# Petition for Writ of Certiorari — Local Freight Drivers, Local 208, International Brotherhood of Teamsters v. Rozay's Transfer > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0197%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1988 - **Citation:** 488 U.S. 953 ## Text United States OCTOBER TERM 1988 LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Petitioner, vs. ROZAY’S TRANSFER, Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ROBERT D. VOGEL, Esq. A Member of WOHLNER, KAPLON, PHILLIPS, VOGEL, SHELLEY & YOUNG A Professional Corporation 15760 Ventura Boulevard Suite 1510 Encino, California 91436 Telephone: (213) 484-2005 Attorneys for Petitioner Local Freight Drivers, Local 208, International Brotherhood of Teamsters Chauffeurs, Warehousemen and Helpers of America Bowne of Los Angeles, Inc., Law Printers (213) 742-6600. i QUESTIONS PRESENTED 1. Do federal courts possess jurisdiction under Sec- tion 301 of the Labor-Management Relations Act to adju- dicate actions challenging the validity of collective bargaining agreements? 2. Does the National Labor Relations Board possess exclusive primary jurisdiction to adjudicate the extent and effect of bargaining obligations imposed upon con- tracting parties by the National Labor Relations Act? 3. Is a union legally obligated to disclose to an em- ployer material information concerning the employer’s obligation to make contributions to an ERISA trust fund and, if so, may the employer reasonably rely on the union’s representations regarding discretionary internal trust policy as a matter of law? ü LIST OF PARTIES AND RULE 28.1 LIST The parties to the proceeding below were petitioner Local Freight Drivers Local 208, International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Help- ers of America (“Local 208”), respondent Rozay’s Transfer (“Rozay’s”) and amicus curiae Southern Cali- fornia District Council of Laborers, International Union of Operating Engineers, Local Union No. 12, Merchants and Manufacturers Association and the California Truck- ing Association. iii TABLE OF CONTENTS JURISDICTION........ STATUTES INVOLVED iv INDEX TO APPENDICES Page APPENDIX A. Lower Court’s Findings of Fact and Conclusions of Laguuu A-1 APPENDIX B. Opinion of the United States Court of Appeals, Ninth Circuit. B-1 Je eg a7 Pe Ed f r ee ES ee ae ee OR eS eee Vv TABLE OF AUTHORITIES CITED Cases A.T. Massey Coal Co., inc. v. Intern. Union, 799 F.2d 142 (4th Cir. 1986), cert. den., — U.S. — /// vccracccccvcsecs Adams v. Budd Co., 349 F. 2d 368 (3d. Cir. 1965) Alvares v. Erickson, 514 F.2d 156 (9th Cir.) cert. den., 423 U.S. 874 (1975õo ) Amalgamated Association of Street, Electrical Rail- way & Motor Coach Employees v. Lockridge, 403 JJ. c bhi adon oes ss Anderson v. Ford Motor Co., 803 F.2d 953 (8th Cir. 1986), cert. den., U.S., 107 S.Ct. 3242 os REL —— ROLE OEE: a oan Eee Associated Gen. Con. of A., Inc., Okl., etc. v. Laborers %% ᷣ ͤ ia eis ic ee cccccieeas Black Clawson Co. v. International Ass’n. of Mach., 313 F.2d 179 (2d Cir. 1962) ................. Board of Trustees v. Universal Enterprises, Inc., 751 F. ad 1177 (Iich Cir. 1986) .................. Chambless v. Masters, Mates of Pilots Pension, 571 F.Supp. 1430 (S.D. N.Y. 1983)............... Connell Construction Co. v. Plumbers & Steamfitters, . c Galvez v. Local 804 Welfare Trust Fund, 543 F.Supp. 316 (E.D. N.Y. 1982)))0 Hernandez v. National Packing Co., 455 F.2d 1252 CR ee I œN]f ⁵ . 8 Intern. Broth. of Elec. Wkrs., 532 v. Brink Const., 825 F.2d 207 (9th Cir. 1987) ................ Page 12 15 10 ‘ | TABLE OF AUTHORITIES CITED CASES Page JS. Griffith Const. v. United Bro. of Carpenters, 785 F. ad 706 (9th Cir. 198:ꝛ: 10 Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982) 12,15 Knoll v. Phoeniz Steel Corporation, 405 F.2d 1128 (3d Cir. 1972), cert. den., 409 U.S. 1126 (1973) 17 Laborer’s Health & Welfare Tr. v. Adv. Light Con., —. U.S. —_, 108 S. Ct. 830 (1988) ......... 13 Leskiw v. Local 1470, International Brotherhood of Electrical Workers, 464 F.2d 721 (3d Cir. 1972) 8 Lexington Cartage v. Intern. Broth. of Teamsters, 713 F. ad 194 (6th Cir. 198 8)))))))))) :; 14 Local 20, Teamsters, Chauffeurs and Helpers Union v. Morton, 377 U.S. 252 (1964) ...... 1 8 Local 435, etc. v. General Motors Corp., 552 F.Supp. 395 (D. Del. 1982) modified on other grounds, 720 Le 8 Local 481 v. Sign-Craft, Inc., — F.2d , 128 LRRM 3070 (7th Cir. 19889))) 9 Lumber Prod. Indus. v. W. Coast Indus. Rel., 775 F.2d 1042 (9th Cir. 19880)))))): : 9, 12 Martin v. Hamil, 608 F.2d 725 (7th Cir. 1979) ... 17 McNally Pittsburgh, Inc. v. Intern. Iron Workers, 812 ELI 10 Mengel Co. v. Nashville Paper Products and Spe- cialty Workers Union, 221 F.2d 644 (6th Cir. +) RPO Gr oO 9 vii TABLE OF AUTHORITIES CITED CASES Page Milk Drivers & Dairy Employees Union v. Vevoda, 772 F.2d 530 (9th Cir. 1985), cert. den., 475 U.S. J ee er er ee 9 Mo-Kan Teamsters Pension Fund v. Creason, 716 F.2d 772 (10th Cir. 1983), cert. den., 464 U.S. D ̃ͤ CFO Gh ck b's oh.ce shee d 6a bees 14 NDK Corporation v. Local 1550 of the United Food & Commercial Workers International Union, 709 , SS 1 P 9 Oates v. Teamsters Affiliates Pension, 482 F.Supp. r Ä . . 17 Ridens v. Voluntary Separation Program, 610 F.Supp. 770 (D. Minn. 1985) ................ 18 Rozay’s Transfer v. Local Freight Drivers, L. 208, 850 F.2d 1321 (9th Cir. 1988) ............ 2. 7, 11,14 San Diego Building Trades Council v. Garmon (“Garmon”), 359 U.S. 236 (1959) ............ 12 Smith v. Evening News Association, 371 U.S. 195 77 ⁵ ˙——a— 55 13 Southwest Administrators, Inc. v. Rozay’s Transfer, Inc., 791 F.2d 769 (9th Cir. 1986), cert. den., — gl UR, Ee 5, 6 Teamsters L. 348 H. & W. Fund v. Kohn Bev. Co,. 749 F. 2d 315 (6th Cir. 1984), cert. den., 471 U.S. c 0 17 eee TABLE OF AUTHORITIES CITED CASES Page United Steelworkers v. Rome Industries, Inc. 437 F. ad 881 (Sth Cir. 1970) ¶ r P77 10 West Coast Tel. Co. v. Local U. No. 77 Int. Bro. of Elec. Wkrs., 431 F.2d 1219 (9th Cir. 1970) .... 9 Administrative Decisions Eastern Market Beef Processing Corp., 269 NLRB Wid. Wy Ces 4a 06 46 bh aaweasseneneececens- 12 Penntech Papers, 263 NLRB No. 33 (1982) ...... 11 Statutes Employee Retirement Income Security Act of 1974 t AA 5 ik se puke thee dea „ 5 Labor-Management Relations Act aes a 1, 2, 5, 6, 7, 8, 9, 10, 11, 13, 14 r A a ⁵ ä 88 8 National Labor Relations aeetettttltWͥt 3, 12 United States Code, Title 28, ee a 6s Slate . 2 United States Code, Title 29, 1 , ¼ . 12 % „ „„ 2 3, 12 In the Supreme Court OF THE United States ‘OCTOBER TERM 1988 LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Petitioner, vs. ROZAY’S TRANSFER, - Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Petitioner Local 208 respectfully prays that a Writ of Certiorari issue to review the opinion of the Court of Appeals for the Ninth Circuit rendered in this case on June 24, 1988. OPINIONS BELOW Respondent Rozay’s commenced litigation against Lo- cal 208 seeking rescission of a collective bargaining agree- ment (“contract”) or, in the alternative, indemnification damages pursuant to Section 301 of the Labor-Manage- ment Relations Act (“LMRA”), 29 U.S.C. § 185 (a), alleg- ing Local 208 fraudulently induced it to execute the contract. 2 Following a bench trial, the district court entered judgment in favor of Rozay’s; rescinded the contract; and awarded Rozay’s indemnification damages equivalent to the pension contributions and related monies it contractu- ally owed the trust fund in accordance with the rescinded contract and the attorney’s fees and costs it incurred in unsuccessfully defending the trust fund collection action both at trial and on appeal because of Local 208’s fraudu- lent misconduct. The lower court entered findings of fact and conclu- sions of law consistent with its judgment. (App. A, pp. A-1-A-11.)' Thereafter, Local 208 timely appealed the judgment to the Ninth Cireuit Court of Appeals (“Ninth Circuit’). On June 24, 1988, the Ninth Circuit affirmed the lower court’s judgment in its entirety. (App. B, pp. B-1-B-34.) The Ninth Cireuit's opinion is reported as Rozay’s Trans- fer v. Local Freight Drivers, L. 208, 850 F.2d 1321 (9th Cir. 1988). JURISDICTION The decision of the Ninth Cireuit was filed on June 24, 1988. The jurisdiction of this court is invoked pursuant to 28 U.S.C. § 1254(1) for review by a Writ of Certiorari. STATUTES INVOLVED This ease directly involves Section 301(a) of the LMRA which provides: References in this Petition to “App.” refer to the Appendices attached hereto. 3 “Suits for violations of contracts between an em- ployer and a labor organization representing employ- ees in an industry affecting commerce as defined in this Act,...may be brought in any district court of the United States having jurisdiction of the parties .. . . 29 U.S.C. § 185 (a). STATEMENT OF THE CASE Prior to September 30, 1981, Rozay's and Local 208 were signatory to a contract which required monthly pension contributions being made on behalf of Rozay’s employees to the Western Conference of Teamsters Pen- sion Trust Fund (“Trust Fund“). After the 1978-1981 agreement expired and during continuing negotiations over the terms of a successor contract, Rozay’s continued to make contributions to the Trust Fund pursuant to the terms of the 1978-1981 contract. In July of 1982, after refusing to execute a negotiated agreed-upon successor contract, Rozay’s informed Local 208 it would no longer make contributions to the Trust Fund. In September of 1982, Local 208 filed an unfair labor practice charge with the National Labor Relations Board (“NLRB”) against Rozay’s contending it had violated Section 8(a) (5) of the National Labor Relations Act (“NLRA”), 29 U.S.C. 5 158 (a) (5), by refusing to execute the new three-year contract. Local 208 later amended its NLRB charge to include the contention Rozay’s had unilaterally and improperly changed the terms and conditions of employment, in pertinent part, by its cessation of payments to the Trust Fund. Local 208 also filed a grievance alleging the cessation of contribu- tions to the Trust Fund violated the 1978-1981 contract. 4 After the NLRB issued an administrative complaint against Rozay’s and while the NLRB and grievance pro- ceedings were pending, representatives of Rozay's and Local 208 met in January of 1983 in an effort to resolve the dispute which culminated in an alleged settlement resulting in Rozay’s resuming making pension contribu- tions to the Trust Fund. During the January meeting, Rozay’s expressed con- cern over being required to make retroactive pension contributions for the time period May 1982 through Feb- ruary 1983. As a result, representatives of Local 208 and other union officials present agreed to contact the Trust Fund on Rozay’s behalf and request a waiver of Rozay’s statutory and contractual obligation to pay the contribu- tions for this time period and allegedly assured Rozay’s it would not have to do so. Following the alleged settlement, Local 208 wrote to the Trust Fund on Rozay’s behalf requesting relief from paying the pension contributions for this period. On February 16, 1983, the Trust Fund voted to deny Rozay’s request for relief from paying the contributions and informally apprised Local 208 of its decision in early March. On March 8, 1983, when the new 1981-1984 contract was executed by Rozay’s and Local 208, Local 208 did not advise Rozay’s the Trust Fund had already voted to deny its request that the payment of the delinquent contribu- tions be waived. Rozay’s, allegedly assuming the unpaid contributions would be forgiven by the Trust Fund, signed the contract. Rozay’s and Local 208 also executed a settlement agreement at the same time resolving the pending NLRB unfair labor practice and breach of con- tract grievance proceedings. Thereafter, consistent with 5 \ the settlement agreement, Local 208 withdrew its unfair labor practice charge and grievance. Approximately three (3) weeks later, on or about March 24, 1983, the Trust Fund informed Rozay’s it had denied its request it not have to pay the pension contribu- tions. After learning of the Trust Fund’s decision, Rozay's did not contact Local 208 for the purpose of reopening contractual negotiations; to rescind or reform the 1981-1984 contract executed on March 8, 1983; and/or to seek other additional economic relief to compensate for the Trust Fund’s decision. Subsequently, Southwest Administrators, Inc., an as- signee of the Trust Fund, commenced litigation against Rozay’s in federal court pursuant to Sections 301 of the LMRA and 502(a) and 515 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA’’), 29 U.S.C. §$§ 1132 (a) and 1145, to collect the delinquent pension contributions for the time period May 1982 through February 1983. See Southwest Administrators, Inc. v. Rozay’s Transfer, Inc. (“Southwest Administra- tors”), 791 F.2d 769, 771-72 (9th Cir. 1986), cert. den., —_. U.S. — 107 S.Ct. 951 (1987). Following a bench trial in Southwest Administrators, the district court eoneluded Local 208 fraudulently induced Rozay’s to sign the 1981-1984 contract by failing to disclose the Trust Fund’s adverse decision at the time the contract was executed and held there was no meeting of the minds between the contracting parties at that time on the question of whether the unpaid retroactive pension constributions were to be made. Nevertheless, the district court concluded Local 208’s fraudulent misrepresentation was not a defense to the Trust Fund’s right to recover the unpaid contributions 6 required by the express terms of the contract and, as a result, entered judgment for Southwest Administrators against Rozay’s for the amount of the retroactive pension contributions, liquidated damages, interest and the attor- ney’s fees incurred by Southwest Administrators in pros- ecuting the case. Id. at 772. Later, after learning of Local 208’s alleged misconduct and appealing the adverse judgment in Southwest Admin- istrators to the-Ninth Circuit, Rozay’s filed a separate action against Local 208 relying upon Section 301 seeking rescission of the 1981-1984 contract and indemnification damages After a bench trial before the same judge who deeided Southwest Administrators, the district court concluded Local 208 was guilty of fraudulent misrepresentation in failing to inform Rozay’s of the adverse trust decision on March 8, 1983 when the 1981-1984 contract was executed; rescinded the contract; and awarded Rozay’s the indemni- fication damages it requested. Later, the Ninth Circuit affirmed the lower court’s decision in Southwest Administrators, concluding Local 208’s misrepresentation constituted only fraud in the inducement rendering the 1981-1984 contract ‘“voidable” rather than “void” as against the Trust Fund and, as a ‘result, Rozay’s was contractually obligated to pay the pension contributions required by the express terms of the 1981-1984 contract. Id. at 775. Subsequently, the Ninth Circuit affirmed the lower court’s decision in this case concluding the district court possessed jurisdiction under Section 301 to rescind the 1981-1984 contract and fashion a “make whole“ remedy compensating Rozay’s for the damages it suffered attribu- table to the fraudulent misrepresentation and bad faith nm eS ee a Tey 7 bargaining misconduct engaged in by Local 208 when the 1981-1984 contract was executed on March 8, 1983; evalu- ated the bargaining history and concluded Local 208 had fraudulently induced Rozay’s to sign the contract; de- clared Local 208 had the legal duty to disclose the Trust Fund’s adverse decision to Rozay’s at the time the con- tract was signed and could he held liable for intentionally failing to disclose such; and determined Rozay’s and Local 208 orally reached agreement on January 17, 1987 extinguishing Rozay’s obligation to make the retroactive contributions consistent with the 1978-1981 contract. See 850 F.2d at 1326-37. REASONS FOR GRANTING THE WRIT I. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS RENDERED BY OTHER CIR- _ CUITS WHICH HAVE HELD FEDERAL COURTS DO NOT POSSESS JURISDICTION UNDER SEC- TION 301 TO ADJUDICATE ACTIONS CHAL- LENGING THE VALIDITY OF COLLECTIVE BARGAINING AGREEMENTS. In concluding the lower court possessed jurisdiction to entertain Rozay’s complaint seeking rescission of the contract and other equitable relief, the Ninth Circuit deciared Section 301 “applies not only to suits for breach of a collective bargaining agreement once it is duly formed, but also to suits impugning the existence and validity of a labor agreement.” [Case citations omitted. ] 850 F.2d at 1326. As a result, the Ninth Cireuit deter- mined “the district court had jurisdiction under LMRA § 301 to entertain this action alleging fraudulent induce- ment in the formation of the agreement.” Id. 8 Cireuit courts are sharply split on the question of whether federal courts may address challenges to the validity of collective bargaining agreements under Sec- tion 301. Although the Second, Fifth, Tenth and Eleventh Cireuits have rendered decisions seemingly consistent with the Ninth Cireuit in this case, the First, Third, Fourth, Sixth and Seventh Circuits have issued opinions which directly and irreconcilably conflict with the Ninth Cireuit's holding a federal court possesses jurisdiction under Section 301 to determine the validity/seek the rescission of a contract and/or award other appropriate equitable relief.” Decision rendered in other circuits which directly con- flict with the Ninth Cireuit's opinion in this regard in- elude Hernandez v. National Packing Co., 455 F.2d 1252, 1253 (1st Cir. 1972) (no jurisdiction under Section 301 to challenge the validity of a contract); Adams v. Budd Co., 349 F.2d 368 (3d Cir. 1965); Leskiw v. Local 1470, International Brotherhood of Electrical Workers, 464 F. 2d 721 (3d Cir. 1972); and Local 435, etc. v. General Motors Corp., 552 F.Supp. 395, 397-98 (D. Del. 1982), modified on other grounds, 720 F.2d 664 (3d Cir. 1983) (Section 301 only applies to cases which involve an alleged breach of contract); A.T. Massey Coal Co., Inc. v. Intern. Union, 799 F.2d 142, 146 (4th Cir. 1986), cert. den., US. — 107 S.Ct. 1964 (1987) (jurisdiction does not exist under Section 301 to allege the parties are not bound to a eontract — a breach of an existing contract must be alleged); Mengel Co. v. Nashville Paper Products and Although this court has not directly addressed this question, it has concluded Section 301’s companion statute, Section 303 of the LMRA, 29 U.S.C. § 187, is limited to the recovery of actual, compen- satory damages suffered. See Local 20, Teamsters, Chauffeurs and Helpers Union v. Morton, 377 U.S. 252, 260 (1964). 9 Specialty Workers Union, 221 F.2d 644, 647 (6th Cir. 1955); and NDK Corporation v. Local 1550 of the United Food & Commercial Workers International Union, 709 F.2d 491, 493 (7th Cir. 1983) (court does not posssess jurisdic- tion under Section 301 to rescind a contract where the validity of the contract was the ultimate issue and it was alleged the execution of the contract was procured by the union’s fraudulent misrepresentation) and Local 481 v. Sign-Craft, Inc., — F. 2d , 128 LRRM 3070 (7th Cir. 1988) (no Section 301 jurisdiction over complaint alleging company repudiated the contract where the ulti- mate question was the contract’s validity). The First, Third, Fourth, Sixth and Seventh Circuits in the above cases essentially adhered to the plain language of Section 301 in determining that although Section 301 provides jurisdiction in suits alleging a violation of a valid contract, it does not afford jurisdiction in actions challenging the validity of a contract where the contract’s validity is the ultimate issue in the litigation. The Second, Fifth, Tenth and Eleventh Circuits, consis- tent with the Ninth Cireuit's holding in this case, have Within the Ninth Cireuit itself, this issue has been decided inconsistently. Compare Alvares v. Erickson, 514 F.2d 156, 161 (9th Cir.), cert. den., 423 U.S. 874 (1975) (allegation of breach of contract is essential element in stating cause of action under Section 301); Milk Drivers & Dairy Employees Union v. Vevoda, 772 F.2d 530, 532- 33 (9th Cir. 1985), cert. den., 475 U.S. 1036 (1986) (claim’ of fraudulent inducement raised in defense of union collection case brought under Section 301 is preempted); and Lumber Prod. Indus. v. W. Coast Indus. Rel., 775 F.2d 1042, 1045 (9th Cir. 1985) (no jurisdiction under Section 301 to remedy tort action alleging breach of prospective contractual relations if a crucial element of... [the] action is identical to an element of an unfair labor practice that is arguably covered by the NLRA....”) with West Coast Tel. Co. v. Local U. No. 77 Int. Bro. of Elec. Wkrs., 431 F.2d 1219, 1222 (9th Cir. 1970) (court has jurisdiction under Section 301 to reform contract 10 declared it is not necessary to allege a violation of an existing contract in order to invoke the court’s jurisdic- tion under Section 301 and federal courts can properly rely upon it in entertaining actions seeking rescission of the contract, declaratory and other appropriate equitable relief. See Black-Clawson Co. v. International Ass’n. of Mach., 313 F.2d 179, 182 (2d Cir. 1962) (“We find nothing in the [legislative] history of Section 301(a) which indicates an intention to restrict that section to suits for damages or specific enforcement”); United Steel- workers v. Rome Industries, Inc., 437 F.2d 881, 882 (5th Cir. 1970) (court possesses jurisdiction to determine the validity of a contract and a party need not allege a violation of it in order to_obtain a declaration of its contractual rights); McNally Pittsburgh, Inc. v. Intern. Iron Workers, 812 F.2d 615, 617-19 (10th Cir. 1987) (court has jurisdiction under Section 301 to render de- elaratory judgment); and Board of Trustees v. Universal Enterprises, Inc., 751 F.2d 1177, 1184 (11th Cir. 1985) (court has jurisdiction under Section 301 to determine if a valid collective bargaining agreement exists.). See also, Associated Gen. Con. of A., Inc., Okl., etc. v. Laborers Int. U., 476 F.2d 1388, 1402 n. 25 (Temporary Emergency even if it involves conduct which arguably constitutes unfair labor practice); J. S. Griffith Const. v. United Bro. of Carpenters, 785 F.2d 706, 712-13 and n. 6 (9th Cir. 1986) (court distinguishes earlier First, Seventh and Ninth Circuit decisions holding jurisdiction does not exist under Section 301 in suits not alleging a breach of contract but litigating the validity of the contract itself because, in those eases, the facts were such the NLRB could have decided the issues presented); and Intern. Broth. of Elec. Wkrs., 532 v. Brink Const., 825 F.2d 207, 212 (9th Cir. 1987) (court, citing Griffith Const., supra, as support, declares it possesses jurisdiction under Section 301 to resolve a contract’s existence and validity as well as whether it has been breached unless it requires resolution of an issue within the exclusive jurisdiction of the NLRB.). cc 11 Court of Appeals 1973) (“The question of whether a collective bargaining agreement has been validly entered into in the first instance have been held to be so related to the subject of ‘suits for violation of’ labor contracts as to permit their resolution by district courts by virtue of §185 . . . . ). Because of the significant split in the circuit courts as to whether Section 301 is limited to actions complaining a valid collective bargaining agreement has been breached, Local 208 requests this court grant this petition and bring about uniformity of decision on this jurisdictional issue. II. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH DECISIONS RENDERED BY OTHER CIR- CUITS WHICH HAVE HELD THE NLRB POS- SESSES EXCLUSIVE PRIMARY JURISDICTION TO ADJUDICATE THE EXTENT AND EFFECT OF BARGAINING OBLIGATIONS IMPOSED UPON CONTRACTING PARTIES BY THE NATIONAL LA- BOR RELATIONS ACT Relying upon Section 301, the Ninth Circuit concluded federal courts possess jurisdiction to rescind collective bargaining agreements and award indemnification dam- ages and other equitable relief if it is factually demon- strated one contracting party fraudulently induced. the other contracting party to execute the contract, conduct which the Ninth Circuit conceded constituted bad faith bargaining and an unfair labor practice. See 850 F.2d at 1326. See e. g., Penntech Papers, 263 NLRB No. 33 (1982) (company committed unfair labor practice by making false and misleading statements concerning the future of its plant if it closed) and Eastern 12 This court long ago declared federal courts do not have jurisdiction to pass upon the propriety of conduct that is arguably subject to Sections 7 or 8 of the National Labor Relations Act (“NLRA”), 28 U.S.C. 55 157 and 158, and must defer to the competence and expertise of the NLRB to address and remedy such complaints. See San Diego Building Trades Council v. Garmon (“Garmon’’), 359 U.S. 236, 245 (1959) and Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 83 (1982). The NLRB possesses exclusive jurisdiction over activi- ties that threaten to interfere with national labor policy and was entrusted by Congress the task of administering labor policy in order “to avoid conflicting regulation of conduct by various official bodies” and to promote a consistent unified development of national labor policy. Garmon, supra, 359 U.S. at 242-45 and Amalgamated Association of Street, Electrical Railway & Motor Coach Employees v. Lockridge, 403 U.S. 274, 285-86 (1981). Although “Congress recognized the need for an admin- istrative agency having the necessary specialized knowl- edge and cumulative experience to resolve conflicts associated with this nation’s industrial relations,” Lumber Prod. Indus., supra, 775 F.2d at 1045, citing Garmon, supra, 359 U.S. at 242, two (2) exceptions to the genera! rule of exclusive NLRB jurisdiction have been judicia ly carved out. If the activity constitutes an unfair labor practice and also allegedly violates a valid collective bargaining agree- ment, federal courts and the NLRB exercise concurrent Market Beef Processing Corp., 269 NLRB No. 19 (1981) (employer engaged in unfair labor practice by disguising and misinforming the union concerning its relocation plans). 13 jurisdiction. Smith v. Evening News Association, 371 U.S. 195, 197 (1962). Secondly, “federal courts may decide labor law ques- tions that emerge as collateral issues in suits brought under independent federal remedies....” Laborers Health & Welfare Tr. v. Adv. Light Con. U.S. ___., 108 S.Ct. 830, 832-33 n. 4 (1988), quoting with approval, Connell Construction Co. v. Plumbers & Steamfitters, 421 U.S. 616, 626 (1975).° In Adv. Light Con., supra, this court remarked that “whether an employer's unilateral decision to discontinue contributions to a pen- sion plan constitutes a violation of the statutory duty to bargain in good faith is the kind of question that is routinely resolved by the administrative agency with expertise in labor law’, the NLRB. 108 S. Ct. at 837. Acknowledging that “situations in which district judges must occasionally resolve labor issues... represent the exception rather that the rule,” this court stated cases concerning whether and when an impasse had been reached in collective bargaining negotiations and whether an employer's decision to discontinue contributions to a pension plan constitutes an unfair labor practice are the type of issues “federal courts typically defer to the judgment of the NLRB.” [Case citation omitted.] Id. Similarly, the questions and issues raised in this case (whether Local 208 fraudulently induced Rozay’s to sign the contract; whether Rozay’s detrimentally relied upon the fraudulent misrepresentation; whether Rozay’s detrimental reliance was reasonable; and whether Rozay’s would have been statutorily and contractually obligated to pay the delinquent pension contributions but for the fraudulent misrepresentation necessitated scrutinizing the collective bargaining history and represent the kinds of questions and issues routinely brought to and resolved by the NLRB, the administrative agency who possesses the expertise in resolving bad faith bargaining disputes such as the instant one. This is why the Ninth Cireuit was unable to find any judicial precedent for the proposition an union has a legal duty to disclose to 14 In this case, the Ninth Circuit determined jurisdiction existed under Section 301 to address an issue which was not predicated upon alleged violation of a valid contract or collateral or secondary to other primary issues raised (Local 208 fraudulently inducing Rozay’s to sign the contract) and, as a result, rescission of the contract and indemnification damages were warranted. The Ninth Cireuit's conclusion the NLRB did not possess exclusive jurisdiction to address and remedy Rozay’s fraudulent inducement claim Local 208 engaged in bad faith collective bargaining directly conflicts with decisions rendered by other circuits on the subject. See Lexington Cartage v. Intern. Broth. of Teamsters, 713 F. 2d 194, 195 (6th Cir. 1983) (court does not possess jurisdic- tion under Section 301 to adjudicate the extent and effect of bargaining obligations imposed upon employers and unions by the NLRA) and Mo-Kan Teamsters Pension Fund v. Creason, 716 F.2d 772, 775 (10th Cir. 1983), cert. den., 464 U.S. 1045 (1984) (union’s lack of majority status can only be challenged in an unfair labor practice proceeding over which the NLRB has exclusive jurisdic- tion and is not a valid defense in a Section 301 action for enforcement of the contract). The misconduct allegedly engaged in by Local 208 in this case — fraudulent misrepresentation in procuring the assent of Rozay’s to the contract — is a claim that arose in common law and measured by standards of conduct and responsibility completely separate from and independent of a collective bargaining agreement. See an employer during collective bargaining material information con- cerning the employer’s obligations to a trust fund and can be held liable under Section 301 for intentionally misrepresenting material facts relevant to the employer's pension contribution obligations. See 850 F.2d at 1328-1331. 15 Anderson v. Ford Motor Co., 803 F. 2d 953, 958-59 (8th Cir. 1986), cert. den., U.S. —__, 107 S.Ct. 3242 (1987). This court has counseled only the NLRB may provide affirmative remedies for unfair labor practices to ensure that in situations like the present one, courts do not engage in conduct inconsistent with the remedial scheme of the NLRA. Kaiser Steel Corp., supra, 455 U.S. at 86. Since the Ninth Circuit’s fashioning a remedy for bad faith collective bargaining under Section 301 directly conflicts with decisions rendered by other circuits which have correctly held the NLRB possesses the necessary knowledge and expertise to exclusively adjudicate and resolve such disputes, this court should grant Local 208’s Petition for Writ of Certiorari. III. THE NINTH CIRCUIT’S DECISION CONFLICTS WITH RELATED DECISICNS RENDERED IN OTHER CIRCUTTS AND RAISES IMPORTANT QUESTIONS OF FEDERAL LABOR LAW WHICH SHOULD BE RESOLVED BY THIS COURT: IS A UNION LEGALLY OBLIGATED TO DISCLOSE TO AN EMPLOYER MATERIAL INFORMATION CONCERNING THE EMPLOYER’S OBLIGATION TO MAKE TRUST FUND CONTRIBUTIONS TO AN ERISA TRUST AND, IF SO, MAY THE EMPLOYER REASONABLY RELY ON THE UNION’S REPRE- SENTATIONS REGARDING DISCRETIONARY IN- TERNAL TRUST POLICY AS A MATTER OF LAW? The Ninth Cireuit's opinion is the first to expressly hold a union is legally obligated to disclose material information to an employer concerning its obligations to make contributions to an ERISA trust fund and if it fails 16 to do so/ecommunicates erroneous information, the em- ployer’s reliance upon such conduct can be reasonable as a matter of law and the union held liable to it for damages on a theory of negligent or intentional misrepresentation. See 850 F. 2d at 1328-32.° Prior decisions have consistently held an employer may not detrimentally rely as a matter of law on a union's misrepresentation regarding the employer’s trust fund obligations if the misrepresentation concerns a subject »Confusingly, after stating Local 208 was not contesting its inten- tional failure to disclose the trust fund’s adverse decision [to Rozay's] could constitute a fraudulent misrepresentation” and, therefore, was not reach ing] the question of whether a party has a duty to disclose material facts to another party during collective bargaining negotiations or whether a breach of such a duty will necessarily constitute actionable fraud,” Id. at 1328, the Ninth Cireuit remarked: ö The substance of the union's argument is that it is unreasonable as a matter of law for an employer to rely on a union’s represen- tations regarding its ability to influence the trust fund, because the union cannot bind a trust fund, nor does it have a legal duty to disclose to an employer any information concerning the employer's obligations to a trust fund.” Id. at 1329. \ Clearly, Local 208 stressed to the Ninth Cireuit its failure to disclose the Trust Fund’s adverse decision to Rozay's on March 8, 1983 when the 1981-1984 contract was signed did not constitute fraud because it was not legally obligated to disclose the information and Rozay’s alleged detrimental reliance upon its prior representation it would attempt to secure a waiver from the Trust Fund of Rozay's statutory and contractual obligation to pay the delinquent contribu- tions was unreasonable as a matter of law because an employer cannot reasonably rely on a union’s misrepresentation concerning the nature and scope of its obligations to the Trust Fund / diseretionary internal trust policy because the Trust Fund is a separate and distinct legal entity over which Local 208 has no express, apparent or implied control. 17 over which the trust fund is exclusively vested with the power and discretion to administer and regulate, such as Rozay’s request the Trust Fund waive its obligation to pay the delinquent contributions. See Knoll v. Phoenix Steel Corporation, 465 F.2d 1128, 1132 (3d Cir. 1972), cert. den., 409 U.S. 1126 (1973) (court declared employ- ees’ reliance on union’s promise they would receive lump sum pension payments was unreasonable because the authority to determine and make that decision rested solely with the pension fund); Martin v. Hamil, 608 F.2d 725, 729 and 730 n. 8 (7th Cir. 1979) (employer could not reasonably rely on the statements of a union business agent concerning pension eligibility when the union repre- sentative stated “he really did not know for sure... but to go ahead and pay until you hear from us”); Teamsters L. 348 H. & W. Fund v. Kohn Bev. Co., 749 F.2d 315, 319- 20 (6th Cir. 1984), cert. den., 471 U.S. 1017 (1985) (employer’s reliance on union representative’s statement certain employees would not be eligible for benefits was unreasonable and could not support an estoppel defense because the employer knew or had a means of determining the truth of the union agent’s statements and the union agent had no authority to bind or act on behalf of the trust fund and thus acted outside his authority in making the misrepresentation); Oates v. Teamsters Affiliates Pen- sion, 482 F.Supp. 481, 488 (D. D.C. 1979) (justifiable reliance does not exist where the promissor is not a trustee or representative of the trust fund but merely an agent of the union without either actual or apparent authority to make the relied upon promise); Galvez v. Local 804 Welfare Trust Fund, 543 F.Supp. 316, 317 (E.D. N.Y. 1982) (employee could not reasonably rely upon union representative’s statement he would be eligible for \ 8 pension since the union agent did not possess express, er" or apparent authority to act or speak for the trust 55 N 18 fund); Chambless v. Masters, Mates & Pilots Pension, 571 F.Supp. 1430, 1451 (S.D. N.Y. 1983) (where trust docu- ments made clear that only trustees could obligate plan, an employee’s reliance upon statement uttered by his union representative his acceptance of employment would not adversely impact on his ability to collect pension benefits was unreasonable); and Ridens v. Voluntary Sepa- ration Program, 610 F.Supp. 770, 777 (D. Minn. 1985) (employee could not reasonably rely upon his supervisor's comments concerning voluntary separation benefits be- cause the supervisor had no authority to make the state- ments and only the program’s administrator could decide if he would be granted an exception under the program). Because this case represents a sharp departure from and is inconsistent with decisions rendered in other circuits which have uniformly held an employer may not, as a matter of law, reasonably rely upon a union’s repre- sentations concerning its trust fund obligations and dis- eretionary internal trust policy, this petition should be granted and this court should decide this important question of federal labor law and harmonize the conflict- ing opinions on the subject. 19 CONCLUSION For all the foregoing reasons, Local 208 respectfully submits this case presents substantial federal questions for this court’s review and the decision below conflicts with other cireuit authority and, as a result, this Petition for Writ of Certiorari should be granted. DATED: September 22, 1988 Respectfully submitted, WOHLNER, KAPLON, PHILLIPS, VOGEL, SHELLEY & YOUNG By ROBERT D. VOGEL Attorneys for Petitioner Local Freight Drivers, Local 208, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America la APPENDIX A Case No. 84 8313 MRP (Bx) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ROZAY’S TRANSFER Plaintiff, vs. LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Defendants. FINDINGS OF FACT AND CONCLUSIONS OF LAW The above-entitled cause came on regularly for trial on January 14, 1986 before the Honorable Mariana R. Pfaelzer, United States District Judge, sitting without a jury. Stephen P. Pepe and Cliff Fonstein, of the law firm of O’Melveny & Myers, appeared as counsel for plaintiff, and Robert D. Vogel of the law firm of Wohlner, Kaplon, Phillips, Vogel, Shelley & Young appeared as counsel for defendant. The trial was conducted pursuant to the Pre- trial Conference Order, the narrative statements of wit- nesses, the testimony and documentary evidence introduced at trial, and the oral arguments of counsel. The cause having been submitted to the Court for deci- sion, the Court now makes the following Findings of Fact and Conclusions of Law. 2a FINDINGS OF FACT 1. Plaintiff Rozay’s Transfer (“Rozay’s’’) is a Califor- nia corporation engaged in the trucking industry in Southern California. (See Stipulated Fact “a” in Pretrial Conference Order (“Stipulated Fact a.“)) 2. The truck drivers and dock workers employed by Rozay’s are now and for several years have been repre- sented for purposes of collective bargaining by defendant Local Freight Drivers, Local 208, International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Help- ers of America (Local 208”) (See Stipulated Fact b.) 3. Rozay’s and Local 208 were parties to a collective bargaining agreement (“Agreement”) and an Employer- Union Pension Certification (“Certification”) which ex- pired on September 30, 1981. (See Stipulated Fact c.) 4. The Argument and Certification which expired on September 30, 1981 required Rozay’s to make contribu- tions to the Western Conference of Teamsters Pension Trust Fund (“Trust Fund”) on behalf of employees represented by Local 208. The Trust Fund is an employee pension benefit plan within the meaning of the Employee Retirement Income Security Act. (See Stipulated Fact d.) 5. Rozay’s made regular contributions to the Trust Fund during the life of the Agreement and Certification and continued to make contributions after the expiration and through April, 1982, while Local 208 and Rozay’s attempted to negotiate a renewal Agreement and Certifi- cation. (See Stipulated Fact e.) 6. On or about April 18, 1982, Local 208 presented a rough draft of a new collective bargaining agreement to Rozay's. After reviewing the draft, on May 6, 1982, 3a Rozay’s returned it unsigned to Local 208 with several corrections. (See Stipulated Fact f.) 7. Also on May 6, 1982, Rozay’s Vice President, Rich- ard Fletcher (“Fletcher’’), raised with Local 208 Busi- ness Agent, Eddie McKiernan (““McKiernan’”’), Rozay’s severe economic problems and explained that in order to stay in business, Rozay’s would need a reduction in labor costs. Rozay’s specifically proposed cessation of pension contributions, and reduced holiday, vacation, and sick leave benefits. (See Stipulated Fact g.) 8. Qn April 26, 1982, the Trust Fund wrote and in- formed Rozay’s that it could not accept pension contribu- tions unless there was a signed collective bargaining agreement in force between Rozay’s and Local 208. (Trial Exhibit No. 11.) On June 30, 1982, the Trust Fund wrote a substantially similar letter to Rozay’s. (Trial Exhibit No. 12.) 9. On June 8, 1982 Fletcher again raised the needed concessions with MeKiernan and with Local 208’s Secre- tary-Treasurer, Alex Maheras (““Maheras”). Maheras re- quested that Rozay’s make the proposal in the form of a letter. (See Stipulated Fact i.) 10. On June 11, 1982, Fletcher on behalf of Rozay’s wrote to Maheras to propose labor concessions. Specifi- cally, Fletcher proposed the following: cessation of pen- sion contributions; elimination of one week’s vacation; elimination of two personal holidays; and elimination of five days’ sick leave. This letter was sent via certified mail. (Trial Exhibit No. 16.) 11. Loeal 208 received the letter of June 11, 1982, but made no reply. (See Stipulated Fact k.) 12. On June 28, 1982, on behalf of Rozay’s, Fletcher sent a second letter to Local 208. Fletcher stated that da having received no response to its June 11, 1982 letter, Rozay’s assumed that the union had no objection to its proposed changes, and the changes would be implemented on July 6, 1982. This second letter was also sent by certified mail. (Trial Exhibit No. 17.) 13. Local 208 received Rozay’s letter of June 28, 1982, but made no reply. (See Stipulated Fact m.) 14. Rozay’s implemented the proposals outlined in its June 11, 1982 letter to Local 208 effective July 6, 1982. (See Stipulated Fact n.) 15. Several months after Rozay’s ceased making pen- sion contributions to the Trust Fund, Local 208 filed an unfair labor practice charge with the National Labor Relations Board (the “NLRB” or Board“). The charge was filed on September 20, 1982 and amended on Novem- ber 1, 1982, under Board Case No. 21-CA-21591. (Trial Exhibits Nos. 18, 19.) Local 208 also filed a grievance pursuant to the grievance and arbitration provisions of the expired Agreement. (Trial Exhibit No. 20.) The Board charge alleged that the cessation of the payment of pension contributions constituted an unfair labor prac- tice, and the grievance alleged that it was a breach of the collective bargaining agreement. 16. On January 17, 1983, William S. Rozay (“Mr. Rozay'), President of Rozay’s, met with Maurice E. Anderson ( Anderson“), International Vice President of the International Brotherhood of Teamsters, and Archie Murrietta (“Murrietta”), President of Local 208. The purpose of this meeting was to resolve the NLRB case then pending between Rozay’s and Local 208. This meet- ing took place in Anderson’s office. (See Stipulated Fact q.) At all times during his dealings with Rozay’s, Mur- rietta was acting as agent of and on behalf of Local 208. 5a 17. At the January 17, 1983 meeting, Rozay’s and Local 208 reached a settlement of the NLRB case. Among the terms agreed to were a reduction of hourly wages by $1.00 per hour and resumption of the payment of pension contributions prospectively. The pension contributions were 98¢ per hour for each employee. 18. At this January 17, 1983 meeting, Anderson agreed to ask the Trust Fund to waive retroactive pension contributions for the period of May 1982 to February 1983. He represented to Mr. Rozay that the Trust Fund had forgiven the unpaid pension contributions of other employers under similar circumstances. (See Stipulated Fact r.) 19. On January 21, 1983, Mr. Rozay sent Murrietta a letter confirming the terms of the January 17, 1983 agreement. (Trial Exhibit No. 13.) Mr. Rozay stated in his letter that under the agreement, retroactive contribu- tions would not be required. On January 26, 1983 Mur- rietta replied to Mr. Rozay’s letter, and did not disagree with or question the statement that there would be no retroactive pension contributions. (Trial Exhibit No. 14.) 20. On January 26, 1983, Murrietta wrote a letter to the Trust Fund, requesting that Rozay’s be relieved from paying pension contributions for the months of July 1982 through January 1983. He sent a copy of this letter to Mr. Rozay. (Trial Exhibit No. 1.) , 21. On February 16, 1983 the Trustees of the Trust Fund met to consider, among other agenda items, whether to forgive Rozay’s unpaid pension contributions for the months of May, 1982 through February, 1983. The Trustees voted not to forgive the payment of these contri- butions. (Trial Exhibit No. 6.) 6a 22. On or about March 4, 1983, Michael Uranga, an employee of Southwest Administrators, the entity who administers the Trust Fund in Southern California, told Murrietta at a social gathering, a Teamsters’ joint Coun- cil meeting, that the Trustees had voted not to forgive the payment of the unpaid contributions. (See Stipulated Fact y.) 23. On March 8, 1983, Local 208 and Rozay’s executed a collective bargaining agreement (Trial Exhibit No. 4), an Employer-Union Pension Certification (Trial Exhibit No. 5), and a settlement agreement (the “Side Agree- ment”) (Trial Exhibit No. 15) which resolved all pending disputes between Rozay’s and Local 208 involving the Board charge and the grievance. 24. At the time that Murrietta and Mr. Rozay signed the March 8, 1983 collective bargaining agreement, Mur- rietta knew that the Trustees had voted not to forgive Rozay’s unpaid contributions, but he did not disclose this fact to Mr. Rozay. The existence of an obligation to pay the $76,133.29 in unpaid contributions was a material fact. Murrietta did not disclose this fact to Mr. Rozay because he knew that if Mr. Rozay was told that the past contributions would not be forgiven, Mr. Rozay would not execute the collective bargaining agreement. Murrietta fraudulently induced Mr. Rozay’s execution of the collec- tive bargaining agreement. When he committed these fraudulent acts, Murrietta was acting as an agent of and on behalf of Local 208. 25. At the time that Murrietta and Mr. Rozay signed the March 8, 1983 collective bargaining agreement, the Employer-Union Pension Certification and the Side Agreement, there was no meeting of the minds between Rozay’s and Local 208 on the issue of retroactive pension contributions. The Trustees’ decision on February 16, Ta 1983 not to grant Rozay’s relief from paying the retroac- tive pension contributions changed the essential character and nature of the agreement which Rozay’s and Local 208 reached on January 17, 1983 and which agreement Mr. Rozay believed he was executing on March 8, 1983. 26. Murrietta by not disclosing the material fact that the past due pension contributions would not be forgiven deprived Rozay’s of the opportunity to renegotiate its agreement for economic relief with Local 208 or to refuse to sign the collective bargaining agreement and the Em- ployer-Union Pension Certification and thus avoid the $76,133.29 pension liability. 27. By letter dated March 24, 1983, the Trust Fund notified Murrietta and Mr. Rozay of its decision not to forgive the payment of the unpaid contributions. (Trial Exhibit No. 2.) Rozay’s first learned of the Trustees’ decision through this letter. 28. On or about June 20, 1983, the Trust Fund filed an action in this Court captioned, Southwest Administrators, Inc. v. Rozay’s Transfer, Case No. 83-4194-MRP (“South- west Administrators”) seeking recovery of the unpaid pension contributions, along with interest, liquidated damages, and attorney's fees. In that action, plaintiff Southwest Administrators, Inc., was the assignee and representative of the Trust Fund. (See Stipulated Fact ff.) 29. Rozay’s did not learn of Local 208’s fraudulent conduct until April 11, 1984 when in the course of litigat- ing the Southwest Administrators case, Rozay’s deposed Michael Uranga, a Trust official. During his deposition, Uranga admitted telling Murrietta and Anderson before the January 17, 1983 meeting that the Trust would not forgive the unpaid contributions. Uranga also disclosed 8a that the Trustees’ decision not to forgive Rozay’s unpaid contributions was made on February 16, 1983. The deposi- tion transcript was served on the parties on April 30, 1984. After waiting thirty days for Uranga to sign the deposition, Rozay’s filed, on July 6, 1984, a motion for leave to file a third party complaint against Local 208 for fraud. 30. At the trial of the Southwest Administrators case, on March 12, 1985, Murrietta for the first time admitted knowing of the Trustees’ decision before March 8, 1983. Until March 12, 1985, Murrietta denied knowing of the Trustees’ decision prior to March 8, 1983. 31. In Southwest Administrators, this Court held that Rozay’s was liable to the Trust Fund for the unpaid pension contributions and entered judgment in favor of Southwest Administrators in the amount of $122,789.03. Added to the amount of back pension contributions ($76,133.29) was $15,226.65 in liquidated damages, $25,039.09 in interest, and $6,390.00 in attorney’s fees. The interest Rozay’s owes is continuing to accrue pending appeal of Southwest Administrators. (See Stipulated Fact ii.) 32. Rozay’s spent approximately $22,010.37 in attor- ney's fees and costs defending the Southwest Admimistra- tors ease in the district court. Rozay’s has currently spent approximately $17,663.21 in attorney’s fees and costs in appealing the Southwest Administrators case. Rozay’s has currently spent approximately $9,304.89 in prosecuting the present case. CONCLUSIONS OF LAW 1. Loeal 208, through its agent Murrietta, intenti- nonally concealed the Trustees’ decision from Mr. Rozay, 9a knowing that this decision was a material fact which changed the essential nature of the collective bargaining agreement. Murrietta did not disclose this fact to Mr. Rozay because he knew that if Mr. Rozay was told that the past contributions would not be forgiven, Mr. Rozay would not execute the collective bargaining agreement. Mr. Rozay justifiably relied upon the intentional misrep- resentation of Murrietta when signing the agreement. Such conduct on the part of Local 208 constitutes fraud. See, e. g., Pence v. United States, 316 (U.S. 332, 338, 62 8. Ct. 1080, 1083, 86 L.Ed. 1510, 1515 (1942) (describing elements of fraud); Hart v. McLucas, 535 F.2d 516 (9th Cir. 1976) (accord); Greene v. Gibraltar Morts. Inv. Corp., 488 F. Supp. 177, 179 (D.C.D.C. 1980) (omission or concealment of material facts can constitute a misrepre- sentation, just as a positive, direct assertion can). 2. Local 208, through its agent Murrietta, by intention- ally concealing the Trustees’ decision from Mr. Rozay, deprived Rozay’s of the opportunity to refuse to sign the collective bargaining agreement and avoid retroactive pension contributions of $76,133.92 or of renegotiating its collective bargaining agreement with Local 208. 2. Because Mr. Rozay justifiably relied on the inten- tional misrepresentation of Murrietta, acting as agent of Local 208, when he signed the March 8, 1983 Agreement which gave rise to Rozay’s liability to the Trust, Local 208 is required to indemnify Rozay’s the full amount. of Rozay's damages arising from such fraud. Great American Ins. Co. v. Evans, 269 F. Supp. 151, 157 (N. D. Cal. 1967) (the principle behind indemnification is that everyone should be responsible for the consequences of his or her own wrong, and if others by reason of a lesser kind of liability have been compelled to pay damages, then they may recover from the real wrongdoer); Graphic Arts a 10a International Union, Local No. 280 v. NLRB, 596 F.2d 909, 910 (9th Cir. 1979) (union required to make employer whole for any financial expenditures made pursuant to a labor contract coerced in violation of the National Labor Relations Act); Moe v. Transamerica Title Ins. Co., 21 Cal. App. 3d 289, 303, 98 Cal. Rptr. 547 (1971) (a person who is required through the tort of another to act in protection of his interest by defending an action against a third party is entitled to recover as damages, compensation for the reasonably necessary attorneys’ fees incurred). Such indemnification includes: a. The amount of Rozay’s liability to the Trust Fund in the Southwest Administrators case, including interest subsequently accrued; b. Rozay’s legal fees in defending the Southwest Administrators case in the district court; e. Rozay’s legal fees in appealing the Southwest Administrators case; and - 4, The 1981-1984 collective bargaining agreement be- tween Rozay’s and Local 203 is null, void, rescinded and is without effect because, as a result of Local 208’s fraud, there never was a meeting of the minds on the essential, material and critical issue of retroactive pension contribu- tions. Boeing Airplane Co. v. Aeronautical Industrial Dist. Lodge, 188 F.2d 356, 357 (9th Cir.) cert. denied, 342 U.S. 821, 72 S. Ct. 39, 96 L.Ed. 621 (1951) (strike by union is material breach of collective bargaining agreement justi- fying employer’s rescission of the agreement). 5. The Court denies Rozay’s request for attorneys’ fees in the present action. lla 6. The Court denies Rozay’s request for punitive dam- ages in the present action. DATED: June 23, 1986 Mariana R. Pfaeizer United States District Judge Ib APPENDIX B No. 86-6544 D.C. No. CV-84-8313-MRP FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Rozay’s TRANSFER, Plaintiff-Appellee, v. LOCAL FREIGHT DRIVERS, LOCAL 208, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Defendant-Appellant. OPINION Appeal from the United States District Court for the Central District of California Mariana R. Pfaelzer, District Judge, Presiding Argued and Submitted January 5, 1988 — Pasadena, California Filed June 24, 1988 Before: J. Clifford Wallace, Thomas Tang and William A. Norris, Circuit Judges. Opinion by Judge Wallace 2b SUMMARY LABOR Appeal from judgment. The court affirmed holding that an employer would not have been liable for retroactive pension fund contributions “but for” a union’s fraud. In Southwest Administrators, the district court found that appellee Rozay’s Transfer had been fraudulently induced by appellant union president Murrietta into sign- ing a collective bargaining agreement. The court also found that there had been no meeting of the minds on a retroactive pension fund contributions issue. Nonetheless, the district court concluded that the union’s oral misrep- resentation was not a defense to the trust fund’s right to collect the contributions required by the express terms of the agreement. Consequently, the district court entered judgment for Southwest Administrators. This court af- firmed and concluded that Rozay’s was still obligated to make the contributions to the pension trust fund required by the express terms of the agreement. At the same time, Rozay’s initiated a separate action against the union under section 301 of the Labor Management Relations Act for fraudulent inducement. The district court con- cluded that the union was guilty of fraudulent misrepre- sentation in procuring the apparent assent of Rozay’s to the March 8 agreement and entered judgment in favor of Rozay’s. In fashioning a make whole remedy, the district court rescinded the March 8 agreement, awarded Rozay’s indemnification, and awarded Rozay’s indemnification from the union for attorneys’ fees and costs. [1] Evidence supports the district court’s factual find- ings of fraud. [2] Given the evidence, it was not clear error for the district court to infer that Rozay’s would not have signed the existing agreement knowing that it would 3b be bound to make over $76,000 in retroactive pension fund contributions and that Murrietta concealed the trust fund’s decision not to forgive the delinquent contribu- tions because he realized that Rozay’s would not sign the contract if he knew of the decision. [3] When Rozay’s finally learned of Murrietta’s fraud, it promptly inter- posed a contractual defense of fraudulent misrepresenta- tion. The facts belie the union’s contention that Rozay’s was satisfied with the agreement even though it obligated Rozay’s to make retroactive pension fund contributions. [4] Rozay’s bases its claim for relief against the union on the union’s intentional failure to apprise it of the exis- tence of a material fact: the trust fund’s adverse decision. [5] Rozay’s amicus persuasively argues that because pension plans are a mandatory subject of bargaining and the employer must negotiate in good faith only through the union’s chosen representative, it is untenable to hold that the union cannot be held liable for intentional mis- representations regarding material facts relating to the employer’s pension obligations. [6] The union has cited no authority or sound legal principle explaining why rules pertaining to fraudulent inducement should not apply to the formation of labor contracts. [7] In view of the union’s inaction, the failure of the parties formally to execute the tentative November 1981 agreement, and the clearly expressed intent of Rozay’s to modify this agree- ment in light of changed circumstances, this court fails to see how a binding agreement came into effect as of November 1981. [8] This court rejects Rozay’s argument that just because an employer may continue contributing to a pension trust fund following the expiration of a collective bargaining agreement it does not mean that a trust fund has the right to sue to collect such contribu- tions during this period. [9] Upon expiration of a collec- tive bargaining agreement, an employer has a duty to 4b continue the status quo until the parties bargain to impasse or reach a new agreement. By unilaterally chang- ing the status quo before that time, the employer commits an unfair labor practice. This obligation to maintain the status quo under the expired labor agreement applies with equal force to the obligation to continue contributing to a pension trust fund. [10] That section 8(a) (5) creates an enforceable obligation on the part of an employer to continue pension fund contributions pending renegoti- ation of an expired collective bargaining agreement belies the Rozay’s claim that an employer is permitted, but cannot be required by the trust fund, to make such contributions during this hiatus. [11] Nonetheless, this court remains unpersuaded by the union’s argument that notwithstanding Murrietta's alleged misrepresentation, Rozay’s would still have been legally obligated to make the pension fund contributions for the period in question. The employer’s obligation to maintain the status quo is merely presumptive in the sense that it ean be discharged through the bargaining process. The parties could always have extinguished this obligation. This court sees no reason why this could not be done retroactively. [12] Union officials clearly evinced by their words and actions their intent to free Rozay’s from the burden of making retroactive pension fund contributions for the period in question. Murrietta’s fraud deprived Rozay’s of the op- portunity to negotiate away any continuing legal obliga- tion to make the retroactive payments. [13] Section 301 allows courts to fashion remedies and in doing so, the range of judicial inventiveness under section 301 will be determined by the nature of the problem. [14] Hence, there is no sound reason why section 301 should bar the district court from simultaneously awarding a remedy of rescission and indemnification for the union’s fraudulent inducement in order to make the employer whole. [15] 5b The union’s suggestion that Rozay’s was tardy in waiting over a year before formally notifying the union of the collection action initiated by the trust fund is contrary to the record. [16] There is no evidence in the record that Rozay’s was remiss or dilatory in conducting discovery that would otherwise have led Rozay’s to uncover Mur- rietta’s fraudulent conduct. [17] The award of attorneys’ fees and costs in this case merely compensates Rozay’s for one aspect of its out-of-pocket expenses attributable to the union’s fraud. Case law supports awarding attorneys’ fees and costs where such expenses were incurred as a result of the defendant’s own misconduct. [18] Thus, the district court did not abuse its discretion by awarding Rozay’s the attorneys’ fees and costs that it incurred in defending the Southwest Administrators lawsuit. COUNSEL Robert D. Vogel, Wohlner, Kaplon, Phillips, Vogel, Shel- ley & Young, Los Angeles, California, for the defendant- appellant. Stephen P. Pepe, O’Melveny & Myers, Los Angeles, Cali- fornia, for the plaintiff-appellee. OPINION WALLACE, Circuit Judge: Rozay’s Transfer, an employer, brought this action against Teamsters Local 208 (union) for fraudulently inducing Rozay’s Transfer to execute a collective bargain- ing agreement. Following a bench trial, the district court found for Rozay’s Transfer-and granted its prayer for rescission of the collective bargaining agreement (agree- ment) and for indemnification for retroactive pension 6b fund contributions under the agreement for which Rozay’s Transfer was adjudged liable in a previous collec- tion action brought by the pension trust fund. On appeal, the union contests not only the merits of the district court’s finding of fraud, but also the district court’s jurisdiction over this action and its authority simultane- ously to award rescission and indemnification as a rem- edy. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm. I The circumstances giving rise to this lawsuit were previously detailed in our decision in Southwest Adminis- trators, Inc. v. Rozay’s Transfer, Inc., 791 F.2d 769 (9th Cir. 1986) (Southwest Administrators), cert. denied, 107 S. Ct. 951 (1987), an action brought by the trust fund to collect retroactive pension fund contributions that Rozay’s Transfer was obligated to make under its collec- tive bargaining agreement with the union. Prior to September 30, 1981, Rozay’s Transfer, an employer in the trucking industry, and Teamsters Local 208 were parties to a collective bargaining agreement. Pursuant to the agreement, Rozay’s Transfer made monthly contributions on behalf of its employees to the Western Conference of Teamsters Pension Fund. This trust fund is a multiemployer pension plan as defined by subsections 3(2) and (37) (A) of the Employee Retirement Income Secur- ity Act of 1974, 29 U.S.C. § 1002 (2), (37) (A). After the agreement had expired, and while negoti- ations were continuing over the terms of a successor agreement, Rozay’s Transfer continued to make con- tributions to the trust fund pursuant to the terms of the 1978-81 bargaining agreement. In July, 1982, Tb when no successor agreement had yet been adopted, Rozay’s Transfer informed the union that it had ceased making contributions to the pension fund. In September, 1982, Local 208 filed an unfair labor practice claim with the National Labor Relations Board (NLRB) charging Rozay’s Transfer under 29 U.S.C. § 158 (a) (5) with refusal to execute a collec- tive bargaining agreement that had allegedly been negotiated. The NLRB charge was subsequently amended to include the charge that Rozay’s Transfer had unilaterally altered benefits and conditions of employment, including cessation of payments to the pension fund. Local 208 also filed a grievance alleg- ing the cessation of contributions to the trust fund violated the collective bargaining agreement. While the NLRB charge and the grievance were pending, William S. Rozay, the owner of Rozay’s Transfer, and Archie Murrietta, president of Local 208, eventually reached a settlement. Under this settlement, employee wages would be reduced by $1.00 and Rozay’s Transfer would resume payments to the trust fund on behalf of each employee at the approximate rate of $.99 per hour. In light of the company’s precarious financial posi- tion, Rozay expressed serious concerns about being required to make retroactive pension fund contribu- tions for the period between May, 1982 and Febru- ary, 1983. Murrietta, and Maurice E. Anderson, the director of the Western Conference of Teamsters, agreed to contact the trust fund and request a waiver of the obligation to make contributions for this pe- riod. Murrietta and Anderson assured Rozay that the delinquent payments would be forgiven, noting that the trust fund had waived the unpaid pension contri- 8b butions of other employees under similar circumstances. Murrietta wrote to the trust fund on behalf of Rozay’s Transfer requesting relief from payment of contributions for this interim period. However, on February 16, 1983, the trustees of the Western Con- ference of Teamsters Pension Fund, voted to deny the request to forgive the unpaid contributions. When the new collective bargaining agreement was executed on March 8, 1983, Murrietta had been in- formed of the trust fund’s decision to deny a waiver of the delinquent contributions. He did not advise Rozay of this action. Rozay, assuming that unpaid contributions would be forgiven, signed the agree- ment, which covered the period from September 1. 1981 to September 30, 1984. The parties also exe- cuted a settlement agreement resolving the NLRB unfair practice complaint and the breach of agree- ment grievance. Local 208 thereafter withdrew the NLRB unfair labor practice charge and the grievance. Subsequently, Southwest Administrators, Inc., the assignee of the Western Conference of Teamsters Pension Fund, filed this action against Rozay's Transfer under sections 502(a) and 515 of the Em- ployee Retirement Income Security Act (ERISA), 29 U.S.C. $§ 1132 (a), 1145, to collect delinquent contri- butions for the period between May, 1982 and Febru- ary, 1983. Rozay’s Transfer contended that its obligation to make pension fund contributions dated only from May 8, 1983, when the collective bargaining agree- ment was signed. Rozay’s Transfer also filed a coun- 9b terclaim seeking the return of $57,235.28 in contributions made to the trust between October, 1981 and April, 1982, the period between expiration of the old bargaining agreement and the date Rozay’s Transfer ceased making payments. 791 F. ad at 771-72 (footnote omitted) Following a bench trial, the district court in Southwest Administrators found that Rozay’s Transfer had been “fraudulently induced” by Murrietta into signing the agreement and that there had been no “meeting of the minds” on the retroactive pension fund contributions. Id. at 772. Nonetheless, the district court concluded that the union’s oral misrepresentation was not a defense to the trust fund’s right to collect the contributions required by the express terms of the agreement. Jd. Consequently, the district court entered judgment for Southwest Adminis- trators for $76,133.29 in retroactive pension fund contri- butions, $15,226.25 in liquidated damages, $25,039.09 in interest, and $6,390.00 in attorneys’ fees. Id. On appeal, we affirmed. Relying on Southern California Retail Clerks Union and Food Employers Joint Pension Trust Fund v. Bjorklund, 278 F.2d 1262 (9th Cir. 1984), we held that while a union’s misrepresentation that amounted to fraud in the execution could constitute a defense to a trust fund’s subsequent collection action, a misrepresentation that amounted only to fraud in the inducement could not. Id. at 774. Concluding that the misrepresentation by the union went only to induce Rozay's Transfer to enter into the agreement, we held that the agreement was not void“, but merely voidable“ as against the trust fund. Id. at 775. Hence, we concluded that, regardless of the union’s fraudulent inducement, Rozay’s Transfer was still obligated to make the contribu- 10b tions to the pension trust fund required by the express terms of the agreement. Id. Subsequent to the entry of judgment by the district court in the collection action brought by the trust fund, but prior to our decision in Southwest Administrators, Rozay’s Transfer initiated a separate action against the union under section 301 of the Labor Management Rela- tions Act (LMRA), 29 U.S.C. 5 185 (a), for fraudulent inducement. After a bench trial, the district court con- cluded that the union-was guilty of fraudulent misrepre- sentation in procuring the apparent assent of Rozay’s Transfer to the March 8, 1983, agreement, and entered judgment in favor of Rozay’s Transfer. In fashioning a make whole” remedy, the district court (1) rescinded the March 8, 1983, agreement, (2) awarded Rozay’s Transfer indemnification from the union for contributions owed to the trust fund as a result of the union’s fraudu- lent misrepresentation, and (3) awarded Rozay’s Trans- fer indemnification from the union for attorneys’ fees and costs incurred by Rozay’s Transfer in defending the Southwest Administrators litigation both at trial and on appeal. The union timely appealed. On appeal, the union challenges virtually all the factual findings and legal conclusions underlying the district court's determination that the union is liable for fraudu- lent misrepresentation. Regarding the remedy awarded, the union challenges the district court’s award of rescis- sion and indemnification for contributions owed to the trust fund on both statutory and equitable grounds, and contests the propriety of awarding indemnification for the attorneys’ fees and costs that Rozay’s Transfer incurred in defending the Southwest Administrators lawsuit. We granted leave to the Southern California District Council of Laborers and International Union of Operating Engi- neers, Local Union No. 12, AFL-CIO (union’s amicus) to 11b file an amicus brief on behalf of the union and to the Merchants and Manufacturers Association and the Cali- fornia Trucking Association (Rozay's Transfer's amieus) to file an amicus brief on behalf of Rozay’s Transfer. In its amicus brief, the union’s amicus objects to the district court’s jurisdiction to hear this case. II Rozay's Transfer brought its action pursuant to section 301 of the LMRA which provides for district court juris- diction over suits involving collective bargaining agree- ments. The union’s amicus, however, contends that because the union’s conduct in this case was arguably an unfair labor practice, the NLRB had exclusive primary jurisdiction over the claims of Rozay’s Transfer. The union’s amicus correctly interprets San Diego Building Trades Council v. Garmon, 359 U.S. 236 245 (1959), as conferring exclusive primary jurisdiction on the NLRB over cases involving conduct that is arguably an unfair labor practice under section 8 of the National Labor Relations Act (NLRA), 29 U.S.C. § 158. Because the union’s nondisclosure is arguably an unfair labor practice, insofar as it constituted a failure to bargain in good faith, the amicus reasons that the district court was deprived of jurisdiction by the Garmon preemption doctrine. Although no one disputes that the union’s conduct was arguably an unfair labor practice, the argument of amicus is incorrect as a matter of law. LMRA § 301 carves out a broad exception to the NLRB’s primary jurisdiction for claims arising out of collective bargaining agreements, whether or not such claims would also be an unfair labor practice under section 8 of the NLRA. In cases involving conduct that is both an unfair labor practice and a 12b violation of a collective bargaining agreement, the NLRB and the district courts have concurrent jurisdiction. See William E. Arnold Co. v. Carpenters District Council of Jacksonville, 417 U.S. 12, 15-16 (1974). Section 301, moreover applies not only to suits for breach of a collec- tive bargaining agreement once it is duly formed, but also to suits impugning the existence and validity of a labor agreement, International Brotherhood of Electrical Work- ers, Local 532 v. Brink Construction Co., 825 F.2d 207, 212 (9th Cir. 1987); John S. Griffith Construction Co. v. United Brotherhood of Carpenters and Joiners, 785 F.2d 706, 712 (9th Cir. 1986) (in suit under LMRA § 301, district court has jurisdiction to determine the existence of a labor contract), including those alleging improper conduct or mistake during the formation of the agreement. See, e. g., Operating Engineers Pension Trust v. Gilliam, 737 F.2d 1501, 1503-05 (9th Cir. 1984) (fraud); H. Prang Trucking Co. v. Local Union No. 469, 613 F.2d 1235, 1238-39 (3d Cir. 1980) (mutual mistake of fact). Thus, we hold that the district court had jurisdiction under LMRA §301 to entertain this action alleging fraudulent inducement in the formation of the agreement. III Unlike its amicus, the union does not dispute the district court’s jurisdiction under section 301. Rather, the union contests the district court’s legal determination that Rozay’s Transfer was fraudulently induced by Mur- rietta’s oral misrepresentation into signing the agree- ment. In addition, the union maintains that even if the district court’s finding of fraud were correct, the relief that it awarded was improper. We now address the liability issues, dealing first with the challenge to factual findings and then to the conclusions of law. 13b A. To establish a claim of fraudulent misrepresentation, Rozay’s Transfer must prove that the union knowingly made a false representation concerning a material fact with the specific intent to deceive Rozay’s Transfer and that Rozay’s Transfer detrimentally relied upon the false representation, See Pence v. United States, 316 U.S. 332, 338 (1942); Hart v. McLucas, 535 F.2d 516, 519 (9th Cir. 1976). On the merits, the union challenges the district court's findings on each of these elements of fraudulent concealment, contending that the district court (1) erred in finding that the union committed a fraudulent misrep- resentation with the specific intent to deceive Rozay’s Transfer into signing the agreement, (2) erred in con- cluding that the alleged misrepresentation concerned a material fact, (3) erred in finding that Rozay’s Transfer had detrimentally relied upon the fraudulent misrepre- sentation, (4) erred as a matter of law in concluding that Rozay's Transfer’s reliance on Murrietta’s representa- tions was reasonable, and (5) erred as a matter of law in concluding that Rozay’s Transfer would not have been contractually obligated to pay the delinquent pension contributions even had it not signed the agreement. We review the district court’s findings of fact, whether based on oral or documentary evidence, under the clearly erroneous standard, Fed. R. Civ. P. 52(a); Cooling Sys- tems and Flexibles, Inc. v. Stuart Radiator, Inc., 777 F.2d 485, 487 (9th Cir. 1985), while we review its conclusions of law de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en bane) (McConney), cert. denied, 469 U.S. 824 (1984). Moreover, we will not disturb the district court’s interpretation of a contract that looks to extrinsic evidence of what the parties said and did unless it is 14b clearly erroneous. Miller v. Safeco Title Insurance Co., 758 F.2d 364, 367 (9th Cir. 1985). The district court’s findings that Murrietta had the specific intent to induce Rozay’s Transfer into signing the agreement and that Rozay’s Transfer detrimentally relied on his misrepresentation are findings of historical fact that are reviewed for clear error. See Fed. R. Civ. P. 52(a); MeConney, 728 F.2d at 1200. Particular deference is paid to the district court’s credibility findings. Ander- son v. City of Bessemer City, 470 U.S. 564, 579-80 (1985). B. [1] Notwithstanding the union’s protestations to the contrary, there was ample evidence to support the district court’s factual findings essential to its determination of fraud. The district court obviously found the testimony presented by Rozay’s Transfer more credible than Mur- rietta’s, and with good reason. There was ample testimony by the executives of Rozay’s Transfer, and corroborating letters from Rozay’s Transfer to the union, to show that the whole point of the settlement agreement was to afford Rozay’s Transfer economic relief and that absent a waiver of the $76,133.29 in unpaid retroactive pension fund contributions, there would be no significant economic relief. Correspondence between Rozay’s Transfer and the union reveals that the Rozay’s Transfer trucking business had fallen on hard times, that it was operating in the red, and that to bring down costs to the point where it could begin operating profitably again, it had to decrease its employees’ total compensation package. During its rene- gotiation of the agreement that expired on September 10, 1981, Rozay’s Transfer consistently maintained that it could no longer afford to provide its employees with the same package of wages and benefits. Indeed, while the disputed agreement of March 8, 1983, provided that 15b Rozay's Transfer would resume pension fund contribu- tions in the future at the approximate rate of $0.99 per hour, the side agreement offset the cost of such contribu- tions by across the board wage reductions of $1.00 per hour and a waiver of five days’ sick leave and two paid holidays. More importantly, however, the trial evidence is en- tirely consistent with the district court’s finding that Rozay’s Transfer would not have signed the agreement if Rozay's Transfer had been aware that the agreement required it to pay retroactive pension fund contributions for the period between May 1982 and February 1983. The parties stipulated that on January 17, 1983, William Rozay (Rozay), President of Rozay’s Transfer, met with Anderson and Murrietta to resolve a pending labor dis- pute between Rozay’s Transfer and the union relating to the unilateral cessation of pension fund contributions by Rozay's Transfer for the period from May 1982 through February 1983. At this meeting, Anderson represented to Rozay that the trust fund had in the past forgiven other employers’ unpaid pension fund contributions. Anderson told Rozay that he would see to it that the trust fund similarly forgive delinquent contributions of Rozay’s Transfer for the period in question. During this same meeting, Murrietta told Rozay that he would write a letter to the trust fund on behalf of Rozay’s Transfer requesting that the trust fund forgive the delinquent payments. | Sometime after this meeting, Rozay called Anderson and was assured that Anderson was doing “all that was necessary” to relieve Rozay’s Transfer of any pension fund obligations for the period in question. On Janu- ary 21, 1983, Rozay wrote a letter to Murrietta in which Rozay confirmed his understanding that In]o pension contributions will be required for the period April 1, 1982 16b through January, 1983.” On January 26, 1983, Murrietta replied to Rozay’s letter and also wrote to the trust fund requesting that it forgive the unpaid pension fund contri- butions of Rozay’s Transfer. [2] Subsequently, around March 4, 1983, Michael Uranga, an employee of the trust fund’s administrators, informed Murrietta at a social function that the trust fund trustees had voted against forgiving the unpaid contributions of Rozay’s Transfer. When Murrietta met again with Rozay on March 8, 1983, for the purpose of executing a new agreement between Rozay’s Transfer and the union, Murrietta did not tell Rozay that the trust fund had already rendered an adverse decision on his request to forgive the unpaid contributions. Given this evidence, it was not clear error for the district court to infer that Rozay would not have signed the existing agreement knowing that it would be bound to make over $76,000 in retroactive pension fund contributions and that Murrietta concealed the trust fund’s decision not to forgive the delinquent contributions because he realized that Rozay would not sign the contract if he knew of the decision. Hence, the district court’s findings on specific intent and materiality are not clearly erroneous. The union contends that the failure of Rozay’s Transfer to seek to reopen negotiations with Murrietta or to re- seind, reform, or amend the agreement after receiving the trust fund’s letter dated March 24, 1983, denying his request to forgive delinquent contributions, proves that Rozay did not in fact detrimentally rely on Murrietta's misreprescntation, but, rather, indicates that Rozay's Transfer was satisfied with the bargain. It was not until the deposition of Uranga on April 30, 1984, however, when the contract had nearly expired, that Rozay’s Transfer 17b first learned of Murrietta’s fraud, and it was not until March 12, 1985, during the Southwest Administrators trial and after the contract had expired, that Murrietta finally confessed to his concealment. 5 [3] Moreover, the union's argument ignores the fact that during the dispute between Rozay’s Transfer and the trust fund, Rozay's Transfer had initially maintained that Rozay and Murrietta had orally modified the provisions of the March 8, 1983, agreement relating to the retroactive contributions for the period in question. When Rozay’s Transfer finally learned of Murrietta’s fraud, it promptly interposed a contractual defense of fraudulent misrepre- sentation. These facts belie the union’s contention that Rozay's Transfer was satisfied with the agreement even though it obligated Rozay’s Transfer to make retroactive pension fund contributions. Rozay’s Transfer never acqui- esced to an agreement that required such payments. In view of this evidence, the district court could have prop- erly concluded that Rozay’s Transfer had in fact believed that Rozay and Murrietta had orally modified the express terms of the March 8, 1983, agreement, that the union would be able to use its influence to procure forgiveness of delinquent contributions, and that there was no basis for attacking its failure to do so until Rozay’s Transfer learned of the fraud years later. It was therefore not clearly erroneous for the district court to find that Rozay had in fact relied detrimentally on Murrietta’s misrepre- sentation despite the apparent inaction of Rozay’s Transfer. C. In addition to attacking the district court’s factual findings, the union also challenges its legal conclusions relating to the ingredients of fraudulent misrepresenta- 18b tion. In this appeal, the union does not contest that Murrietta’s intentional failure to disclose the trust fund’s adverse decision could constitute a fraudulent misrepre- sentation, and, therefore, we do not reach the question of whether a party has a duty to disclose material facts to another party during collective bargaining negotiations or whether a breach of such a duty will necessarily consti- tute actionable fraud. * The union first contends that Rozay’s reliance on Mur- rietta’s misrepresentation was unreasonable as a matter of law. Obviously, as a question of law, we review this issue de novo. See McConney, 728 F.2d at 1201. Because the trust fund was not forbidden by law from forgiving delinquent contributions, we do not believe that an em- ployer can never reasonably rely on a union’s representa- tions that it can influence favorable discretionary acts by the pension administrators. Because there was a common- ality of interest between the union and the trust fund to further the welfare of the employees, it was not unreason- able as a matter of law for Rozay’s Transfer to believe that the union could favorably influence the trust fund. [4]The substance of the union’s argument is that it is unreasonable as a matter of law for an employer to rely on a union’s representations regarding its ability to influence a trust fund, because a union cannot bind a trust fund, nor does it have a legal duty to disclose to an employer any information concerning the employer’s obligations to a trust fund. The cases that it cites for this broad proposition, however, do not address the question presented here — whether an employer may sue a union for its intentional misrepresentation of an existing mate- rial fact. Chamberlin v. Bakery & Confectionery Union & 19b Industry International Pension Fund, 99 L.R.R.M. 3176, 3177-80 (N.D. Cal. 1977), for example, involved a suit by a retired employee seeking to estop a trust fund from denying him benefits based upon a union representative’s erroneous representation that he was eligible for such benefits. Because the trust had not made any misrepre- sentations, the union representative lacked apparent au- thority to bind the fund, and the terms of the collective bargaining agreement rendered the employee ineligible for benefits, the district court determined that the em- ployee had not reasonably relied on a representation of the defendant, and denied relief. In the present case, in contrast, Rozay’s Transfer bases its claim for relief against the union on the union’s intentional failure to apprise it of the existence of a material fact: the trust fund’s adverse decision. Chamberlin, which involves a suit against a trust fund based upon misrepresentations of a union representative, is thus inapplicable to the question of Rozay’s reasonable reliance in this case. See also Pension Trust v. Moine Brothers Excavators, 124 L.R.R.M. 2031 (C.D, Cal. 1986) (trust fund not bound by union representative’s misrepresentations). In Lucky Construction Co. v. Operating Engineers Local 12, 4 E. B. C. 2521 (S.D. Cal. 1983), the district court held that an employer could not recover benefits paid to a trust fund from a union based upon a union agent’s alleged verbal representation regarding the employer's obliga- tions to the trust fund. The court determined that Lucky’s reliance on the union’s representation was unreasonable as a matter of law because it was charged with knowledge of its legal and contractual obligations set forth in the Master Labor Agreement and the trust agreements to which it was bound. Because the union had no power to modify these agreements, and because the union owed no duty to explain to Lucky its legal obligations under the 20b agreements, the union could not be liable for its negligent misrepresentations concerning Lucky’s legal obligations under the agreements. Id. at 2523. Lucky stands for the familiar proposition that an em- ployer cannot reasonably rely on a union’s erroneous representation regarding the scope of the legal obliga- tions to a distinct entity of which the employer is presum- ably aware. This rule is inapplicable here. In the present case, Rozay’s Transfer alleges that the union intention- ally misrepresented a material fact by failing to disclose that its obligation to the trust fund would not be forgiven. Rozay’s Transfer did not miscomprehend its legal obliga- tions to the fund, rather, it misunderstood the state of facts, known to the union, existing at the time it entered into a separate agreement with the union. Lucky does not control this issue before us. Similarly, in Operating Engineers Pension Trust v. Cecil Backhoe Service, Inc., 795 F.2d 1501, 1507-08 (9th Cir. 1986), we held that a union owed an employer no duty to disclose that he was legally bound by a short form collective bargaining agreement that incorporated the terms of a master labor agreement requiring the employer to make contributions to an employee pension fund. Cecil Backhoe, like Lucky, however, is clearly distinguishable from the instant case. The union in that case had not led the employer to believe that its legal obligations would be anything other than those set forth in the written agree- ment, nor had the union intentionally concealed a mate- rial fact. Id. at 1508. Here, by contrast, Rozay’s Transfer was affirmatively led to believe that the union would be able to exert its influence to see to it that its delinquent contributions were forgiven. In the present case, moreo- ver, the information that the union failed to disclose did not pertain to legal consequences, which the employer is 21b presumed to understand. See id. at 1508 (the union committed no “wrong” by failing to disclose that the agreements applied to Cecil Backhoe’s employees). Rather, the information pertained to a material fact, namely, that the trust fund had already refused to exer- cise its discretion to forgive the delinquent payments. Here, we are bound by the district court’s factual finding that at the time the parties signed the March 8, 1983, agreement, “there was no meeting of the minds between Rozay’s and Local 208 on the issue of retroactive pension contributions.” Further, we are bound by the district court’s determination that “[t]he Trustees’ deci- sion on February 16, 1983, not to grant Rozay’s relief from paying the retroactive pension contributions changed the essential character and nature of the agree- ment which Rozay’s and Local 208 reached on January 17, 1983, and which agreement Mr. Rozay believed he was executing on March 8, 1983.” Reviewed in the light of all the evidence that Rozay signed the agreement only be- cause he believed that he was securing economic relief for his company, mainly through avoidance of the retroactive pension fund contributions for the period in question, we cannot say that these findings by the district court were clearly erroneous. Consequently, there having been no “meeting of the minds” between the parties on the issue of retroactive pension fund contributions, regardless of the apparent plain language of the agreement, it was not unreasonable as a matter of law for Rozay to rely on Murrietta’s fraudulent misrepresentation prior to signing the March 8, 1983, agreement. [5] While the union has cited no authority for the proposition that a union cannot be held liable to an employer for intentionally misrepresenting facts relevant to the employer’s pension fund obligations during the 22b collective bargaining process, neither Rozay's Transfer nor its amicus have alerted us to any direct authority recognizing such liability on the part of the union. Rozay's Transfer’s amicus, however, argues that because pension plans are a mandatory subject to bargaining and the employer must negotiate in good faith only through the union’s chosen representative, it is untenable to hold that the union cannot be held liable for intentional mis- representations regarding material facts relating to the employer’s pension obligations. We find this argument persuasive. : First, as Rozay's Transfer’s amicus correctly observes, the trustees are not collective bargaining agents and hence cannot negotiate pension fund provisions. See NLRB v. Amar Coal Co., 453 U.S. 322, 334 (1981). Second, as the Seventh Cireuit pointed out in Battle v. Clark Equipment Co., 579 F.2d 1338, 1349 (7th Cir. 1978), overruled on other grounds, Rupe v. Spector Freight Sys- tems, Inc., 679 F.2d 685, 690 n.3 (7th Cir. 1982), an “employer cannot be held liable for... retroactive mone- tary relief when it relies in good faith on union actions or representations that are not obviously outside the scope of its authority.” In that case, the employer had relied on the union’s representations that its members had ratified certain amendments pursuant to properly conducted in- ternal union procedures. Jd. Although the present case involves the union’s representations concerning its au- thority to induce the trust fund to forgive delinquent pension contributions, rather than internal union proce- dures, we do not believe that the union’s ability to influ- ence a discretionary act of the trust fund was “obviously outside the scope of its authority.” [6] Finally, the union has cited no authority or sound legal principle, nor can we discern any, explaining why 23b rules pertaining to fraudulent inducement should not apply to the formation of labor contracts. Hence, we do not find it unreasonable as a matter of law for Rozay’s Transfer to have relied on the union’s assurances that it could convince the trust fund to act favorably on the petition of Rozay’s Transfer. 2. Next, the union argues that because Rozay’s Transfer would have been obligated to make the pension eontribu- tions even had it not signed the agreement, Murrietta's misrepresentation could not have been “material” to Rozay’s decision to sign the agreement. We interpret this materiality contention as a “causation” argument. The union is really arguing that if Rozay’s Transfer were legally obligated to make the retroactive contributions whether or not Rozay signed the March 8, 1983, agree- ment, then Murrietta’s misrepresentation could not have been the cause-in-fact of the injury to Rozay’s Transfer. Causation is ordinarily a question of fact that is reviewed for elear error. See Armstrong v. United States, 756 F.2d 1407, 1409 (9th Cir. 1985.) But whether or not there was a prior legal obligation to make such payments absent a valid, signed collective bargaining agreement is a mixed question of fact and law that requires us to assess whether legal duties arise under a given set of facts. Accordingly, we review this issue de novo, See McConney, 728 F.2d at 1201-02. [7] The union marshals two main arguments in sup- port of its contention that Rozay’s Transfer would have been obligated to make the payments even had it refused to sign the March 8, 1983, agreement. Initially, the union argues that as of November 1981, “[t]he undisputed material facts in this case disclose” that the parties had es Wu 24b reached a mutual agreement on a new contract and that the refusal by Rozay’s Transfer to sign it did not prevent the agreement from going into effect. We find no merit in this claim. The record discloses neither a stipulation by Rozay’s Transfer, nor a finding by the district court that a binding agreement was reached in November of 1981. On the contrary, the record reveals that while the parties had reached a tentative agreement on the terms of a successor agreement, which the union was to incorporate into a written draft, Rozay’s Transfer did not receive a draft until April 18, 1982. On May 6, 1982, Rozay’s Transfer returned to the union the draft unsigned to make certain corrections, but the union never responded. Because Rozay’s Transfer had experienced severe financial problems during the interim, on this same day it informed the union that a reduction in labor costs, including termi- nation of pension benefits, was required if Rozay’s Trans- fer were to remain in business. Indeed, on both June 11, 1982, and June 28, 1982, Rozay’s Transfer sent certified letters to the union proposing, among other things, cessa- tion of pension contributions. On neither occasion did the union respond. In view of the union’s inaction, the failure of the parties formally to execute the tentative November 1981 agreement, and the clearly expressed intent of Rozay's Transfer to modify this agreement in light of changed circumstances, we fail to see how a binding agreement came into effect as of November. 1981. In presenting its first causation argument, the union reads our prior decision in Southwest Administrators as holding that Rozay’s Transfer was still contractually obligated to pay the delinquent contributions even if the March 8, 1983, labor contract were rescinded for fraud. However, while we recognized in Southwest Administra- tors that Murrietta’s fraud did not render the agreement void as to the obligations of Rozay’s Transfer to the trust 25b fund, 791 F.2d at 774-75, this holding has no bearing on the question of causation in this action. Just because Rozay’s Transfer is contractually obligated to the trust fund does not answer the question whether the union caused Rozay’s Transfer to assume this obligation. We did not suggest in Southwest Administrators that Rozay’s Transfer could not seek redress against the union in a separate action. Indeed, we suggested that the proper remedy for Rozay’s Transfer might lie in an action for indemnification against the union. See id. at 777 n.4. [8] In the second branch of its “causation” agreement, the union maintains that even if the parties had not negotiated any new labor agreement after the old one had expired in September 1981, Rozay’s Transfer would none- theless have remained statutorily obligated under the NLRA to continue paying into the pension fund through- out the period in question. The union relies on NLRB v. Carilli, 648 F.2d 1206, 1213-14 (9th Cir. 1981), which held that until the parties negotiate a new agreement or bargain in good faith to impasse, the employer is required to maintain the status quo under the expired collective bargaining and trust agreements, including payments to pension trusts. Accord Southwest Administrators, 791 F.2d at 776. Rozay’s Transfer, however, does not interpret our decision in Carilli as imposing a general obligation on the employer to maintain the terms of an expired collective bargaining agreement pending renegotiation. Instead, it reads Carilli as holding only that an employer may continue to contribute to a pension trust fund following expiration of a collective bargaining agreement without violating section 302 (e) (5) of the LMRA, which forbids such payments in the absence of an express, written agreement. Just because an employer may continue con- tributing to a pension trust fund following the expiration of a collective bargaining agreement, Rozay’s Transfer 26b argues, does not mean that a trust fund has the right to sue to collect such contributions during this period. [9] After giving this argument careful consideration, we reject such a narrow interpretation of our holdings in Carilli and Southwest Administrators. Our cases have long established that upon expiration of a collective bargaining agreement, an employer has a duty to continue the status quo until the parties bargain to impasse or reach a new agreement, Southwest Administrators, 791 F. 2d at 776-77. By unilaterally changing the status quo before that time, the employer commits an unfair labor practice in violation of NLRA § 8(a)(5) (failure to bargain in good faith). See, e.g., Laborers Health & Welfare Trust v. Advanced Lightweight Concrete. 779 F.2d 497, 500 (9th Cir. 1985) (Advanced Lightweight), aff d, 108 S.Ct. 830 (1988). This obligation to maintain the status quo under the expired labor agreement applies with equal force to the obligation to continue contributing to a pension trust fund. South- west Administrators, 791 F.2d at 776-77; Peerless Roofing Co. Ltd. v. NLRB, 641 F.2d 734, 736 (9th Cir. 1981). Further, this obligation to continue making pension fund contributions is legally enforceable. While the Su- preme Court just recently held that the district courts do not have jurisdiction under ERISA over a suit brought by a pension trust fund to recover delinquent contributions due after expiration of a collective bargaining agreement, it also recognized that a pension trust fund could seek to enforce this obligation by filing an unfair labor practice charge before the NLRB. See Advanced Lightweight, 108 S.Ct. at 837-38; see also Advanced Lightweight, 779 F. ad at 500-02. [10] That section 8 (a) (5) creates an enforceable obli- gation on the part of an employer to continue pension fund contributions pending renegotiation of an expired 27b collective bargaining agreement belies the claim of Rozay's Transfer that an employer is permitted, but cannot be required by the trust fund, to make such contributions during this hiatus. Rozay’s Transfer did not allege, nor did the district court find, that the parties had bargained to impasse. Given this interpretation, we turn to the question of whether Rozay’s Transfer would have been obligated to make the contributions “but for“ Mur- rietta’s misrepresentations. [11] One might read our prior decision in Southwest Administrators as suggesting that Rozay’s Transfer had an independent legal obligation to make the payments. See 791 F.2d at 776-77. Nonetheless, we remain unper- suaded by the union’s argument that notwithstanding Murrietta’s alleged misrepresentation, Rozay’s Transfer would still have been legally obligated to make the pen- sion fund contributions for the period in question. During oral argument, Rozay’s Transfer suggested the basis of our reasoning. The gravamen of its contention is that, even assuming that it would otherwise have been obli- gated to make the retroactive contributions while await- ing negotiation of a new labor agreement, the parties in fact reached a new agreement on January 17, 1983, extinguishing any incipient obligation to make retroactive contributions. We find this argument convincing. For even if we were to find that Rozay’s Transfer were legally obligated under the NLRA to continue the pension contri- butions all along, the union was free to bargain away such a right through the collective bargaining process. See American Distributing Co. v. NLRB, 715 F.2d at 446, 449- 50 (9th Cir. 1983) (American), citing NLRB v. C&C Plywood Corp., 385 U.S. 421, 430-31 (1967). The em- ployer’s obligation to maintain the status quo is therefore merely presumptive in the sense that it ean be discharged through the bargaining process. Waivers of union’s right 28b under the NLRA ean occur “by express contractual provi- sions, by bargaining history, or by a combination of the two.” American, 715 F.2d at 450. Thus, it is not true as a matter of law that absent Murrietta’s fraud, Rozay’s Transfer would still have remained liable for pension fund obligations under the expired labor contract. The parties by express provision in a new agreement could always have extinguished this obligation. We see no reason why this could not be done retroactively. See Advanced Light- weight, 108 S. Ct. at 838 (“the employer and the union may enter into a settlement that either reduces, or even might waive, the employer’s postcontract obligations to contribute to the pension fund“). [12] Moreover, that the parties would have agreed to such terms is not sheer conjecture at this stage. We observe that the contract as executed did not contain such a term, apparently because “the parties believed it was not possible simply to draft a collective bargaining agree- ment providing for prospective-only payment of contribu- tions to the pension fund.” Southwest Administrators, 791 F.2d at 771 n.1. The union may have been constrained in its bargaining because “[i]t was the established policy of the Western Conference of Teamsters Pension Trust Fund not to accept contributions made under any colle~- tive bargaining agreement which provided for a ‘gap’ in contributions. Thus, when a collective bargaining agree- ment expired, in order for the employer to be reinstated in the trust fund, the new agreement had to provide for the payment of contributions for the interim between the two agreements.” Jd. at 771-72 n.1. Even so, union offi- cials clearly evinced by their words and actions their intent to free Rozay’s Transfer from the burden of mak- ing retroactive pension fund contributions for the period in question. Indeed, the district court found that on January 17, 1983, Rozay’s Transfer and the union agreed 29b to “the resumption of the payment of pension contribu- tions prospectively.” (Emphasis added.) Although at this time, the district court did not find that the parties agreed specifically to a waiver of retroactive pension fund obligations, it found that Anderson represented to Rozay that the trust fund had forgiven unpaid pension contribu- tions of other employers in the past and that he would ask the trust fund likewise to waive the unpaid contributions for the period from May 1982 to February 1983. Further, the district court found that four days later, on January 21, 1983, Rozay sent Murrietta a letter confirming the terms of the January 17, 1983, agreement, in which Rozay articulated his understanding that, under the new agree- ment, retroactive contributions would not be required. In his reply to this letter, Murrietta did not express any disagreement or objection to Rozay’s understanding that there would be no retroactive pension contributions. Hence, we agree with the district court that Murrietta’s fraud deprived Rozay’s Transfer of the opportunity to negotiate away any continuing legal obligation to make the retroactive payments — a result that was clearly in- tended by the parties’ words and course of conduct during the negotiations that culminated in the January 17, 1983, settlement agreement. We recognize that despite the union’s desire to relieve the obligation of Rozay’s Transfer to make the retroactive payments, the union may have believed that it could, not include such a term in the new agreement, because of the trust fund’s policy against allowing gaps in coverage. Had the parties reached impasse, or had the union agreed retroactively to abolish the delinquent contributions to the trust fund, the trust fund’s exclusive remedy, if any, would have been to file an unfair labor practice charge under the NLRA to compel payment of the delinquent contributions. The district court found that the direct 30b consequence of Murrietta’s fraud was to induce Rozay’s Transfer to sign an agreement that provided for the payment of these delinquent contributions to the trust fand. Without this agreement, the trust fund would not have been able to pursue its prior action under section 515 of ERISA, 29 U.S.C. 5 1145, to collect these contribu- tions, for an action under section 515 is available only to collect “promised contributions.” Advanced Lighweight, 108 S. Ct. at 832. As the Supreme Court observed, an ERISA collection action generally provides a more effec- tive remedy for the trust fund than an unfair labor practice proceeding under the NLRA, See id. at 838. This is true, in part, because in an action under the NLRA, the union and the employer can always enter into a settle- ment waiving the employer’s post-contract obligations to contribute to a pension fund. Id. It is thus clear that Murrietta’s fraud is the cause-in-fact of the liability of Rozay’s Transfer to the trust fund in the Southwest Administrators case. IV The union and the union’s amicus also raise three objections to the remedy that the district court granted: (1) the simultaneous award of rescission and indemnifica- tion exceeded the district court’s authority under section 301, (2) indemnification for the amount of the judgment entered against Rozay’s Transfer in Southwest Adminis- trators was improper because Rozay’s Transfer could have “reasonably and prudently” avoided incurring the judg- ment in that case, and (3) indemnification for the attor- neys’ fees incurred by Rozay’s Transfer in Southwest Administrators was improper because the defense of Rozay’s Transfer in that case was legally meritless as against the trust fund in both the district court and on _ 81b appeal and because Rozay’s Transfer did not first provide the union with the opportunity to defend Rozay’s Trans- fer against the trust fund in the prior case. A. The union’s amicus argues that by awarding indemnifi- cation and damages as the remedy, the district court exceeded its authority under section 301, the sole juris- dictional basis invoked. According to amicus, section 301 permits only an action for rescission for fraudulent in- ducement, leaving an award of indemnification or dam- ages for common law fraud beyond the district court’s remedial power. Implicit in this argument is the assump- tion that section 301 permits only contractual-type reme- dies and that while granting both rescission and restitution is a proper contractual remedy, granting both rescission and indemnification is not. Because the inabil- ity of the district court as a matter of law to rescind the obligation running from Rozay’s Transfer to the trust fund makes it impossible literally to restore the parties to their status quo ante, the union correctly asserts that the district court’s “make-whole” remedy following its order of rescission is more properly characterized as indemnifi- cation than as restitution. [13] Nonetheless, how this court chooses to character- ize the remedy granted in this case and whether simulta- neously granting rescission and indemnification is a proper “contractual” remedy are irrelevant to the district court’s remedial authority under section 301. The union’s amicus points to no authority holding that a claim for equitable indemnity or other noncontractual relief is not cognizable under section 301. Contrary to its suggestion that section 301 strictly limits the remedial power of the federal courts, the Supreme Court has construed section 32b 301 as a congressional mandate to the federal courts to fashion a body of federai common law to be used to address disputes arising out of labor contracts,” Allis- Chalmers Corp. v. Lueck, 471 U.S. 202, 209 (1985) (foot- note omitted); see Textile Workers v. Lincoln Mills, 353 U.S. 448, 456-57 (1957). In Lincoln Mills, the Court held that section 301 allows courts to fashion remedies even though lacking in express statutory sanction and that “(t]he range of judicial inventiveness [under section 301] will be determined by the nature of the problem.” 353 U.S. at 457; see also Bowen v. United States Postal Service, 459 U.S. 212, 222 (1983) (Bowen) (“of para- mount importance is the right of the [injured party]... to be made whole“); Black-Clawson Co., Inc. v. Interna- tional Association of Machinists, 313 F.2d 179, 182 (2d Cir. 1962) (Black-Clawson) (legislative history of section 301’s predecessor contemplates “not only the ordinary lawsuits for damages but also such other remedial pro- ceedings, both legal and equitable, as might be appropri- ate in the circumstances’). Recognizing that [t] he label attached to the remedy as tort or contract is not disposi- tive of the scope of federal common law which under section 301 (a) it is our responsibility to create,” the Third Cireuit in Wilkes-Barre, Publishing Co. v. Newspaper Guild of Wilkes-Barre, Local 120, 647 F.2d 372, 381 (3d Cir. 1981), cert denied, 454 U.S. 1143 (1982), held that a claim for tortious interference with a labor contract was proper under section 301. [14] Other courts have similarly allowed tort-like, ‘“‘make-whole” remedies similar to the one fashioned by the district court for breach of contract and breach of duty of fair representation claims under section 301. These remedies have included awards for back pay and future losses, Thompson v. Brotherhood of Sleeping Car Porters, 367 F. 2d 489, 492-93 (4th Cir. 1966), cert. denied, 33b 386 U.S. 960 (1967), compensatory damages, see Bowen, 459 U.S. at 222, and attorneys’ fees, Dutrisac v. Caterpil- lar Tractor Co., 749 F.2d 1270, 1275-76 (9th Cir. 1983) (Dutrisac). In analogous cases of union misconduct, this court has affirmed an award imposed by the NLRB requiring a union to make an employer whole for financial expenditures coerced from the employer in violation of the NLRA. See Graphic Arts International Union, Local No. 280 v. NLRB, 596 F.2d 904, 910 (9th Cir. 1979) (Graphic Arts International); NLRB v. Warehousemen’s Union Local 17, 451 F.2d 1240, 1243 (9th Cir. 1971) (upholding Board remedial order requiring union to make employer whole for financial expenditures made by em- ployer as result collective bargaining agreement). The NLRB’s “broad discretion in fashioning remedies to effectuate the policies of the NLRA in light of the cireumstances of each case,” Graphic Arts International, 596 F.2d at 910, justified its award of make-whole“ remedies in these cases of union unfair labor practices. No reason has been provided to suggest why, by analogy, the federal district courts’ broad remedial powers under section 301 should not similarly invest them with the power to devise “make-whole” reme- dies, “both legal and equitable, as might be appropriate in the circumstances.” Black-Clawson, 313 F.2d at 182. Hence, there is no sound reason why section 301 should bar the district court from simultaneously awarding a remedy of rescission and indemnification for the union’s fraudulent inducemént in order to make the employer whole.“ B. Taking a different tack, the union next maintains that Rozay's Transfer could have “reasonably and prudently” 34b avoided the judgment entered against it in Southwest Administrators if it had done either of two things. First, it argues that Rozay’s Transfer could have contacted the union after learning of the trust fund’s unfavorable deci- sion by mail on March 24, 1983, for the purposes of reopening negotiations or amending the agreement. We construe this as a claim that Rozay’s Transfer failed to take steps to mitigate its damages. At that time, however, Rozay’s Transfer was unaware of any grounds that would have entitled it to reopen negotiations or modify the March 8, 1983, agreement. Murrietta’s fraud was not revealed until much later. Further, the union’s position in the instant case is completely inconsistent with a desire on its part to renegotiate or amend the March 8, 1983, labor contract to reflect Rozay’s Transfer’s mistaken understanding of that agreement. [15] Second, the union suggests that Rozay’s Transfer was tardy in waiting over a year before formally notifying the union of the collection action initiated by the trust fund on June 20, 1983. This claim is contrary to the record. While Rozay’s Transfer did not file its complaint against the union in this case until after September 26, 1984, the union had actual notice of the Southwest Admin- istrators trial from its outset. Moreover, the union does not explain how notice of the trust fund’s action against Rozay’s Transfer would have resulted in mitigation of damages. Union officials, after all, testified against Rozay’s Transfer in the Southwest Administrators litigation. [16] Third, the union alleges that had Rozay’s Trans- fer promptly conducted discovery in that case, it would have uncovered Murrietta's fraudulent conduct, and could then have moved at an earlier date to serve a third party complaint against the union seeking rescission. 35b There is, however, no evidence in the record that Rozay’s Transfer was remiss or dilatory in conducting discovery. In addition, we held in Southwest Administrators that because ERISA was intended to provide a streamlined and simplified procedure for employee benefit trust funds to collect delinquent contributions,” the district court reasonably denied Rozay’s application to implead the union. 791 F.2d at 777. The strong policy in favor of avoiding complicated, lengthy trials in ERISA collection actions suggests to us that impleader might well have been denied at any stage of the Southwest Administrators proceedings. Moreover, even if the union had been joined as a third party defendant, Rozay’s Transfer still would have been adjudged liable to the trust fund, although it then could have simultaneously sought indemnification from the union. In either event, Rozay’s Transfer would not have avoided its primary liability to the trust fund. C. The union also attacks that part of the district court’s judgment indemnifying Rozay’s Transfer for the attor- neys' fees and costs that it incurred in litigating the Southwest Administrators case at both the district court and circuit court level. An award of attorneys’ fees on the grounds of bad faith is a matter committed to the district court's discretion and will not be reversed absent an abuse of discretion. Beaudry Motor Co. v. ABKO Proper- ties, Inc., 780 F.2d 751, 756 (9th Cir. 1986) (Beaudry Motor). According to the union, the theory of defense at trial of Rozay’s Transfer and on appeal in Southwest Administra- tors was frivolous and, moreover, Rozay’s Transfer failed to provide the union the first opportunity to defend Rozay's Transfer. Therefore, the union reasons, the dis- 36b trict court should not have ordered it to indemnify Rozay’s Transfer for the attorneys’ fees and costs in- curred in defending Southwest Administrators. We find these arguments to be patently without merit. Merely because a party ultimately loses does not mean that its defense was not in good faith. Indeed, our lengthy discus- sion of the defense of Rozay’s Transfer in Southwest Administrators recognized the force of its position, al- though we were compelled ultimately to reject it as a matter of law. Moreover, the union’s apparent fraud was not the only good faith defense that Rozay’s Transfer raised in the prior case. See 791 F.2d at 775. Last, we know of no authority that requires the victim of inten- tional fraud to request its defrauder to defend it in a suit brought by a third party. Particularly in this case, the conflicting interests between Rozay’s Transfer and the union would have counseled against allowing the union to defend Rozay’s Transfer in the prior lawsuit. The union would hardly have been willing to admit to the fraud of its own agent, thereby subjecting itself to potential liability. Nor could one expect it vigorously to take a position in conflict with the best interests of its members by arguing that Rozay’s Transfer was not obligated to make the retroactive pension fund contributions. Indeed, as we have previously observed, the union actively sided with the trust fund in the Southwest Administrators litigation. [17] The award of attorneys’ fees and costs in this case merely compensates Rozay’s Transfer for one aspect of its out-of-pocket expenses attributable to the union's fraud. Case law supports awarding attorneys’ fees and costs where such expenses were incurred as a result of the defendant’s own misconduct. See e.g., Dutrisac, 749 F.2d at 1275-76 (holding that award of attorneys’ fees in a section 301 suit is proper where fees reimburse an em- ployee for union’s failure to represent him at a hearing); 37b Moe v. Transamerica Title Insurance Co., 21 Cal.App. 3d 289, 303 (1971) (one who is required by another's tort to defend an action brought by a third party is entitled to recover attorneys’ fees on that action, even if unsuccess- ful). Such an award by the district court is also consistent with the rule that allows a court to award attorneys’ fees against a party whose conduct resulting in a lawsuit constituted fraud or who otherwise acted in bad faith. See F. D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129 (1974); Beaudry Motor, 780 F.2d at 756; Dogherra v. Safeway Stores, Inc., 679 F.2d 1293, 1298 (9th Cir. 1982), cert. denied, 459 U.S. 990 (1982). The union’s claim that under Weston v. Globe Slicing Machine Co., 621 F.2d 344, 349 (9th Cir. 1980), an indemnitee cannot recover its attorney’s fees from an indemnitor absent an express contractual provision ignores the fact that Weston was a diversity action applying Idaho law, and, moreover, that it did not involve, as in this ease, the commission of an intentional tort by the indemnitor. [18] Thus, the district court did not abuse its disere- tion by awarding Roza [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0197%3A1. Public record. Not legal advice.