of federal law. Because TaylorMade has not signed

the Commercials Contract, it follows that it has not incurred

any such pre-existing obligations under § 1145. The trustees’

“joint employer” theory, by seeking to impose obligations

above and beyond those required by collective bargaining

agreements, directly conflicts with the plain language of the

statute. Therefore, we decline the invitation to extend the

“joint employer” theory to the context now before us.

8938 TRUSTEES v. NYCA, INC.

[4] That several other circuits have adopted the same read-

ing of the statutory language supports our conclusion. See

Cement & Concrete Workers Dist. Council Welfare Fund v.

Lollo, 35 F.3d 29, 36-37 (2d Cir. 1994) (“[Section] 1145 does

not impose a duty to make pension contributions, even on one

who qualifies as an ‘employer’ under the general definition

provided in 29 U.S.C. § 1002(5), if the duty to contribute did

not previously exist.”); Mass. Laborers’ Health & Welfare

Fund v. Starrett Paving Corp., 845 F.2d 23, 25 (1st Cir.

1988); Int’l Bhd. of Painters & Allied Trades Union v. George

A. Kracher, Inc., 856 F.2d 1546, 1549 (D.C. Cir. 1988)

(“ERISA does not require employers to provide pension

plans; the obligation to do so, and to contribute to them,

springs from a privately-made contract embodied in a plan or

a collective bargaining agreement.”).4 Thus, we are satisfied

that the trustees cannot hold TaylorMade liable under the

“joint employer” theory.

We hasten to point out that an employer may not avoid lia-

bility merely by showing that it has not signed the applicable

collective bargaining agreement. Shareholders and officers of

a corporation may be liable for the company’s contribution

obligations in situations in which justice requires piercing the

corporate veil. Alman v. Danin, 801 F.2d 1, 4 (1st Cir. 1986).

A non-signatory company may also be liable if the non-

signatory is the “alter ego” of the signing company, Leddy v.

Standard Drywall, Inc., 875 F.2d 383, 387 (2d Cir. 1989), if

4

We acknowledge that the “joint employer” theory is recognized under

the FLSA. See Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997).

Unlike ERISA, however, the FLSA imposes independent obligations on

employers. See Leddy v. Standard Drywall, Inc., 875 F.2d 383, 387 (2d

Cir. 1989) (stating that the “FLSA commands employers to pay specified

wages, whereas ERISA does not require employers to provide pension

plans.”). In addition, although the FLSA defines the term “employer” in

almost the same way as ERISA does, see 29 U.S.C. § 203(d), the key lan-

guage — “who is obligated to” — is missing from the FLSA. Thus, even

if TaylorMade is an employer within the meaning of § 1145, it is not obli-

gated to contribute under any plan or collective bargaining agreement.

TRUSTEES v. NYCA, INC. 8939

the two entities are a “single employer,” Carpenters Local

Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 526

(5th Cir. 1982), or if “the interests of the nonsignatory and

signatory parties are materially inseparable,” Hotel Employees

& Rest. Employees Int’l Union Welfare Fund v. Gentner, 50

F.3d 719, 722 (9th Cir. 1995).

[5] These theories, however, attempt to determine whether

the two entities are, in reality, one and the same. If the non-

signatory company is really the same as the signatory com-

pany, then it is fair to say that the purported non-signatory is

actually a signatory, and therefore an “employer who is obli-

gated to make contributions” within the meaning of § 1145.

The trustees’ “joint employer” theory is completely different.

The trustees do not contend that NYCA and TaylorMade have

interrelated operations, common management, centralized

control of labor relations, or common ownership, as required

by the single employer or alter ego theories. Nor do they seek

to pierce the corporate veil. Rather, the trustees merely allege

that “NYCA and TaylorMade jointly exercised sufficient con-

trol over Fred Couples’ employment such that NYCA and

TaylorMade are ‘joint employers’ for purposes of federal

labor law.” This is not enough to show that TaylorMade is

“obligated to” contribute within the meaning of § 1145.

[6] Accordingly, the district court properly dismissed this

cause of action.5

III

The trustees also contend that the Commercials Contract

itself obligates NYCA to contribute based upon Couples’ total

compensation. The trustees assert that the phrase “gross com-

5

The district court held that the allegations in the complaint “do not

allege fraud with the specificity required by Rule 9(b)” of the Federal

Rules of Civil Procedure. The trustees do not challenge that conclusion on

appeal.

8940 TRUSTEES v. NYCA, INC.

pensation,” as used in the Commercials Contract, includes all

sums paid to Couples under the endorsement agreement. At

the very least, the trustees argue, the meaning of the term

“gross compensation” is ambiguous and not appropriately

determined on a motion to dismiss.

[7] With this argument, the trustees find more solid footing.

The key section of the Commercials Contract, section 46.A,

obligates “Producers” to “contribute an amount equal to

14.30% of all gross compensation for services paid to princi-

pal performers as herein defined with respect to television

commercials.” (emphasis added). It is clear that NYCA, a sig-

natory to the contract, is a producer, and that TaylorMade, a

non-signatory, is not a producer. Section 46.A, however, does

not expressly limit a producer’s contribution obligation to a

percentage of the gross compensation paid by the Producer.

Indeed, Section 46.A does not identify who pays the gross

compensation. The plain language of Section 46.A is there-

fore susceptible to the reading that the trustees urge: that the

Commercials Contract measures a producer’s contribution

obligation by a percentage of the gross compensation paid to

principal performers even by entities other than the producer.

NYCA does not dispute that Section 46.A is ambiguous.

Instead, NYCA identifies other provisions in the Commercials

Contract that it insists “make clear that ‘gross compensation’

is limited to sums paid to the principal performer by the ‘Pro-

ducer.’ ” NYCA points first to Section 5.A.1, which provides:

“The terms and conditions of this Contract apply to commer-

cials produced by Producer in the United States . . . and to

commercials for which Producer engages principal perform-

ers.” (emphasis added). NYCA also emphasizes Section 1.A,

which provides: “Compensation to principal performers in

commercials is based both on the services which the principal

performer renders in the production of such commercials and

on the use which is made of the finished commercial in which

the principal performer has rendered services.” (emphasis

added). According to NYCA, the Commercials Contract

TRUSTEES v. NYCA, INC. 8941

plainly contemplates that “Producers like NYCA (a) engage

principal performers to work on commercials, (b) compensate

the performers for that work, and (c) make pension and health

contributions to the Plans based on that compensation.”

We disagree. The contractual passages cited by NYCA

establish unambiguously only that the Commercials Contract

requires contributions in situations in which the Producer and

the principal performer have an employment relationship, i.e.,

when the “Producer engages principal performers.” The pro-

visions do not rule out contributions made by the producer

based upon total compensation when a non-signatory is a co-

employer of a principal performer. In other words, if NYCA

had no relationship whatsoever with Couples, the Commer-

cials Contract would not obligate NYCA to contribute any-

thing.

But that is not the case here. We emphasize that this case

involves commercials in which NYCA played a significant

part. Indeed, TaylorMade and NYCA worked together to pro-

duce the ads that form the basis of this action. The trustees

allege that NYCA “paid employee Fred Couples [$102,187.50]

. . . for the performance of Covered Services on a TaylorMade

commercial.” If accepted as true, this allegation establishes

that the Producer — NYCA — “engage[d]” a “principal per-

former[ ]” — Couples — in the production of commercials

within the meaning of the Commercials Contract. The ques-

tion whether Couples’ “gross compensation” includes sums

paid by TaylorMade is not clearly answered.

Nor do the instructions accompanying the contribution

form at the end of the Commercials Contract, also emphasized

by NYCA, compel a contrary conclusion. Paragraph 6 of

those instructions provides: “Only Producers who are signa-

tory to an applicable collective bargaining contract of the

Screen Actors Guild are eligible to make contributions to the

[plans] on behalf of the eligible Performers employed by such

Producers.” (emphasis added). That paragraph further requires

8942 TRUSTEES v. NYCA, INC.

producers to certify that “all compensation subject to contri-

butions earned by Performers in our employ during the period

covered has been reported herein.” (emphasis added). Accord-

ing to NYCA, those provisions show that “only compensation

‘earned . . . in [the] employ’ of the signatory Producer is

included in the contribution calculation.”

Once again, we are unable to say that the contract is unam-

biguous. The contribution form establishes only that Produc-

ers, i.e., signatories to the Commercials Contract, are

obligated to make contributions. It does not conclusively

resolve the issue whether compensation paid to principal per-

formers may include payments made by non-signatories. Like

Section 46.A, the contribution form appears to leave that key

question unanswered. Paragraph 6 merely refers to “all com-

pensation subject to contributions earned by Performers in our

employ.” It does not define compensation to mean amounts

paid by a producer to a principal performer.

[8] When a collective bargaining agreement is ambiguous,

“it is well established that the parties’ ‘practice, usage and

custom’ is of significance in interpreting their agreement.”

Consol. Rail Corp. v. Ry. Labor Executives Ass’n, 491 U.S.

299, 311 (1989). Indeed, the interpretation of a collective bar-

gaining agreement “calls into being a new common law—the

common law of a particular industry or of a particular plant.”

Id. at 312 (internal citation and quotation marks omitted).

Because the district court did not consider such evidence in

ruling on NYCA’s motion to dismiss, it must, on remand,

determine whether the parties’ practice, usage and custom—

as well as other appropriate aids to interpreting an ambiguous

contract—sheds light on the meaning of “gross compensa-

tion.” Whether the trustees will ultimately prevail, of course,

will depend on the extrinsic evidence produced during discov-

ery.

IV

We turn, lastly, to the trustees’ remaining state law causes

of action. The trustees attempt to enforce both the endorse-

TRUSTEES v. NYCA, INC. 8943

ment agreement and the NYCA-TaylorMade agreement as

purported third-party beneficiaries. They rely on the following

language in the NYCA-TaylorMade agreement:

For all talent engaged or used by [NYCA] on [Tay-

lorMade’s] behalf, [TaylorMade] agree[s] to pay

[NYCA] the engagement rate approved by [Taylor-

Made], together with any taxes, pension and welfare

fund contributions and other similar payments appli-

cable thereto. [TaylorMade] recognize[s] that

[NYCA] [is] signatory to collective bargaining

agreements with the Screen Actors Guild and other

talent-related union agreements, and that the hiring

and use of talent by [NYCA] on [TaylorMade’s]

behalf will be subject to the terms of such agree-

ments.

The trustees highlight similar language in the endorsement

agreement. Notably, the endorsement agreement also specifies

that no party is a third-party beneficiary of the agreement.

[9] The trustees have not stated a cause of action under Cal-

ifornia contract law. Under California law, a purported third-

party beneficiary must show that the contract was “made

expressly for the benefit of a third person.” Cal. Civ. Code

§ 1559. California courts interpret the word “expressly” as the

negative of “incidentally.” Spinks v. Equity Residential Briar-

wood Apts., 90 Cal. Rptr. 3d 453, 468 (Ct. App. 2009). Thus:

“it is not enough that the third party would incidentally have

benefited from performance . . . . The contracting parties must

have intended to confer a benefit on the third party.” Id. (cita-

tion and internal quotation marks omitted).

[10] The NYCA-TaylorMade agreement plainly protects

NYCA, it does not ensure that the plans receive their contri-

butions. Under the agreement’s plain language, TaylorMade

must indemnify NYCA for required contributions, but is

under no affirmative obligation to contribute in the first

8944 TRUSTEES v. NYCA, INC.

instance. The plans “would incidentally have benefited from

performance,” id., of course, because receiving payments

from TaylorMade would make NYCA more likely to fulfill its

own obligations. Nevertheless, it is plain that the agreement’s

reimbursement provisions are expressly for the benefit of

NYCA, even though they may incidentally benefit the plans.

Similarly, the endorsement agreement is not for the express

benefit of the plans, because the agreement is clear that no

party is a third-party beneficiary of the agreement.

[11] Even if the NYCA-TaylorMade and endorsement

agreements were for the plans’ benefit, we are persuaded that

nothing in either agreement imposes an affirmative obligation

on either NYCA or on TaylorMade to contribute. As dis-

cussed above, the NYCA-TaylorMade agreement recognizes

NYCA’s pre-existing obligation to the plans by requiring

TaylorMade to reimburse NYCA for its pension and health

plan contribution obligations when NYCA hires performers

on TaylorMade’s behalf. Cf. Transpersonnel, Inc. v. Roadway

Express, Inc., 422 F.3d 456, 461 (7th Cir. 2005) (“stating that

the obligation to reimburse for contributions made by another

is not the equivalent of an obligation to contribute in the first

instance.”). Similarly, the endorsement agreement, while

requiring TaylorMade to contribute directly to the plans in

some situations, mandates such contributions only if payment

is otherwise required. That qualifier demonstrates that the

endorsement agreement, like the TaylorMade-NYCA agree-

ment, recognizes only a pre-existing obligation to contribute

and does not impose an affirmative duty.

[12] Accordingly, the district court properly dismissed the

trustees’ state law causes of action.

IV

We AFFIRM the district court’s grant of summary judg-

ment to NYCA and to TaylorMade on the trustees’ second,

third and fourth causes of action. We REVERSE the district

TRUSTEES v. NYCA, INC. 8945

court’s grant of summary judgment to NYCA on the trustees’

first cause of action, and REMAND for further proceedings.

Each party shall bear its own costs on appeal.

AFFIRMED REVERSED and REMANDED